Fundnel Spotlight • 28 May 2020
We sit down with Dr Nitza Kardish, CEO of Trendlines Agrifood Fund to discuss how COVID-19 has triggered a rethink of the urgencies in addressing food security and sustainability in Asia.
Since the outbreak of COVID-19, we have had to collectively reshape our relationship with food—from our understanding of how it comes to our shelf to how we source and consume it. This impact has been felt not just by us as end consumers, but has permeated the entire food and agricultural supply chain.
Victor Ng, Chief Commercial and Strategy Officer at Fundnel sat down with Dr Nitza Kardish, CEO of Trendlines Agrifood Fund and Vice Chair of Trendlines Agrifood Innovation Centre to discuss how COVID-19 has triggered a rethink of the urgencies in addressing food security and sustainability in Asia.
Watch the recap above and check out some highlights from the conversation below.
Effects of COVID-19 on Consumer Trends
Victor: Which changes in consumer trends will persist in a post-COVID world? What are some other changes you anticipate or see?
Dr Nitza: One of the most obvious things that has happened is that consumers increasingly want to have more control. They want to have more information and visibility about the food they consume throughout the supply chain. While it was already previously possible, people are more interested in knowing this information now more than ever.
Since the onset of this pandemic, we have observed Google searches for functional foods and foods that improve the immune system increasing by 50%. This trend will probably remain after the pandemic.
Some other changes that can be anticipated:
- AI and big data are changing how people consume food more tangibly in the years to come.
- Alternative proteins such as plant-based and insect-based proteins will also gain traction, while technology that uses nutrition from food waste will also be an interesting trend to observe.
- Sterile and clean packaging, which is mainly used to market the product, will gain importance, possibly even more so than the importance of recycling.
- For restaurants, dark kitchens (also known as ghost and cloud kitchens) will gain prominence.
- People will also purchase more products from the grower to the end-user with applications such as Alibaba and Redmart.
- Lastly, to minimise involvement of humans throughout the supply chain, automation and robotics will see a rise in demand as well.
Effects of COVID-19 on Food Security in Asia
Issues around food security were previously focused on addressing the impact of climate change. However, the shocks to the food supply chain during COVID-19 has highlighted that climate is not the only change that has the ability to drastically affect food security.
Victor: What would a resilient food supply chain in a post-COVID, climate-challenged Asia look like? What are the most pressing issues innovators and investors should tackle?
Dr Nitza: Supply chain in agriculture is extremely complicated because of its requirements. There are many parameters that should be considered and studied: for example, certain products have strict storage requirements from farm to shelf, and others may ripen before they reach the end consumer. Last-mile logistics is also a great issue in the industry, and the effects of COVID-19 have made it even worse.
As investors, Trendlines is looking at the supply chain challenges, and seeks to evaluate technologies that enable localisation of food supply chains and those that shorten the distance from production sites to sales sites. For example, one of the technologies that we are considering bringing into Singapore involves the transport of fish in unique conditions to preserve its freshness. This allows the fish to be retained in a condition similar to that of when it is just removed from the sea when it arrives at the supermarket.
Additionally, there are many technologies that can come out of the biological, chemical and physical disciplines that can improve current supply chain systems. Some of them include improvement of warehouse methodologies, automation and robotics of packaging, cleaning of products and even urban farming technologies.
Blockchain technology can also be utilised — a relevant example is the project that Rabobank and Cargill launched involving a USD12 million commodity trade using blockchain technology to reduce transaction times.
Bringing Innovations to Market
Given the heavy focus on R&D, disruption of age-old supply chains, compliance with strict regulatory standards and focus on consumer safety, to say that innovation in agrifoodtech has a long commercialisation timeline is an understatement.
Victor: What are some of the interesting technologies to watch out for? How do we help commercialise some of these technologies?
Dr Nitza: When Trendlines evaluates technology, we remain very conscious about unmet needs of the market, and firmly believe that the best solutions come from addressing the specific needs of the market. This is to say that if you have the best solution for a specific problem, the chances of your technology going to market is very high.
While many entrepreneurs today are focused on the technology and how their ideas will benefit the world, some are not taking the time to check what their solutions mean from the end users’ or market’s perspective(s). From Trendlines’ perspective, and especially with regard to our activity in Singapore, we are very experienced within the agrifoodtech industry and its relevance to the country’s unique and strategic plan for food security.
Urban farming has been in the spotlight recently, and as far as we are concerned, there are two main issues to urban farming. Firstly, the operational costs are challenging as they require special infrastructure, light, water and placement, to name a few. Secondly, indoor farming has only been successfully carried out on a small variety of vegetation, consisting mainly of green leaves. For it to be truly sustainable and scalable, there should be an increase in the variety of crops grown indoors to include fruits and vegetables.
However, because we are drastically changing the environment to grow such vegetation, this may necessitate genome editing to be paired with other classical breeding methods. This should also be paired with big data and AI in urban farming processes to allow crops to grow under indoor/urban conditions.
The general question here is: how do we implement a quantum technology to have new crops and varieties that can grow indoors and yet still produce high yields?
At the same time, other technologies to watch out for include technology that supports alternative protein trends and make them more viable and cost effective, as well as technology that supports the reduction of chemicals all over the value chain, from field to fork. The use of chemicals that harm the climate from a sustainability point of view should be reduced dramatically.
Trendlines supports technologies that contribute to this mission by helping startups and entrepreneurs through its business model or by partnering with strategic partners that are already in the market. These strategic partners also provide feedback to startups to minimise mistakes in the development phase, and help them to take their products to the market.
Victor: How receptive are large companies in partnering with startups, as opposed to developing technologies in-house?
Dr Nitza: We’ve definitely observed a fundamental shift in the MNC mindset over the past few years. Recognising startups as a valuable treasure trove of innovation, and innovation as a way to distinguish themselves and forge ahead, MNCs are now increasingly open to forging strategic partnerships with startups for mutual benefit.
Investment Trends in Agrifoodtech
Globally, agrifoodtech investors have largely focused on downstream solutions thus far. Given the limited arable land that will only decrease with climate change, coupled with population growth and changes in consumer behavior towards higher quality diets, food supply chains will struggle to keep up with this demand if the chasm between upstream/midstream investments to ensure food security is not bridged.
Victor: Are downstream investments overheated? How can government, investors and industry work together to spur upstream/midstream investments in agrifoodtech?
Dr Nitza: Downstream investment sectors are definitely overheated at the moment. While downstream sectors are important, they do not solve the fundamental challenge of preserving food security. Given that food security is an issue with national implications, governments should rightly intervene in the matter and bring the right approach to tackle these issues.
There is market failure when it comes to private agrifood technology investments — such investments tend to have a long gestation period and there is a lack of familiarity with the associated business models. Some ways governments can intervene would be by developing the local startup ecosystem with grants, which is currently being done by the governments of Israel with its Innovation Authority and Singapore with Enterprise Singapore.
Overall, partnerships between governments, industry and academia are key to developing local ecosystems to solve the issue of food security.
In the long-term, climate change may have a significantly greater impact than COVID-19 on food production and security. Hence, addressing climate change will remain a key priority for governments.
The Singapore government is a leading example of how governments can develop local ecosystems both by providing funding grants and streamlining regulations, allowing for a quicker commercialisation time.
The Example of Singapore
Singapore is clearly looking into becoming more self-sufficient when it comes to food security, setting a big hairy audacious goal for the country — to locally produce 30% of food consumed by 2030 — that will require huge gains in both technology and human capital.
Victor: Is Singapore’s “30 for 30” goal attainable? Which cities can Singapore learn from? Is it enough?
Dr Nitza: While I do not know a lot about Singapore’s history, I am aware that Singapore has previously defied seemingly impossible odds to achieve several big goals. A great example would be in the water industry, where Singapore developed NEWater to gain self-sufficiency for this critical resource.
“30 for 30” is not a simple goal, but with the right attention, resources and leadership, it can happen and probably will in Singapore. No other country has better infrastructure than she does to support high-tech farming, and the small size of the country suggests an ease of implementation.
On top of that, there is strong human capital present in Singapore. Founders from Singapore have shown the highest fluid intelligence in the world — an important trait for adapting to changing situations. Advanced technologies such as big data, computer vision, AI, tissue culture are also present in this country. These are crucial fundamental building blocks that when applied to the agrifoodtech industry will aid Singapore in achieving this goal.
More importantly, we hope that people now see the importance of agrifoodtech investment, and not only realise it post-catastrophe.
This dialogue is part of the Fundnel Spotlight series, where we share insights into the growth and investment potential of deeptech sectors featured in Deal Fridays.
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