Developments and initiatives to develop the industry
Even if you are not familiar with the term “agritech”, you may have seen examples of it without your knowledge in restaurants, farms, etc. Take for example, if you’ve dined at farm-to-table restaurants like The Foodcraft farm in Bangsar Sud, you have already encountered agrotechnics in the form of hydroponics.
While incorporating it into a restaurant concept is unique, there is more to agriculture than hydroponics. Here’s what you’ll find in the Malaysian agritech scene today with a little digging (pardon the pun).
What is Agritech?
Simply put, it is the abbreviation of agricultural technology, which is the collection of scientific techniques used to improve plants, animals and microorganisms, providing benefits to farmers, the environment and consumers, according to Australian Biotechnology Organization.
These techniques are used in plant and animal biotechnology and biofertilizers to protect crops from pests and diseases, reduce the need for pesticides, lower the cost of food production, and provide alternative fuel sources.
Here is some use case of agritech:
- Smart agriculture (automated irrigation, vertical agriculture, hydroponics, etc.);
- Drones and satellites (digitization and monitoring of crops and the field);
- IoT (Internet of Things) based sensors (provide accurate information on weather, quality and current soil condition);
- Blockchain and big data (for consumers to learn about the origin of their products);
- Biotech (create crops that adapt better to the environment than ordinary ones, develop synthetic fertilizers, etc.);
- Agricultural maintenance technology (optimization of water use, correct selection of ripe products, etc.);
- Production and innovation technology (eliminate intermediaries and allow agriculture to be closer to urban areas).
Agritech is not only applicable to agriculture, but also to horticulture (gardening, mainly) and aquaculture (raising aquatic animals or growing aquatic plants for food).
An example of agritech role Simplifying farming involves using a soil sensor to detect moisture content and moisture flow, which can send data back to a farmer on demand, hourly or daily. This saves a farmer having to go to the field to regularly check the soil from time to time.
When there are technologies involved like IoT and AI, agriculture becomes more efficient and less labor intensive, which helps produce more output for compared to traditional agriculture. It also puts less burden on the farmer to meet the demands of our growing population in the world.
How important is the Agricultural sector in Malaysia?
Agriculture remains one of the most important sectors in the country and, since the last report in 2019, the agricultural sector is the third largest contributor to GDP (7.1%, or 101.5 billion RM) in the country, alongside the mining and quarrying sector.
Exports increased from 114.5 billion RM in 2018 to 115.5 billion RM in 2019 (increase of 0.9%), and imports increased from 93.3 billion RM in 2018 to 93.5 billion RM in 2019 (increase of 0.2%). The trade balance of this sector increased by 4.1%, from 21.1 billion RM in 2018 to 22.0 billion RM in 2019.
Dictionary time: The trade balance is the net sum of a country’s exports and imports of goods without taking into account all financial transfers, investments and other financial components. A country’s trade balance is positive (meaning it has a surplus) if the value of exports exceeds the value of imports.
With agriculture being one of our most important economic sectors, it is all the more crucial that ways to improve processes are constantly developed and implemented. But a major problem remains in our way.
Those Who Need Agritech Most In Malaysia Can’t Afford It
The group of farmers most in need of agritech are the smallholders, who constitute the majority of farmers who dominate the local agricultural sector.
They are the ones who tend to face low productivity and low agricultural output in addition to the lack of labor on their farms. In addition, there is also the problems lack of capacity to manage natural disasters and waste resulting from inadequate agricultural practices.
With regard to the labor force just mentioned, employment in the agricultural sector has in fact fall slightly from 1,570,300 in 2018 to 1,541,100 people in 2019. Therefore, it is important that agritech enters the picture to cushion the decline before it hits an all-time low for farmers.
However, agricultural technologies like smart sensors and drones don’t come cheap. For example, drones that provide images of field conditions can cost around $ 1,000 (roughly RM 4,145) each, regardless of the salary of the talent hired to operate one. Currently, this is an unrealistic price for many small farmers, if they are expected to shell out the money out of their own pockets.
“We would love to get our hands on automated equipment such as a robotic combine harvester, which would reduce our labor costs, or a weather station device that can tell us the best time for planting, fertilization and irrigation based on historical data. But it’s all just too expensive now, ”said local farmer Markus Chin of Shinnou Farms. Al Jazeera in 2019.
Development of the Agritech sector in Malaysia
Over the years, several initiatives have been undertaken by the public and private sectors in Malaysia to stimulate the growth of agritech by funding startups with agritech solutions, providing micro-finance programs for farmers to adopt the agritech, and more.
In 2018, the Malaysian Digital Economy Company (MDEC) has launched a pilot project to boost crop yield and quality using the latest technologies, through a public-private partnership with the Pertubuhan Peladang Kawasan Kuala Langat (PPKKL).
He saw farmers adopt an Internet of Things (IoT) enabled fertigation (combining fertigation and irrigation) system that helped them reduce monthly fertilizer use by 20%, reduce monthly on-hand requirements. -work by 25% and increase the overall quality of the yield (Grade A chili peppers) up to 90%.
In 2019, the Malaysia Global Center for Innovation and Creativity (Magic) led a boot camp for agritech startups with a demonstration day at the end of the 10-day event at the Global AgriTech Summit.
3 agritech startups that emerged as bootcamp winners were:
- Sayur.Farm: Develop a FitBit-like device that serves as an agricultural assistant that can update the current state of crops and its environment, gather information through artificial intelligence and data visualization to provide predictions of yield, plant health, recommended prescriptions, data sharing, insights, benefit analysis and yield analysis;
- Origin of life: Produce larvae of black soldier flies using organic waste and transform it into food for livestock, animals and pets;
- FarmExchange: A closed market where farmers can get loans directly for their required equipment. Farmers can also be given a credit score, and lenders can have a transparent view of the farmer’s requirements, proposed return on investment, and timing.
However, it appears that not all of them except Life Origin have been active recently. A few other local agricultural startups that are currently active include:
- Braintree Technologies Sdn Bhd: Uses drones to count and spray trees, map plantations, map infestations, etc.;
- TanaLink ears: Uses technology to provide real-time data and monitor their farm for theft, harvest, fertilizer coverage, wildlife presence, soil sensors, etc.
- plantOS: Uses a fertigation system which can detect diseases in advance, works as a soil sensor, and can automatically fertilize your crops accordingly, reducing wasted nutrients;
- Fefifo: Provides smallholder farmers and young unemployed agricultural graduates farm ready spaces and technologies to start a modern agricultural business with a guaranteed harvest;
- Nutribah: Uses an IoT-based smart farming system and their own fleet of riders to eliminate middlemen and deliver their products directly to consumers.
Although there are not yet too many local agricultural startups established in the country, Dzuleira Abu Bakar, CEO of MaGIC, noted that agriculture is evolving with the pace of the acceleration of change. While this has been underfunded and less popular in the past, it is changing quickly. With these technological advancements in agriculture as well, the industry is starting to become more inclusive and more attractive to the younger generation.
Even Petronas has made a foray into the agro-tech ecosystem by become a VC for Braintree Technologies last year, as part of Petronas Ventures and in line with Petronas’ Sustainability Agenda and United Nations Sustainable Development Goals, which further signal the potential of agritech in Malaysia.
Last week, MDEC and CIMB Islamic signed a memorandum of understanding to expand a large-scale micro-finance program with an allocation of RM 10 million as a seed funding program to catalyze technology from digital agriculture (Digital Agtech) in Malaysia. As the program progresses, this allocation could be increased to RM 25 million.
MDEC’s ongoing eLadang program also benefited 548 participants in December 2019, 78 farmers using digital agricultural technology, resulting in a 20% increase in productivity and a 30% increase in income as well as
a 30% reduction in operating costs.
With the MoU contributing to the increasing use of technology in agriculture, it is estimated that there will be a 30% increase in job opportunities created by 2025 in this sector. At the same time, more young people will be pushed to participate, which will be needed to manage and exploit innovative technologies.
- You can read more Agritech related articles that we have covered here.
Featured Image Credit: Poladrone via Technology for impact