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The heart of Southeast Asia’s economy beats to the rhythm of agriculture, a sector that not only contributes a significant 10.5% to the region’s GDP but also nurtures over 30% of the employment in countries like Vietnam and Myanmar, according to figures from the World Bank. Now, the adoption of agricultural technology or agritech is gaining popularity in the region.
The surge in the usage of agritech finds its impetus in the stark reality that the agricultural sector in the region has borne the brunt of extreme conditions caused by global warming. The Covid-19 pandemic created labour shortages, leading to disruptions in the global supply chains, impacting agriculture further. Moreover, most Southeast Asian farmers have small land holdings, which suffer due to inadequate information distribution and under-developed waterways.
Faced with this situation, agritech has emerged as an avenue for elevating farming practices beyond the confines of spatial limitations, climatic constraints, and manual labor. Furthurmore, Southeast Asia’s agritech has seen participation from rural and urban farming sectors adopting cutting-edge technologies for better efficiencies.
With a market share expanding from 42% in 2014 to 50% in 2020, Asia has the maximum share in the global food market. According to PWC, consumers are expected to spend an additional $4.4 bn on food over the next ten years amid massive demographic changes and fast-changing consumer needs. Also, Asean.org predicts that the agritech market’s size in Southeast Asia will fall within the range of $24 bn to $48 bn by the year 2030.
How is technology changing farming?
Agritech not only solves the problem of food production but also helps with food processing and distribution. Today, smartphones are leveraging artificial intelligence (AI) and big data for crop management. At the same time, drones are being used for weather prediction, disaster management, crop mapping, and yield enhancement. These technologies have also led to increased income for small farmers.
Additionally, soilless agricultural systems like aeroponics or hydroponics help urban farmers to enhance crop yields and deal with soil-borne pests and diseases. Along with that, LED lighting, sensors, and IoT technology help to create favourable growing conditions. With the swift adoption of transformative technologies by both consumers and businesses, Southeast Asia is poised to emerge as a significant hub for agritech advancements.
Asia’s agritech initiatives
Countries in Southeast Asia have been frontrunners in adopting technology in agriculture. Here’s a look at how China, Japan, and Singapore are positioned to reap benefits from the sector’s growth.
The Chinese government has unveiled a plan to drive the advancement of agricultural and rural modernization throughout the 14th Five-Year Plan period (2021-2025). According to the plan, grain production monitoring is highlighted as an important factor to judge the quality of the yield and efficiency of production techniques.
Moreover, as per Fact.MR estimates, the Chinese agricultural drone market is anticipated to expand to a size of $470.4 mn by 2033, exhibiting a CAGR of 13.7%. At the same time, the global consultancy Growing Smart has been working for over twenty years in China to enhance farming efficiency. The company has been involved in innovative cultivation methods at a greenhouse project based in Jiangxi Province.
In Japan, the government has also taken a stance to cooperate with overseas firms as a part of its “Plan to Promote the Establishment of Global Food Value Chains”, introduced in 2019.
This plan seeks to expand the overseas operation of Japanese food and agriculture firms by encouraging joint ventures with overseas firms. Supporting the deployment of Japanese agricultural technology overseas is also part of this plan.
Meanwhile, the Yano Research Institute predicts the Japan agritech market to double by 2026 to over 54 bn yen, led by continued agricultural workforce decline and telecommunications advancements such as 5G.
On the other hand, the Singapore Food Agency (SFA) has introduced the ‘30 by 30 goal’ to reduce its major dependence on agricultural imports and minimise the impact of supply disruptions.
This goal aims to transform Singapore’s agri-food industry into a highly productive one with innovative techniques. Singapore began supporting agritech in 2019 when it launched the Singapore Food Story Research and Development Programme.
In India, The Economic Survey of India 2022-23 highlighted that in the last six years, over 1000 agritech start-ups have emerged. The report also suggested that infrastructural development plays a key role in building a robust agritech sector. The nation has also set up an Agriculture Infrastructure Fund (AIF) to modernise farming practices. Indian Finance Minister Nirmala Sitharaman explained, “The fund will aim at bringing innovative and affordable solutions for challenges faced by farmers. It will also bring in modern technologies to transform agricultural practices and increase productivity and profitability”.
Agritech is a promising sector, but it may pose some challenges for rural farmers in the near term. Agritech depends heavily on technology, which is developing faster than ever. Rural farmers may not have the know-how to leverage it and may even face connectivity issues. “Farmers themselves are notorious for eschewing new technology for traditional methods. Hence a key component of any agri-tech campaign will be framing these new technologies in a way that is attractive to them,” says Morgan Stanley.
Moreover, agritech could also lead to several agricultural job losses in villages, which may have a sudden impact on the rural economy.
