Agricultural Technology Booms Amid Covid-19 Outbreak
Food Crisis Amidst Pandemic and Climate Change
This year, the bushfires in Australia, the volcanic eruption in the Philippines, the locust plagues in Africa, the global coronavirus pandemic, the floods that swallowed many regions in southern China, in addition to other natural and man-made disasters have caused communities everywhere to feel a sense of unprecedented doom and despair.
As the coronavirus has been ravaging the world, it has also disrupted the global food supply chain and paralyzed economies, both of which have affected the delivery of agricultural products to markets and consumers — both within and across borders.
For the first time in recent memory, we have been reminded that in order to ensure food is available in nearby supermarkets and restaurants, we must also guarantee the unimpeded functioning of all components of the agricultural supply chain, including farms, trucks, processing centers, warehouses, cold storage centers, and transportation routes.
Bloomberg reported that by the end of 2020, there will be 132 million more hungry people than previously estimated, a spike that will likely represent more than three times any increase so far in the twenty-first century. Some predictions indicate that by the end of this year, COVID-19 will cause more people to die of hunger than from the disease itself.
Stuart Oda, CEO of Alesca Life, a Beijing-based agricultural tech company, said that agriculture and agricultural technology have come into sharp focus from the fallout of the COVID-19 outbreak.
“Whenever there’s a recession or a global health and food crisis, agricultural technology booms and the interest from governments, investors, and the general population increases,” Oda said.
The coronavirus outbreak has made many governments more aware of the significance of agricultural technology, and venture capital has started focusing more on the sector, according to Oda.
“At the beginning of the pandemic, accessing masks and ventilators was a challenge. As coronavirus continues to spread, accessing some of the most basic food items may become a challenge,” Oda said. “Governments are beginning to realize that investing in technology to enable local food production and building up resilience and capacity now is becoming more important as the frequency of disasters continues to increase.”
Alesca Life has received significant investor, government, and partner interest from all over the world, and has even seen a spike in job applications as people become more aware of the issues of food and nutritional security.
Oda emphasized that climate change has also initiated a spike in investors’ long-term interests in agricultural technology.
“If you look at agricultural activity over the past several decades, the impact of climate change is undeniable with many crop varieties being cultivated in new geographies. By 2050, climate change will be a major factor in where you can grow what. Many governments and organizations are working to tackle these challenges by investing in technology,” Oda said.
Alesca Life: Labor, Water and Energy Efficient, Soilless Indoor Farming
Founded in 2013, Alesca Life is a Beijing-based agricultural technology company that builds indoor vertical farms and farm management solutions to make food production more localized and data driven. The startup’s vision is to expand access to fresh and nutritious food by democratizing the means and knowledge of production
Oda and his team at Alesca Life develop all of the core hardware, software, and automation, then rigorously test their technology and processes to grow a wide variety of plants. The team currently has several hardware systems that are tailored to growing microgreens, leafy greens, herbs, vine vegetables, and flowers. Oda added that the company plans to grow various fruits, such as strawberries, as well as Chinese herbal medicine in the future, as their technology becomes more advanced.
Unlike most of their global competitors, Alesca Life also designs their own LED lights that are optimized for their current variety of plants.
“The lights we designed are meant to activate specific parts of the plants and make them grow better, faster, and stronger,” Oda said. “Our LEDs also do not emit any harmful radiation, so our grow operators and customers can work under them without posing any health risks.”
Oda said that they are planning to develop more specialized LEDs in the future to emulate a more natural environment. “Plants in nature are under constant stress from the environment, animals, and pests. By simulating certain types of stress, the plant can become more nutritious and flavorful,” Oda said.
The indoor growing systems developed by Alesca Life recycle all of the water and nutrients, and use an alternative material for soiling, such as clay pellets and biodegradable sponges. This helps to maintain the farm’s cleanliness and save a significant amount of water. “We estimate that we use 97% less water compared to traditional farms in Beijing,” according to Oda.
Oda said that one commercial shipping container farm will be growing over 5,000 plants at any given time. As such, it can be quite challenging for one person to manage the entire process.
“Eventually, we want one person to be able to manage 10 container farms or 50 container farms,” Oda said. “The only way to make this possible is to provide our operators with the best software and automation tools to increase their productivity by an order of magnitude from today.”
As an indoor farming company, one of the most frequent issues is flavor and nutrition. Oda said that most vegetables will lose 40% to 70% of their nutrients between the farm and the supermarket or restaurant. He noted that the vegetables grown in his farms are pesticide-free and retain almost 100% of the nutrients, and are significantly more flavorful because of their freshness.
Alesca Life has launched projects in partnership with clients in China, Singapore, the UAE, and Saudi Arabia, with the majority of its customers in China being high-end hotels. The company’s next step is to expand their production volume and variety and start working with larger supermarkets and restaurants with the ultimate goal of making the fresh vegetables affordable to everyone.
Despite growing up in the US, Singapore, and Japan, Oda chose to start his business in China. He noted that various innovations are adopted very quickly in China by consumers, businesses, and the government, claiming that China will inevitably become the largest market for his team’s technology.
“The Chinese government often make investments that will have a material impact on the citizens many years, and sometimes decades, in the future. The will and capacity to take a long term view on urban development and improving the country’s basic infrastructure is one of the unique advantages of the country,” Oda said.
He added that Beijing has a great talent pool due to the country’s many competitive universities and high-tech companies, especially in the Chaoyang district where he started his business.
As a promising enterprise, Alesca Life won the Startup of the Year award at the 7th Overseas Talent Entrepreneurship Conference (OTEC) last year in Beijing. Pandaily reported earlier that the event provides an entrepreneurial reward of 1 million yuan, extensive media coverage, and investment opportunities from top international investment institutions.
As a participant in the OTEC competition 6 years ago, Oda said that the event provided the company with valuable feedback early in their development, as well as access to a large audience to present to and hire from.
“Events like OTEC provide us with an opportunity to connect with people in our local community, and engage and hopefully inspire them to join our company and mission to revolutionize the global agricultural industry,” Oda added.
Held by the Beijing Chaoyang Talents Association, OTEC not only offers entrepreneurial funding for qualified projects but also gives project support and follow-up services, covering qualification for CEO training through Phoenix School enrollment, policy consulting on talent introduction, industry and financing, consulting services regarding residence status, working permits, obtaining foreigners’ visas, and others.
The event organizer Vivian Lin said one of the core missions of OTEC is to help non-mainland-Chinese entrepreneurs quickly understand and adapt to the Chinese market, and develop the international innovation and startup ecology and brand for talents working in Chaoyang District.
This year’s OTEC will hold a one-week event, the Global Innovation Week (GIW), starting from Sep. 14. The event organizer told Pandaily that they are still looking for innovative startups with less than three years of founding history before any pre-series A or series A rounds of financing to join the competition. The application deadline is Sep. 4.
SEE ALSO: As OTEC’s Global Innovation Week Sets to Kick Off in Beijing, Recruitment of Global Talent Underway
China Embraces AI and Data-driven Agricultural Technology
In recent years, a number of representative foreign agricultural tech start-ups have obtained large amounts of financing in the capital market.
In 2019, Plenty, a vertical farm solution provider in San Francisco, received $260 million in funding from Jeff Bezos and SoftBank in support of its promise to upend agriculture, Business Insider reported. The company was in talks to raise $100 million in April this year, according to Bloomberg.
New York-based Bowery Farming received an additional $50 million in an extension of its Series B round in November last year, with the total amount raised reaching 172.5 million, Crunchbase reported. It uses robots, LED lighting, and data analysis technology to grow leafy green vegetables indoors, while sharply reducing water consumption by 95% and increasing the yield by 100 times, according to Forbes.
AeroFarms, a startup company located in New Jersey, has so far received $238 million in funding in 2019 after completing a $100 million Series E round to expand its warehouse facilities with numerous indoor farms, and test the growth of new products, according to The Financial Times.
Other big tech firms that received huge venture capital include Infarm, BrightFarms, Gotham Greens, Agricool, Illumitex and others.
As this entire market becomes more and more prosperous, China appears to represent an ideal opportunity for entrepreneurs due to its underdeveloped urban agriculture industry and huge market potential.
The “2016-2022 China Organic Vegetable Industry Special Survey and the 13th Five-Year Development Business Opportunity Research Report” pointed out that as food safety and food health are receiving more and more attention in China, the consumption of high-end vegetables will rise sharply in China with the compound growth rate of the market scale hitting 20%. By 2020, the demand for high-end vegetables will be close to 100 million tons.
In an interview with Reuters in 2018, Plenty’s CEO Matt Barnard said that Plenty has begun hiring in China, and is looking for locations and distributors in Beijing, Shanghai and Shenzhen, and plans to build 300 vertical farms in China.
According to incomplete statistics, there are more than 100 domestic plant factories in China which have plant cultivation systems that fully or partially control the environmental conditions required for plant growth, so that its growth is either completely or partially unaffected by the natural environment.
The report released by AgFunder in March this year, produced in cooperation with Chinese food technology company VC Bits x Bites, shows that the economic slowdown in China, the outbreak of swine fever, and the intensification of the trade war with the United States have brought huge challenges to agricultural technology start-ups and investors.
On one hand, these developments have led to a decline in technology investment across most agricultural technology industries, thereby causing a decrease in agricultural food technology transactions in 2019. At the same time, people’s concerns about food security have triggered a $44.1 billion investment in large-scale agricultural projects, almost four times previous levels. This may represent good news for agrotech start-ups seeking to extend their solutions to large-scale agricultural production, according to AgFunder news.
All of this activity in the smart agriculture sector has attracted the attention and investment of several leading companies.
The largest Chinese retailer, JD.com, uses drone agriculture, forestry and plant protection services as a starting point to build a smart agriculture community. In 2018, the company launched the JD Agricultural Service app, Jingdong Nongfu, to help farmers, cooperatives, and governments use unmanned drones for crop protection, according to the company’s website.
Baidu‘s interest in agriculture is focused on cooperation with agricultural companies. In 2017, it cooperated with Yunnan’s Jiaye to install an intelligent edge platform on the equipment side of its operations. Baidu Cloud and Sinochem Agriculture have also joined forces to build an intelligent agricultural production process management platform, which will help agricultural enterprises in their intelligent transformation. In 2018, Baidu signed a cooperation agreement with Lovol Heavy Industries to start cooperation on the intelligentization of agricultural machinery.
According to the research report by Huawei XLabs, the potential market size of smart agriculture is expected to grow from $13.7 billion in 2015 to $26.8 billion in 2020, with a compound annual growth rate of 14.3%.