Ensuring food security is a complex equation with many variables – food production capacity and efficiency, rate of importation and exportation, supply stockpiling, and consumer purchasing habits, among others – with food production capacity and efficiency being a key variable directly influenced by technology. As Asia expects 700 million more people to feed by 2050, food security is the number one unmet need facing its food system.
This is creating an impetus for the region to increase food production, bringing novel, high-yield methods into the foreground. However, food production systems will need to adapt to land scarcity and decreased labor for production as the region experiences rapid urbanization. To add further complexity, the increased purchasing power of Asia's expanding middle class will increase demand for higher-value products like fresh proteins, which typically require notable amounts of space to produce.
Local startups are looking to address Asia's food security through a myriad of approaches that require regional considerations, as highlighted below:
Note: For the purposes of this insight, only novel food production methods and uses are examined. Thus, improvements to traditional agricultural approaches (e.g., via advanced harvesting or precision livestock farming) are not included. The regional scope includes West Asia, Central Asia, South Asia, Southeast Asia, and East Asia.
1. Plant proteins:
China is becoming a hotbed for plant-based innovation and growth in Asia. While foreign companies, most notably Beyond Meat, look to break into the region, homegrown startups like Green Monday are gaining momentum, as they offer products more closely catered to the local palette. The production capacity of foreign incumbents like Beyond Meat presents challenges for local entrants, but expect momentum to continue in China nonetheless. On the upstream side, there is a cluster of companies (Equinom, InnovoPro, and ChickP) out of Israel honing in on chickpea protein, an attractive source of plant protein from the region. As domestic players are showing, plant-based products must make regional sense, both from a consumer preference and a supply chain perspective.
2. Insect proteins:
With many insect protein players targeting animal feed for their go-to-market strategy, only a handful of players are focusing on insects for human food (the same is true outside of Asia as well). Of the few, the two most noteworthy ones are Hargol FoodTech and Flying SpArk, both hailing from Israel. The latter's use of fruit fly larvae is particularly attention-grabbing, claiming that rearing fruit flies is more efficient than growing crickets, grasshoppers, mealworms, or black soldier fly larvae because the fruit fly can increase its body mass by 250× in seven days. The company is now using an investment from Thai Union Group's VC arm to construct its first insect production facility in Thailand. For insect proteins, efficiency must be prioritized as the industry moves from a nascent to a reliable alternative.
The algae space as a whole has experienced many woes over the years, but one bright spot is the focus on the food (and cosmetics) industries by Euglena of Japan, and its resultant success since 2005. Although sparse, newer entrants in Asia are appearing, with one, Sophie's BioNutrients, signaling an interesting opportunity: the use of algae in seafood substitutes. The opportunity is particularly intriguing given the Asian market's incredible demand for seafood. Identifying novel applications for algae-derived ingredients, such as seafood alternatives, will be critical to making its case over plant proteins, which are readily accessible.
4. Cellular agriculture:
2019 and 2020 have been a whirlwind for the cellular agriculture space, with a flurry of investments and new players, and Asia has contributed to much of that. Israel-based company Future Meat Technologies is the furthest ahead in development among regional players, aiming to introduce hybrid products combining both plant-based and cell-based meats in 2021. Fellow Israel-based company Aleph Farms and Japan-based IntegriCulture are not far behind. Even if these companies can reach meaningful scale, like anywhere else, regulations stand in the way of commercialization. Countries like Israel, Japan, and Singapore are proponents of cellular agriculture, but larger countries will need to remove regulatory barriers to unlock a mass market.
5. Indoor & urban farming:
Some of the world's largest indoor farms reside in Asia, such as the 25,000 ft2 facility of Mirai in Japan that yields 10,000 heads of lettuce per day. VertiVegies out of Singapore is planning to top that by a safe margin with a 215,000 ft2 facility, nearly 9× the size of Mirai's and roughly 50% larger than the 150,000 ft2 farm planned by AeroFarms from the U.S. Regardless of size, operational expenses are of concern in order to realize profitability, namely electricity costs. UrbanKisaan of India is looking to change this threat into an opportunity, given the low electricity prices in the country. Finding such locations that balance Nexus components (water, energy, and food) to minimize input costs and include favorable regulations will reduce the time to achieve ROI.
A single approach will not solve Asia's need for food security; hence, those interested should view these food production methods from a portfolio perspective. Whether your organization is based in Asia or elsewhere, map out the spread of bets that align with your organization's strategy. Do not make bets on companies just because they are headquartered in Asia; instead, select those that offer unique and valuable capabilities that satisfy regional trends and needs.
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