Agritech in Southeast Asia: Are We There Yet?

In 10,000 BCE, agriculture made the growth of human civilization possible. Now in 2020 CE — after two world wars, the discovery of the Internet and the rise of Tik Tok — agriculture is still an industry that we depend on for survival. Countries around the world need agriculture to maintain food security, as well as for economic gains. 

In Southeast Asia, the agriculture industry is a major contributor to rural incomes and job security. This is on top of its contributions to the respective nations’ food security and GDP. As an example, in Indonesia, agriculture contributes $135.5 billion to the country’s GDP and provides employment for about 30% of the nation’s population.

However, compare this to countries like the United States and France and you’ll notice an incongruency. 

In the US, agriculture contribution to GDP is $204.9 billion with only 1.42% employed in agriculture. While in France, where GDP is $55.6 billion — slightly over ⅓ of Indonesia’s — only 2.6% of the population is employed in agriculture. 

Why are the ratios so different? Shouldn’t a country that employs such a large number of its population in agriculture be producing more? 

This difference is largely due to the approach to farming. 

Unpredictable ways of adopting tech

While agritech has seen an encouraging level of adoption in Europe and parts of the Americas, Southeast Asia is lagging behind. Farmers in Southeast Asia have, thus far, been reluctant to adopt agriculture apps even though these new technologies would enable an increase in efficiency and productivity.

Through a series of interviews with farmers from Indonesia, Myanmar and Vietnam, Grow Asia discovered that farmers were already “actively using their mobile phones to support their farming decisions”. However, not in the way that was anticipated. 

Rather than using agritech apps that had been created, these farmers wanted to learn from their peers. They wanted to “use digital tools to build on trusted relationships”. They were staying informed through social media, rather than using agronomy-specific tools. 

According to Grow Asia’s research, groups on WhatsApp, Facebook and Line “engage millions of Asian farmers each day in lively discussions on topics such as seed varieties, prices and the weather”.

But while these conversations may provide some pertinent information, they fall short with regards to real-time insights that can help decision-making, especially in the areas of agricultural input management and harvesting. 

Lack of data leading to inefficiencies

In Vietnam, for example, productivity is “among the lowest in Asia”. Agritech startup co-founder Nam Vang says that agriculture in Vietnam is “super inefficient” because of issues like over-irrigation, as well as overuse of fertilizers. 

This results in significant wastage — 50% of water is wasted, up to 60% of fertilizer is not absorbed by the crops — and besides the harm this causes to the environment, it also results in a loss of export opportunity as many consumers today prefer food with a lower amount of chemicals, if not chemical-free. 

When it comes to agriculture as an industry, farmers have to walk the fine line between producing at an efficient rate, while maintaining quality of their crops, as well as the environment they are growing in. It’s hard to do this using only manual or traditional techniques. 

And in Southeast Asia, agriculture is largely still a traditional and rural craft. Based on a World Bank report on agriculture in Malaysia, most farmers are aging. These would have taken over the farms from their parents. At the same time, their young are leaving the industry. 

When these farmers consider the fact that their farms may no longer be in operation after they retire, there’s less of a desire to adopt new technology that often requires a large upfront investment. 

Lack of affordable tech

It’s a sad fact that a lot of agritech solutions currently available are just too expensive for smallholder farmers to afford

Although there’s a lot of money being thrown into the industry as a whole — whether it’s venture capital for agritech startups or government grants for farmers — the individual farmers don’t actually receive enough to buy the machines and that could provide them with high tech solutions. 

Besides the upfront hefty price tag (a simple drone to provide imagery could cost more than $1,000 each), there’s also the cost associated with training, implementation and maintenance.  

The good news, however, is that governments and forward-thinking entrepreneurs are beginning to realize that implementing agritech in Southeast Asia is necessary, not just to improve local economies but also to ensure food security in the region. 

Efforts to strengthen agriculture

In Indonesia, the government has been working to raise the living standards of its farmers. Bank Indonesia, which is the country’s central bank, has initiated a scheme that supports microfinancing for micro, small and medium enterprises. A platform called iGrow lets individuals become partial “farm owners” by allowing them to invest in seeds and sharing in profits derived.

In Myanmar, a startup called Tun Yat provides a platform for farmers to connect with machine suppliers for rental. In the Philippines, startups like Cropital act as peer-to-peer lending platforms to connect interested investors with farmers who need more affordable financing. 

In Malaysia, the government is giving out grants to “young agropreneurs” ie. people below age 40 who want to start farming. 

Agriculture is an industry that has long been taken for granted in the Southeast Asian region. Although it’s a major contributor to economic growth, it’s not always seen as a desirable industry to work in. 

But the tides are turning. Governments are beginning to see the industry for the goldmine that it is. They’re beginning to create opportunities for innovative minds and forward-looking investors to come in. 

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