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Malaysian startups provide impetus for country’s agritech sector

Written by Vulcan Post Published on   5 mins read

Several initiatives have been undertaken by the public and private sectors to boost the country’s agriculture.

Those who have dined in farm-to-table restaurants like The Farm Foodcraft in Bangsar South might have already encountered agritech in the form of hydroponics. While the dining concept is unique, there’s more to agritech than just that.

What is agritech?

Simply put, it’s the abbreviation of agricultural technology, which is the collection of scientific techniques that are used to enhance plants, animals, and microorganisms, offering benefits to farmers, the environment, and consumers, according to Australia’s 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 are some use cases:

  • Smart farming (automated irrigation, vertical farming, hydroponics);
  • Drones and satellites (scanning and surveillance of crops and the field);
  • IoT-based sensors (provide accurate information about the weather, quality, and current condition of the soil);
  • Blockchain and big data (for consumers to get to know the origin of their produce);
  • Biotech (creating crops that can adapt to the environment better than ordinary ones, developing synthetic fertilizers);
  • Farm maintenance technology (optimizing water usage, correctly selecting ripe produce);
  • Production and innovation technology (removing the middlemen and allowing farms to be closer to urban areas).

Agritech isn’t applied to just agriculture, but also horticulture and aquaculture, the rearing of aquatic animals or the cultivation of aquatic plants for food.

For example, agritech can simplify farming with a soil sensor that detects moisture, which can send back data to a farmer. This saves the farmer time from going out to the field to regularly check on the soil.

When there’s technology involved like IoT and AI, farming becomes more efficient and less labor-intensive which helps produce higher yields than traditional farming. This also puts less burden on the farmer to meet the demands of the world’s growing population.

How important is agriculture in Malaysia?

Agriculture remains one of the most important sectors in the country, and based on the latest report from 2019, it is the third highest GDP contributor with 7.1% or MYR 101.5 billion (USD 24.5 billion), following the mining and quarrying sector.

Exports increased from MYR 114.5 billion (USD 27.6 billion) in 2018 to MYR 115.5 billion in 2019 (0.9% increase), and imports increased from MYR 93.3 billion (USD 22.5 billion) in 2018 to MYR 93.5 billion in 2019 (0.2% increase).

Who needs agritech?

Smallholder farmers need and benefit the most from agritech as they make up the majority of farmers who form the local agriculture sector.

They’re the ones who tend to face low productivity and crop yield on top of the lack of manpower in their farms. Additionally, there is also a lack of ability to manage natural disasters and waste from inadequate farming practices.

Employment in the agriculture sector has actually dropped slightly from 1,570,300 in 2018 to 1,541,100 persons in 2019. Agritech could step in and cushion the decline.

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However, smart sensors and drones aren’t cheap. For instance, a drone that provides imagery of field conditions can cost around USD 1,000, without taking into account the manpower to operate it. That is currently an unrealistic price for many smallholder farmers.

“We would love to get our hands on automated hardware such as a robotic harvesters, which would cut down our labor costs, or weather stations that can tell us the best time for planting, fertilizing, and irrigation based on historical data. But all this is just too expensive now,” Markus Chin of Shinnou Farms told Al Jazeera in 2019.

Growing the sector in Malaysia 

Over the years, several initiatives have been undertaken by the public and private sector to drive the growth of agritech through funding startups or providing microfinancing for farmers.

In 2018, the Malaysian Digital Economy Corporation (MDEC) initiated a pilot project to spur the yield and quality of crops utilizing the latest technologies, via a public-private partnership with the Pertubuhan Peladang Kawasan Kuala Langat (PPKKL).

It has seen farmers adopting an IoT-enabled fertigation—fertilization and irrigation—system that helped them reduce monthly fertilizer usage by 20%, lower monthly manpower requirements by 25%, and increase the overall quality of yield by up to 90%.

In 2019, the Malaysian Global Innovation & Creativity Center (MaGIC) conducted a boot camp for agritech startups with a demo day at the end of the ten-day event during the Global AgriTech Summit.

Startups that emerged as winners were:

  • Sayur.Farm: Developing a Fitbit-like device serving as a farming assistant that can update the current condition of the crops and their environment, collating info via artificial intelligence, and data visualization to provide yield forecasts, plant health, recommended prescriptions, data sharing, insights, profit analysis, and yield analysis;
  • Life Origin: Producing black soldier fly larvae using organic waste and turning them into food for livestock, animals, and pets;
  • FarmExchange: A closed marketplace where farmers can get loans directly for their required equipment. Farmers can also receive a credit score, and lenders can get a transparent view of the farmer’s requirements, proposed ROI, and timeline.

However, it seems that all but Life Origin have not been recently active. A few more local agritech startups that are currently active include:

  • Braintree Technologies: Uses drones to do tree counting and spraying, plantation mapping, infestation mapping;
  • TanaLink: Uses technology to provide real-time data and monitoring of their farm for theft, harvesting, fertilization coverage, wildlife presence, soil sensors;
  • PlantOS: Uses a fertigation system that can detect diseases in advance, works as a soil sensor, and can automatically fertilize crops accordingly, which reduces nutrient wastage;
  • Fefifo: Provides smallholder farmers and young unemployed agri-graduates with ready-to-farm spaces and technologies to kick-start a modern farming business with guaranteed off-take;
  • Nutribah: Uses an IoT-based smart farming system and has their own fleet of riders to cut out the middlemen and deliver their produce straight to consumers.

Although there aren’t too many established local agritech startups in the country yet, Dzuleira Abu Bakar, the CEO of MaGIC, noted that agriculture is changing. With technological advancements, the industry is starting to become more inclusive and attractive to the younger generation. Even Petronas has forayed into the agritech ecosystem by becoming a VC for Braintree Technologies last year.

Just last week, MDEC and CIMB Islamic signed an MoU on extending an extensive microfinancing program with an allocation of MYR 10 million (USD 2.41 million) as an initial funding package to catalyze Digital Agriculture Technology (Digital Agtech) in Malaysia. As the program progresses, the allocation can potentially increase to MYR 25 million.

MDEC’s ongoing eLadang program has seen 548 participants as of December 2019, with 78 farmers utilizing digital farming technology, leading to a 20% increase in productivity and a 30% income increment as well as a reduction in operating costs by 30%.

With the MoU contributing to the growing use of technology in agriculture, it’s estimated that there will be a 30% increase in job opportunities by 2025.

This article was originally published by Vulcan Post


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