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Feeding Asia: Robots, Automation & Four+ Billion Mouths to Feed

From farm to chopsticks: Not enough land, not enough water, too few farmers, and $470 billion in annual food spoilage

Rabobank’s somber assessment: “Asia cannot produce enough to support itself.”
Asia-Pacific: Agricultural Perspectives

No choice other than robots and automation
The numbers are striking no matter how one looks at them: Asia, with over half of the world’s population (4.3 billion headed to 5.1 billion by 2050), has only 20 percent of the world’s agricultural land.

Although for the past five decades Asia has done a remarkable job at providing for its massive population, a billion more mouths to feed by 2050 combined with a burgeoning middle class that’s demanding better nutrition, will soon overburden the continent’s ability to support itself.

For China, it’s scarcity of resources. With 6 percent of the world’s water and only 7 percent of the world’s arable land, China has to feed a country that’s equal to 22 percent of the world’s population.

China already “accounts for 25 percent and 27 percent respectively of world soy and meat consumption.” Those percentages are steadily rising. China is forced to feed itself through massive imports: In 2016 it bought nearly 60 percent of the world’s soybean harvest (26 million bushels (706,500). Brazil alone supplies 53 percent of those soybeans.

For Japan, it’s scarcity of people. “The country’s agricultural workforce fell 8 percent on the year to 1.92 million last year — sliding below 2 million for the first time. The number is half of what it was two decades ago. Moreover, the average age in the agricultural sector is 67.”

China as well has a people problem. In three decades of continuous industrialization over 25 million Chinese farmers have moved to the cities.

The gloom settling in over Asia tells a sad story of lower yields from the available arable land plus “depleting resources including water, deteriorating soil quality, inadequate logistics and inefficient farming practices and land usage.”

Added to those considerable challenges is the quick rise of an “emerging Asian consumer” who is savvy about consumer technology and boasts an “increased awareness of health and wellness issues and brand consciousness.”

Pile on rising income levels, urbanization, and environmental concerns, and the mountain of challenges seems quickly to be getting out of reach of a realistic solution.

Cause for hope
Rabobank is also quick to report that the nascent stirrings of a “Farm of the Future” movement seem to be awakening in Asia, what the bank calls  “Asian Agriculture 2.0”, from farming to agribusiness.

The Financial Times in its Asia digs deep to upgrade its agriculture, concurs, writing: “The good news is that answers are starting to emerge. Agribusinesses are harnessing information technology. Organic farms and so-called plant factories are becoming hothouses for innovation. International investors are keen to water the seeds.”

From Vietnam’s startup Mimosa TEK bringing Smartphone information technology to monitor agriculture, to Singapore’s Temasek Life Sciences Laboratory  producing a resilient rice strain to combat global warming, to urban lettuce factories like Japan’s Spread that daily produces 30,000 heads of lettuce “grown indoors” in a warehouse, to Australia’s “growbots” that automatically spray herbicides and fertilizers, agribusiness is getting a shot of financial adrenaline.

“I think there is a tipping point now in the robotics industry because several big players are looking at that business now. Big engineering and equipment companies from Asia are considering that sector and we may see other exits like we’ve seen with Blue River (acquired by John Deere for $305 million” (2017))” said Eric Marty of Emertec Gestion, a cleantech venture capital firm specializing in agrifood technology.

“Many of the large agricultural technology companies recognize that robotics and artificial intelligence will become ubiquitous across different types of equipment in the future, adds Dan Harburg of Dutch agtech venture capital firm Anterra Capital.

“That is driving them to rethink the processes by which they bring new products to market and the composition of the software and hardware teams. John Deere clearly understood this trend and was an early mover in bringing on a very talented team with a proven product. I wouldn’t be surprised if others follow suit.”

Spoilage, $470 billion worth…yearly!
Added to an already fragile till-to-harvest environment, what Asia does eventually grow and harvest largely spoils before it gets to market.

The tale of food spoilage and waste is shocking, sad, tragic, devastating…and avoidable.

Imagine for a moment a single apple tree in China that is ready for harvest. Some 17 percent of the apples on that tree will be waste before ever getting to a warehouse; another 23 percent will become waste in handling and storage; still another 13 percent will be lost in processing and distribution.  Over 50 percent of the apples on that tree will never reach a consumer’s table, according to the World Resources Institute.

The same apple tree in Southeast Asia would lose 88 percent of its crop before offered for sale.

Food waste mounts up: “Annually, about $32 billion worth of food is thrown away in China,” reports the World Resources Institute.

It’s both shocking and sobering to realize that the one billion new mouths headed for Asian dinner tables by 2050 could easily be accommodated—without putting any new acreage under cultivation—if Asia’s current 50 percent wastage of food was eliminated.

According to the World Resources Institute a third of the global food we produce is wasted, costing $940 billion per year. Nikkei Asian Review reports half of that waste is taking place in Asia, where the cost of “not feeding” people ramps up to  $470 billion per year, which is slightly more than the GDP of Poland.

 

Prologis reports that most of Asia’s existing inventory of warehouse and distribution floor space is outdated and obsolete; the industrialized Asia of Korea, Japan, and China are bad off, but Southeast Asia is worse.

Increased use of robots, automation technology, modernized cold-storage warehouses, and IT automation infrastructure, could eliminate spoilage in handling and storage across Asia. Currently, poor handling and storage accounts for 23 percent of waste in industrialized Asia and a whopping 32 percent in Southeast Asia.

For example, India is the second largest producer of fruits and vegetables in the world after China. “But due to losses of up to 20 to 50 per cent of total fruit and vegetable production, it accounts for just 1.5 per cent of the world’s exports.”

Pawanexh Kohli, chief executive at India’s National Center for Cold-chain Development, served up a troubling figure. “Our logistics are not able to handle more than 60 percent of what we produce,” he said. A good chunk of what the country grows never reaches consumers.”

Then is there any wisdom in growing only as much as the logistics system can handle? Although the spoilage of $4.5 billion in Indian crops is unacceptable, more nutrition is badly needed by the country’s underfed consumers.

“The impact of hunger on hundreds of millions of Indian children is most visible in their stunted growth and intellectual development, with some 39 per cent of Indian children stunted from poor nutrition, according to government figures, while micronutrient deficiencies affect the country as a whole.” One in every three malnourished children in the world lives in India.

Opportunity, transformation…and salvation
Food waste is an enormous, big-money sinkhole; however, it also presents a huge opportunity for robots and cold-storage automation to reverse the losses. Spoilage prevention also opens the door to a new and vast employment resource.

In what could be the start of an enormous new industry of food preservation, governments, automation and logistics technology developers, real estate/ land owners, multi-nationals and local businesses, as well as consumers, are finally beginning to band together to formulate and implement solutions.

It’s early yet, but everyone seems to be in concert as to the need for immediate change in the global food system.

Seems obvious then that shifting focus from producing more food to reducing food waste is potentially a new multi-billion dollar mega-industry in waiting.

Change is coming as is evident in Robots and the Great Asian Warehouse Makeover​, but slowly. Some, however, are moving quickly to take early advantage of the business potential. Alibaba, for example, has slated $16 billion for future logistics investments, both to increase its market reach and to improve the reliability and speed of delivery.

The CBRE Group, the world’s largest commercial real estate services and investment firm ($10.9 billion in revenue in 2015), heralds and analyzes the high-tech transformation of logistics: Automated Technology: Driving Change in Real Estate: Transformation of the Global Supply Chain.

CBRE’s approach has been to invest in “properties that need upgrading before they are sold”.  With $37 billion of commercial assets under management, it’s interesting to note the answers that CBRE’s research sees as the critical enablers.

“Automation within the logistics space will change the way facilities are built and maintained,” writes CBRE. “The rise of automation will affect logistics facilities, transforming the labor component and altering the way operators configure and build their warehouses and distribution centers.”

“Advanced robotics and automated systems are becoming more justifiable not only because of the labor component, but there is also a need for increasing the speed of the cycle time, which in most cases is the time between an order dropping and when it hits the back of the truck.”

Such a dawning realization and committed buy-in from mega-asset holders and real estate developers as CBRE is key to transformation. They provide the platform upon which everything from automated transport to bin-picking robots depends.

Their warehouses and distribution centers can be islands of preservation where food has a fighting chance of getting to consumer tables before it spoils.

Giving food a chance
Not a moment too soon, agtech, agribots, automation and billions in public and private investment capital seem to be germinating in the right way and in the right proportions to be meaningful. Asian Agribusiness 2.0 now has a legit chance of making the journey from farm to chopsticks, a journey that every table in Asia can depend on.

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