Palm oil is our nation’s third-largest export, and contributes about RM36.87 billion to our GDP; Malaysia is the world’s second-largest palm oil producer. A large part of our success in palm oil is owed to the pioneers of the Federal Land Development Authority (FELDA) plantations, who, since the 1950s, have been the backbone of our agriculture industry.
To maintain its momentum, the sector needs to enhance its investment in research and development (R&D).
And in the FELDA plantation in Mempaga, Pahang, change is in the air. In a move to revitalise and reinvigorate our agriculture sector with technology and innovation, it was selected last year as a sandbox under the National Technology and Innovation Sandbox (NTIS) programme.
Here, five high-technology companies — Poladrone, Aerodyne, Braintree Technologies, OFO Tech and Nanoezinn — are working to stress-test various drone, robotic and artificial intelligence (AI) solutions to improve aspects of harvesting, maintenance and fertilisation of the crop in oil palm plantations here.
Around 25ha have been earmarked as implementation sites for the drone and robotic solutions, and the sandbox aims to alleviate issues faced by the smart farming and agriculture industry. It is expected to increase settlers’ incomes per month to RM5,000 from the current average of RM3,017, reduce dependency on foreign labour up to 50%, improve productivity by up to 30% and reduce costs by up to 20%.
It is a shining example of how agriculture technology, or agritech, will propel the sector into the future, improve livelihoods and help ensure Malaysia’s food and innovation security.
Agritech and agritech investment is on a growth trajectory. According to the Emerging Tech and Innovation forecast in Malaysia’s Agriculture Landscape study by Deloitte and Malaysian Global Innovation & Creativity Centre (MaGIC), the global agritech market is expected to bloom at a compound annual growth rate (CAGR) of 12%, from US$17 billion in 2019 to US$41 billion (RM172 billion) in 2027. More encouragingly, investment in agritech is also set to grow at a CAGR of 26.4%.
Agriculture is the third-largest contributor to Malaysia’s GDP, contributing RM1,421.5 billion (7.1%) in 2019, and employs 10% of the national workforce. It goes without saying that it is a huge contributor to our nation’s economic prosperity and potential.
In Malaysia, our agricultural sector is hampered by productivity and crop yield issues, high food waste and unsustainable practices, an inefficient and fragmented supply chain, as well as an ageing workforce and high reliance on foreign workers.
As one of the signatories of the United Nations’ 2030 Agenda for Sustainable Development, it is our goal to achieve food security and improve nutrition among all Malaysians, while promoting sustainable agriculture among big and smallholder farmers.
As such, we need to take action now: testing, developing, innovating, inventing and commercialising agritech to resolve our most pressing problems and pave the way to brand new growth in agriculture.
Malaysia’s food imports have increasingly outpaced our food exports, resulting in a growing food trade deficit. In 2017, Malaysia’s food trade balance deficit stood at RM19.45 billion. Our tastes have also changed: In the 1960s, 49% of our calories came from rice, but it is down to about 20% today. Meanwhile, our intake of meat from total calorie supply grew from 3.8% to 9%.
These changing appetites are not unique to Malaysia, but we must face the fact that we now have to deal with food security issues. As our food consumption increases, it becomes far more vulnerable to global volatility, such as the Covid-19 pandemic and changing climate, which disrupted an already-complex supply chain. The scale and size of the agriculture supply chain — from growers to sellers, manufacturers to consumers — means it is susceptible to multiple points of breakdown and failure, putting our food security at risk.
Another challenge is the shortage of capital investment in Malaysia’s agriculture sector, which begs the question: If agritech isn’t in the hands of those who would need it most, will we make any impact at all? Often, smallholder farmers who do not have a lot of funding will not be able to purchase automated hardware such as robotic harvesters, which could help them combat the labour shortage, or invest in drones, AI or cloud solutions.
This is further exacerbated by labour challenges, as ageing farmers, rural-urban migration and the “3D” (dirty, dangerous and demeaning) stigma associated with agricultural jobs have led to a labour shortage in the sector. Consequently, agriculture relies heavily on foreign workers, taking the largest share of foreign workers in the country — 27% in 2017.
These challenges, however, are increasingly being tackled by the brightest minds in the nation.
Aerodyne, for example, is tackling the time-consuming task of processing massive amounts of data in farming through the use of AI, autonomous drones and Internet of Things (IoT) for agriculture seeding, spraying, planting and analysis mapping. Their drones gather data and shorten the time to process and plan with the use of AI, leading to 67% improved crop yields and a decrease of production costs by 50%.
Malaysian-born company BoomGrow uses a cloud-connected indoor Machine Farm with a modular plant racking system equipped with controlled lighting to ensure optimum growing conditions of the plants. Its data and analytics then guides crop cycles and automates the system to shorten plant cycles and increase crop yield through AI-driven platforms — using less water, land and fuel.
Not only are there bright talents making farming better for farmers, end-users also benefit. For example, Food Market Hub uses a cloud-based procurement and inventory system that keeps track of everything in one place, assisting restaurants to keep track of their ingredient purchases, reduce waste and ultimately save costs of up to 23%. At the same time, local farmers were also able to digitalise their business operations by providing alternative sales channels to distribute their fresh produce to buyers.
Similarly, Fefifo Malaysia also empowers smallholder farmers by offering farmspace-as-a-service with a proprietary tech platform and predictive analytics.
The public sector, too, is fully on board: The NTIS has helped over 130 companies accelerate their innovations and products at various stages, from testing and prototyping to commercialisation, including in agritech, all geared at improving supply.
The Agritech Bootcamp start-up programmes have also shown to be beneficial for early-stage start-ups — giving more than a dozen start-ups the opportunity to build, test and refine their ideas to produce a minimum viable product (MVP) and secure investment. And we have room for more.
Programmes to entice the youth to enter the sector are bearing fruit. They include the Agropreneur Muda (Young Agropreneur) scheme, in which the young have shown interest, as more than 6,000 participants have received grants of RM20,000 each through this since 2016.
At Technology Park Malaysia (TPM), we have kicked into high gear with the proposed Sustainable Agritech Zone, which is nestled in Phase 3 of TPM.
The Agritech Zone will complement the offerings of the AI Park as a hub to showcase an existing biotechnology incubation centre, which houses R&D companies within the agri sector. It will act as an innovation hub to commercialise tech-driven solutions to transform and increase value-add of the agriculture sector. Other uses include providing on-ground training in a knowledge centre, a co-working lab and enabling R&D facilitators.
And with the recently launched Malaysian Research Accelerator for Technology and Innovation (MRANTI), these efforts will have greater speed, scalability and synergy.
For Malaysia, there is no better time than now to ramp up innovation in agritech, not just for the growth of the sector, but for the shared prosperity and security of the nation.