The Asia Food Challenge

Harvesting the Future

Asia is at a cross-roads. The huge growth in demand for food has created an attractive investment opportunity, but collective action is required to unlock this.

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Overview

Asia’s food and agricultural industry will undergo significant change over the next decade in response to population growth and changing consumer requirements, coupled with the major challenges presented by climate change and environmental degradation.

These challenges require urgent action and shared responsibility, but also present significant opportunities for innovation and disruption.

The struggle is real

The struggle is real

By 2030, Asia’s population will be 250 million larger, the equivalent of another Indonesia. 65% of the world’s middle-class population – who are willing to pay a premium for more nutritious, safe, sustainable and convenient food – will be residing across the region.

While Asia’s spend on food is expected to increase by around 7% per year over the next decade, its food industry is struggling to keep up. Growing populations and massive urbanisation have led to high wastage and poor food quality as supply chains are stretched and broken. Meanwhile, climate change and environmental degradation continue to impact yields and farm output.

The struggle is real

Ripe for innovation

New technologies will need to be deployed to increase yields, reduce the environmental impact of farming and food waste, as well as improve food safety, traceability and distribution to increasingly urban settings. This will encompass both high and low-tech innovations, reflecting the diverse needs of Asian farmers and food supply chains.

Limited investment in Asia to date

Limited investment in Asia to date

The lack of investment is a key barrier to the uptake of new technology. There are a number of factors contributing to this:

  • The food and agricultural industry is large, complex and diverse, creating a challenging investment environment
  • The immaturity and pre-commercial nature of many technologies can mean longer timelines for investment returns
  • Many innovations from other markets are not always relevant in the Asian context due to the diverse food and agricultural challenges unique to the region
  • Asian farms are typically smaller than their regional counterparts with lower capacity to invest in new technologies


However, the Asian AgriFood sector presents many characteristics that make it attractive for investment. Food is a necessity, demand growth will be strong, changing demand will drive complexity, and regulatory barriers are high, whilst climate change will drive an urgency to adapt. Disruption potential is therefore significant.

Limited investment in Asia to date

Unlocking the opportunity

Harvesting the future: Investment requirement

Harvesting the future: Investment requirement

We estimate a cumulative investment requirement of US$800 bn above existing levels over the next ten years. The majority of this (around US$550 bn) will help to satisfy demand for better quality food (including safer, healthier food, and more sustainable food).

The remainder (around US$250 bn) will drive increased quantities of food to feed Asia’s growing population.

Concerted effort and shared responsibility

Concerted effort and shared responsibility

Solving Asia’s food challenge and unlocking its market growth calls for a concerted effort across both private and public sectors:

  • Greater collaboration between corporates, investors, and academia
  • Establishment of corporate venture capital teams and incubators
  • Greater acceptance of new technologies and food products by large corporates
  • Greater government support, legislation and policies to foster the development of technology and support investment
Potential Agri-Food Tech Investment and Innovation Hubs

Potential Agri-Food Tech Investment and Innovation Hubs

While we expect innovation and investment to be predominantly driven by the private sector, government-coordinated ecosystems and the development of regional Agri-Food Tech Investment and Innovation Hubs can help create a nurturing environment for collaboration between start-ups, large corporates, investors and academia.

We have ranked 30 of the largest Asian cities to determine a shortlist of centres that we believe have the key facets to become an “Agri-Food Tech Investment and Innovation Hubs”. Key cities with many of these characteristics include Bangalore, Beijing, Hong Kong, Mumbai, Shanghai, Shenzhen, Singapore and Tokyo.

We believe these cities have the potential to drive development, funding and collaboration across the food and agricultural sector, exporting technology and knowledge across Asia to improve food production and ensure a healthy, sustainable future for the population of Asia.

The Asia Food Challenge Report

About the report and its creators

A first-of-its-kind in-depth report that delves into Asia’s food and agricultural landscape, The Asia Food Challenge: Harvesting the Future is officially released by PwC, Rabobank and Temasek in conjunction with the 2019 Asia-Pacific Agri-Food Innovation Week in Singapore.

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At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with over 276,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com/sg.

We have over 3,000 food and agribusiness and corporate finance experts, spanning more than 60 countries, offering a breadth of expertise not usually combined in a service offering to address the urgent need for fully integrated food and agribusiness advisory.

Rabobank Logo

Rabobank is a Dutch cooperative and a global leader in food and agri banking. Enabling the change to a more sustainable food supply chain by working together is core to our mission of ‘growing a better world together’. We do this by providing access to our knowledge, networks in 39 countries and financing solutions. Together with our clients, partners and colleagues worldwide, our efforts are focused on addressing the four most pressing food issues: increasing the availability of food, improving access to food, promoting a balanced nutrition and increasing stability of food supply chains.

Measured by Tier 1 capital, Rabobank Group is one of the world's largest financial institutions with high credit ratings by all rating agencies. As an industry leader in environmental, social and governance (ESG), Rabobank is ranked as an ESG Leader by Sustainalytics, placing Rabobank in the top-5% of its industry peers.

Read more about Rabobank at www.rabobank.com.

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Temasek is an investment company with a net portfolio value of S$313 billion (US$231b, €206b, RMB1.55t) as at 31 March 2019.

Our Temasek Charter roles as an investor, institution and steward shape our investment stance, ethos and philosophy, to do well, do right and do good.

Six structural trends help shape our investment direction in Temasek: Longer Lifespans, Rising Affluence and Sustainable Living drive social progress, enabled by technological solutions for Sharing Economies, Smarter Systems and a More Connected World.

We actively seek sustainable solutions to address present and future challenges, as we capture investment and other opportunities that help to bring about a better, smarter and more sustainable world.

Headquartered in Singapore, we have 11 offices around the world.

For more information on Temasek, please visit www.temasek.com.sg.