The AgTech Ecosystem in India and Southeast Asia
The first of a two-part blog series, this article by Brinc’s Climate Tech team and Theia Ventures looks at recent agtech startup activity in the region, as well as challenges and opportunities.
Agtech encompasses innovations driving sustainable agricultural practices across the value chain. [Source: CORDIS]
I. OVERVIEW
Agtech (also known as agrifood tech or climate-smart agriculture) encompasses innovations including advanced materials for sustainable crop growth, enhanced farming practices through monitoring and analytics, soil health enhancement, fintech solutions for farmers, and crop waste upcycling. Sustainable food production is a critical global challenge, but especially relevant in the Asia-Pacific (APAC) region, which is expected to represent 60% of global food consumption by 2030 and where agriculture is a major economic driver (a US$34B market predicted by 2027 in India and currently a US$717B market across Indonesia, Thailand, the Philippines, and Vietnam, encompassing 40% of their entire workforce).
In terms of climate impact, APAC currently accounts for 35% of global emissions from agriculture.
ASEAN Regional Guidelines for Sustainable Agriculture highlight interrelated themes of environmental integrity, economic resilience, social well-being, good governance, food security, and poverty alleviation. By empowering farmers with information and market demand for sustainable practices, they can achieve inclusive growth in finance and education.
Technology innovation can promote climate justice by empowering smallholder farmers, who historically have had minimal contribution to climate change, to reduce or even remove emissions through improved practices. Technologies that can increase yields may also reduce water usage and restore soils. Additionally, tension exists between reforestation efforts and the increasing demand for cropland that can be addressed through innovation.
The APAC agtech startup ecosystem has grown significantly, with US$3.9B in funding deployed across the region (ex-China) in the first half of 2022. This article, the first of a two-part series, will cover recent startup activity in India and Southeast Asia (SEA) along with challenges and opportunities for future scale-up. Details on additional technologies and policy drivers will be covered in future publications.
i) ADVANCED MATERIALS
Synthetic biology can increase plant yield and reduce the need for chemical fertilizers. [Source: C&EN]
Enabling Fertilizers Using Synthetic Biology:
Synthetic biology involves the genetic modification of simple microorganisms (such as bacteria and yeast) to achieve specific functions. One of its major agtech applications relates to reduced chemical fertilizer usage. In India between 2015-16 and 2019-20, the consumption of chemical fertilizers increased by 16%, accounting for 59 MMT (Million Metric Tons) per year. By comparison, in SEA, the total consumption of chemical fertilizers in 2021 was 100.6 MMT. Global fertilizer production produces 2.6 Gigatons (GT) of emissions per year. By modifying microorganisms to knock out feedback loops for nitrogen fixation, requirements for chemical fertilizer usage can be significantly reduced. For example, Joyn Bio, a collaboration between Bayer and Ginkgo Bioworks in Boston, is developing microbes that extract nitrogen from the air and deliver it to crops, eliminating the need for energy-intensive fertilizers. String Bio, headquartered in India, is also working on the soil microbes to increase the soil /crop health by fixing the atmospheric nitrogen.
The success of the nitrogen fixation can be measured via the total nitrogen difference (TND) method, acetylene reduction assay (ARA) technique, xylem-solute (or ureide production) method, and the use of 15N labeled compounds.
To fully harness the benefits of synthetic biology in agriculture, well-defined policy, and regulatory frameworks are needed in India and across SEA to support research and commercialization. Establishing public-private partnerships and investing in infrastructure will be essential to accelerate the adoption.
Waste Upcycling:
Conventional practices for handling crop residues optimize for low costs, with significant adverse climate and health effects. For example, rice straw, a byproduct of rice cultivation, is typically burned (90 million tons annually in India and a significant portion of the 150 million tons produced annually across SEA). For every kilogram of rice straw burned, 1.2–2.2 g of methane is released into the atmosphere, which is 80 times more harmful to the atmosphere in the first 20 years of release compared to carbon dioxide. Burning residues also impact air quality and increase particulate matter. The Nature Conservancy has been actively working in India to raise awareness of these issues and promote alternatives.
However, crop residue upcycling offers economic opportunities for farmers, with potential applications including packaging, textiles, battery electrolytes, dye colors, and personal care and food preservative products. Nutrient recycling of crop waste is also becoming more mainstream in SE Asia, with insect bioconversion systems like Nutrition Technologies in Malaysia, FlyLab in Thailand, and FlyFeed in Vietnam at the forefront of this technology development. These startups integrate into the existing agricultural supply chain, working with agricultural cooperatives and upstream food processors to facilitate the production of high-grade organic fertilizer.
At the same time, smallholder farmers who provide the input waste streams can increase their income by generating revenue from their organic waste. Startups such as Canvaloop, KBcols, and altM bio are using crop residue to upcycle agricultural residue waste into high-value products for various industries. Programs such as Thailand’s Bio-Circular-Green Economy (BCG) Naga Belt Road Initiative, which focused on technology innovations to more efficiently produce glutinous rice, and in particular proposing upcycling approaches for rice straw. Indian startups such as Strawcture and Dharaksha are upcycling rice straw and paddy waste into agri-bio panels and packaging.
II. SOIL ENHANCEMENT USING CARBON REMOVAL (CDR)
To simultaneously address residual carbon dioxide (CO2) emissions, improve soil health, and support food security with increased crop yields, two CDR approaches are gaining traction across the region.
i) Enhanced Weathering
Over geologic timescales, rocks (minerals such as silicate) react with CO2 to form carbonates, permanently sequestering CO2. Enhanced weathering aims to accelerate the process of durable carbon removal by finely crushing rocks and spreading them over croplands (detailed explanation here).
Enhanced rock inputs are deployed in the field. The resulting carbonates are eventually washed away and stored in the ocean. [Source: ESG Broadcast (Figure by James Jerden for RTE)]
Startups including Mati (part of Frontier Fund's Fall 2023 carbon credit pre-purchase cycle) and Everest Carbon have prioritized operations in India, due to unique location factors:
High amounts of agricultural land to effectively scale across the country (155 million hectares, second only to the US in terms of arable land)
Favorable climatic conditions include homogeneous weather patterns, high rainfall, high temperatures, and low soil pH enabling faster weathering.
Potential to scale among a group especially vulnerable to climate change, smallholder farmers (representing 80% of the food supply in the region)
Access to a local workforce who offer relatively low-cost labor and are eager to support the scale-up of climate technologies by raising awareness and streamlining adoption among smallholder farmers
A large supply of relevant minerals, such as basalt in the Deccan Traps, and the potential to use slag byproduct from Indian steel manufacturing.
Looking across SEA, comparable favorable location factors can be seen in Indonesia, with 26 hectares of arable land, similar climatic conditions, and more than 1 billion tons of basalt rock reserves across Sumatera, Java, Kalimantan, Sulawesi, and Papua.
The ability of enhanced weathering companies to scale will be heavily dependent on how they source their minerals, find quality materials, and demonstrate a repeatable grinding process. They will also need to implement rigorous measurement, reporting, and verification (MRV) methodologies for CDR while navigating regulatory compliance related to the risk of potential contaminants. In particular, companies (perhaps in partnership with research institutions) will need to validate the long-term impact of enhanced weathering on crop yields, especially for “repeat” applications along the same areas of cropland compared to new plots.
Overview of different types of input feedstock and conversion processes to create carbon and energy products, including biochar. Typically, lower oxygen processes such as pyrolysis favor increased output of biochar compared to energy products. [Source: Counteract VC]
Data from the 2023 CDR.fyi mid-year report shows biochar as the most common removal method for delivered projects over time. There is significant potential for a positive impact beyond improved soil health by deploying biochar in developing countries, particularly in the Global South, with potential co-benefits such as:
Reduced water requirements
Improved biodiversity
Increased smallholder farmer income through less fertilizer usage
Waste management (using waste streams as input feedstock)
Reduced air pollution (by avoiding burning)
Co-production of clean energy streams
There are several startups in the region working on biochar, including but not limited to: Ankur Scientific, WasteX, Thai Carbon, and Neditel. Husk, operating out of Cambodia, is one of the startups recently selected for support by the Milkywire Transformation Fund. Husk transforms leftover rice husks into biochar, which then serves as a fertilizer alternative.
Discussions with Alvin Lee, Regional Head, APAC at Puro.earth, highlighted how biochar quality is compared across projects based on durability, the presence of contaminants, and production costs (typically dependent on the input price of feedstock materials).
“Durability typically ranges from over 100 years to several hundred years and is measured by a lower ratio of hydrogen to organic carbon in the biochar,” Lee elaborated.
Melissa Leung, Director of Business Development and Carbon at GECA Environment, further described the challenges of onsite production in areas such as India and SEA. While modular operations onsite may offer more favorable unit economics compared to centralized operations for the use of waste feedstocks, additional challenges to address for deployment in these regions may include warehousing infrastructure (given the heavy rain and monsoon season), access to reliable electricity grids, and limited road infrastructure.
III. OVERARCHING CHALLENGES AND OPPORTUNITIES
Smallholder farmer adoption is the largest challenge cutting across each of these innovative approaches, representing 80% of the food supply in the region (~25M in India and 100M across SEA, respectively). Nutrition Technologies founder Nick Piggott, who recently launched the world’s first insect-derived liquid fertilizer product, emphasized the established nature of agricultural supply chains across SEA and the need to connect with dealers, who have strong informal networks with smallholder farmers and introduce and provide advice about new product offerings. Agros founder Max Nelen highlighted how they have adapted their go-to-market strategy when entering different markets, depending on the influencers involved (ranging from input shops, brokers, and formal co-op structures). Nelen hopes governments (or NGOs) could help support the first year of customer acquisition costs, which can be high, to enable faster scale-up.
As typical farmers are currently dependent on chemical fertilizers, they are concerned about the impact on their yield – and therefore their livelihoods. As soil enhancement solutions move out of the lab and into the field, startups need to establish trust, typically through education and building “on the ground” awareness. At the same time, startups are working to demonstrate safety and efficacy through research, case studies, and onsite measurements. Private funding opportunities for early-stage investors are critical to drive advanced material innovations out of the lab (after initial grant funding).
Cost sensitivity is a reality for new agritech, and solutions need to provide compelling economics to scale. One of the major factors impacting unit economics and overall scalability can come from logistics and transport. In particular, Leung highlighted that the radius for transporting feedstock and other last-mile distribution or manual processing steps can significantly increase overall costs and limit the viability of certain solutions. Using waste inputs and eliminating costs for harvest clearance activities can provide economic benefits to farmers, however. The efficacy of solutions is also a moving target due to droughts, floods, and temperature changes. Prior soil and crop treatment makes accurate prediction of benefits challenging.
Our analysis of the ag-tech startup ecosystem in India and SEA will continue in our next article, focusing on industry incentivization schemes to drive the adoption of sustainable practices and data-driven opportunities with precision agriculture.
Read this thought piece in the Carbonless newsletter. Thanks to the Carbonless Asia team for featuring the joint thought piece article on climate-smart agriculture in India and SEA by Brinc and Theia Ventures.
About Authors:
Janina Motter - Janina is currently the Climate Tech Program Manager at Brinc. She holds a Bachelor's degree in Chemistry and a Master's degree in Materials Science and engineering from Stanford as well as a joint MS/MBA degree from Harvard. Janina has extensive experience working in R&D, operations, and business development at several deep tech startups in Silicon Valley and Boston. She also has prior venture capital experience at SOSV and Clean Energy Ventures. Janina was involved with ecosystem-building initiatives during business school such as the sustainability track ("Eco") of the biotech incubator Nucleate and the Harvard Circular Economy Symposium.
Himanshu Sharma- Himanshu is an investment associate at Theia Ventures. He holds a bachelor’s degree in Manufacturing Engineering from BITS Pilani along with a minor degree certification in Finance. He is also a founding member of India Care Collective, a COVID-19 relief fund that supported over 5000 migrant worker families in India with a direct cash benefit of $100K in a span of four months. He started his career with JP Morgan and has experience in management consulting and banking and also worked in the public sector with the Government of National Capital Territory Delhi, India.
Isabella Tasset - Isabella is a Climate Tech intern at Brinc and a World Bachelor in Business student at the Hong Kong University of Science and Technology. She has experience writing on global social movements in Barcelona and Los Angeles and has been involved in sustainability-related student associations and youth-led startups in the US, Mexico, Ghana, and Hong Kong.
Waroon Chabbra - Waroon worked as an investment banker for more than 5 years, where he was involved in financing large-scale infrastructure and energy projects. More recently, he has been active in the early-stage start-up investments space, focusing on deals in the ClimateTech, FinTech, and EdTech sectors. He is currently reading for his MBA degree at Judge Business School, University of Cambridge.