IPI Innovation Advisor Harish Methil shares how SMEs in the agri-food sector have a unique opportunity to pioneer sustainable solutions amid rising global food demand and environmental pressure.
With the global population projected to reach 10 billion by 2050, the demand for food is set to double. This increasing demand comes with a heavy environmental price. At COP28 in 2023, the UAE Minister of Climate Change and Environment Mariam Almheiri stressed that our current agricultural practices account for about 30 per cent of global greenhouse emissions, 70 per cent of freshwater use and 80 per cent of deforestation in tropical areas.
Although these figures are alarming, small and medium-sized enterprises (SMEs) in the agri-food sector have an opportunity to lessen the toll of the sector on the environment through innovation.
Harish Methil, Innovation Advisor at IPI and an industry expert, explains that the sector needs to evolve to not only meet the growing demands but to produce food sustainably as well. He outlined three key areas for innovation that SMEs can focus on: products and technology, business models, and business processes.
To maximise their potential to curb the harmful environmental effects of agriculture, SMEs can focus on trends in technology, institutional collaboration, growing consumer preferences as well as social and policy changes.
Integrating smart and sustainably farming technology
As farming technology advances, SMEs can harness new processes to streamline supply chains while reducing emissions. Methil highlighted artificial intelligence (AI) and data analytics as some of the tools available to improve efficiency. Controlled environment farming, which optimises food production while conserving resources, is another key opportunity. Cell- and plant-based agriculture can also help meet the demand for meat, dairy and seafood with fewer emissions.
At the end of the food cycle, another area that can benefit from more innovation is food waste management. By tackling waste at the source, SMEs can turn them into valuable by-products through upscaling techniques.
While the growing population is set to put more pressure on the agrifood tech sector, SMEs can play a vital role in mainstreaming sustainable food development. By focusing on product, business, and process innovation, and adopting technologies like smart farming and controlled environment agriculture, SMEs can reduce emissions, conserve resources, and address food waste.
Changes in the market and policy
Asia has become the largest global food market, with consumer spending on food expected to increase by US$4.4 trillion over the next decade. This growth presents substantial opportunities for SMEs to innovate and cater to evolving consumer demands.
SMEs can tap into local projects like urban farming and food cooperatives to learn how to strengthen connections with their consumers. Policy shifts, like those promoting climate-resilient farming and waste reduction, can further support SMEs in adopting sustainable practices by providing potential financial incentives and creating frameworks.
For example, in the ASEAN region, where agriculture contributed 11 per cent of the GDP in 2020, the industry is adopting new technologies to address challenges like extreme weather. For instance, Singapore aims to achieve 30 per cent self-sufficiency in nutrition by 2030. To support this goal, the city-state’s government has invested S$309 million to improve the quality of produce and encourage the use of climate-resilient farming technologies.
Along with the focus on farming technologies, Methil cited Aquaponics, insect protein, and food waste management including valorisation among the emerging trends in Singapore.
Leveraging collaboration for success
Outside of technology, Methil also noted the critical role institutions play in supporting SMEs through opportunities like knowledge sharing. By engaging with larger corporations, governments and research institutions, SMEs can gain access to valuable resources and expertise that can help them maximise their production.
In Singapore, SMEs can tap into the dynamic agri-food ecosystem for support. According to a report by the local Economic Development Board, there are eight globally-leading agrifood accelerator programmes, such as Big Idea Ventures (BIV) and GROW, that budding SMEs can subscribe to.
SMEs can also explore opportunities with organisations like IPI, which runs an open innovation programme and provides networking opportunities and valuable advisory services for SMEs.
“In short, IPI’s Agrifood Tech Bundle offers a curated list of technologies for enterprises to access, license or co-innovate with technology providers to create new products and services in the agribusiness,” said Methil.
For instance, in his role as an IPI Innovation Advisor, he helped a Singapore-based venture, who wanted to build the region’s largest controlled environment farm.
“As the project was started from scratch, we helped the enterprise create a blueprint to operate the business, right from articulating the vision, mission and setting strategic objectives to strategic plans and tactics with clear milestones,” he explained. “We also helped them to develop KPIs, identify productivity levers, and yield calculations to target profitability at the second stage of expansion.”
On the other side of these opportunities, the industry still faces obstacles when trying to innovate further. Many companies are hesitant to change and lack the financial resources needed to scale. Key hurdles include access to finance, talent acquisition, and long research and development (R&D) cycles.
To overcome these challenges, Methil advises that SMEs actively engage with the agri-food industrial community and innovation ecosystems, seek partnerships and outsourcing opportunities, and commit to continuous learning. Additionally, they should maximise government support, technology partnerships, and industry forums to access resources and expertise that can help drive innovation and growth.
