There is an ancient Chinese saying: “Food is the first necessity of people” which symbolizes the importance of food to our well-being. With the recent rapid economic development and advancement of science and technology, times are changing and people’s demand for food has far exceeded the stage of just solving the basic needs of nourishment, sleep, and clothing. The increased emphasis in China calling for more innovations in food safety, smarter food production, and distribution as well as the deployment of new technologies in farmlands led to the creation of a new business term – “Agriculture and Food Technology, or in short Agri-Food Tech.”
Talking about agriculture and food technology, many may have questioned what this actually means. We want to provide a quick overview of the Agri-Food Tech industry in China. In short, agriculture and food technology are promoting the development of agriculture and food industry through new technologies. Globally, food and agriculture is a 7.8 trillion industry, responsible for feeding the planet and hiring over 40% of the workforce. Agriculture and food technology covers areas such as food substitutes, new seeds, smart kitchens, restaurant technology, eating 2.0, food safety, tracking, agro-tech and many more.
China inhabits a fifth of the world’s population (1.41 billion) but covers only 5% to 7% of the world’s arable land. Resource scarcity and population growth have pushed agricultural innovation to the top of China’s agenda.
In 2017 Chinese government emphasized again the crucial role of food and agriculture in the Central Conference on Rural Work. Xi Jinping, President of the People’s Republic of China, also pointed out “the key to agricultural modernization lies in the advancement of science and technology and in the modernization of agriculture, we have to pay more attention and rely more on the progress of agricultural science and technology and take deeper development in this area than ever before.”
China’s “13th Five Year” plan for agriculture and rural science and technology innovation indicates:
A) Improve the agriculture high-tech industry.
Key fields like agricultural biotechnology, agricultural information, new agricultural materials, smart farm machinery, modern food manufacturing and agro-environmental protection need to be strengthened. A number of agricultural high- and new technology industry demonstration areas and agricultural science and technology parks will be systematically constructed in order to incubate and cultivate agricultural high-tech enterprises.
B) Enhance the international cooperation in agricultural science and technology.
Implement the national strategy of “One Belt and One Road” and the strategy of “going global” for agriculture and make full use of the two markets and resources to improve China’s capability of independent innovation in significant agricultural fields.
Step up on international cooperation in bilateral and multilateral agricultural science and technology and create an innovative community along the “One Belt and One Road.”
Food safety issue in China
Lately, the British “Economist Intelligence Unit” released the “2017 Global Food Safety Index Report“. Out of 113 countries assessed, Ireland ranked first overall ranking over the United States. China’s Composite Index score was 63.7 and ranked 45th. Food safety is a major national defense issue for any country. Food safety is even more of a challenge to China, which has the largest population in the world.
China’s food safety traceability mindset has existed since ancient times when the Princess issued orders to trace the sources of food used and its inspection information. A so-called “Living Note” recorded the details of food sources and the production process.
Article 42 of the new “Food Safety Law” adopted on April 24, 2015, clearly stipulates the establishment of a full traceability system for food safety. At this point, the food safety retrospective legal system at the national legislative level has been shaped. Blockchain technology can potentially be a major technology enabler to establish a flawless tracking network in China.
In 2016, the State Council of the CPC Central Committee issued the “Outline for Healthy China 2030” plan, aiming to improve the system of food safety standards. The final goal is to achieve conformity of food safety standards with international ones. continuous enhancement, monitoring and evaluation of food safety risks will support this aim. By 2030, China aims to achieve full coverage of food safety risk monitoring and establish foodborne disease reporting networks, further promoting the establishment of a food safety credit system and improvement of the disclosure system of food safety information.
The urbanization and rapid growth of China’s middle class are significantly changing consumption habits of Chinese consumers. As the standard of living and disposable income are rising, consumers are looking for more healthy, natural, organic, and imported foods in China. Research in “Trends in Food, Beverage & Consumer insights in China 2016” shows that 86% of the consumers from 1st and 2nd-tier cities are considering food safety when buying food. A total of 52% of the consumers from 1st and 2nd-tier cities say they would give top consideration to food safety when buying food. And 88% of consumers from 1st and 2nd-tier cities are against food additives. This shows the importance of food safety and quality among China’s uprising middle class.
Can Chengdu become a new highland for development of agriculture and food technology?
To raise or improve the status quo of food and agriculture around the world, agriculture and food technology is a niche but rapidly growing industry for startups and investors. In Rome, SBC has accelerated more than 20 startups in agri-food tech. Startups include the smart home-farming – “Neofarms”, a replacement for palm oil – “BiteBack Insect” and Intelligent farming platform – “eVja”.
So what about Chengdu which is known as “the land of abundance”, is it suitable for the development of agri-food tech? Here are great reasons why it is!
Chengdu’s Geographical advantage
Sichuan province has cultivated an area of 6.736.066 hectares, accounting for 13.86% of its whole land area and ranking sixth in China. Major food crops in Sichuan consist of three categories of cereals, beans, and potatoes. The main cash crops are rapeseed, cotton, sugar cane, silkworm mulberry, fruit, tea, vegetables, tobacco, hemp, flowers, herbs, and forestry.
In addition, Sichuan has a number of renowned research institutions in the field of agriculture and food: Chengdu Institute of Biology, Chinese Academy of Sciences, Sichuan Agricultural University, Sichuan University School of Light Industry and Food, Sichuan University Institute of Agricultural Products Processing.
As of May 2016, Sichuan Agricultural University has 6 key laboratories under the Ministry of Education and Ministry of Agriculture, 3 scientific observation experiment stations under the Ministry of Agriculture, 3 engineering (technology) research centers under the Ministry of Education and the Ministry of Agriculture, 1 State Ministry of Science and Technology platform and 9 Innovation Teams under the Ministry of Education, Ministry of Science & Technology and Ministry of Agriculture.
Last but not at least, several listed companies with a background in agriculture or food such as Wuliangye Group (五粮液), New Hope Group (新希望) and Wintrue (云图控股) are also rooted in Chengdu. This is another good indicator to boost innovation and entrepreneurship of agri-food tech in the region.
Optimism from VC’s
Recent studies which investigated 40 active Chengdu VC investors (including seed, angel, and A and B round investment institutions, incubators, angel investors, crowdfunding platforms and investment service agencies) have shown strong interest in agri-food tech. Fifty-three percent of investors are interested in ventures up and down the industry value chain, while most investors are focused on startups in the food supply chain.
Chengdu is a very promising choice for developing innovative technologies and solutions in the Agri-Food Tech sector. We expect to see new opportunities sprouting in the region for global companies to expand to China.