“What have we seen within what has happened in the North American market is consolidation which is a major trend occurring. Particularly in the vine crop markets, they’ve consolidated to a more traditional business form. Retailers can be heard in the same sentence saying “I would like fresh and local items from a small-scale producer’. They’re compelled by their market share that is consolidated to compete with each and every major manufacturer in the agriculture and production sector,” says David Chen who is the Chief Executive Officer at Equilibrium Capital in an Asia-Pacific Agri-Food Innovation Summit panel.
David was the moderator of the “state of CEA and vertical farming, and the way ahead Panel. Joining the panel was Jay Desan, Co-Founder of BoomGrow, Jesper Hansen, CCO at YesHealth Group, Jessica Naomi Fong the CEO and co-founder of Common Farms, and Frank Barillaro as a partner at Roc Partners.
David Chen, Jay Desan, Jesper Hansen, Jessica Naomi Fong, and Frank Barillaro
David continues to talk about the topic. David has witnessed a lot of mergers happen that he refers to as 3 billion or more revenue giants. These companies are strong in marketing and incorporate an owned farm aspect in their business model. In addition, they have a strong method of sourcing, that is evident within the greenhouse industry. “We are currently surrounded by four to five players who are likely to be part of the same space. It’s just one billion and beyond. But, this pattern will continue to be the same and will force the market to alter its organization.”
When he was discussing issues, David mentioned the ad-hoc of greenhouse startups and vertical farms. failings. “The aftereffects and restarts are proving successful in various ways. They are bringing to life the following strategies: high-quality, capital-efficient model of business, which is not too much about what we can expand, but rather what can we be growing, and that’s an important difference. The things you should be growing are those that you have the ability to expand, which gives you an advantage over your competitors in contrast to me being able to increase all things.”
Jay Desan
“The secret to the successful’
Jay Desan, Co-founder of Boomgrow declared: “It’s critical to understand the context in which you work. The fundamental systems, which guide every aspect of decision-making allow an understanding of the consumer that is who is at the core of consumption. This means that they can meet the consumer needs and analyzing patterns of consumption.” The company is responsible for around 80% of the 5 star hotels across Malaysia and a tiny percentage of hotels in the Philippines, B2B is the agriculture industry’s largest market. Farms are supplied on-site, which has enabled traceability transparency within the perspective of the agriculture system, and connecting consumers to data.
Examining the effectiveness of resource use of vertical farms Jesper Hansen, the CCO of YesHealth Group remarked, “There is a concept that I am constantly hearing about, Asia has been a manufacturing powerhouse over the last years. For manufacturing, there is an idea we refer to as “4 M’s and 1 E” that YesHealth has followed over the recent years. It has become apparent that every problem and the solution to it should be located by examining four M’s as well as one E. These four M’s are machine (technology) and Materials (input) and Method (how-to) as well as men (the users of the machine) as well as the E stands for environment (in the environment you work).”
Jesper Hansen
According to Jesper the moment a issue arises, there’s no reason to instantly eliminate a technological or mechanical. The issue can instead be resolved by one of the other elements. It’s not just the equipment itself, it’s a combination of all the components. “This technique let us sit down and consider how to address the issue with the least amount of expense that is essential for Asia.”
In response, David Chen with Equilibrium asked the panelists how they have addressed the issue of competition and investing within an Asian environment. Responding to the question, Jessica Naomi Fong, Chief Executive Officer and Founder Common Farms, Founder and CEO Common Farms remarked, “99 percent of our competition comes from imports of our products. We must be competitive for our customers base which includes hotels and restaurants. Our method was to secure our customers and then finding out the things they would like as well as what the issues they face and then how we can address them quickly. Following the gathering of these needs, we began to build the product based upon these needs. In the beginning, we’ve grown this diversity, as well as cultivating the plants that are difficult to source. This has added worth in terms of waste food and costs. We’re choosing high-value crops in order to make unit-economics feasible, since we’ve begun modest and prudent.”
Jessica Naomi Fong
While CEA players are found throughout the globe, Australian players e.g. have a different set of issues as stated Frank Barillaro, Partner at ROC Partners. “For us, the issue isn’t that we’re facing land shortages and the high cost of infrastructure, especially given the labour costs which only appear to rise.”
The firm that invests in it has observed an increase in the number of sellers who want to have a steady stock of goods as people expect local items to be readily available all year from the store. These expectations have changed how manufacturing systems must respond. So, ROC is increasingly looking at CEA for a better understanding of whether CEA are able to expand into markets that overlap and what the process would be like.
Frank Barillaro
“We have a number of companies with great ideas, but do not have a solid plan as of yet. Since we are a late-stage investor it’s more difficult for us to take the idea as an investment idea. It’s a good thing to observe that a lot of companies have put in the work and have figured out the secret recipe to make things function. But I believe there are possibilities to integrate technological advancement, know-how and to develop new systems in Australia. There is a way to diversify from the traditional agricultural practices to produce different kinds of food.”
Equilibrium
David Chen, CEO
+1 971-352-8430
info@eq-cap.com
eq-cap.com
BoomGrow Farms
Jay Desan, co-founder
jay@boomgrowfarms.com
www.boomgrowfarms.com
YesHealth Group
Jesper Hansen, CCO
www.yeshealthgroup.com
Common Farms
Jessica Naomi Fong, founder and CEO
hello@commonfarms.com
www.commonfarms.com
Roc Partners
+61 2 9099 1900
Level 4, 11 Young Street
Sydney NSW 2000
www.rocp.com
Source: The Plantations International Agroforestry Group of Companies