Nutrition
More productivity, less chemistry
The food industry, one of the biggest sectors that the Singaporean chemical industry serves, has been at the center of an irreconcilable dialectic: At one pole is the need to produce more food for a growing global population; this need would require the use of more chemicals in the form of fertilizers, crop protection agrochemicals and soil improvers. At the opposite pole is the need to reduce agricultural intensity and chemical use due to environmental and health concerns, with the agri-food industry accounting for up to 31% of GHG emissions globally (based on UN data). These two simultaneous pressures have propelled investments into sustainable agriculture practices and sustainable agrochemicals and bio-alternatives (bio-fertilizers, biopesticides, bio-fungicides, and bio-stimulants). Singapore is at the core of the effort to tackle the challenges of both food security and food sustainability, but the events of the past few years – first the pandemic, then the invasion of Ukraine – have increased the urgency. “What we see today - including climate change and the pandemic - form an almost perfect storm that is becoming even worse with the crisis in Ukraine, inflationary pressures, and the lockdowns in China,” said Saad Haroon, head of marketing for APAC at Syngenta, a leader in crop protection and seed technology.
“The usage pattern of fertilizers globally is divided into three classes: Mature countries like Japan, the US, Canada and Europe are shifting from using chemical fertilizers to organic ones or new farming techniques after reaching peak fertilizer usage. The second category of countries like China, Brazil, Russia and India is currently at the peak of fertilizer usage, and are expected to cut down the consumption growth in the next 5-10 years. Lastly, Africa and Latin America have vast amounts of land, huge populations to feed, and very low use of fertilizers.”
Murari Rakshit, CEO, NutriSource
The war in Ukraine has impacted the food industry in two ways: One, caused by choking essential exports of grain and vegetable oil from Ukraine, and the second caused by blocking fertilizer exports from the world’s biggest source, Russia. The fertilizer crisis exacerbates the food crisis because fertilizers play a big role in increasing productivity and yields – extremely necessary over periods of low supply. As a consequence of this double crisis, both food commodity prices and fertilizer prices have ballooned. The Food and Agriculture Organization’s (FAO) price index for the most globally traded food commodities reached its highest point since records began three decades ago, while the price for phosphates and potash rose by almost 30% since the start of the year, according to the World Bank.
Against the backdrop of these global dynamics, the Singaporean food and agrochemical sector is awash with opportunities. Singapore is a preferred HQ destination not only for chemical MNCs but also for global food ingredient companies and food technology start-ups - a buoyant sector that has earned Singapore the designation of “the Silicon Valley of food start-ups.” While some players are attracted by the opportunities of scale offered by Singapore’s easy sea access to some of the world’s most populous countries, others are drawn to the blend of cultural and culinary influences, coupled with the availability of know-how, which makes the island a perfect innovation hotspot.
Nutrition is one of the biggest segments and a principal investment priority for most chemical companies in the country. For BASF, Singapore is home to its Nutrition Application Lab, and this year the company will inaugurate a new crop protection formulation plant. Though it doesn’t have any manufacturing plants in Singapore, Tate and Lyle also chose Singapore as the global HQ for its “growth markets,” including Asia, Africa, LatAm, and the Middle East. The sector that has made the most out of the crossover between food and chemical opportunities on the island is the distribution companies, and ongoing investments suggest that the agro-food sector is high on the agenda of most chemical distributors: Azelis recently opened a S$1 million Regional Innovation Center for Food and Health in Singapore, while IMCD opened two pilot plants dedicated to food applications, one in Bangkok and one in Jakarta. Brenntag expanded its food and nutrition business with the acquisition of Zhongbai Xingye, a leading food ingredients distributor in China.
In the food ingredients space, competition is fierce, and the winners are those whose innovations come closest to what the consumer wants, especially when we speak about taste. In a diverse region like Southeast Asia, tastes differ, and they embed rich cultural flavors difficult to replicate in a lab. For this reason, IMCD is now building a network of chefs who can develop regional culinary expertise: “Food is locally ingrained, and in Southeast Asia, food has a very important cultural significance. We are now building a network of chefs to enhance our culinary expertise in Southeast Asia. Chefs support in creating the unique sensorial experience with their culinary knowledge, completing the technical expertise of the IMCD teams,” said Emmanuel Colette, Business Group Director for Food and Nutrition (APAC), IMCD Group.
“In APAC and beyond, both customers and consumers are demanding cleaner labels, with fewer, more natural, and more transparent lists of ingredients.”
Emmanuel Colette, Business Group Director for Food and Nutrition (APAC), IMCD Group
Obtaining the right taste through unconventional methods is also inspiring the burgeoning food start-up scene. Fermatics is a biotech start-up that has developed a fermentation technology using E-coli bacteria, as opposed to chemical synthesis. “Our product is the essence of raspberry. The molecule itself is not complex and is already available in the market, but the uniqueness of the product lies in the racemate, which is a mixture of two equal quantities or two molecules with mirrored molecular structures. The racemate cannot be separated (in a cost-competitive manner) using petrochemical synthesis, which means the essence will not be pure because the (S)-enantiomer has a more unpleasant taste that remains in the end product. Our USP is that we only produce the (R)-enantiomer with the raspberry essence. This purity is what the flavor and fragrance industries are striving for,” said Stefan Bahnmueller, the CEO of Fermatics.
But beyond the traditional taste, texture, or color considerations, consumers come with new expectations; that food is healthier and more ethical. Andrew Taylor, president of growth markets at food and beverage solutions provider Tate and Lyle, identifies four chief consumer interests: sugar reduction, gut health, plant-based foods, and more label transparency. “More consumers read labels and are better educated about the ingredients that go into products,” he said.
These consumer trends are also influencing the agricultural space, where biological alternatives to chemicals are in high demand as part of a larger trend of making agriculture more sustainable. More companies are bringing to the market biostimulants and biocontrols, and some of them have managed to create lucrative synergies for these products. For instance, Behn Meyer, a German-Singaporean distributor of specialty chemicals and food ingredients, came up with an organic soil improver that uses the frass from Singaporean and Malaysian insect larvae farms. The final product is sold to regional producers of mango, mangosteen and durian: “Through this project, we do not only help insect farming to become residue-free and turn their waste into value, but we also offer a much healthier, non-chemical way to improve fruit quality and yield,” said Dirk Lorenz-Meyer, member of the board at Behn Meyer Group.
Image courtesy of Syngenta
Another way to reduce the quantity of chemicals used is through precision agriculture technologies like drones, which can measure with exactitude how much fertilizer or pesticide is required for each plantation. Saad Haroon, head of marketing for APAC at Syngenta, reminds that, even though precision agriculture and other digital technologies are “the talk right now,” the realities of Asian farmers are different. Because this is a fragmented market of farmers with small landholdings of one hectare each or less, small yield improvements obtained by spending less on fertilizers will have little impact on individual farmers. Instead, what Syngenta, Behn Meyer, and other companies in the region have been doing is to help create digital communities for farmers in a bid to consolidate the market, but also to empower farmers so they can recognize the economic opportunities created by the market needs. For example, Tate and Lyle is running a sustainability program to encourage Chinese stevia growers to implement sustainable agriculture practices so as to better benefit from the high demand for stevia as a no-calorie sweetener.
The answer to these multiple pressures of increasing productivity in the food supply while also looking after the environment and increasing profitability for local farmers (who are often unaware of the global dynamics) is in a business model that combines products with sustainability and technology, at least this is what Murari Rakshit thought when founding NutriSource in 2020. Based out of Singapore, Nutrisource has identified a market gap in supplying African countries with NPK (nitrogen, phosphorus, potassium) fertilizers: “While there is a strong global call for reduction of chemical fertilizer usage, Africa is in dire need of increased fertilizer consumption to ensure food security. To address these dual issues of increased and optimal nutrient management and availability along with a focus on the reduction of GHG to promote sustainable agriculture, NutriSource is coming to the market with crop-specific, soil-specific, customized NPKs to help African farmers get the best nutrients for every dollar they spend,” said Rakshit, the CEO and founder of NutriSource.
Together with one NPK plant in Togo ready to open and three more in the pipeline, NutriSource is also preparing to launch a digital platform where Sub-Saharan farmers would have access to real-time advisory on everything from technical aspects like pest diagnosis and fertilizer usage to market insights.
Image courtesy of James Baltz on Unsplash
CONCLUDING THOUGHT
“Sustainable agriculture should be the standard way of doing agriculture, but this is obviously difficult for low-income farmers; therefore, sustainable agriculture should also be the most profitable way of doing agriculture. To make that happen, we must connect farmers with the customer that is willing to pay more for the sustainable way that something is grown.”
Saad Haroon, Head of Marketing, APAC, Syngenta