31 Dec China AgTech
First there was an Industrial Revolution, then a Cultural Revolution, and now there is an Agricultural Revolution.
The Royse AgTech Innovation Network brought Silicon Valley to China this past December, hosting pitches, panels and presentation events in Shanghai, Beijing, ShenZhen and Hangzhou (and additional events in Taipei, Hong Kong and Seoul). Panels consisting of cross border VCs, tech companies and members of Royse AgTech exchanged views on the state of agtech in Asia, including the investment climate and new innovation. It is clear from the exchange that China is poised to be an agtech powerhouse, both as a market for new technology as well as a source of innovation.
Many countries and cities claim to be the next Silicon Valley, but China already has a Silicon Valley; in fact it has several Silicon Valleys in tech hubs throughout the country. Agtech plays a prominent role in those national innovation initiatives.
For starters, China is huge – 5 times the population but only a little more land than the United States. Of that population, roughly 800 million people are engaged in agriculture, according to Cynthia Xing of Yuan Associates, a food and agricultural consultancing based in China. That is not a typo – the number is 800 million, with two 0’s. As you might expect, farms are very small compared to US farms, but that is changing as the country becomes more urbanized. As farms consolidate, and the number of farmers decrease, the need for technology solutions will increase. The Chinese government knows this well, and both local and national governments are actively encouraging the development of solutions.
Secondly, China is growing. The International Monetary Fund (IMF) calculates that China’s GDP exceeds America’s, if Chinese GDP is converted into dollars at purchasing power parity (the exchange rate that would equalize the dollar price of similar goods in each country). While GDP growth has slowed, it is still high enough to require technology solutions to solve existing problems and alleviate stress on the system.
Other factors are driving the need to innovate in food and agriculture. Like many other countries, China has a farm labor shortage. Because of urbanization, i.e. the movement of people from the rural areas to the inner cities for economic opportunities, the farming areas are left with girls under age 16 and men over 50, who are not the most productive farm workers. Like the experience in other industries, technology must step up to fill that gap.