This article first appeared in Digital Edge, The Edge Malaysia Weekly on September 25, 2023 - October 1, 2023

In Malaysia, a stark contrast persists between traditional farming practices and the technologically advanced agricultural sector. While many farmers grapple with the laborious task of managing data, particularly in areas like accounting and crop cultivation, only a small fraction are well-versed in the potential benefits of digital solutions that could streamline these processes.

With the right guidance, the majority of farmers could readily embrace technology to enhance their farming practices. To address the problem, FarmByte Sdn Bhd rolled out a pilot project involving 35 farmers in Johor from mid-February to the end of March.

FarmByte is a digital agriculture subsidiary of Kulim (Malaysia) Bhd, which in turn is a subsidiary of Johor Corporation (JCorp). Its FarmByte Food Hub platform was launched in March to establish a technology-driven agro-food ecosystem.

“We started by conducting focus groups and farmer engagements to understand their pain points, to ensure that the solution we develop addresses their needs. As a result of this approach, convincing new farmers we met to join the FarmByte ecosystem was easy,” says FarmByte CEO Syed Aiman Kifli Syed Jaafar.

For instance, farmers like Nesamani Perumal still meticulously write down the amount of vegetable crops — such as chillies, tomatoes and leafy greens — they harvest. Despite making detailed notes on her crops, Nesamani is often at a loss when she has to retrieve important information on planted crops, financial transactions and receipts because there are so many books to go through.

Moreover, Nesamani single-handedly monitors the crops, from their growth and watering schedule to determining the optimal prices for selling at the wet markets — again, manually.

With the Food Hub platform, FarmByte hopes to make the lives of farmers easier, transform Johor’s agro-food sector and create opportunities using the farm-to-fork strategy through a digital-first approach.

“We are working closely with farmers and partners to optimise the design and functionalities of the app, to make it as easy as possible to use while ensuring that it serves the needs of farmers,” says Syed Aiman.

The agriculture industry is vital to Malaysia’s economy, contributing 7.1% (RM98.9 billion) to the country’s gross domestic product (GDP) in 2021 — albeit a slight decrease from 7.4% (RM99.11 billion) reported in the year before, reported German online platform Statista in March.

Last month, FarmByte entered into a memorandum of understanding with Singapore-based Archisen, an agritech company on urban farming, to create automated vertical indoor farms for producing Asian greens in Johor.

FarmByte will provide the farming infrastructure and local insights, while Archisen will supply the technical know-how, offering counsel on indoor farming practices and essential technological requirements, including automation systems and data analytics. Additionally, Archisen will facilitate comprehensive training in the latest vertical farming technologies for FarmByte’s employees.

FarmByte also signed MoUs with three companies involved in different verticals of the agro-food value chain — Malaysian Agricultural Research and Development Institute (Mardi), Bank Rakyat Malaysia and Waqaf An-Nur Corp Bhd.

“With Mardi, we are conducting research and development (R&D) to improve existing technologies that can improve farming decisions. Our scope of collaboration with Bank Rakyat entails a financing programme for farmers. And lastly, together with Waqaf An-Nur Corp, we are looking to provide financing opportunities to target groups such as B40 farmers,” says Syed Aiman.

According to Deloitte’s Emerging Tech & Innovation in Malaysia’s Agriculture Landscape study in 2020, emerging tech is reflected in Malaysian companies in the agriculture sector. For instance, Aerodyne Group, which has a business model of precision agriculture, is the global leading provider of drone-based asset management solutions with artificial intelligence-powered analytics across 35 countries.

Syed Aiman believes that it is important to slowly shift traditional methods and digitalise the system. “From our conversations with farmers, they have been curious and accepting about new ideas on how Malaysia can tap into technology to drive operational excellence in their daily operations.

“The FarmByte app brings the most value through its functionalities that have been curated to address the key pain points of farmers — from planning to harvesting.

“When farmers can do financial transactions digitally, it enables them to have digital records or proof of these transactions. This, in turn, can help them seek loans in the long run to finance their business,” he adds.

According to the World Economic Forum (WEF), scaling these types of digitalisation programmes is critical given the potential for their far-reaching global economic impact. Agriculture accounts for 4% of global GDP, totalling nearly US$4.5 trillion (RM21.09 trillion), and employs more than a quarter of the global workforce (608 million smallholder farmers produce about a third of the world’s food).

Yet for many, farming no longer guarantees a decent sustainable livelihood. Some 65% of adults who make a living through agriculture are still relatively poor, notes WEF.

Innovation can transform the agricultural sector significantly, Syed Aiman believes, given technological advancements such as the Internet of Things (IoT), nanotechnology, genome sequencing, artificial intelligence (AI), blockchain, food sharing and crowdfarming.

“Malaysia is eagerly embracing these technologies as part of its efforts to enhance food security and ecological preservation through technological means,” he adds.

One such initiative is Malaysia Digital Economy Corporation’s (MDEC) pilot programme, Digital Agriculture Technology (Digital AgTech) set up in collaboration with stakeholders and ecosystem partners to empower the national agriculture sector by incorporating digital technologies such as IoT, big data analytics, AI and even drone technology to increase productivity, yield and quality.

Digital AgTech was announced under Program Modenisasi Rantaian Nilai Agromakanan by MDEC with the Ministry of Agriculture and Food Security. MDEC is the official evaluator, validator and strategic partner.

Digitalising agriculture is also necessary to improve the country’s food security, especially with the economic fluctuations and rising global population that is expected to double the demand for food and food prices.

According to a World Bank Group Food Security Update released on July 17, between February and May this year, a significant number of low- and middle-income countries experienced a surge in food prices. It noted that 61.1% of low-income countries, 79.1% of lower-middle-income countries and 70% of upper-middle-income countries faced inflation rates higher than 5%, with many of them encountering double-digit inflation levels.

Malaysia is not exempted from the growing threat of rising food insecurity. According to the 2022 Global Hunger Index, Malaysia’s hunger score showed a moderate increase from 10.9 in 2014 to 12.5 in 2022, due to the impact of the Covid-19 pandemic.

Data from the Malaysian Adult Nutrition Survey indicates that in 2021, 22% of respondents reported having to reduce their meal size or skip a meal due to financial constraints, while 21% of respondents reported even having to feed their children with less food variety. This prevalence is likely higher in 2022.

To prevent the situation from worsening, Johor wants to spearhead the national agro-food sector and become the nation’s food basket, said JCorp CEO and president Datuk Syed Mohamed Syed Ibrahim during FarmByte’s launch in March.

According to news reports, several programmes have been lined up by the Johor government to consolidate its food security, especially in increasing production.

Johor has the potential to not only become the food bank for the whole country but also for all Asean countries. The state is also ready to increase by 2027 the production of fruits and vegetables by 32%, aquaculture by 62% and ruminants by 22%, Datuk Zahari Sarip, state agriculture, agro-based industry and rural committee chairman, was reported as saying in June. He added that Johor contributed 12.8% or RM13 billion of the country’s gross agriculture output in 2021. Zahari said the Johor government allocated RM60 million to conduct 149 programmes last year to improve the food security agenda.

To meet the expected increase in production, FarmByte will build a new collection processing packaging centre (CPPC) and two new collection distribution centres in the state. The CPPC will better integrate all the activities throughout the value chain — from production to distribution — while creating efficiencies, transparency and trust.

“We are currently in the conceptualisation and design phase of the CPPC, which is key to our agro-food value chain’s midstream. This includes identifying the technological solutions that will be incorporated into the facility to improve efficiencies and quality of end products,” says FarmByte’s Syed Aiman.

Agro-food produced from FarmByte’s farms is currently being distributed via hotel, restaurant and catering (HoReCa) channels, including The Westin Desaru Coast Resort, One&Only Desaru Coast, Holiday Inn Johor Bahru City Centre, Persada Johor International Convention Centre and Columbia Asia Hospital.

“Our produce will eventually be sold under a new brand, Southern Valley. It will be available on the market by September. We’re currently focused on refining the packaging of Southern Valley’s pineapple range, comprising whole and cut fruits and juice,” adds Syed Aiman.

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