Food for Thought: Opportunities for ASEAN’s Agri-food Sector

ASEAN is poised to be the world’s 4th largest economic bloc by 2030, according to the World Economic Forum (WEF). Currently, there is a rising middle class demographic in Southeast Asia that will comprise 65% of the population by 2030, an almost threefold increase from 2010. Furthermore, as income levels in the region are expected to grow annually by 6%-8%, ASEAN would represent 16% of the world’s new consumer class. By 2030, favorable demographics and rising income levels are likely to drive up domestic consumption, doubling ASEAN’s GDP to US$4 Trillion.  

The resulting increase in levels of disposable income is likely to be reflected in the rise in demand for not only food in general, but also quality produce. ASEAN consumers will continue to spend more in food & beverages (F&B) than in any other product categories. By 2030, F&B spending will represent 30% of ASEAN consumption. Coupled with concerns about disruptions in food supplies, developing a resilient food supply chain has become one of the top priorities of countries both within ASEAN and on a global landscape. These concerns signal an urgent need for innovation within the agricultural and food processing sector to develop sustainable production technology, improve the global food supply chain as well as tackle issues surrounding food wastage.

In a 2019 report by Oxford Economics, the agri-food sector made a GDP contribution of US$717 billion across Indonesia, Thailand, the Philippines, and Vietnam, and marked a 30 percent increase from 2015. The sector is also responsible for almost half (48 percent) of the entire workforce with 127 million jobs, and contributed a total of US$95.6 billion in tax revenues across the region. According to the USDA, Vietnam and Thailand are the second and third largest exporters of rice behind India, standing at 15% and 13% of global exports respectively. Indonesia is the largest producer of palm oil, followed by Malaysia – with both countries accounting for 85% of the world’s palm production annually.


Stages in a Food Value Chain

We will focus on the early stages of the food value chain, from production to handling and food storage before it reaches retailers’ shelves. Optimising these early stages of the food value chain is essential in ensuring that ASEAN’s food supply is not disrupted whilst allowing producers to enjoy cost savings. Furthermore, large amounts of food loss generated in the early stages of the food value chain can be prevented with effective post-harvest technologies, proper storage and/or efficient  processing.


Advancements in the Agri-food Industry

With rising population and income levels driving higher demand for food, the agriculture sector has to constantly improve and adapt their farming techniques in order to raise production levels. Producers in the region are beginning to develop smart farms, which leverage technological innovations, to improve the quantity and quality of their produce and to alleviate manpower concerns commonly associated with traditional farming methods. 

To further ensure that demand is met, it is also important that modern food production and processing methods are used to attain maximum efficiency. This has spurred food manufacturers to adopt technologies that provide them with the ability to scale, improve shelf life of their products, reduce wastage and raise hygiene standards in food production.

As production of food rises along with higher demand, managing and mitigating food waste have become increasingly important areas to address in efforts aimed at combating acute food insecurity globally. According to a study by the UN Food and Agriculture Organization’s (FAO), approximately one-third of all food produced for consumption is wasted annually. Southeast Asia (SEA) is a significant contributor to that number, producing roughly 25% of the world’s food waste. This has sparked many conversations about managing food waste in SEA, causing various organizations to step up their efforts to reduce food loss. 

In recent years, there has also been rising interest in corporate social responsibility (CSR) surrounding food production. Food sustainability has become one of the key decision-making considerations among consumers, prompting food producers to incorporate it as part of their business strategies. With stricter compliance regulations and scrutiny surrounding business practices and their impact on the environment, there is an immediate incentive for food producers to adopt sustainable practices in order to comply with regulations.

Overall, there is an increasing focus for producers to adopt a range of technological solutions such as IoT, drones, automation, digital twins, demand planning systems, food storage technologies as well as energy saving technologies to address challenges in productivity, food safety, traceability and minimising food loss along the supply chain.

Over our next few posts, we will discuss more about how ASEAN enterprises across the agri-food value chain are improving the region’s food security through innovative technologies and continual improvements. Follow us on our LinkedIn page to keep up to date on our latest articles in this series.


30 June 2021

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