How will China feed 1.4 billion people? China's next big boom: AgriTech and FoodTech.

hello there in this video i'm going to talk about agriculture and the real problems that china is facing in this industry but also i believe this is the biggest booming industry in the next 10 years that china will experience because of their technology investment they're doing right now into the industry the mindset change the planning that's happening and most important the demand of the consumers is completely different today so welcome to this week's pascal's china lands on agritech and food tech [Music] so a few weeks ago at the age of 91 years old yuan long ping he actually passed away and he was the father of hybrid rice and as a tribute i wanted to make a movie about agriculture and food industry because yuan long ping he really changed the complete industry he changed it because he created a new type of rice which increased the production of the yield with 20 which means that 70 million more chinese could actually get some food i mean amazing achievement and this was back in the 70s now this also had an influence globally because 20 of all the rice that we eat in the world is actually has its origins with this invention so chinese definitely are inventors they're doing innovation we just don't always know about it this is one great example now if we think about foods there's a chinese saying that goes and that means for the population for people food is like heaven and if you've ever lived in china or went in china and they host they those hosts they give you some food i mean you know how great it is these banquets i mean it's incredibly good food and this is what i miss the most not living in china right now and not being able to go to china because of of course the pandemic so the food is fantastic but it's really about the food being part of life every single day and so if we think about foods china has really two parts there's the north of china which is a lot of grain or millet and then the south it's all about rice growing and if you go back in history for the past many many centuries millennia actually china was an agriculture country with 90 percent of all the farmers or all the people that were farmers in china or involved in the agriculture industry so it's a farming country and at that time due to confusionism chinese farmers were looked at the most honest people in society so it was a great job to have and this is also why today there's a lot of respect towards farmers but then in 1949 with mao zedong and the people's republic of china that was established things changed a little bit because before that there was a lot of landlords who owned that farmland and then people were working really hard to work the farm the land and then mao zedong he really gave away all that land from all these landlords to all the peasants and so everybody got his little plot of land and that changed society completely but it's very interesting to see because mao zedong originally also came from a farming background so there's a lot of farmer mentality into china so what does that mean to feeding the chinese well the problem is that and there's a book about that that is like 25 years old from lester brown and that problem is that it says like china has only seven percent of the arable lands but it has to feed almost 20 percent of the global's population how do you do that and you clearly see when you compare with america and canada and brazil and a lot of places i mean there's not very equal diversification of this arable land compared to the population living in these areas so china and also india they're kind of dependent on the rest of the world now the difference between china and india is that chinese are consuming much more food and so what do you do so this is something that is a real challenge for china and so they've been struggling with this specifically since the 80s where consumption went up because before that it was a very different environment what we remember before that and even today sometimes is this iron rice bowl it's people wanting to work for state-owned enterprise that was the symbol of this iron rice bowl because they knew if they worked for a state-owned enterprise they would always have this bowl of rice and they would have food for themselves for their family for their kids and so this was the mentality of china but that has changed a lot since the opening up 40 years ago and what we see is that now the consumption of for example meat has gone completely out of proportion compared to 40 years ago in 40 years time china and asia in general just went times 10 in consumption and production of meat for their population while the rest of the world the western world like us and europe it like doubled almost but that's a big big difference so how are you going to feed 1.4 billion people with just this increase in meat that is needed but not the arable land to have the cows and the pigs roaming around so this is going to be a challenge it has been a challenge what is china doing well if you look at grains and you look at wheat you look at rice you look at corn actually china over the past 10 15 years has really made sure that they are self-sufficient 98 of all these grains are actually produced in china and is enough for the chinese population so no problem there but it took lots of planning and lots of work but they made sure they had that but that is to feed the population specifically people who eat rice and grain a lot but people eat meat as well and meat that means animals it means livestock it means fish all these things have to get fed as well and so this livestock is getting fed by soybeans and so every year china imports more than 100 million tons of soybeans because they can't produce enough themselves and so this comes from the us it comes from brazil and argentina mainly these three countries and so that tells you a lot about this trade war where china and and xi jinping and trump were fighting about this and china wanted to import more which they had to do in the trade war that's not so good for brazil in argentina because they imported it from the us but it tells you a little bit about their dependency towards the world and so this created this tension over the past decade specifically the last five years which means that china has started to buy a lot of land and there's a lot of land grab that we say in the west have been doing in australia and south america and africa but also in ukraine where they leased the size of belgium just to produce all the crops that they need and so this is not just about china wanting to take a lot of land this is really bad if they don't do it and suddenly the imports aren't happening anymore because of a geopolitical war then they can't feed the 1.4 billion people so it's kind of like an insurance towards the future and this is how we have to look at it but the most important is that besides getting land outside china is actually trying to elevate the industry themselves and this is more about domestic investment and the interesting thing is that companies like alibaba like pindodo like mai tai a lot of companies lately jd.com they have been investing massively into the agriculture and this is just two years old and the reason they've been doing it is because if you look at e-commerce i mean 23 of all retail happens online already but for agriculture it's about seven percent so there's still a big growth margin but getting vegetables getting fruit to consumers is a much more complicated thing than getting a cell phone or a pc and the reason is because there needs to be all these supply chain in the middle and and cooling systems and you need to look quality and so it's really difficult and there's many many steps in the process and so that means that today chinese tech companies are investing in that logistics in in indo supply chain to make sure that they can actually deliver it because it's a new opportunity market for them so this is what's changing now if we look at china and the agriculture world and the food world there are some really serious problems first of all most farmers have a very small plot and this dates back from the mao zedong area and they have like two football fields of size and plot and that means that they don't invest a lot of money into it because investing technology or innovation it's not worth it if you have like a big area your machines that you buy actually go down in price and so you can get the efficiency up but a small plot you just do it with the hands it's not used to invest on top of that and i know that very well from 25 years ago when i started my first job in fertilizers is that chinese were just dumping fertilizers into the ground really really bad quality it was just all about quantity and getting these crops to grow as quickly as possible how it got into the ground and into the water and into the soil they didn't care that much and that mentality still today is with a lot of farmers like that because they don't have time to worry about these things they just need to survive by growing these crops and so you see that this soil with the environmental problem today with china is now top of the agenda but the farmers don't want to change as quickly now on top of that there's natural disasters with climate change of course there's also some cutting of trees and and lots of problems that china has had with the environment in itself which created a lot of rains and falls i mean this has been going on for centuries but now this is really a problem when you have to feed so many people that want to eat better and higher quality food there's an aging population problem in china i made another video about that but aging farmers is even a bigger problem than the aging population of china because the young kids from the farmers their children and grandchildren they don't want to become a farmer anymore they want to live in the cities have a great life earn money there so who's going to follow up on these farmers kids and grandchildren i mean if they're not going to do the farming anymore it's not sexy to be a farmer in china and so that's a problem and so on top of it there's the food safety problem and we've heard about it with the pandemic but the reality is that there's so many links in between the farmer and the consumer so many distribution channels like five six times it goes from one company to another company that if there you find a quality problem it's really hard to track it back to trace it back to the origin to the farmer to the cow to maybe the the vegetables or the fruit i mean it's hard to figure it out so something needs to be done but it's like a place where it's easy for bad actors to actually do some bad things on top of this i think there's also another issue which has to do with getting technology and innovation and into the farmlands and into the agriculture and that has to do with the international cooperation where a lot of companies in the past have been still today are in innovating massively into agriculture in holland for example i mean it's full of it in belgium in many places but it's not streaming towards china and the main reason they didn't flow in china so much is because these farmers didn't care too much about innovation they didn't care about these technologies they just wanted to work their land and if they got it they basically were trying to get it cheap or get it quickly and steel from time to time so they got a really bad reputation in china about this industry which means that a lot of companies in the fertilizer industry and other industries have decided not to invest too much into china because it's a dangerous place to invest you could lose your technology lose your innovation and you don't really get the market why because the whole industry of agriculture is really built around policies and so government is trying to push this industry very much which means that foreign companies are often excluded from taking part into these tenders and policies and so on because they can't do anything about it so a lot of companies in the west feel this is not very fair and so a lot of them have not participated and on top of that china used to be a developing country a poor country 40 50 years ago and so the world was helping china but now very few countries and companies want to say we're going to help china develop no now it's really their economic power let's deal now and i want to have a fair deal and so it's a lot of tensions happening the other thing is about digital and if there's one industry where the digital inclusion is still very very low it's it's in the rural areas i mean the only place where in china you find people that still don't have this smartphone it's actually with the farmers and so they still have to go into that digital future of china where the cities are completely digitized three years ahead of the west very often but the farmers are not and so all this combined creates a huge problem that china has to tackle and so this is why i believe this is changing now this is a high priority now there's some good news as well and one of the good news is that now it's not just driven by these farmers who just want to make money but consumers are actually driving a better higher quality of products they want it faster they want it better and so they want to know where the products come from and so what you see now is that this market is becoming a quality market food agriculture anything that has to related to health is becoming a consumer market and so there's a lot of people in china that now want to eat plant-based meat they want to be vegan or vegetarian and and it makes total sense because even 40 years ago meat was not on the menu very often so they're kind of used to it but due to the opening up they became a meat consuming country but now it's like yeah let's look at health and specifically with the pandemic that changed a lot a lot of organic in china it's growing like crazy and then with the live streaming now they also feel they can reach out to these farmers know who they are they can themselves control somehow where the products come from and so there's a direct connection between farmer and consumer and i made a video last week about this consumer to manufacturing which really shows how a company like pindodo is making that direct link which means that now pindado helps these farmers to send it directly to the consumers you don't need all these steps in the between and that means that the quality can actually be checked easier and pindodo is investing in that quality right now so you have the companies that are investing you have the consumers that are now demanding better quality and better products so the farmers have to follow specifically now with the five-year plan of china the 14th five-year plan that just came out in march this year is that you see that china's put new policies there to really digitize and innovate and put technology into this sector so typically when we look at this kind of industry and you compare that with health care with education with mobility what you see is that it's the same three factors available the government gives the guideline consumers are demanding so they really want better products or better quality and then there's the companies who see a market opportunity and whenever you see these three things come together which you now see in agriculture you know the next five to ten years is going to be a trend of investment and a change in mentality so i'm very bullish on this market right now now if you look at china their mindset right now is on self-sufficiency whether it's for microelectronics or for any type of technology and that has to do a lot with the tensions with the us primarily but also for seeds there's now a seed war going on and china wants to make sure that they have their own seats to not be dependent on the seats of the rest of the world and that means cooperation will be more difficult but it also means china is putting money into innovation and technology and one of the other things that the government is now funding and subsidizing a lot is automation and robotization and machinery for even if it's small plot and then sometimes these plots work together these farmers work together and they say okay buy one machine for 10 then you can actually use it together and then it makes a lot of sense drones is used everywhere in agriculture now because china's the biggest drone producer in the world the other thing is monitoring and now more and more of these plants and and greenhouses and and even outside are getting monitored in real time and many companies in artificial intelligence alibaba huawei and so on they're actually helping these farmers to get more insights on how to grow their plants better how to have better nutrition less fertilizer or more optimized so that they can improve or have less work for growing the same plants at a higher yield it makes total sense in the animal life in the livestock life there's actually real cool things happening and and this for me shows how the rest of food will also follow just a couple of years later if you look in the livestock what you see is that companies like alibaba huawei and also pingham the biggest insurance company in the world have started to use face recognition imagine face recognition to track the health of pigs and cows and sheep and so the whole idea here is an example of ping-an which is the biggest insurance company in the world and they're ensuring these picks for the farmers on one condition that the farmer actually takes a picture of that pick when they buy the pig and then every month or every two months they have to take another picture and then ping on they can actually track this and tell the farmer how the pig is doing they're health are they pregnant or not is there a problem and so when a pig dies they actually know which pig said the pig pig died and it's very important for an insurance company because otherwise the farmer could claim a pig die but it's actually another pig that died maybe a pick that is not as as valuable but then get more money and so there's a lot of scams happening but now with face recognition they know exactly which pig died and on top of it this company pinghan which is also a bank is now giving money to farmers to buy more pigs or cows because they can track it they can monitor and they're getting better production of their livestock which is a win-win for both and so this is happening more and more now on top of that technology is getting embedded everywhere it's a combination of blockchain iot and ai i already talked a little bit about ai with some monitoring and also with the face recognition as example but when you look at blockchain this is actually probably the most important technology when it comes to the food industry and that has to do with the fact that you can trace everywhere where these products come from and where what were the steps in between and so blockchain is a very interesting technology because they can actually make sure that whenever you buy something you know where it comes from and now iot is included in that as well internet of things and as you can see from this picture on the on the the chickens well the chickens actually they have a sensor on their legs and what that means is that you can actually track how these chickens behave every single day i mean this is hilarious but what's interesting is that if you go into a store in shanghai for example a herma store from or fresh hippo store and you scan a qr code you could actually see for that one particular chicken how many steps that chicken has made if it eats if it did eat well and how it behaved in health you can figure out everything but the steps will tell you if the chicken is healthy or not because a chicken who dates more steps than a chicken who does last steps actually probably is more healthy and consumers will rather eat or buy that chicken and so it's quite weird situation but we're getting to the micro level of tracking micro level of monitoring to make sure that you get the best quality for the consumer and the combination of blockchain iot and ai is really the golden triangle to help these agriculture industry help these farmers to create better yields on top of that there's a lot of vertical farming happening in china that has to do with the fact that now 63 of the chinese live in the cities and so if you live in the city i mean bringing these vegetables and this fruit to the cities i mean it takes time there's risk food safety issues i mean lots of problems it's costly as well so why not just build it into the city in a vertical farm maybe in a cellar or on a roof or wherever you want to do it but it can be internal inside a location and just with specific lamps led kind of lamps you can actually grow it much more efficient and much faster and you can just go and get it next door so vertical farming is something that a couple of years ago started off in belgium there's a great company urban crops doing that and they actually are uh sending some of these uh designs and ideas to the rest of the world and china is is trying to lead as well in that industry i think there's a lot of opportunity there the other thing is precision agriculture this is something that the west and specifically in europe in america we've been very very good at to optimize really the amount of nutrition the amount of water the amount of temperature the amount of environment and and which seeds to put where and so this is what we know where this has become a science in the west and we're so optimized that we can almost not get the yield higher anymore because it's the optimal yield compared to china growing strawberries for example i mean it's a big big difference if you look at the results but that has to go into china now and we're seeing that now little by little this isn't getting introduced it's still the early days and i think it's one of the latest industry to transform but i see the next five to ten years a big big transformation there the question is will the west be willing to share if not china will have to create their own innovation and that's what they're going to do now the other thing is gene editing and a very controversial topic genetic manipulation of food and this is something that in the u.s is happening a lot i think it's more than 30 percent of food is now gm or genetic manipulated china has been very reluctant and very careful on going that direction but with the problem of self-sufficiency and the fact that a lot of countries are not willing to give to china the food they need unless they pay higher taxes and it's a trade part of a trade deal so there's kind of like a little blackmail there maybe on both sides but the reality is they feel they need to do this themselves so since this year gene editing is really becoming a big thing in china and so we see that china's putting a lot of effort on all these what i call agri-food tech 2.0

technologies to elevate the whole industry so big exchange is happening i believe there's a five to ten year window now a 5 to 10 year window for any foreign company to get into china and work with agriculture agritech food tech companies to build things together because the chinese are really starting to fly into this industry they're going very fast what we've seen in healthcare what we've seen in retail what we've seen in mobility it's happening now in agriculture so the window is still early on but there is only i think a 10-year window if you want to do anything in that business in china and you wait 10 years i don't think china will be needing any of these innovations and technology anymore now the problem is this is very difficult to do because there's chinese policies which is mainly aimed at domestic support this is so you'll need a partner at the same time the mindset of these farmers need to change and it's hard to do as a foreign company i mean there's a lot of barriers but i believe just like we've seen in many industries unless you get in now it's going to be too late so the choice is to any company in the west to either work with china or not work with china but right now is the choice to be made so the agriculture industry is going to make a transformation like never seen before in china and as foreign companies if we want to understand the industry we shouldn't look at the problems we actually should look at the opportunities and the opportunities is really to work together with the chinese and see china and the market not just as a market to sell to but a market as a lab for the whole world because they're going to experiment and do things and you can try it out on a big scale and then bring it worldwide and that is the opportunity and we only have 10 years to catch that opportunity hope you liked it see you next week for another episode on pascal's china lens

2021-06-19 01:05

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