From indoor farming to alternative proteins: the entrepreneurs looking to feed the world

Technological innovations are being developed along multiple levels of the food system, from farm level to the supply chain, including retail, transport, consumption, waste management and packaging.

The problems they attempt to solve are numerous and complex, but they are a vital part of the picture in mitigating and adapting to climate change. A 2021 study published in the journal Nature cited food systems as the cause of one-third of global greenhouse gas emissions.

Meanwhile, the global population is forecast to grow from seven billion in 2010 to 9.8 billion in 2050, while incomes grow across the developing world, leading to an overall rise in food demand of more than 50%, according to the World Resources Institute.

Demand for more resource-intensive foods such as meat and dairy products is projected to rise even faster, by nearly 70%, it says. Added to which, hunger and malnourishment are still rife, affecting more than 800 million people today. The global food network must simultaneously produce more food, using less land, energy and water, and distribute it to more people, while producing less waste. It is no small ask.

Consultants at Morgan Stanley recently ranked 10 key agriculture tech sectors. Most promising were alternative proteins, seeds that can reduce crop loss and optimise the use of resources such as nitrogen, land and water, and precision agriculture. These sectors provide high growth, compelling risk-reward, significant customer benefits, and are supported by favourable policy initiatives, the consultancy said.

Agri-food testing, animal health and organic and naturally healthy food came next on its list, judged to be low-risk, with reasonable growth opportunities. It was less convinced by innovations in crop protection and fertilisers, due to concerns over sustainability and government policy, while it flagged vertical farming and aquaculture to be potential areas to watch.

For Stuart Thomson, senior manager of food and agriculture at PwC, the most promising technologies fall into two areas. First: the collection, analysis and use of data that can monitor farm performance, and its impact on climate change, soil quality or water use, and second: engineering solutions that allow farmers to use precision farming techniques such as spraying individual pests, or controlled environment farming in greenhouses using renewable energy.

The latter is seeing a boom in the U.S., according to Travis Parman, chief communications officer at startup AppHarvest. “There is a lot of opportunity with controlled-environment agriculture, because the U.S. is so under-built,” he says. “It is a way to really de-risk our fresh fruit and vegetable production.”

The company grows tomatoes, salads, strawberries and cucumbers in Appalachia using high-tech indoor farms with robotics and artificial intelligence. It claims its farms are producing yields up to 30 times that of traditional agriculture, using up to 90% less water than if the crops were grown on fields.

The company, which launched in 2017, built its first greenhouse by 2019, and harvested its first crop in 2021. It now has four farms consisting of some 67 hectares under glass, and believes there are only two companies in the U.S. with greater capacity.

Like all startups, it has had to overcome multiple hurdles. Construction of the farms was capital- intensive. The company obtained venture capital, and also decided early on to list on the Nasdaq stock exchange, says Parman.

Bids for funding were aided by the fact that a combination of climate change impacts, such as a mega-drought in the south-west of the U.S. and COVID-19, had exposed weaknesses in the food system to public scrutiny. “The headline issues helped people recognise that we really do have a domestic food security issue, and we do need a more climate-resilient solution for this,” he says.

Awareness of the need to decarbonise the global agri-food system has motivated support from investors for food product innovator Terviva, according to Marc Diaz, the company’s chief commercial officer.

Over the past 13 years, Terviva has developed products from the pongamia tree, a tree traditionally used in Asia in medicine, and for lamp oil and fertiliser. The tree is both low-input and high-yielding, with an ability to grow on degraded land, and absorbs both carbon and nitrogen from the atmosphere. The company developed technology to remove the bitter taste of the seeds, which had previously prevented it from being used as food.

The tree’s seeds contain high levels of protein and oil, which can be used for cooking, or as an ingredient in foods such as vegan mayonnaise, cakes and biscuits, or meat and dairy alternatives. It has recently launched an energy bar with Hawaiian protein company Aloha made with the oil.

Terviva is also planning to supply crude oil from the tree as biofuel feedstock. Ashley Kleckner, the company’s senior vice president of sales and marketing, acknowledges that this is a “faster to market path” while it builds up the food side of the business.

The company’s ability to support decarbonisation in the industrial and transport sectors, as well as reduce Scope 3 emissions from global food producers had provided “incredible tailwinds” for investment, raising the company over $100 million in 13 years, according to Diaz.

Terviva is now growing pongamia trees with farmers in Australia and Hawaii, and is paying people in India to harvest beans from the trees growing wild there. However, the company has worked to attract a certain type of investor, since the trees do not bear harvest for four years.

Over the past five to seven years, its investors have mostly been those who are climate-focused, and understand that the company’s business model is long-term, and its products are not “Zeitgeisty” or being launched with a “sustainability halo”, says Kleckner.

“What we’re solving is specific supply-chain challenges and risk mitigation,” she says. Locating operations in different geographies and combining wild harvest as well as agroforestry models is an important part of the company’s business model, she adds.

“Fundraising is never easy, so it would be ridiculous for us to claim that people are lining up outside the door, but we've actually had fairly good luck and we have really amazing investors because of the way our business is structured,” she says.

Much of the media coverage of climate-friendly innovations in food have centred around alternative proteins. These have seen huge growth in the past couple of years, according to Alison Rabschnuk, director of business development for plant protein at Kerry Group.

Kerry Group has been involved with the development of plant-based foods for several decades, working as an effective innovation arm for other companies by using technologies to help them develop plant-based foods, she explains.

“The number of launches went through the roof, not only in retail, but also in food service, and all of a sudden plant-based products were everywhere. A lot of retailers had to scramble to actually find the shelf space from which to merchandise these products,” Rabschnuk says.

Parman also flags issues around finding distribution and buyers for the end product as a challenge for many startups in the sector, particularly smaller players. “Fortunately, we have a distributor that is well networked throughout the U.S. and through our contract with them they take our product to the top restaurants and grocery stores,” he says.

Despite current challenges, commentators are positive about the future of innovation in food. Diaz believes that startups will be key to helping large global businesses tackle their Scope 3 emissions.

“This is one of the big trends that I think startups ought to take real heed of. If you’re a large food company, 95% of your supply chain emissions are in farms and the gathering of commodity crops like palm, coffee and cocoa, and they increasingly need different ways of being produced, or substitutes. There is going to be a really promising pathway for startups that can make a durable change in strategic supply chains.”

Rabschnuk sees a role for continued innovation in food, which could drive mass adoption of more sustainable foods by making them cheaper, more tasty and more convenient. She gives the example of precision fermentation, a refined form of brewing, under which microbes are multiplied to create animal proteins or specific enzymes.

“There are absolutely technologies that aren't available today, that will be in five or 10 years,” she says. “It's just a matter of getting the scale and the regulatory approval to move forward.”

Thomson sees a future shift in data provision, so that consumers will have much more insight of the origins of the food and can choose accordingly. At the moment, the number of people wanting to know more about the origins of their food is quite small, but that reflects the challenge of accessing data, he says.

“The days of putting a picture of a farmer on a packet of carrots to communicate a brand working with farmers will be gone. There will be genuine technology, such as QR codes to enable the consumer to track and trace their products back to specific farms.”

“I think we'll see some big changes in the next in the next five years, both in terms of how supply chains function, but also in terms of what's happening on the ground in farms,” he says. “It’s really exciting.”