Technological solutions: How China fights food insecurity

Valeria Vlasova
26.01.2022
3 min read

The Covid-19 pandemic has affected every aspect of our life, and Agri-FoodTech is not an exception. While the global food system faces new challenges, for China it’s always crucial to feed all the population, thus there is no surprise that 2021 was a year when Agri-FoodTech took the stage of the Chinese central government’s 14th Five-Year Plan (2021-2025). This review is an attempt to shed some light on what has happened to the Chinese Agri-FoodTech industry in 2020-2021.

Trends in Agri-FoodTech investments

For 2 years in a row, eGrocery remains the backbone of China agrifood investment. While eGrocery makes up just 10% of food sales in China today, in 2020 the sector raised $3.6 billion showing a 147% surge in gross merchandise volume (1).

Following the inevitable growth of eGrocery sector caused by the pandemic, a trend of new ready-to-eat products that bring the restaurant experience to the comfort of their homes. The pandemic also accelerated spending on health, particularly conscientious indulgence like guilt-free snacking, low-sugar desserts and alternative protein sources.

That also leads to supply chain upgrades nationwide as large platforms and regional players link up. China’s foodservice industry is expected to reach $950 billion by 2024, and this growing market is drawing strategic investors looking to expand both vertically and horizontally (1).

Last but not least, 2020 saw a shift of investor interest toward technology that boosts agricultural efficiency and agrifood self-sufficiency. Supported by a new policy, more investors are becoming comfortable with agrifood opportunities that align with government food security initiatives, especially as industrial scale farms grow in China.

Leaders of Agri-FoodTech investments

With the growing popularity of new ready-to-eat products, the company Zihaiguo received great success. It’s a self heating hotpot brand that, in just under 10 months, raised three equity rounds and is now valued at $500 million (1).

Farm Robotics, Mechanization & Equipment is a fast-growing sector of investments which was very successful in the previous year. The largest agriculture-first drone company in China XAG is serving close to 9 million farmers with precision input devices and software. The company raised a Series C extension of $174 million — the biggest deal ever in digital farming in China (1).

Previously mentioned Chinese AgTech policy promotes use of science in the agricultural sector for tightening environmental protections and to flatten agrochemical use. Leader of BioTech deals is a life sciences company CapitalBioTechnology, which develops food safety and molecular breeding solutions, raised $116 million (1).

Alternative proteins gathered significant pace in China in 2020, together with the rest of the world. Although the majority of Chinese Innovative Food companies are in the early-stage, top fundraiser Green Monday received $70 million funding (1). Green Monday is a platform encompassing not just plant based food product sales, but also vegetarianism ventures, food services, and groceries.

The bottom line

The flow of investments in the Chinese Agri-FoodTech sector became possible due to the long-awaited policy that put a high priority for tech in agriculture. The market is receiving an increasing number of startups, and the industry is gradually opening up to technology adoption. Country’s high production capacity in agriculture with application of new technologies is a win-win situation for companies and investors and for Chinese government food security initiatives.