Agriculture is the economic mainstay of Southeast Asia, accounting for about 11% of ASEAN’s GDP in 2022 and roughly a third of all jobs in the region. The sector’s importance is especially significant in agriculture-centric countries like Myanmar and Cambodia where it contributes more than 20% of GDP and about 35% of total employment. In Laos, the numbers are even starker, with agriculture jobs comprising 70% of total employment.
Agriculture’s vital role in ensuring ASEAN’s economic stability is coupled with its centrality to the region’s food security. With Southeast Asia expected to add more than 780 million more people to its populations by 2050, the region’s food supply chains will come under significant stress, especially as the impacts of climate change loom.
Exhibit 1: Population growth in Southeast Asia by 2050
Source: United Nations Department of Economic and Social Affairs Population Division
Compared with other regions of the world, Southeast Asia is especially vulnerable to the adverse impacts of climate change, which has precipitated a surge in extreme weather events that have resulted in huge losses for the agriculture sector. According to a 2021 research report by the Asian Development Bank, climate-related disasters led to as much as US$21 billion in crop and livestock production losses between 2008-2018 in Southeast Asia. Surging temperatures are also impacting yields, with regional cereal production for crops such as rice, wheat and other staples projected to decrease by between 7% and 9% by 2050.
Left unaddressed, a lack of food security could limit Southeast Asia’s long-term economic potential, but new solutions are emerging to tackle these challenges.
The transformational impacts of AI
Artificial intelligence (AI), for one, has recently emerged as a powerful tool that could contribute as much as US$1 trillion to the regional economy by 2030, despite the technology’s nascency. Capable of quickly processing large amounts of data and injecting automation into everyday processes, AI could play a transformative role in agriculture and agritech to enhance the region’s climate resilience and food security.
There are already many examples of how AI is being used to revolutionise various aspects of the agriculture sector, such as farming and livestock management. In Indonesia, for example, AI-powered application Dokter Tania helps farmers identify and manage plant diseases, while also offering expert guidance on crop cultivation and fertiliser use. A similar AI app has been developed in Vietnam to help local smallholder farmers identify and treat the problem of pests and diseases devastating dragon fruit crops, which account for 32% of the country’s agriculture exports.
AI is also driving efficiency and productivity in livestock management through data-driven insights. Consider Indonesian startup Pitik, which uses AI to make recommendations to broiler farms to improve feed efficiency, monitor animal health, and streamline overall farm management.
Similar capabilities can also be extended to crop monitoring and disease prediction as well with AI-enabled drones being used to conduct aerial reconnaissance. These drones are able to not only identify insect-infected areas but also spray pesticides in a more efficient way that minimises crop damage and saves 99% of pesticides.
AI is also being used in other parts of the food supply chain, such as quality grading and food waste management. Easyrice, a Thai deep tech startup, uses an AI-based solution to inspect the quality of 25 different types of locally-grown rice. Ten times faster than traditional methods, the tool has reportedly helped cut costs and time spent on rice inspections by 30%, and has a 95% accuracy rating.
Southeast Asia: A hotbed for Agritech innovation driven by AI
The positive impacts of AI on ASEAN’s agriculture sector are manifold, yet challenges remain. Low digital literacy among farmers, small farm holdings, and limited access to finance pose significant hurdles to adoption.
To this end, various ASEAN governments have launched national strategies to encourage AI adoption across sectors, including agriculture. Indonesia’s Stratnas AI plan, for example, prioritises food security as a focus area for developing the technology. In Vietnam, the Ministry of Agriculture and Rural Development aims to standardise the use and share of open agricultural data sets that are needed to enable the use of AI applications in hi-tech agricultural production to ensure transparent and clean food supply systems.
These initiatives are just some of the ways ASEAN is exploring AI’s potential to strengthen local food security in support of future economic development, but they exemplify the region’s long-term commitment to embedding cutting-edge technologies into economic policies.
To harness the full potential of AI in agritech, there needs to be more investment in promising agritech startups as well as funding to support adoption by smallholder farmers, whether through subsidies or innovative financing mechanisms.
Agritech startups are the bedrock upon which new innovations will emerge that can speak directly to the unique needs of ASEAN’s agriculture sector. In 2022, investment in Southeast Asian agrifoodtech startups reached US$1.7 billion across 192 deals, a significant achievement, but more will be needed to spur new solutions for this large and complex sector.
Exhibit 2: Agrifoodtech startup investments in Southeast Asia in 2022
Source: Asia-Pacific AgriFoodTech Investment Report 2023
Simultaneously, smallholder farmers will need financial support to access these costly innovations, especially in countries like Laos and Cambodia where there are large under- and unbanked communities. In these markets, a 6-year study by national universities (supported by the Australian government) are exploring the potential impact of mobile financial services to support farming households’ financial needs.
Venture capital (VC) could be the right solution for innovative agritech startups, especially emerging firms specialising in niche tech sectors. One example is AgFunder, a global venture capital firm that provides essential capital to innovative agrifood tech startups that develop sustainable, efficient and safe food production technologies, among other things.
In recognition of startups’ need for funding, there has also been a growing movement in ASEAN to open the doors to capital markets as potential venues for fundraising in the region. Thailand’s Securities and Exchange Commission (SEC), for example, launched LiVE Exchange (LiVEx), a secondary market through which startups can fundraise through private placements or crowdfunding. Similar efforts are also being explored in Malaysia.
The importance of AI in agritech will only deepen as the climate crisis progresses, which is why it’s crucial to devise new solutions that can help communities adapt to changing weather patterns, maintain crop productivity levels, and enhance overall food security. Providing the right funding will be fundamental to this, but fully realising this potential requires concerted efforts to address digital literacy, build partnerships, and establish supportive policy frameworks. With strategic investments and supportive government policies, ASEAN can position itself as a global leader in agritech innovation, ensuring food security and sustainable growth for the region over the years to come.
Samantha Cheh is an editor and writer with over 7 years of experience. She specialises in research and writing about technology, digitalisation, sustainability, energy transitions and supply chain resistance. With a background in reporting on Southeast Asia’s tech scene, she has published widely in outlets such as South China Morning Post (SCMP), New Naratif, VICE Indonesia, and Salaam Gateway (Reuters). Since 2021, she has worked with StoneBench on thought leadership content with major brands throughout Asia Pacific.
