Is agtech the solution to the global wheat crisis?

Three months of war in Ukraine have already significantly disrupted the global food supply chain. Known as the “breadbasket of Europe”, the country is one of the largest grain producers in the world , whose production capacity in the continent is only rivaled by Russia. Since the crisis began in February, Ukrainian farms and ports have been disrupted and economic sanctions have been imposed on Russia. Given that both countries supply a quarter of the world’s total wheat exports , it is no surprise that the war has strained the world’s access to not only food, but also natural gas, metals, and other commodities essential to its production and distribution. That the crisis comes at the heels of the coronavirus pandemic makes the issue even more challenging. 

The time it will take for Ukraine to resume full operations of its wheat production and distribution are unclear, but the forecasted global effects are grim: exports are expected to drop by around 3.5 million tons  compared to pre-conflict estimates. Food prices  have risen by 25%, with developing countries struggling the most to meet consumer demand. These changes are exacerbated by persistent problems in the broader food supply chain: land degradation, brought about by monoculture farming and climate change, is adding further stress to annual wheat yields. In response, countries are renegotiating deals with exporting countries like Australia, India, and Canada to secure supplies for their population. 

 How is the world responding to the global wheat crisis?

Solving this crisis requires concentrated effort and ingenuity from the global community. Throughout history, technological advancements in food production, distribution, and waste management have allowed the world to feed its population and grow exponentially. Of course, challenges still remain to make food access equitable, but the pattern suggests that countries could become more food secure through the use of technology. The article explores if Agtech could be a potential solution to the global wheat crisis.

In Ukraine, agriculture is mostly traditional, and agrifood technology companies have a limited presence. According to our FoodTech Data Navigator  database, we count only 6 AgriFoodtech startups in Ukraine (4 of which are in Agtech), which have raised a total of €340K+ in funding. It is therefore likely that technological progress in agriculture production in Ukraine will be limited in the short term as the country focuses on rebuilding. President Zelensky recently announced a series of measures  including revised tax law and a new credit program that makes financial access easier for farmers to purchase equipment and inputs, but we anticipate much of the spending to be primarily directed towards traditional agriculture. 

The good news is that research and application of wheat production technologies around the world are already underway. If we look at the global Agtech sector, there are over 1,972 active companies, which have cumulatively raised over €25B in funding since 2012. Almost half of all these companies have been established in the past 5 years with increasing investments over the same period, indicating a strongly growing interest in the space.

Source: The FoodTech Data Navigator

Within specific sub-verticals under Agtech, Agbiotech takes the lion’s share of funding raised in 2021 (30%), followed by Vertical and Indoor farming (26%), and Farm management and precision farming (20%). These sub-verticals (which constitute three-fourths of all Agtech) are also the most common technologies used in wheat production (see figure 2 for a complete view of how Agtech funding is split based on clusters of activity). We turn to case studies from around the world, including major exporters and major importers, to understand the future trends in Agtech in light of the crisis.

Source: The FoodTech Data Navigator

Agtech applications towards wheat production around the world

China, one of the world’s biggest wheat producers, is deploying precision agriculture technologies to reduce resource inefficiency and maintain soil fertility and quality for wheat cultivation. Researchers  have found that conservation-based technologies such as rational management of crop residues to eliminate burning in the field are among the recommended strategies to increase wheat production. For example, JD Farms , one of the largest retailers in China, is using app-assisted drone technology called Jingdong Nongfu to monitor water, soil, pesticides, fertilizer, weather, diseases and pests. These data-driven insights inform the farmers about the right time to begin crop protection, seeding, and fertilization and increase the traceability of agricultural products. Startup companies in China such as FJ Dynamics  are also developing robotics that provides automated steering for tractors and field sensors that can be applied to wheat production. Israel-based startup CropX  is also developing a cloud-based decision support platform that employs predictive models for crop yields, specifically tailored for grains such as wheat, rice, and barley.

Source: CropX

India, another major wheat exporter, is experimenting with similar technologies to boost wheat production. According to the Indian Agriculture Research Institute , the adoption of resource conservation technologies combined with traditional agriculture remains the most viable solution to maintaining high wheat yields. This is done by managing environmental data in a specific geospatial format to optimize output and minimize the risk of crop failure. Companies like CropIn Technologies  combine these technologies with AI-enabled food traceability technology to provide farmers with comprehensive reporting tools to allow them to adjust their production methods and maximize yields. Initiatives like Tata Kisan Kendra  are also in place to expand and enable access to these technologies to small- to commercial-scale farms. 

The challenge to innovate is perhaps the greatest for countries that rely on the Black Sea region to meet their wheat needs. Egypt, one of the largest importers from Ukraine and Russia, is aiming to meet 70% of local wheat demand  using modern irrigation methods and varieties of the wheat crop that are adaptive to its salinity and drought conditions. The Egyptian government has partnered with IBM  to integrate its AI-powered automation software into the shipping, transport, storage, and supply of wheat in its silos nationwide. 

Recent developments in tech-enabled wheat production

Other AgriFoodTech innovations are also being considered for boosting wheat production. Improving fertilizer production has been in development for a long time, with a focus on synthetic fertilizers such as urea ammonium nitrate. The production process relies on natural gas from Russia which the global market cannot currently rely on. Now, there is renewed interest in alternative types of fertilizers, such as biofertilizers, a group of natural substances and microbial inoculants that contribute to soil fertility. Companies like Pivot Bio  are developing innovative ways to capture nitrogen in the air and redirect it towards crops, with significantly less greenhouse gas emissions from synthetic fertilizer. In partnership with Bayer, Pivot Bio developed its first biofertilizer for corn and recently launched a second variety for sorghum and wheat. Pivot Bio has already raised €515M in funding and is the most funded company active in biofertilizer production.

Source: Pivot Bio

Moreover, preliminary data point toward controlled environment farming to be an attractive solution, for cultivating wheat in a resource-efficient, climate-controlled environment. A recent study  from Princeton University found that a 1-hectare, 10-layer indoor vertical farming could produce 1,940 t/ha/yr, which is approximately 600 times larger than the average yield in the field. However, the study also found that given calculated capital and energy costs to operate this type of farm, wheat produced from indoor farms are currently too costly to be competitive in the market. This is especially challenging given how the current situation has negatively affected the world’s access to energy and semiconductors that are needed to deploy this technology.  

More recently, there have also been advancements in the field of plant genetics. In 2020, Argentina approved  the cultivation and consumption of genetically engineered flour wheat, the world’s first country to implement drought-resistant technology into the crop. The company Bioceres  developed wheat called HB4, which has drought-resistant genes from sunflowers, that allow it to grow despite having less water than the average crop. HB4 wheat is reported to increase yields up to 20% compared to similar non-genetically engineered varieties, while also reducing the water required for cultivation. This year, HB4 wheat was also approved for commercialization , and other countries have already taken action: Brazil has approved imports of HB4 wheat, and Bioceres aims to distribute seeds to major markets such as China, the US, Australia, and South Africa. US-based startup Inari  is also developing insect- and weed-resistant seeds, aiming to boost yield up to 20% in corn, soy, and wheat. It has already raised €329M in funding and established a partnership with Australian cereal breeding company Intergrain  to research improving wheat yield potential further.

Is Agtech the solution for the global wheat crisis?

While there are many promising applications of Agtech for wheat production, it is not an immediate solution to the global wheat crisis. According to the International Food Policy Research Institute , potential solutions include exempting food and fertilizer from economic sanctions (which constitute only ~5% of Russian GDP), avoiding hoarding and panic buying, and targeting food subsidies toward the neediest. The technology and financial viability (particularly with vertical farming) for wheat production are still being improved, and so fully adopting tech-enabled solutions has a long way to go. In the short-term, traditional agriculture with selected tech-enabled components will be used such as in the case of China, India, and Egypt; the mix of tradition and technology requires experimentation over time before countries transition to the latter in the long term. Maintaining existing global storage and distribution facilities is also important while the wheat supply chain recalibrates to the new geopolitical situation. 

It is important to maintain an open flow of goods and ideas as the world develops these solutions together while being sensitive to the social and environmental implications it has for the future. A future with Agtech-enabled solutions is desirable and possible because it allows countries to innovate towards global competitiveness while protecting themselves against external supply shocks from wars and droughts like those that we are facing today. More importantly, however, the current food crisis may even push us to reconsider our reliance on wheat to meet our food needs and redirect us to the diversity of food options that were once widely available.