Singapore's Temasek Bets on 'Skyscraper Farms' As Growth Market

Joint Venture With Bayer To Develop Seeds

To Boost Food Security In City-State

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TAKASHI NAKANO, Nikkei staff writer

September 10, 2020

SINGAPORE -- Singapore's state-backed investment group Temasek Holdings has extended its business portfolio into urban farming, a concept that will aid the city-state in its quest to become more agriculturally self-sufficient.

Temasek and German pharmaceutical major Bayer established Unfold, a 50-50 joint venture, last month. The company will develop and market seeds for vertical farming both in Singapore and at its California headquarters.

Singapore produces less than 10% of the food it consumes. The government plans to raise the ratio to 30% by 2030.

Vertical farming, officials believe, is crucial to attaining that goal. The technique grows agroponic layers of crops under artificial light inside skyscrapers. Because the plants are not dependent on weather, the method is expected to generate large yields in a relatively quickly.

"Temasek is recognized as one of the leading investors in the food and agriculture segment," said Jurgen Eckhardt, head of Leaps by Bayer -- an investment arm of Bayer. "They have investments in, and relationships with, a range of vertical farming companies."

Bayer will provide plant genetic data to Unfold, which will first develop new varieties of lettuce, spinach and tomatoes, among other crops. The company will sell seeds to food producers.

Temasek will introduce companies to the technology and expertise at Unfold and other investment targets. Temasek holds a stake in Sustenir Agriculture, a Singaporean urban farming company, providing a channel for Sustenir to cultivate Unfold's high-yield seeds.

Vertical farming is projected to grow into a $12.77 billion market in 2026, according to Allied Market Research, up from $2.23 billion in 2018.

Temasek invested 3 billion euros ($3.7 billion) into Bayer in 2018 -- funding which helped Bayer complete the acquisition of U.S. seed producer Monsanto.

The company anticipates further investments in the agricultural sector.

"Whether it's in the area of an alternative protein, aquaculture, or crop science, it's an area that requires actually more capital," said Temasek International CEO Dilhan Pillay Sandrasegara. "So far it's done well for us and we're still keen to invest more in it."

Temasek has expanded its portfolio of life sciences and agribusiness investments. Allocation in the domains stood at 8% at the end of March, or five points higher than five years earlier. The size of the holdings is about $17 billion.

The coronavirus pandemic has heightened concerns over food security. Thailand and other trading partners temporarily imposed restrictions on exports. The Singaporean government doled out 30 million Singapore dollars ($22 million) in subsidies this April to help companies produce more eggs, leafy vegetables and fish.

"In Singapore, with less than 0.8% arable land, vertical farming innovation is critical," said Unfold CEO John Purcell.

This year, Temasek has invested in startups that develop meat and fish substitutes, as well as plant-based milk. GIC, another Singaporean state investor, in May picked up shares in Apeel Sciences, a U.S. company that developed an artificial peel for fruits and vegetables to extend shelf life.

The less-than-stellar portfolio performance has also factored in Temasek's investments into agribusiness. For the year ended March, the company reported a return of minus 2.3%, the first negative result in four years. Declining stock values of domestic companies such as the banking group DBS Group Holdings and the conglomerate Sembcorp Industries were behind the setback.

When Singapore Airlines sought to raise up to S$15 billion in rescue funds this March, Temasek was the first to indicate it would sign on in light of its status as a major investor in the carrier. Saddled with its role as a financial provider of last resort, the state investment group's ability to reap returns from investments in agriculture and other growth sectors will sway its performance.

Temasek has also stepped up investment in advanced medical fields such as biopharmaceuticals in the past year, with stakes in 10 companies revealed in 2020 so far.

Vertex Venture Holdings, a Temasek unit that oversees a fund specializing in the medical field, has invested in more than 20 healthcare-related startups, including American drug developer Elevation Oncology in July.

"COVID-19 has shone a light on the importance of continued R&D investment," said Lori Hu, managing director of Vertex Ventures HC. "It has revealed critical unmet needs in the health care industry. We continue to actively look at new deals."

Leveraging its broad network, Vertex took a stake in Israeli telemedicine platform operator Datos Health in April and invested in India's IVF Access Hospitals, which specializes in infertility treatments, two months later.

Through its investments in the medical field, Temasek is also involved in the global race to develop coronavirus treatments. It was part of a group of investors to pour $250 million into Germany's BioNTech, which is jointly developing a COVID-19 vaccine candidate with Pfizer. South Korean drugmaker Celltrion, in which Temasek holds a roughly 10% stake, has brought a diagnostic kit to market in the U.S. last month.

Investments in biopharmaceutical developers carry high risks, but the payoff can be large when a treatment successfully reaches the market. Holdings in unlisted companies accounted for 48% of Temasek's portfolio as of March-end, up six points from a year earlier.

Lead photo: Courtesy of Unfold - Vertical farms use hydroponics to grow crops inside buildings.

Vertical Farms Could Grow All The Wheat We Need - But At A Cost

Dharna Noor

July 27, 2020

For years, vertical farming has captured headlines, including on this very website. A new study published in the Proceedings of the National Academy of Sciences on Monday shows the practice could revolutionize the world’s ability to grow wheat.

The global population eats a lot of wheat. It’s the most widely grown crop in the world, and it accounts for approximately 20% of the calories and proteins in the average human diet. As the global population grows, we’ll need more of it to sustain humanity. With arable land a premium, the new study looks at if vertical farming—a method of growing crops in vertically stacked layers—could help.

To find out, the authors created two growth simulation models of a 10-layer vertical farm set up with optimal artificial light, temperatures, and carbon dioxide levels. They found that the simulation could yield up to a whopping 1,940 metric tons of wheat per hectare of ground per year. For context, the current average wheat yield is just 3.2 metric tons per hectare of land.

It makes sense that the authors would be looking into this now. Globally, one in nine people already face hunger, and the problem could become more acute as the population increases. The world could have to produce more than 60% more wheat to account for population growth. That won’t be easy; rising temperatures and other changes in growing seasons driven by the climate crisis are lowering crop yields around the world.

The new study offers an insight into how to address some of these problems. But right now, scientists are only offering simulations. Actually bringing these massive wheat crop yields to fruition would come with massive challenges.

For one, vertical farming is wildly expensive. It requires massive amounts of energy to work, especially because unlike traditional farming, it requires artificial lighting systems. The authors say their simulated systems would provide a light intensity for the crops 30 to 50% greater than directly overhead sunlight. Watering systems and technology to ensure optimal temperature and air quality conditions in these indoor environments would also be costly—not to mention energy-intensive. Depending on how the systems are powered, that could be a problem for the climate. Previous research shows that powering these systems could require vastly more energy than our current high-emissions food system.

“No one has ever attempted to grow food crops under artificial lighting that’s as strong as sunlight, much less stronger, for the simple reason that it would require too much energy,” Stan Cox, a scientist and plant breeder at the Land Institute in Salina, Kansas, said in an email.

The new study’s authors note that recent innovations in solar energy are lowering the costs of electricity and lighting is becoming more efficient, but note crops grown this way are still not likely to be economically competitive with current market prices of agriculture. Cox found that to be an understatement.

“A decade ago, given the amount of light wheat plants require to produce one pound of grain, I calculated that growing the entire U.S. wheat crop indoors would consume eight times the country’s entire annual electricity output,” he said. “That was before recent advances in lighting efficiency. So, hey, maybe it would now use up only four to five times our total electricity supply! For one crop!”

Innovations in automation, the authors note, could further lower the costs of vertical farming. That may be true, but in our current economic system, that could be a problem for farmworkers, who are already seeing their pay get cut. For these reasons and more, vertical farming has been a controversial topic in agricultural and environmental circles.

The new study’s authors note that there are also many unanswered questions about growing wheat in indoor facilities. It’s not clear, for instance, what the nutritional value and quality of indoor-farmed wheat would be, or what diseases could arise in such facilities.

Though their projected crop yields are exciting, even if vertical farming does work, it can’t be the only solution to our agricultural issues. Other systemic changes, including reducing food waste, moving away from meat-centric agricultural systems, diversifying crops, and improving soil health, should also play a role.

“Under specific circumstances, and if the energy cost and profitability issues can be resolved, indoor vertical wheat farming might be attractive,” the authors conclude. “Nonetheless, the outcomes described here may contribute only a relatively small fraction (yet to be determined) of the global grain production needed to achieve global food security in the near future.”

Dharna Noor

Staff writer, Earther

Lead photo: Wheat being harvested in an open field. It could be a thing of the past someday. By, Christopher Furlong (Getty Images)