Digitalization in agriculture is beginning to ensure that resources are used efficiently and effectively, with minimal environmental impact. Under the umbrella term of ‘smart farming,’ several AgriTech trends are emerging, such as managing farms using IoT, drones, robotics, and AI. The application of these technologies is set to increase the quantity and quality of products, as well as optimizing the use of resources.
Another option is bringing farms to the cities. This is the case of iFarm, a company uniting specialists in IT, agriculture, and science to create solutions for the advancement of urban farming. In an interview with the M&A Community, Alexander Lyskovsky, Founder and President at iFarm spoke at length about this exciting new field.
Let's start with the most relevant question of the current time: how did the pandemic and quarantine restrictions affect your business?
Localizing food production has been one of the biggest trends in agriculture over the past few years. It is happening due to high urbanization rates, population growth, and in 2020, the impact of the Covid-19 pandemic and the following quarantine, which exacerbated the problems of long supply chains and food security. Under such conditions, it has become necessary to grow vegetables, berries, and greens in the immediate vicinity of the consumer. Translucent greenhouses are not always suitable for this: there can be little light, expensive land, it’s too hot or too cold, and the sheer cost of building them in any quantity. iFarm's vertical farming technologies help to provide the local population with fresh food, regardless of seasonality, import difficulties as well as other factors.
Many of your clients are in Central and Northern Europe. How difficult was it to enter these markets? How did you deal with these challenges?
Indeed, there is a difference in the business organization, economic ‘weather’, mentalities, traditions, and eating habits from region to region. We opened a showroom in Finland which helped our potential clients from the European region clearly understand how vertical farms, using iFarm technology, are arranged (in 2020, due to the coronavirus pandemic, many meetings and tours took place online).
At the same time, we studied the consumer preferences of Northern European people to create growing recipes for the crops popular there. For example, in contrast to the Russian region, where young baby leaves are in demand, Finns like to buy larger greens. Therefore, agronomists have developed a growth recipe for Iceberg lettuces which are almost 300g from one pot (with the classic recipe, this figure is ~80 g). We are currently working on forming a pool of distributors to represent iFarm technologies in each specific region, design vertical farms, and sell equipment as well as, if necessary, further service the farms themselves and their components.
One of the possible options for entering a new market is integrating individual components of a vertical farm (light, power preparation system, etc.) from third-party manufacturers and our iFarm Growtune IT platform. We are participating in the construction of a vertical farm for growing greenery in Switzerland, exactly in this format under a trilateral agreement with Yasai and Logiqs.
How do you see the prospects for digitalization and technologization of agriculture in Russia? Which areas look the most attractive for investment?
The digitalization of traditional farming is focused on technologies that increase yields, save resources, reduce the impact of the human factor on production efficiency, and harmful effects on the environment.
Farmers and agricultural enterprises are faced with the task of solving the problems of low yields, early detection of diseases, and, of course, forecasting crops with high accuracy to plan other work in the production cycle: collection, transportation, storage, and the sale of products.
Computer vision technologies, machine learning, the automation, and robotization of many processes, including planting and harvesting, are effective solutions in this direction.
The interaction of ‘traditional’ agriculture and innovative projects like iFarm: from your standpoint, is it better for AgriTech projects to take the path of startups and develop separately or within large business structures?
A small startup develops faster and solves emerging problems more efficiently, unless, of course, these are problems like lack of money and other resources. But when startups become more stable and more visible in the market, they are most often bought by large corporations. It has been the case with IT startups for many years, and I am sure that it will also be the same in the AgriTech industry.
The iFarm business is based on the SaaS model. Are you planning to independently (or in partnership) develop a digital ecosystem around your solution?
The digital ecosystem around iFarm technology is similar to what Apple does, except for with food crops. We plan to develop the iFarm Growtune SaaS platform as a marketplace for new farmers. In our team, we call it a ‘super-app’. Today, there are over 150 growing recipes, the ability to plan plantings and maximize production utilization, monitor the microclimate, and crop growth, monitor the return of funds invested in farms (for those who invested in their construction), and much more in the GrowTune system, access to which is provided by subscription. The main work in this direction awaits us in 2021, but our clients already have a lot available to them within the platform, and they are actively helping us come up with new services.
The smart farming market is predicted to increase. Are you considering taking over other industry players – or M&A with a larger market player?
We are negotiating integration with other digital services and are actively using third-party equipment. For example, we do not make our own robotic systems for picking strawberries and tomatoes, but we plan to supply our clients with farms that have these components from trusted/known manufacturers. We also work a lot with teams that make new vegetable hybrids specifically for growing under LED lights. In the future, this may lead to some kind of merger. But at the moment it is too early to say.
As for the takeover of iFarm by a large company. Any such proposals will most likely start to arrive later, but for now, the total area under the control of our technology is a little more than a hectare. We are working to increase this figure.
iFarm entered the Impact Index as a company with high potential, capable of positively impacting the environment globally. How do you see your next steps towards sustainability? Could digital agriculture be a solution to the food crisis and a long-term food security strategy?
Modern, sustainable agriculture requires a lot of accurate information. Based on this, various monitoring systems will be necessary which will make it possible to identify problem areas in advance and help to make decisions for their elimination.
Logistics planning and management systems will also be paramount. It will help farmers determine the required planting volume for shipment, taking into account orders and warehouse balances, avoiding overproduction and the disposal of unused products.
Ecosystems focused on the cultivation of edible plants in cities and the immediate vicinity of the consumption location are coming to the fore worldwide. It is all happening due to food security issues. Firstly, such technologies make it possible to grow natural vegetables, berries, and herbs without pesticides and chemical treatment. In addition, the localization of production became especially relevant during the pandemic, when the world faced closed borders. It disrupted global food supply chains, and labor migrants couldn't leave their countries to plant and harvest.
Digitization in agriculture can help use resources efficiently and rationally, allowing farmers to get the most out of the outcome with minimal environmental impact.