"Our main strategy for the next few years is to build GroGrace in other parts of the world. Expanding our current farm allows us to reach economies of scale to prove our value. With the proof of concept and proof of value, we will be able to attract impact investors. At this point, we're raising a few million, and we're very close to closing the deal! The series will be dedicated to current farm expansion and also for some promising projects in the region," says Grace Lim, Founder, and CEO of GraceGro, a vertical farm based in Singapore.
A total of 720m2 is dedicated to growing its current main crop, the Lalique lettuce, on request of their customer, a major distributor of vegetables in Singapore, who will, in turn, supply the produce to a high-end fast food joint.
In terms of geography, all business is centered around Asia, especially countries such as Malaysia, Hong Kong, and Indonesia. The main focal area is spreading awareness of the importance of embracing new and innovative ways to produce food because, due to climate change, water scarcity, and rapid urbanization, we simply cannot continue to grow food the in same way.
"We need new and innovative solutions to produce food that can also help to reduce food miles and food wastage, thereby increasing the food security and food sustainability angle." That is why Grace is a great believer in the future of farming being indoors. Participating in the ASEAN Economic Community conversations with ASEAN Ministers enables GroGrace to create awareness amongst these countries. Despite having vast agricultural land, depending on the weather for food cannot reliably build the city's resilience.
"I'm trying to educate people as much as possible and get a public-private partnership going with the government to explore building an indoor farm to contribute to food security."
Earlier this year, the farm was opened
Hard to compete in the local market
As Grace elaborates on the importing issue that Singapore is facing, she notes that it's rather hard to be a local farming business as they are competing directly with foreign imports. According to her, there are very few opportunities for us to sell locally, so in a way, we are competing with local (indoor) farms as well, even though we are all working towards contributing to the 30 by 30 vision.
"Unfortunately, at this point, the market can only absorb a small part of local produce. Therefore, we can only really change the game if the government would cut some percentage of imports, and in return, it should come from local farms. Then, we're talking. If not right now, local farms are competing amongst us."
A robust business case is of essence
Grace feels that the CapEx of building a farm is definitely an important asset of total economics. Though at the end of the day, it's about keeping the OPEX low and being able to fetch a good price for the produce to sustain the farm and build a robust business case, she points out.
"The Proof of Concept may be perfect, but if the market cannot absorb my produce that is grown at a certain cost and sold at a certain price, then the business is not sustainable. We have to look at the viability of the entire business from OpEx, market demand, consumer perspectives, etc. Our government is contributing a lot on CapEx to help agricultural entrepreneurs, but it is up to us to explore energy solutions, keep labor costs low and establish goodwill with distributors to be profitable," Grace affirms.
The opportunities across borders
Indoor farming in Singapore is definitely a tough business, Grace shares. However, when exporting the business case to other parts of Asia, the scenario can be quite positively different. These countries have cheaper land and rental and lower energy and labor costs.
Grace goes on to say: "I could break even in two years as the costs of production would be slashed by two-thirds. Being able to grow more cost-efficiently also meant the produce can be sold at lower prices to reach the masses. I want everyday people to have access to fresh, clean, and nutritious produce. That's my goal, and that is the impact I want to make."
Once Grace is able to prove the value of her proof of concept as a home-grown company, she wants to be able to directly impact food security in Singapore. Two years from now, she wants to raise money to build a large indoor farm that can cultivate a few thousand tons of vegetables per year and eventually supply them to a large part of the market.
For more information:
Grace Lim, Co-founder, and CEO
Urban Farming Partners Singapore Pte Ltd
Address of GroGrace: 42D Penjuru Road, #05-02B