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India needs to embrace hydroponics urgently

The word hydroponics comes from hydro meaning water, and ponos meaning labour. It is meant to represent the growing of plants in any medium — sand, gravel, or liquid, with added nutrients, but without soil.

RN Bhaskar – Jun 25, 2018

hydroponicsMost people in India have grown up on the idea that good water, good soil and lots of sunlight translate into good farming.  That may have been true for most farmers, for a great deal of time.  But new research and practice have shown that what healthy plants really require are good seeds, good water and nutrients.  Plants do not really require soil.  And plants need not sunlight, but spectrum.  The entire process of photosynthesis is possible when the plant separates the sunlight to soak in the spectrum that it requires.  Broadly, different types of plants use blue, red or yellow spectrum.  Some use white spectrum as well.

What is hydroponics?

The word hydroponics comes from hydro meaning water, and ponos meaning labour.  It is meant to represent the growing of plants in any medium —  sand, gravel, or liquid, with added nutrients, but without soil.  It is also referred to as vertical farming, because this type of farming allows for crops to be grown in layers – in shelves or trays, one layer over another.  These layers could be as many as you want – from 2 or 3 or even 20 – one on the top of another.  A very good idea of the potential hydroponics can have can be viewed from  ‘The rise of vertical farming – a VPRO documentary – 2017’, a 54 minute video of how it is practiced around the world (https://www.youtube.com/watch?v=VBhTyNbJE6A).

2018-06-23_Hydroponics-mkt-size-aggregateWhat hydroponics does best is eliminating the need for soil, sunlight and rain.  Since almost 90% of pests come from the soil, there is automatically a dramatic reduction in pests.  Hence fewer pesticides, herbicides and insecticides are used.  Aerial pests that may sneak in are often caught by the insect traps that are there in any hydroponics farm. The plant uses the water that runs below each  tray, and this water is then re-circulated, preventing both evaporation and wastage.

Nutrients that the plants need are carried through the water and caress only the roots of the plants — each range of trays carries the nutrients specific to each type of plant, depending on its age and the  and the special qualities it is meant to have when it is ready to be sold to customers.

The identification of nutrients that plants need has itself become a big booming industry.

Market size

Is hydroponics just a fringe movement, primarily found on the shelves of laboratories, or has it become commercially viable?  The truth is that this industry is growing by leaps and bounds.  The hydroponics industry has become huge during the past decade.

How big? Well, that is where the problem lies.  There are varying estimates.

For instance, a news report put out by Reuters in August 2017 (https://www.reuters.com/brandfeatures/venture-capital/article?id=15345), which quotes Stratistics MRC, expects the global hydroponics market to grow from $226.45 million in 2016 to reach $724.87 million by 2023. And it is reported to be growing at a furious pace of 18.1% CAGR (compounded average rate of growth).

2018-06-23_Hydroponics-tomatoes-percent-shareBut another estimate put out by Mordor Intelligence and which is often quoted by many industry experts, paints a picture that is positively glowing. This report puts the global hydroponics market at US$ 21,203.5 million in 2016. The market is expected to register a CAGR of 6.5%  during 2018 to 2023 (https://www.mordorintelligence.com/industry-reports/hydroponics-market).  The percentage looks modest, but on a base of $21,203 million, it means that the industry grows by at least US$1.4 billion each year.  That is heady growth indeed!

If one takes into account the types of plants grown using hydroponics, you will find products like tomato, cucurbits, lettuce, almost all varieties of leafy vegetables, peppers, and other food crops.

Tomato forms the largest market segment and it is likely to account for 30.4% share of the global market, by the end of this year.

As consumers become increasingly aware of the superior quality in greenhouse-grown vegetables, the demand for hydroponics has been growing in Europe and Asia-Pacific. Hydroponics crop production is expected to continue growing when it comes to tomatoes, lettuce and other leafy vegetables. Experiments with creeper plants has also been quite promising, and it won’t be long before we have large scale cultivation of fruit like grapes and plums using hydroponics.

The scale of operations for hydroponics-focused companies is actually astonishing. For instance, just one company in Holland produces and exports almost 100 million kilos of tomatoes (100,000 tonnes),

But if all types of crop are considered, it is the US which is the hydroponics centre of the world (refer to timeline 20:45 in the video mentioned above).  There, one company, Aero Farms, has begun picking up dilapidated and abandoned warehouses and reshaping them into hydroponic farms. As one of its managers puts in, “Today, we can produce more than 130 times what a person can conventionally produce in one acre.”  This is done by multiplying the layers of farm shelves in our hydroponic farms, and also increasing output.”  Thus, effectively, with a 130 x output, economies and technologies are brought into play making this one of the most incredible industries in the agriculture sector.

And when people tell hydroponics scientists that their way of farming is unnatural, they chuckle.  They point out that organized farming is barely a thousand years old.  Compared to the millions of years the earth and its natural evolution has been around, it is farming that is unnatural.  Hydroponics is only one way to doing what nature does, but in a better and more scientific manner.

As Aero Farms managers point out, once a crop is harvested, it begins to lose its nutritional value and its flavour very rapidly.  Hydroponics allows a farmer to grow the crop next to consuming centres.  Thus a hydroponics farm on the terrace of a building located in a business district can supply fresh crop to workers as well as to restaurants in this very district.  There is less of transportation, hence hardly any transportation or refrigeration costs.  Moreover, the crop is both safe and fresh, hygienic and nutritional.

Some of the key players in the world’s hydroponics market include AMCO Produce Inc., American Hydroponics, Inc., Argus Control Systems Ltd., BetterGrow Hydro, Eurofresh Farms, General Hydroponics, Inc., Greentech Agro, Llc, Heliospectra AB, Hydrodynamics International, Inc., Hydrofarm, Inc., HydroWholesale Inc, Koninklijke Philips NV, Logiqs B.V., Lumigrow, Inc., and Village Farms International.

Expect this list to grow longer as Asian companies have now begun to look at hydroponics as the next big market.  Already, since South Korea is the hub for LED lights, almost half the leafy vegetables in that country are said to be through the hydroponics route. China has begun to embrace it, because it uses barely 10% of the water plants conventionally use. As the plant grows on shelves, and as the water gets recycled, there is little evaporation, little of water going into the earth, and hence you actually get more crop per drop than even drip irrigation. Even energy costs have tumbled as most hydroponics plants use solar power instead of the more expensive power through the power grids.

Media to nutrients

It is the nutrients market that got one Indian company – HiMedia – to begin looking at the hydroponics market very seriously.  HiMedia is a group headquartered in Mumbai but with its main laboratories in Nasik and it is one of the largest players globally in the biological media industry.  It produces media required by industries related to pathology, pharmaceuticals and food.  HiMedia’s brochure proudly defines itself as one of the top 5 media companies in the world.

What started as a home enterprise by the Warke family, in 1973 gradually grew into a firm dealing with microbiology, animal cell culture and gradually to plant cell culture. The last phase was accidentally triggered by an incident when a consignment of HiMedia was rejected by Australia because that country was not comfortable with India’s quality standards especially when related to animal based culture media.  The Mad Cow disease was a dreaded word, and hence culture media  from animal origins were deemed suspicious especially if they originated in countries like India.

So the Warke family began experimenting with plants to source cell cultures from there.  The HiMedia management believes that when it comes to plant based culture, their group could be the world’s largest player.

A chance meeting with the legendary Jim Rogers in China in 2006 brought them global attention and an association with VWR Inc, one of the biggest players in this line of business. That brought HiMedia more credibility and today it exports its products to almost all major markets in the world, including EU, USA, Japan and Korea. Today, even though 35% of its product is still sold under the brand names of some of the biggest players in the world, the remaining 65% sells under the HiMedia brand.

Working on plant cultures brought the company close to identifying the molecules that plants need to grow healthily. Today, HiMedia has protocols for over 50 different plants relating to nutrition and growth.  That in turn has got the Warke family into hydroponics. Today the management is looking at this business segment a lot more seriously than most people do in India.  The Warke family has decided to call this division Higronics.

The case for India

But why should India look at hydroponics?

2018-06-23_Hydroponics-capex-opex-income-1000-sq-mtrThere could be several reasons why India may have no option but to embrace this method of farming.

The first is that it is economically viable (see chart).  The figures are indicative, from just one vendor.  But as more vendors start entering this field, prices could drop. What is needed is a sound  government policy on the one hand, and active handholding of the farmer on the other.

Second, this is the closest one can get to fresh food, uncontaminated by pesticides and insecticides.

Third, at a  time when agriculture itself is being buffeted by climate change including unseasonal rain and hail storms, hydroponics is a way of managing to grow plants under controlled conditions.  Thus, you could recreate the atmosphere of say Gangtok in the middle of Maharashtra and actually focus on growing medicinal plants that normally found in the North East parts of India.

You could control all the variables, including the strength of active ingredients which have tended to degenerate and deteriorate over a period of time.

Fourth, it could be the best solution for the Indian government when it comes to land acquisition.  The government could offer farmers land for land, and work out ways whereby the hydroponics company would handhold the farmer to teach him how to master the technologies involved. That was the strategy Narendra Modi used when he was chief minister of Gujarat (http://www.asiaconverge.com/2010/05/narendra-modis-farm-miracle/).  He allowed micro-irrigation companies to get the subsidy amounts only after another specified government agency certified that they had handheld customer farmers. That way, farmers would be able to stick to farming even if the landholding was very small (you can grow as much as 130 times the conventional amount on any plot of land).

Fifth, with controlled supply of nutrients and with hardly any pesticides being used, the cost for crop management begins to diminish.

Sixth, since consuming markets are close to producing centres, the transport miles shrink, leading to a further reduction in costs.  As farmers learn to strike deals directly with consumers, and as they learn to space out crop production so that a limited supply is available every day, they can move away from rapacious middlemen as well.

And lastly, this is one way to reduce farmer distress.  These new technologies have the power to reduce the germination life of plants from around 30 days (the conventional time span for plants) to just around 11 days. Thus the farmer can rotate his crop more often.  That allows him to keep pace with changing tastes. A higher crop intensity also helps him to better his earnings.  It is also one way to bring farming closer to food processing centres and embrace the cold chain system that agriculture so sorely needs.

There is also one more factor that would endear urban investors to this opportunity. The sale proceeds from the agricultural produce got through hydroponics invites zero taxes.  That could add another dimension to urban incomes altogether.

Hopefully, weather vagaries and farmer distress with soon compel the government to sit up and embrace and promote this method of farming.

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