AgTech startups in Chile: 4 success cases

Agriculture is not always associated with high-tech, but this is rapidly changing. Chilean startups are becoming increasingly relevant in agriculture innovation, mixing genetics, engineering, software development, and IoT. These companies are part of the AgTech landscape.

What is FoodTech and AgTech?

FoodTech has been defined in different ways, one of the most comprehensive definitions is:

“Food Tech as the emerging sector exploring how technology can be leveraged to create efficiency and sustainability in designing, producing, choosing, delivering and enjoying food” by ForwardFooding.

On the other hand, the definition of AgTech industry comes from uniting the agriculture and technology industries. It is an emerging economic sector that can dramatically reshape global agriculture by increasing the productivity of the agricultural sector and, at the same time, reducing social and environmental costs associated with current agricultural production practices. It can, therefore, lead us on the path towards a more sustainable agricultural system.

AgTech is also associated with the concept of Agriculture 4.0, which references the digitalization of agriculture. Connectivity is the cornerstone of industrial and agricultural transformation. IoT is an enabling technology that is increasingly part of agriculture’s equipment.

Challenges facing agriculture and technology

A few decades ago, farmers could cope with a growing food demand by expanding the land they used to farm. However, this is no longer feasible. Around 50% of the world’s land is already being used for agriculture, and most of the rest isn’t appropriate to grow food. Climate change is also impacting agriculture in many ways, from changing precipitation patterns to heatwaves and increased pests’ occurrences.

Furthermore, the consumer’s behavior and their demand is rapidly changing; affluence is related with an increased demand for fruits, vegetables and animal products. While connectivity is associated with a growing market for internet-based strategies.

Here is where innovators can play a crucial role in developing the agriculture of the future. Innovations can be short-term solutions by creating waste-reducing irrigation tech. They can be long-term by developing sustainable technologies to use water smartly.

Even though the opportunities to integrate agriculture and digitalization are multiple, there are several obstacles to adopting new technologies. Among them are the mindset and practices in the agricultural sector, the challenge of standardization, and the ability to invest and modernize agricultural equipment and supporting infrastructures.

Tracing the origin of the food in a certifiable way is every day more critical. Here the implementation of technologies such as blockchain could ensure that the point of origin is known. Furthermore, the same process could be modified to include data on the product’s treatment in each stage along the food chain. This would ensure that the labeling at the point of sale is correct and that there are no frauds on the product’s quality.

AgTech investment

The AgTech sector has enormous investment opportunities. The demand for sustainable food, fibers, fodder, and energy is projected to grow. Through most of the 20th century, a major part of agricultural innovation investment was funded with public money. However, during the 1980s, public expenditure in agricultural R&D stagnated.

During the first two decades of this century, private investment in food and agricultural innovation has steadily grown; indeed, between 2005 and 2015, the number of investment funds specializing in food and agriculture assets grew from around 30 to more than 300, with current holdings over US$52 billion. Between 2015 and 2020, global venture funding for AgTech had added more than US$15 billion. In 2020, the investment in FoodTech companies was projected to reach €15 globally.

AgTech investment in Chile

The agriculture sector is one of the main economic sectors in Chile’s economy. Furthermore, the country’s quality of agricultural exports is widely recognized, from bottled wine to fresh and dried fruits. By the early 2010s, the country’s potential for agricultural investment was being highlighted due to its farming capabilities and for being a geographic center.

In the last decade, the Chilean government started to seriously consider public and private investment in the development of agricultural innovation in the country. In collaboration with the World Bank, the government implemented a plan to fund technological agricultural innovations to project the sector into the future.

By 2017 the government had begun to work with farmers, private investors, researchers, and technology firms to develop functional ingredients and specialty additives of natural origin in Chile. This project had a public investment of US$3,600 million.

Partnerships between innovation companies, the state, and venture capitals have found fertile ground in Chile. Among the main factors to invest in the country are:

– the good reputation of its agricultural products

– the country’s institutional and macroeconomic stability that guarantees security for investors

– the support of the Chilean government that continues to invest in AgTech industry via CORFO and other institutions

– the country’s free trade agreements with more than 80% of the world’s GDP

off-season fruit production for the Northern Hemisphere

Four successful Chilean AgTech and FoodTech startups

Many AgTech startups have appeared in Chile during the last years, thanks to the innovative partnerships between public and private capital. Below you can find more information about 4 Chilean startups that have revolutionized the foodtech industry.

NotCo

NotCo is a food technology company that produces plant-based meat and dairy substitutes. It uses artificial intelligence to make plant-based food that tastes, looks, and smells the same as animal-based. The company was founded in 2015, and it has raised more than US$115 million. NotCo has a range of products that include NotMilk, NotBurguer, NotIceCream, and NotMayo. It has partnered with Burger King and Papa Johns in Chile. The company is expected to shortly scale its operations in the U.S. The most important rounds of investment for the company have been September 2020 with US$85 million lead by Future Positive, L Catterton and March 2020 with US$30 million lead by Bezos Expeditions, The Craftory

PolyNatural

PolyNatural is based on disruptive intelligent science that is used for the first time in the fruticulture industry. Based on all-natural ingredients, the company offers unique products that benefit the quality of food. Shel-life® is a natural emulsion manufactured with natural extracts, lipids, and plant polymers to form a covering on the fruit that reduces the growth of microorganisms and dehydration, thus reducing food waste. The company’s product differs from the competition in the components used, most of which consist of synthetic waxes derived from petroleum. PolyNatural’s Shel-life® is organically certified in the European Union and the United States, so it can safely be used to protect organic apples, peaches and oranges, among other produce.  The company was founded in 2015, and it has raised US$800 thousand in funding so far. The most important investment round for the company has been February 2020, with US$800 thousand lead by ChileGlobal Ventures.

Instacrops

Instacrops is an AgTech platform that integrates different technologies and services. It is a virtual assistant that combines IoT modules and software to optimize irrigation based on weather forecasts and can also detect diseases and pests and maximize fertilizers’ utility by giving farmers real-time recommendations and actionable insights. The Chilean startup’s services are based on Big Data and virtual assistance, the use of Plug & Play technologies, continuous research and development, and remote monitoring and control. Instacrops was founded in 2015, and it has raised US$220 thousand in investment. The most important round of investment for the company has been February 2020 with US$100 thousand lead by Thrive Agtech Accelerator.

Agrourbana

Agrourbana is the first vertical agriculture company in Latin America, leading the foodtech industry in the region. It produces the best vegetables using cutting-edge technology as well as social and environmentally responsible processes. Vertical agriculture allows farmers to grow high-tech crops indoors. With much less space, it is possible to grow the same amount of food in only 1% of the land compared with traditional agriculture, while also saving up to 95% of water. Agrourbana’s innovation is particularly relevant when considering that most of the land adequate for agriculture is already being used. The company has raised US$1 million in investment so far. The most important investment round for the company has been February 2020, with US$1 million lead by CLIN.

Chilean AgriTech startups are leading the path towards a more sustainable agricultural system, reducing food waste, increasing productivity and, giving consumers new and healthy food choices.

New trends in sustainable packaging

The packaging is an integral part of the food we eat. Unless you eat something straight from the tree after picking it, the food you eat is involved in one way or another with some form of packaging. The use of packaging allows for products to last longer and is therefore associated with less food waste. However, not all packaging is created equally.

Packaging has positive and negative impacts on the environment. On the one hand, we have packaging-related emissions and waste; and on the other, packaging allows us to move and distribute goods that would otherwise be unavailable.

The different functions of food packaging

Besides transportation and distribution, packaging can also be used as a form of advertising. A visually pleasing package attracts attention, which is vital in an increasingly competitive market.

In developed countries, where packaging is widely used,  can be as low as 3% for processed foods and up to 15% for fresh food, while in less-developed countries, where packaging is minimal, food spoilage can be as high as 50 percent.

Packaging in numbers

Globally, the  was USD$851 billion in 2017, and it reached USD$876 billion in 2018, according to data from Smithers Pira. By 2023 the industry is expected to have a value over USD$1 trillion, and by 2028 an additional USD$$150 billion will be added to the market. Overall, an expansion of 3% per annum is expected to occur up until 2028.

The  is located in Asia, representing more than 42% of the industry, followed by North America (24.3%) and Europe (18.4%).

In terms of , cardboard (35%) dominates -primarily due to the growth in e-commerce-, followed by flexible packaging (23%) made with plastic or paper. Flexible packaging gained over rigid plastic mainly due to its lower weight.  leading material is flexible packaging, followed by rigid plastic, paper-based containers, liquid cartons, metal, and glass.

Packaging in agriculture

Packaging is an intrinsic part of agricultural production; moving the product safely from one part of the production cycle to the next is key to achieving a successful business. Non-recyclable packaging is often used because of its ; waxed cardboard or plastic wrap are cheaper than pressed wood.

The reliance on non-recyclable packaging is based on its ability to do a good enough job for its price. However, this is not always the case; broccoli, when packed in unrecyclable waxed cardboard boxes, often reach its destination in an unfit-to-sale state due to bacterial growth.

Developing safe and effective sustainable packaging is critical to achieving a sustainable agriculture system.

Environmental considerations

Plastic pollution is a ; from the 350 million tons of plastic produced each year, 8 million end up in the ocean. Moreover, plastic food packaging is the most common beach trash. Nine of the top ten  are related to food and drink; the most common items are food wrappers, straws, forks, knives and spoons, plastic beverage bottles, plastic bottle caps, plastic grocery bags, plastic lids, and plastic cups.

There was a rapid increase in plastic from the 1950s onwards, and currently, the usage of single-use plastic is rising, particularly in developing countries. Globally, less than 10% of plastic is recycled; this is particularly troubling when we consider that plastic takes more than .

The  in the ocean reached such a level of notoriety that the United Nations Assembly passed a resolution signed by more than 200 countries to eliminate plastic pollution in the seas. Although the treaty is not legally binding, some countries have already passed local legislation to decrease their plastic pollution.

Packaging materials

Food packaging is made from various materials, including plastics, glass, metal, ceramics, cardboard, wood, and waxes. The majority of modern packaging is made of glass, plastic, paper, and paperboard. The manufacture of food packaging materials involves using various resources, including energy, water, chemicals, minerals, petroleum, fibers, and wood. The manufacturing process often  that include particulates, greenhouse gases, toxic contaminants, and wastewater.

Glass manufacturing  greenhouse gasses, sulfur oxides, nitrogen oxides, and fine particulates containing heavy metals. The manufacture of aluminum requires significant energy quantities; it uses a lot of water and creates a toxic sludge that may contain heavy metals and radioactive elements; the emission includes greenhouse gasses, sulfur dioxide, and wastewater. The manufacture of paper and cardboard involves a lot of land used to obtain the fibers. The milling process uses a lot of energy and water; air emissions include sulfur dioxide, carbon monoxide, and nitrox oxides. Plastic manufacturing emits significant amounts of greenhouse gasses, hydrofluorocarbons, nitrous oxides, sulfuric hexafluoride, and perfluorocarbons.

Sustainable food packaging

The most significant . The concern over the environmental impact of products is a long-lasting phenomenon. The EU launched an initiative geared towards circular economy principles, focusing on plastic waste and single-use plastic packaging.

Reusable food packaging is an alternative for diverting plastic from landfills and oceans. Not so long ago, food containers were reused, milk and beer bottles were returned to the manufacturer for cleaning and reuse. Shoppers can bring their own containers to stock from bulk bins, besides carrying their own shopping bags.

When reusable containers are not the solution, more sustainable packaging alternatives are needed. Researchers, entrepreneurs, and companies are stepping up to solve this issue. Non-petroleum-based plastics – made from corn or sugarcane- better recycling technologies, degradable plastics are in the works.

Consumers are putting recycling responsibilities mainly  More than two-thirds of US shoppers say that manufacturers should be responsible for environmentally friendly choices. While 55% of Brazilian consumers agree that companies should offer sustainable solutions and 45% of Swedish consumers say brands should use more recycled materials.

As sustainability has risen as a critical motivator for consumers, brands have begun to look for innovative packaging alternatives to show their sustainability commitment. Nestle has committed to making 100% of its packaging reusable or recyclable by 2025. Unilever followed closely with its own sustainable packaging commitment. Besides these giants, many other companies are actively researching new packaging technologies;  announced new materials that are fully biodegradable in industrial and home composting.

The rise of food e-commerce has had associated the need to  to protect the product during the last mile, besides being perceived as a sustainable choice by consumers. In development are packaging alternatives that weigh less, are sustainable, and perform well in the delivery market.

Innovative alternatives in sustainable agricultural packaging

provides flexibility, versatility, and durability. Packages with these materials save space and are easy to transport due to their collapsible assembly.

Food wraps made from seaweed and casein. These wraps reduce plastic reliance, have a lower carbon footprint, promote positive environmental practices, and can even be edible.

Plastic-less  specially designed for avocados, apples, and other fruits; are able to preserve the produce from damage while looking enticing for the consumer. These packaging solutions are critical for the fruit export industry.

Food coatings that can be applied to fruits and vegetables also help to preserve food. By preventing dehydration and serving as a protecting barrier from bacteria, . Food coatings can be made from a combination of ingredients, including synthetic and natural ones. The main advantage of using natural coatings is their reliance on natural -non-plastic- ingredients; they are also better accepted by discerning consumers and strict legislations -such as the EU-. Fruit coatings are critical for a more sustainable fruit export industry.

Consumers can make a difference

Consumers’ actions and preferences have led to changes in the industry, a more sustainable food packaging industry is possible. Consumers can continue to make a difference by using less plastic in the kitchen, choosing beeswax wrappers over plastic wrap, avoiding plastic cutlery, and electing to use compostable materials, carrying their own bags when shopping, and selecting zero-waste stores that have been opening in new places, allowing consumers to buy bulk products in reusable containers.

Fruit and vegetables are often sold in bulk, and many companies also pack them to extend their shelf-life;  has found an alternative. The company produces a thin edible fruit coating made with natural materials that is tasteless and can be applied to fruits to make them last longer. By using this coating, it is possible to extend the shelf-life of fruits and reduce food waste.

Sustainable food trends are here to stay, particularly considering that the largest majority of Gen Z want eco-friendly packaging and seek environmentally sustainable products. From fruit coatings that make produce last longer to biodegradable and compostable plastics sustainable packing is steadily growing.

The myth of shiny fruit: natural food trends for FoodTech

Have you ever wondered why supermarket fruit looks different from the one you can find in your local farmer’s market? It probably has a lot to do with the use of edible coatings, but what exactly are those?

You might have seen online videos claiming that apples or other fruits have dangerous substances covering them. Nothing further from reality, the main role of that substance, or coating, is to protect the fruit and maintain its freshness for longer.

The importance of edible fruit coatings

Edible coatings can provide an additional protective layer to fresh products; this can have a similar effect as modifying the product’s surrounding atmosphere and internal gas composition, which allows preserving fruits for a more extended period of time.

Learning to love natural products

Many fruits produce their own protective wax naturally. However, after picking and cleaning, this coating is lost. Therefore, adding a coating to its surface for the fruit to last longer is necessary. The coating’s principal role is to preserve the fruit’s qualities, avoiding moisture loss and protecting its surface from microbes.

New trends, and the fight to reduce hunger and food waste, have put a new paradigm  in place, the one where the so-called “ugly fruits” and natural appearances are no longer rejected, but promoted and demanded by consumers.

Applying natural coatings alternatives will preserve the natural appearance of fruits, which, in some cases, are not shiny at all. The final product will have a protecting layer, but not a glossy finish.

Natural and artificial coatings can contain fungicides to inhibit mold growth while at the same time controlling fruit respiration to delay the ripening process, protecting it from bruising during transportation. Artificial fruit coatings -such as petroleum-derived- are designed to merge food preservation and presentation; they can look nicer, but in some countries are forbidden, and they won’t get organic certification.

Are coatings safe?

Coatings are meticulously formulated and tested. They have to meet the local food authority requirements, be it the US Food and Drug Administration, or the European Legislation on food additives, or more generally, the FAO Codex Alimentarius on International Food Standards. The last one is a collection of codes, guidelines, and practice that ensures that food is safe and can be traded; the 188 global members agree in the Codex’s content. 

Not every country or region in the world allows the use of the same coatings or food additives. Among the most restrictive commercial zones is the European Union, which allows only for the use of naturally made fruit coatings.

Concerns have been raised regarding the sealing of pesticides that can occur by applying a coating. However, it has been shown that the prior fruit washing removes the majority of pesticides. And as far as the coating goes, it has no health issues since the body does not absorb it, and it passes right through the digestive system.

The regulatory bodies are in charge of ensuring that fruit is safe to eat, so they regularly check for things like pesticide and herbicide levels. Coatings need to be safe. They also have to meet consumers’ demand, who want to buy fruit that looks and tastes good and is not covered in strange looking substances.

Coatings in time

Wax was the first edible coating used to preserve fruits. During the 12th and 13th centuries, the Chinese used to apply wax to preserve lemons and oranges. Later, in the 1930s, melted paraffin waxes were used as edible coatings in pears and apples. Paraffin and wax both were able to slow down the respiratory gas exchange, allowing the fruit to be stored for more extended periods of time.

Nowadays, many more natural ingredients -not based on fossil fuels- are used to make coatings. Among the most widely used ingredients are:

  • beeswax (bees)
  • candelia wax (desert plant)
  • carnauba wax (Brazilian palm)
  • shellac (Indian lac bug)

Synthetic esters are also used, they can be made by combining fatty acids and sucrose. Polyethylene is also frequently applied; it is interesting to note that it can be vegan if the ethanol is made from corn.

Consumer perceptions have also evolved in time. A larger proportion of buyers is more in synch with their food, their precedence and any treatments that have been applied.

Trends driving change in the agrifood industry

The agrifood industry is rapidly evolving. Among the leading natural food trends driving the change are the demand for a healthier and more sustainable food future. Transparency, plant-based foods, wellness, and food waste are part of the industry’s latest tendencies.

Consumers want to know and understand the ingredients that go into what they eat; they seek simplicity besides quality. It is now routine for consumers to check the back of packages and labels to see what they are buying. Consumers are currently looking for brands that are transparent with their products, their sourcing, and ingredients.

Plant-based burgers are perhaps the better known of the plant-based foods. They became ubiquitous in 2019 in restaurants and grocery stores. They are sought after by vegans, vegetarians, and everyone else trying to reduce their meat intake. More recently, plant-based pork, fish, and chicken have also become available, along with non-dairy milk, cream, and mayo.

Health and wellness are gaining traction in the agrifood industry, accompanied by labels claiming “better for you” characteristics and organic alternatives. Consumers are becoming more educated on the benefits of healthier choices. This has led companies to change many of their products for other options with less sugar, preservatives, fats, artificial coloring, and GMO-free.

In an effort to reduce food waste, the practice of upcycling foods is becoming more common. Upcycling allows producers to add value to by-products or surplus ingredients that otherwise would have been wasted. Rescuing wonky fruits and vegetables, using eggshells to make a calcium supplement, and turning fruits into sugar substitutes are among the many food upcycling ideas.

The development and implementation of eco-friendly and sustainable packaging is a growing trend in the food industry. Many companies have started to use compostable, biodegradable or recycled materials. The use of sustainable packaging helps companies meet their environmental goals, and it also helps them enhance the brand’s image as consumers become more aware. It has been estimated that 74% of consumers are willing to pay more for sustainable packaging.

Natural alternatives to preserve fruits, reduce food waste and protect consumers health

Many new alternatives that consider the latest natural food trends in the food tech industry and AgTech industry have appeared globally. PolyNatural is a startup with a clear view towards using more natural plant-based ingredients and reducing food waste.

PolyNatural’s Shel-Life® is a natural coating that creates a “second skin” in fruits, especially used in those that travel long distances from South America to northern markets.

Shel-Life®is prepared from polysaccharides made from rinds discarded from the juicing industry. This natural and innocuous polymer protects the fruit from dehydration and the action of microorganisms. In that way, it allows for a longer shelf-life while maintaining its natural smell, flavor, and shine.

Also, Shel-Life® can outperform all other products available in the market since it is made from all-natural ingredients, ensuring its consumer’s wellness. It can also reduce rot incidence and dehydration, thus reducing food waste. Furthermore, Shel-Life is organically certified in the United States and Europe.

Shel-Life® has a 3% rot incidence reduction and 7% less dehydration. It has an equal performance as current petrol-based coatings but has no restrictions for entering the European market due to its all-natural ingredients. When comparing with untreated fruits, Shel-Life® extends in 40% gondola days.

Shel-Life®is available for pomaceous, citrus, and stone fruits, besides one specially designed for avocado. In the development process for cherries, blueberries, and kiwis.

The trend to achieve a more transparent, sustainable, and healthier food tech and AgTech industry is here to stay. By adapting to consumer’s demands, the industry is turning towards a world with potentially less food waste and hunger.