Controlled Environment Agriculture

Organic  vegetable farming

by Freepik

Controlled Environment Agriculture
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
Food and Agriculture
Business Model Description

Invest in companies providing CEA solutions to adopt a B2B model by selling their technology, services and products to farms, grocery stores, and restaurants. They may also adopt a B2C model by selling products directly to consumers through their own stores or online marketplaces. Revenue streams can come from the sale or leasing of CEA systems, ongoing maintenance and support services, as well as the sale of produce. Examples of companies active in this space are:

Agroz Group uses advanced CEA hydroponics technology to optimize growing conditions, such as temperature, humidity, and lighting, resulting in higher crop yields and quality. As of May 2023, VCI Global Limited has signed an IPO advisory mandate with Agroz Group which entails a USD2 million advisory fees and a success fee of 5 per cent of the market capitalization of Agroz when listed (18).

Cultiveat conducts indoor precision farming, deploying CEA technologies that provide optimal growing conditions such as temperature, humidity, and lighting, resulting in higher crop yields and quality. They sell their products via an online marketplace and deliver across Klang Valley. Their price range for fresh lettuce is between RM20 - RM 40 or USD 5 to USD 10 (19).

Boom Grow Farms utilizes their patent-pending 'Machine Farm', a modular CEA hydroponics system that is space efficient and scalable. Automation and precision equipment monitor and control factors including temperature, humidity, and nutrients. As of 2021, Boom Grow raised USD 216,000 from SME Corp, PlaTCOM Ventures and MDEC. Boom Grow has also been funded by Angel Investors (20, 48).

Expected Impact

Increase national food security and self-sufficiency, enhance sustainable agricultural practices for local food production, increase the yields and the agriculture sector's share of GDP, and optimize land use.

Indicative ReturnDescribes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
> 25% (in IRR)
Investment TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market SizeDescribes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
> USD 1 billion
Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
< USD 500,000
Direct ImpactDescribes the primary SDG(s) the IOA addresses.
Zero Hunger (SDG 2) Life on Land (SDG 15)
Indirect ImpactDescribes the secondary SDG(s) the IOA addresses.
Decent Work and Economic Growth (SDG 8) Reduced Inequalities (SDG 10) Gender Equality (SDG 5)
Sector Sources
  • 1) Prime Minister’s Department of Economy, Economic Planning Unit. 2021. Twelfth Malaysia Plan (12MP) 2021-2025: A Prosperous, Inclusive, Sustainable Malaysia. 2) Ministry of Agriculture and Food Industries. 2022. Executive Summary National Agrofood Policy 2021-2030. 3) National Food Security Policy Action Plan (DSMN) 2021-2025 4) Tracxn. SEA Tech Annual Funding Report. 5) MOF. 2023. Budget 2023 Speech. 6) NCER Strategic Development Plan 2021 – 202. 7) TNB. Pricing & Tariffs For Industrial Consumers. 8) The Edge Malaysia. 2022. Time of reckoning for energy-intensive industries as electricity surcharge rises. 9) MIDA. Incentives for New investment. 10) Deloitte. 2021. Emerging Tech & Innovation in Malaysia's Agriculture Landscape. 11) Alam et al. 2011. Impacts of Climate Change on Agriculture and Food Security Issues in Malaysia: An Empirical Study on Farm Level Assessment, World Applied Sciences Journal, Vol. 14(3), pp. 431-442. 12) The Economy Impact. Global Food Security Index. 13) Department of Statistics Malaysia. 2023. Annual Economic Statistics (AES) Agricultural Sector, 2021. 14) US International Trade Administration. 2022. Malaysia - Country Commercial Guide, Agriculture Sector.'s%20global%20agricultural%20trade%20reached,Pakistan%2C%20and%20the%20United%20States. 15) Baker Mckenzie. 2021. AgriTech - a promising response to climate change. 16) GSMA. 2022. Reaching and Empowering Women with Digital Solutions in the Agricultural Last Mile. 17) ReportLinker Consulting. 2021. Malaysia Agriculture Industry Outlook 2022 - 2026.,the%20%2423%2C960%20Million%20in%202021.
IOA Sources
  • 21) Stakeholder Consultation on Feb 8, 2023. 22) Stakeholder Consultation on March 21, 2023 23) Stakeholder Consultation on March 22, 2023 24) Stakeholder Consultation on March 23, 2023 25) Stakeholder Consultation on March 23, 2023 26) Stakeholder Consultation on March 24, 2023. 27) Mu, P. 2021. Ministry allocates RM63 million for community garden programme 28) Lexology. 2019. Agribusiness in Malaysia. 29) Economic Planning Unit (EPU), Prime Minister's Department. 2021. Malaysia Digital Economy Blueprint (MyDigital). 30) Economic Planning Unit (EPU), Prime Minister's Department. 2021. National Forth Industrial Revolution (4IR) Policy. 31) World Bank. 2023. Economic Monitor Malaysia, Expanding Malaysia’s Digital Frontier. 32) UNDRR. 2020. Disaster Risk Reduction In Malaysia: Status Report 2020. 33) The Edge Markets. 2023. Growing need for urban farming in Malaysia. 34) Abdulsalam I. Shema and Halima Abdulmalik. 2022. Urban Vertical Farming as a Path to Healthy and Sustainable Urban Built Environment. 35) OECD. 2020. Strengthening Women’s Entrepreneurship in Agriculture in ASEAN Countries. 36) IsBD. 2019. Country Gender Profile: Malaysia. 37) UN Department of Economic and Social Affairs. 2022. SDG Indicators Database. 38) World Bank. 2022. Gender-smart agriculture: The only way forward for women and climate. 39) Celina Gómez, et al. 2019. Controlled Environment Food Production for Urban Agriculture. 40) Agrobank. 2021. 41) MDEC. 2021. MDEC and CIMB Islamic sign MoU providing RM25 million to scale AgTech Pilot 42) FFTC Agricultural Policy Platform. 2019. Precision Agriculture in Malaysia. 43) Government of Malaysia. 2022. Malaysia's Update of its Nationally Determined Contribution. 44) UNFCCC. 2021. Malaysia's update of its first nationally determined contribution. 45) Shaharuddin, Ahmad Ashraf. 2020. Protecting the Agriculture Sector During the Covid-19 Crisis. Khazanah Research Institute 46) Hassan, Hazlin. 2023. Malaysia turns to smart farming to boost food security 47) DOSM. 2023. Special Report on Impact of Floods in Malaysia 2021.,to%20the%20floods%20recorded%20RM6. 18) Financial Buzz 2023. Breaking News: VCI Global Limited Signs IPO Advisory Mandate With Agroz Group. 19) Options. 2021. Local vegetable delivery services stuck with fresh produce they can no longer sell due to pandemic — here are ways to help. 20) e27. 2021. Boom Grow 48) WIPO. 2023. BoomGrow – Combining Precision Farming and Vertical Agriculture. 49) Government of Malaysia. Industry4WRD Policy. 2018. 50) Government of Malaysia. Economic & Fiscal Outlook and Federal Government Revenue Estimates 2023. 2023.