When Oii Boon Sheng started Web Bytes Sdn Bhd, a cloud-based point-of-sale (POS) service provider in 2007, it was not common for businesses to have internet access. "It was a luxury. Some of our customers used on einternet account for a couple of outlets. When we entered the market, we had to make our solution offline and build a client/server-besed model," says Ooi. He co-founded the company in Penang after joining the Microsoft Imagine Cup, a technology competition for students.

The digital economy of Southeast Asia continued to be resilient in 2020 despite the Covid-19 pandemic ravaging most of the region's largest economies. Led by Indonesia and Vietnam, the total gross merchandise value of Southeast Asia's digital economy reached US$100 billion last year. Despite that, funding was lower as a result of the pandemic. This lack of funding led to fewer "unicorns" emerging in the region, with only one company getting on the unicorn list.

MGROW is a contract farmer that supplies its fresh produce to the Federal Agricultural Marketing Authority (FAMA) and to private companies mainly in the northern region of the country. In the international front, it has also brokered exporting deals to China, a promising market for the tropical fruit. Ting shares, “The market here has been very welcoming. We are excited to get an overwhelming enquiry from distributors and exporters, to the point that we had to say ‘no’ to some! It is a good problem and has boosted our confidence in the product. But we recognise the high-demand and we plan to expand our farm soon so we can venture into more contract opportunities.” For MGROW, contract farming is a strategic component of the business growth. “Contract farming provides a set target that allows us to make precise decisions on how many acres of pineapples we are growing, how many the farm will produce, and when it will be harvested. Once the pineapples are planted, the only focus is to ensure we meet the deliverables,” says Ting.

Contract farmers reap advantages that allow for a sustainable income and business growth. For instance, Treegrow Orchids engage contract farmers in Cameron Highlands via a standing order. The pre-agreed price ensures that the sell-price will not fluctuate, thus enabling sustainable, stable income for the farmers. Meanwhile in peak seasons, exporters like Treegrow Orchids may also offer to purchase slightly more than the agreed quantity with a competitive price. At the same time, farmers are also keen to improve farming practices to ensure the quality of the crop and attract more business with existing and new exporters. In the case of Treegrow Orchids, farmers also benefit from the transfer of technology and best practices from the company. “Whenever we notice that the crop quality is not up to standards, we take the initiative to visit the farm to identify problems with the farmers and provide free consultation to help tackle any issues,” said Seng Yee.

The Nestlé Chilli Club (NCC) is a contract farming model that supports local farmers who are contracted to supply fresh chillies for MAGGI Chilli Sauces. Working closely with Agricultural Services Department and the Farmers’ Association Board, it was first introduced to the local farmers in Kelantan in 1995. For over 25 years since its establishment, NCC has since reached other parts of the country, namely Dungun, Terengganu and Kuala Langat, Selangor. In line with digital transformation in agriculture, Nestlé also appoints Agricultural Services professionals to equip farmers in leveraging technology to produce the highest possible yield, at par with global standards. In particular for Farmer Connect initiatives, Nestlé shares best practices with local farmers through the Sustainable Agricultural Initiative (SAIN) toolkit, specifically designed to train and assist farmers for better crop quality and yield.

With the increasing focus on food security and safety, digitalisation is the way forward for the industry. Tan reiterates that the first criteria to truly benefit from technology is to implement a closed-house farm system. Aside from providing a better system in maintaining the climate, ventilation, watering system and sanitation, it is also the key in improving disease-control.

“Even though Aqina Group is now fully-integrated, we also provide local farmers with the opportunity to participate in contract farming as well. This is in line with the government’s initiative towards shared prosperity and we support this vision wholeheartedly. At the same time, we are proud to contribute to the national economy by supporting local farmers, instead of relying on foreign labour. This ensures shared prosperity throughout the broiler chicken supply chain in Malaysia,” says Wesley Tan Seah Ging, Group Executive Director of Aqina Group.

When starting one’s own contract farming business, there are a few key factors to consider. One must first have land to operate the farm, whether it is one’s own land, or rented from other farmers – with license to operate a chicken farm. They also need to have the know-how in managing collaborations with integrators to ensure quality of chicks and the chicken feed are not compromised, or at an optimum level that does not negatively affect productivity levels.

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For small farmers, taking the leap to start contract farming come with many advantages. Firstly, the nature of the pre-agreed contract protects agropreneurs from loss of profit in the future. This means that if the open market price goes down – due to cases such as oversupply - this would not impact the take-home income from the chilies sold. At GrasiCili, this arrangement has worked largely because the extra profits from whenever the market price is high, are strategically funneled into the participants’ collective funds. Thus in seasons of low market price, these funds will later be paid out to the participants to match the pre-agreed sale price. This modern business model is agreed by participants and minimizes risks of failing.