Delbros shifts to vertical farming to transform the company while addressing hunger in the Philippines.
2020 has been a challenge worldwide for many reasons.
But in the Philippines, the hits just keep coming.
Just 12 days into the new year, the Taal Volcano in Batangas, Philippines, spewed ash across Metro Manila and parts of Central Luzon and the Ilocos Region. This event led to dozens of deaths and disrupted businesses, schools, and travel – flights to and from the region. Then COVID hit, and now, it’s the flood season.
“Filipinos are resilient optimists,” says Jose Paolo Delgado, a member of YPO and CEO of the Delgado Brothers Group (Delbros). “2021 will be a challenging year.”
Delbros is a private, 73-year-old international corporation and family business that began in logistics and goods transportation. Today, its business is roughly 50% logistics and 50% agriculture and technology — a shift specifically into modernized vertical farming and fintech.
The year 2020 fast-tracked many conversations within the Delbros family business: Where will they be in 10-15 years?
The combined impact of the volcano, COVID-19 and flooding greatly has affected Delbros’ fleet of thousands of trucks and trailers used for shipping and inland transport. On the other hand, airline transport of imports and household goods, such as food, medical supplies and medicine, has been very strong this year. Things that normally would have been placed on ships are being placed on planes.
But when it comes assessing the company’s future direction, tough decisions may have to be made.
“Nothing is off limits, especially when all the writing is on the wall,” Delgado says. “Traditional agriculture with climate change won’t work. So as a business sector person, you have to ask: Do we stay in what we know, or do we look at how the business is shifting?”
Driving growth and addressing hunger
Transport and logistics have been the pillars that define Delbros as a family business. The company connects the Philippine islands with containers filled with goods. And while logistics is steady, Delgado says it won’t derive the returns needed for succeeding generations.
Enter vertical farming.
“Technology and innovation have given us a future — vertical farming,” Delgado says. “As a company, it’s given us new purpose. Everyone is working feverishly on it. It will dramatically change the landscape in the Philippines.”
This breakthrough in farming involves a five-story, semi-automated vertical tower that allows plants to grow over 300 square meters.
Each farm requires land and money to build. And while these farms are not meant to replace traditional farming, the vertical farms are cheaper over time. The farms come with a higher upfront cost, but they lower the cost of vegetables by removing the need for logistics and minimizing waste. The farms also can be placed in city centers — highly urban, very dense and poor areas.
The advantage that vertical farming brings to the Philippines is huge. There are no fields that can be wiped out when a storm comes through. In fact, the plants can be moved indoors and then returned to the towers once the danger has passed.
Five farms already have been constructed and six more are in the pipeline to be finished in 2021. The existing farms can produce enough food to feed 150 households per month. Delgado says it would take a great effort to reach food security and stamp out hunger in the Philippines.
“We would need thousands of towers to make a difference,” he says. “But we’ll get there.”
Our world today has so many data points. You’re almost remiss not to access it to make decisions. But I don’t see so many businesses doing that. They’re in this mindset that they can stay stagnant. ”
— Jose Paolo Delgado, CEO, Delgado Brothers Group (Delbros) share
Embracing potentially disruptive change and innovation
The Delgado family is known in the Philippines as pioneers. Shareholders are open to dedicating resources toward trying new things.
So, when it comes to approaching new technology and innovation, Delgado offers these five pointers on bringing this to family members and business partners:
- Are you willing to spend the money? New technology is expensive. You must be willing to burn cash, and you can’t expect immediate or great initial returns.
- Do you — and your company — really want this? Many family businesses are enamored by technology and its applications. But at the heart of it, Delgado says, “they are competent and comfortable just continuing with what they are presently doing.”
- It needs to be a family decision. The last thing you want to do is start a project, and then have the family lose its nerve and not continue the investment. This is disruptive.
- Stay plugged in. Read a lot of data. Says Delgado, “Our world today has so many data points. You’re almost remiss not to access it to make decisions. But I see so many businesses doing that. They’re in this mindset that they can stay stagnant.”
- Network as much as possible. YPO is filled with a network of global family businesses. Delgado invites others in the agritech network to compare notes and discuss what is being done across the industry.
Implementing technology is a messy process.
Recently, Delbros took a risk with the formation of a research development and technology team, hiring 16 new members in all. There was no mandate, just the freedom to kick things around and experiment.
So far, it’s doing wonders for the Delbros corporate office.
“We hired a totally different set of people — IT backgrounds, disruptive thinkers — and we put them across the business units,” Delgado says. “We had drones flying around in offices. Departments kicked around their operations. It really shifted our culture.”
What bubbled to the surface were the tech-savvy parts of the Delbros business. Delgado says it was a great way to spend money, allowing these employees to take what they’re learning about the company and potentially do away with some older legacy systems.