An expanding world population, coupled with increasing concerns about resource scarcity, land availability, biodiversity conservation and global warming is fostering interest in sustainable agriculture technologies.
Large companies and clean technology investors are focused on energy, and some are following water. Yet very few are tracking opportunities in breakthrough clean and green agricultural technology. And that suggests opportunity.
Certain innovations from a new crop of companies have the potential to expand yields, increase efficiencies, reduce waste and address concerns about toxicity, safety and the environment. There are innovative companies that are potentially poised for success across all categories of the taxonomy of agricultural cleantech.
In its new report on agricultural cleantech, Kachan uses the following criteria to differentiate cleantech developments from generic agricultural innovations:
- improved efficiency of resource use
- reduced ecological impact
- smaller carbon footprint
- sustained or enhanced profitability
Technologies which reduce the demand for water and chemical inputs are included as they reduce strain on the global water supply and reduce the impact on surrounding ecosystems via the introduction of foreign chemicals. Technologies which enhance the health and yield of crops and herds are included as these reduce waste from the industry and alleviate pressure to convert native land into agricultural fields. Innovations which reduce the carbon footprint of agriculture are included as they directly address the climate challenge we face today. Also included are land and resource management practices which decrease or eliminate nutrient drain and erosion of soils such that the land may sustain cultivable yields indefinitely. Focus in this definition is given to technologies which function at a commercial scale (as opposed to subsistence farming and hobby practices).
The following walks through the above taxonomy, offering definitions of each of the five main categories and profiles one leading company within each. The five companies profiled in this blog have either reached an exit (trade sale or IPO) or are simply compelling examples of the category in question. The full Kachan agricultural cleantech report goes through the taxonomy line by line and profiles a total of 57 companies.
Crop farming - Crop farming includes the cultivation of grains, fruits, vegetables, fiber crops, fuel crops and other plant varieties like mushrooms and fungi. This sector is of particular importance as cropland covers 12% of the earth’s ice-free land, and grain cultivation alone accounts for 50% of the world’s food supply (when supplies fed to livestock are considered).
Sustainability in crop farming focuses on increasing yields as well as improving resilience and persistence of crops. Greater yields are, and will continue to be, needed in order to feed the growing population with existing agricultural lands. Crop resilience describes the capacity of the plant to buffer shocks and stresses, which helps ensure food security in the face of climactic stresses. Persistence describes the ability of arable land to sustain a crop rotation indefinitely without diminishing yields.
Innovator Example: Plant Health Care (AIM:PHC) is best known for two natural crop amendments; Harpin and Myconate. Harpins are proteins produced by a variety of pathogens which cause plants to release cellular calcium and increase their metabolic rate. Photosynthesis and nutrient uptake rates rise, resulting in greater immunity and growth. Plant Health Care synthesizes Harpin proteins which have been shown to increase yield and shelf-life of certain crops. Harpin, discovered by Plant Health Care’s chief scientist, was a cover feature of Science Magazine. Myconate, a compound naturally secreted by drought resistant crops like red clover, promotes the colonization of plant roots with beneficial networks of fungi which work to increase the effective surface area of roots. Plant Health Care has developed a process to generate synthetic Myconate. Ultimately, the company claims, Myconate allows greater access to water and nutrient resources which has been shown to generate yield increases on the order of 9% for corn crops and 13% for soybeans.
Plant Health Care is headquartered in the USA with offices in the UK, Iberia, the Netherlands and Mexico. The management team has been involved in the agriculture industry for decades and retains the discoverer of Myconate as their chief scientist. The board of directors draws on similar experience in the agricultural and chemical industry with past endeavors at Arista and ICI. Long-term partnerships with Bayer CropScience, German Seed Technology, Syngenta and Monsanto, among others, have and continue to provide a secure revenue source alongside direct product sales. Plant Health Care continues to research new Harpin proteins which may have higher activity levels, applicability to different crops and elicit greater disease resistance.
Controlled environment agriculture - Just over half the world’s population currently resides in urban areas. This fraction is expected to rise over the coming decades, reaching 67% (~6 billion people) by the year 2050. Urbanization presents a myriad of challenges for the agricultural industry and introduces new environmental considerations associated with food production and distribution. One way of addressing these issues is by finding ways to cultivate food within city limits. Urban agriculture practices can take a variety of forms, from greenhouse farming to vertical farming in unused indoor spaces to rooftop gardens and so on. Urban agriculture can reduce risks associated with weather and spoilage. Indoor climates are predictable and controllable, thus droughts and cold snaps pose no threat. Shorter transport distances to markets reduce the fraction of food lost to spoilage and the carbon footprint of products. On top of the practical advantages of urban agriculture, society as a whole has a preference for local food. Research has indicated that citizens of developed countries are willing to pay a 15%-20% premium for local products.
Innovator Example: Urban Barns (OTCQB: URBF.OB) claims its developments are best described as ‘cubic farming’. The company’s patent pending system is said to surpass the yield of top-of-the-line vertical farming developments several times over by making full use of the entire volume of an available space with no restrictions on floor plan or available height. The company asserts its system provides adequate growing conditions for leafy green vegetables in any building with standard climatic controls.
Urban Barns has been highlighted by experts on account of its impressive management team. The team has over 225 years of collective experience in the industry. Jack and Leo Benne (CEO and COO, respectively) have considerable experience in the area of controlled environment agriculture, Daniel Meikleham (Chairman and CFO) has had a forty year financial career with high profile multinational corporations, and Robyn Jackson (Vice president) has been a fresh food distribution entrepreneur for forty years. The technology has been implemented in North America and Puerto Rico with recent efforts to extend the business into the Middle-East.
Sustainable forestry - Forests provide a number of invaluable ecosystems services. They are hubs of biodiversity and play an integral role in global carbon and hydrological cycles. Timber is an inherently renewable resource, however proper management practices are paramount to sustaining the regenerative nature of forests. Sustainable forest management seeks to: maintain and enhance forest resources, promote the health and vitality of forest ecosystems, conserve biodiversity and ensure forest land retains its natural relation to soil and water systems. The ultimate goal is to retain the forest’s ability to support ecological, socio-economic and cultural functions beyond timber harvesting. Over the past three centuries, timber extraction has caused a net loss of 7 to 11 million km2 of forest land. An additional 2 million km2 have been converted to highly managed timber and oil palm plantations. The technologies outlined below represent new opportunities to reduce our impact on native forests and improve the sustainability of silviculture stands.
Innovator Example: Triton Logging Inc. has developed a pair of devices which enable the collection of submerged forests from dam reservoirs. Harvesting these dead stands displaces live harvesting and impacts a previously disturbed ecosystem, resulting in a very low impact timber product. The SawFishTM is a remote controlled submarine equipped with a grapple and 55 inch chainsaw designed for deep reservoirs (>40m) where divers and surface mounted equipment cannot safely operate. Navigating via video, sonar and GPS, the SawFish can harvest a tree every three to five minutes (in good conditions), sending each one to the surface using reusable airbags. The SharcTM harvester is a barge mounted device with a telescopic boom and cutting head capable of harvesting timber up to 36.5m below the surface. The Sharc locates timber through sonar, remote cameras and GPS.
Triton is the only company to offer a mechanized means of collecting submerged timber at this scale and holds considerable competitive advantage. With 60,000 reservoirs globally, the company addresses a large market. Triton has operations in Canada, the USA, Ghana and a prospective project in Brazil. Triton’s Ghana project harvests odum, mahogany, ebony and a variety of other high demand tropical hardwoods from Volta Lake, the world’s largest man-made reservoir (350,000 hectares). The project is to be in full swing by 2013, harvesting 400,000m3 of wood each year. Licensing negotiations continue for developments in Brazil, where the company would profit from an estimated 300 million submerged trees. Revenue streams include eco-wood sales, inventory assessment, harvest concession development and logging services.
Animal Farming - Livestock operations present an increasingly important segment of the agricultural industry. Nations tend to increase their consumption of animal protein as they become more affluent. China, as an example, more than doubled its consumption of animal products during the 1990s. Over the next ten years, livestock is expected to provide 50% of agricultural output in value terms. Combining the land devoted to animal feed crops and pastureland, animal farming accounts for 75% of agricultural lands (3.73 billion hectares). Thirty-five percent of crop production globally is currently devoted to animal feed. Concentrated animal feeding operations (CAFOs) are becoming increasingly popular in the animal farming sector. CAFOs present unique challenges, most pressingly in the area of waste management.
Innovator Example: Livestock Water Recycling (LWR) has developed a patented system that combines chemical and mechanical treatments to process manure and discharged water from CAFOs. The company claims that its technology will save operators 0.5 cents per gallon of manure produced, a substantial savings given that conventional handling costs currently sit at 1-1.5 cents per gallon. The system is also intended to address the pressing issue of manure storage. As illustrated in the following figure, the system converts animal wastes into a set of salable products, including concentrated liquid ammonium fertilizer, solid phosphorous fertilizer and potable water. The company claims that the system will save farmers nearly $10,000 for every million gallons of manure generated before profits from the sale or use of generated fertilizers. LWR estimates the market value of fertilizer product generated by each million gallons of manure at $12,500. The LWR system is said to be robust and fully automated, enabling indefinite operation with little more than routine maintenance. LWR expects a 20% annual return on investment from the system.
Livestock Water Recycling has a well-rounded team with experience in chemical engineering, waste water treatment, biological science, business development, industrial design and marketing. The company has had past success remediating contaminated aquifer sites throughout North America, working on projects related to pipeline spills and railway sites. LWR is fully integrated, addressing all matters from initial design to follow up and maintenance. In this way it plans to protect its proprietary process from copy-cat operations. The company is currently backed by AVAC investments and has earned an F.X. Aherne Prize for Innovative Pork Production, a Top-10 New Products award at the World Agricultural Expo and an Emerald Award for Environmental Excellence. The company has completed extensive testing of the system and says it is currently installing systems for customers at both dairy and hog operations in North America. LWR claims to have international inquiries and plans, in future, to extend its focus to areas including China, Korea, Europe, and Russia.
Aquaculture - Seafood currently provides 17% of the world’s protein and over 25% of protein in low-income countries. Roughly half the fish entering the market come from aquaculture and half from fisheries. The aquaculture industry is said be growing at 8-10% per year, making it the fastest growing sector of agriculture. Aquaculture is widely recognized as having a pivotal role in fighting world hunger and promoting the sustainable acquisition of dietary protein. The impacts of commercial scale aquaculture are, however, poorly understood. Primary concerns surround the acquisition of fishmeal and the impact on supporting ecosystems. Sustainable growth in the aquaculture industry will require innovations that minimize ecosystem impacts from open ocean aquaculture operations and methods of providing adequate nutrition to growing fish stocks in a manner that enables maintenance of feed fish populations. Recently a number of developments have occurred that support integrated multi-tropic aquaculture (IMTA), which describes nested aquaculture systems that raise fin-fish in conjunction with mollusks and other species, mimicking a natural ecosystem and lessening the load on the supporting environment. While such developments may play an important role in increasing aquaculture sustainability and a number of fish farms, like Cooke Aquaculture, have taken up the practice, the technology itself is not saleable per se and so has not been included herein.
Innovator Example: Marrone Bio Innovations (MBI) produces natural products for pest management. The company’s Zequanox product has demonstrated 90% mortality rates for zebra and quagga mussels, invasive pest species originating in the Caspian and Black seas which wreak havoc on aquatic ecosystems in North America. Zequanox consists of dead cells of a particular micro-organism which contain a compound naturally lethal to the target species. The company claims that at proper dosages Zequanox is safe for fish, insects, crustaceans, plants, algae and even native mollusks. In September of 2012, the company was chosen as a 2012 Top 50 Water Company by the Artemis Project on the success of its Zequanox product.
Zequanox finds a large market in North America as zebra and quagga mussels are a burden not only to aquaculture operations but also to industrial operations, power generation facilities, irrigation systems, public infrastructure and recreational facilities. The company has extensive experience in natural pesticides. Pamela Marrone, the company’s CEO, also founded AgraQuest in 1995.
As the world’s population grows and developing nations become more affluent, increased agricultural output and protein production will be necessary to meet demands. Issues of land and water scarcity alongside concerns about climate change and ecosystem degradation require increased emphasis on sustainability in agriculture.
Consensus on the ideal form of sustainable agriculture has not been reached. There are those who support a mix of high yield, heavily managed lands interspersed with sections of land reserved as natural sanctuaries, and there are those who support an agro-ecology approach where lands are farmed in a less productive manner while retaining ecosystem services.
A variety of agricultural cleantech innovations are emerging in the areas of crop farming, urban agriculture, sustainable forestry, animal farming and aquaculture. Venture capitalists have expressed only modest but growing interest in the area of agricultural cleantech, and increased investment is expected as our understanding of what truly constitutes sustainable agriculture evolves.
This has been an abstract of Latest Agricultural Technology Innovation by Kachan & Co. The full report details agricultural cleantech trends and drivers, and profiles 57 important clean agricultural technology companies worldwide.
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