Agriculture 2.0 Conference Focusing on Sustainable Agriculture
on May 12, 2010
(Nicholas Sarkisian is an Essinova contributor covering international sustainability issues.
This article is Part One of a two-part report highlighting innovations and best practices in sustainable agriculture and its role in countering the environmental impact of industrial scale agriculture. Click here to see Part Two, NRDC’s Growing Green Awards Promote Sustainable Agriculture Stewardship.)
Sponsored, hosted and organized by NewSeed Advisors and SPIN Farming, with additional co-host U.S. Venture Partners (USVP), the Agriculture 2.0 Silicon Valley 2010 Event, held March 24, 2010, at the Four Seasons Hotel in Palo Alto, California, was the first West Coast conference of its kind, bringing together venture capital firms and early to late stage start-up companies with a focus on sustainable agriculture. This marked a notable convergence of cleantech, and even biotech, within the agricultural sector.
Janine Yorio, former Wall Street investment banker and founder of NewSeed Advisors, explained that the goal of NewSeed Advisors in organizing and sponsoring the Agriculture 2.0 Conference “is to attract institutional investors’ capital to the sustainable agriculture industry.” Ms. Yorio added that since the sustainable ag industry is a “relatively young industry, the companies tend to be pretty early stage.” As a result, NewSeed also assists these companies to “refine their messaging and structure their capital stack so that they are more attractive to investors.”
Need for Sustainable Solutions in Agriculture
In her opening address, Janine Yorio explained that the agricultural industry contributes more green house gases (GHG) in the U.S. than all of transportation combined, totaling up to “30% of U.S. GHG emissions”. With the U.S. itself contributing almost 25% of world GHG annually, reduction in U.S. GHG agricultural emissions is a key component to any GHG solution.
On that sustainability premise, the conference delivered a day of keynote, panel, and company presentations on sustainable “agtech” innovations and included a separate conference track on sustainable aquaculture sponsored and organized by Aquacopia Capital Management LLC, a venture capital firm specializing in aquaculture. Approximately 250 investor representatives, farmers, agtech professionals and academia were in attendance, including representatives from Draper Fisher Jurvetson, Foundation Capital, Kleiner Perkins, Khosla Ventures, Mindful Investors, Mohr Davidow, Open Prairie Investors, Nexus Venture Partners, Rockport Capital Partners, RSF Social Finance, and U.S. Venture Partners, to name a few.
Tom Tomich, U.C. Davis professor and Director of the Agricultural Sustainability Institute at the university, provided one of the main keynote addresses, focusing on practices that promote a sustainable and secure food industry. Mr. Tomich highlighted that while agriculture represents only 4% of California’s economy, 20% and 40% of California land area and fresh water, respectively, are allocated to agriculture.
One of the featured panels was a Sustainable Ag panel focused on agribusiness models and practices that promote sustainable solutions and standards, and included Melanie Cheng, founder of FarmsReach, a San Francisco-based startup facilitating the development of a model for a regional food market infrastructure, Michael Dimock with the non-profit, Roots of Change, Scott Exo with Food Alliance, and Jeff Dlott with Sure Harvest.
As an example of sustainable practices, Melanie Cheng explained how FarmsReach is collaborating with other organizations to coordinate the formation of a regional food distribution model connecting regional (think “local”) food producers, i.e., farms, with their regional counterparts, the buyers of produce, such as restaurants, food merchants, and other urban distribution points. Melanie Cheng disclosed that the USDA recently granted $300,000 for FarmsReach and four other organizations to formulate and replicate a regional distribution model that has been found to be profitable in certain regions in the U.S, stating that, “Up until now there’s been no model whose processes have been documented, replicated, and profitable in multiple places. This model entails finding buyers, identifying their needs, and finding producers that can supply their needs, and very hands on orchestrating the distribution between the two. FarmsReach will provide the software tool in this process, and all five organizations will work to align supply and demand, and coordinate the conventional food distributors that are in between food producers and their customers.”
Local Dirt, an early stage firm located in Madison, Wisconsin, presented a comparable service it provides through its website that connects local farms with food buyers, including restaurants and grocery stores. The company, founded in 2009 by Heather Hilleren, a former Whole Foods employee, posts information about local farms across the country, enhances transparency of food distribution, and enables placement of food orders and deliveries.
Other panel presentations included a venture capital panel moderated by Janine Yorio with Amol Deshpande of Kleiner Perkins, Stu Rudick of Mindful Investors, Jim Schultz of Open Prairie Ventures, and Don Shaffer with RSF Social Finance, and a capital formation panel comprised of Troy Centazzo, Engagement Partner with Growthink, Dr. Charles Cleland, Director of USDA Small Business Innovation Research (SBIR), Scott Hackenberg, Lending Manager for RSF Social Finance, Jeana Hultquist, VP, US AgBank, and Niko Klein, Analyst with Imprint Capital. The panels highlighted the fact that one of the challenges faced by VC companies is the longer investment holding period associated with some of the agtech companies, especially early stage companies.
In the afternoon, Charles Hoyng, Partner with the law firm Latham & Watkins LLP, presented on intellectual property aspects of agricultural bio-technologies.
Big Agribusiness also weighed in on its position with respect to sustainable agriculture with panelists from Lamb Weston, a subsidiary of Con Agra, JR Simplot, Toro Micro-Irrigation, and Dow Venture Capital. While admittedly not exclusively committed to sustainable Ag practices, and remaining focused on the bottom line, these companies are being influenced from both a corporate social responsibility perspective and as a competitive strategy to stay attuned to sustainability trends in agriculture.
Aquaculture on a Growth Curve
With 80% of all seafood in the U.S. currently being imported and massive over-fishing of existing ocean fish stocks, the Aquaculture track showcased a very compelling business case throughout the featured presentations, including a key note presentation by David Tze, founder and President of Aquacopia. Based upon United Nations’ Food and Agriculture Organization (FAO) data, aquaculture is projected to generate revenues in excess of U.S. $100 billion. However, aquaculture is still struggling with public perceptions stemming from practices in which fish stocks are raised in close and non-hygienic enclosures. David Tze commented that, “Because Aquaculture is in its infancy, beginner’s mistakes are very much on peoples’ minds and so some of the issues of the 1970’s and 1980’s have created some public relations legacy that aquaculture is still dealing with; but the truth of the matter is that in many cases these things have long been corrected and there are new ways of doing things better and a lot of what this conference is about is addressing these better methods which will have more sustainable forms of production. Specifically, we’re going to hear from companies about the ‘re-circulating’ aquaculture -- which is land-based tank systems -- and about offshore aquaculture which is a relatively novel type of farming that’s based on production that’s a substantial distance from land -- 2 miles, 10 miles, 100 miles -- where there’s real depth of water, significant current and you can afford to raise fish in a low density way --overall in an environment that’s much closer to their natural habitat and I think by almost any definition more sustainable.”
Mr. Tze went on to explain that, “The other sustainability issue that often comes up in aquaculture is the question of feeds because so much aquaculture feed is in essence based upon reduction fisheries - catching herring … and other small bony fish, processing them into fish meal and fish oil which then become the key ingredients of aquaculture feeds.” As an alternative, Mr. Tze explained that several aquaculture companies are focused on providing an ultra-sustainable fish meal replacement protein meal that addresses those questions. Also, Open Blue Sea Farms conducted feeding trials with fish meal selected for low-mercury content, and those farmed fish showed no detectable levels of mercury. With respect to objections to the use of antibiotics in aquaculture, Mr. Tze believes that, “Once the FDA produces standards for organic seafood, I think you’ll see a lot of producers conform to that. If you use the right methods then you don’t need to use antibiotics.”
Mr. Tze’s presentation was followed by Bjorn Myrseth, founder and CEO of Norwegian company, Marine Farms ASA, who as one of the pioneers of farmed fishing, presented on his company, one of the most mature and successful aquaculture firms in the world. Of note, Marine Farms provides hormone and anti-biotic free salmon to Whole Foods markets here in the U.S. Mr. Myrseth also presented on recent developments in the farming of Cobia, a tropical fish considered to be of high nutritional and market value.
Innovative Technologies and Companies
Many of the “Agtech” and “Aquatech” companies who presented at the Agriculture 2.0 Conference are highlighted below by industry sector.
Urban Production and Greenhouse-based Companies. These companies have developed urban agricultural solutions, primarily consisting of proprietary aeroponic greenhouse and rooftop production facilities. Companies included AeroFarm Systems, Cityscape Farms, InkaBiospheric Systems, and Verdant Earth Technologies. These start-ups are focusing on the $4 billion bagged-salad market and the $7 billion greenhouse produce market. Urban agriculture solutions require less land area, reduce water consumption by up to 50%, reduce transportation related carbon emissions, and strengthen food security in the respective urban locations. Cityscape Farms, still not yet in production, uses natural fertilizer from filtered fish effluent – from the co-located aquaculture – creating a closed-loop, pesticide free, and organic system. In addition, such designs use no soil, a minimum of fertilizers and water, and in the case of AeroFarm Systems can be vertically stacked to be even more efficient.
Bio-pesticide and Natural Fertilizer Companies. Many of the Agtech companies offered alternatives to the current industrial pesticide and fertilizer practices that contribute significantly to water toxicity and carbon and nitrous oxide emissions. These companies included Marrone Bio Innovations, Itronics Inc., Pasteuria Bioscience, TerraGreen Biologics, and Vestaron. Marrone Bio Innovations (MBI) stood out of the pack with respect to its business model and technologies; MBI products, specifically its biofungicide Regalia, its bioherbicide, GreenMatch, and a forthcoming invasive Mussel deterrent, Zequanox, are projected to generate almost $6 million in 2010 revenue, up from $1.3 million in 2009. Pam Marrone, PhD., founder of MBI, explained that the development cycle for naturally occurring biopesticide agents is much shorter than for standard chemical agents. Moreover, use of MBI’s and Pasteuria Bioscience’s natural products is compatible with organic growing practices. Vestaron is innovating with agbio insecticide products that are derived from and guided by isolated peptides sourced from spider venom and counters the proliferation of environmentally toxic, and increasingly insect resistant, chemical insecticides. Two other companies, Solum, Inc., and Soil & Topography Information provide innovative nutrient diagnostics and delivery solutions that can potentially reduce the overuse of nitrogen and enhance and support crop yield and management. Reductions in fertilizer also affect the bottom line -- in some cases, fertilizer represents up to 50% of the operating cost of food production.
Next Gen Fish Farms and Related Technologies. Half of the aquaculture companies presenting at the conference were next generation early stage fish farm companies, including Blue Ridge Aqua Culture (Blue Ridge), Kona Ahi, Open Blue Sea Farms, Hawaii Oceanic Technology which also produces its patent-pending “Oceansphere” deep ocean fish farming system. These companies are all aware of the huge market for its products – the U.S. imports 85% of its fish, the second largest imported product after oil. And wild fish stocks are being depleted in most areas and thus the current $70 billion fish market is quickly becoming unsustainable. All these farms represent that their fish are or shall be free of growth hormones, antibiotics, and contaminants. Kona Ahi is a subsidiary of the developers of shrimp farms, High Health Aquaculture, and, like Hawaii Oceanic Technology, will farm sashimi-grade ahi tuna in Hawaii. The sashimi grade tuna market is over $7 billion annually. Open Blue Sea Farms operates out of Panama and produces Cobia, a sashimi-grade, marine white fish, targeted for the gourmet seafood market, the upper 20% of the seafood industry in the U.S. Blue Ridge is unique in using indoor facilities, massively recirculating, filtering, reusing, and reoxygenating the water to produce fresh water Tilapia.
Fish Meal Replacement Technologies. Two companies, Montana Microbial Products and Oberon FMR, are bringing to market fish meal replacement products intended to supplant traditional fish meal the fish stocks for which are being rapidly depleted – thus driving prices up -- and that frequently contain contaminants. Montana Microbial Products is producing a barley protein concentrate with similar nutritive value to that of fish meal. Oberon’s proprietary process actually reclaims waste water from food manufacturing plants, incorporating a waste water treatment plant and process that reclaims protein meal as a byproduct of this process. Oberon FMR will also offer an organic fish meal replacement product. These fish meal replacements are also associated with less water pollution.
Food Transport, Traceability and Safety Technologies. Other technologies that rounded out the company presentations related to enhanced food packaging and transport, food traceability, and safety. Purfresh addresses all of these issues with its solution, reduces chemical inputs that permit it to meet organic standards, and integrates with the existing refrigerated transport container systems. FoodLogiQ presented its information technology solution, a Software as a Service (SaaS) offering that enables traceability by and for the user. Food Alliance presented its third-party quality assurance and traceability certification that extends through the entire supply chain for any given product, from grower to packager, processor, and distributor. Food Alliance is used by Shepherd’s Grain, a company that was recently honored by the National Resources Defense Council (“NRDC”) as a business leader in sustainable agriculture and is highlighted in Part Two of this report, NRDC’s Growing Green Awards Promote Sustainable Agriculture Stewardship.
Tags: agriculture, sustainable agriculture, food, farming, Agriculture 2.0, aquaculture, New Seed Advisors, Janine Yorio, Aquacopia, David Tze, SPIN Farming, U.S. Venture Partners, urban farming, food transport, food safety, venture capital, FarmsReach, Melanie