Today we share with you a new monthly feature for GAI News — Consultant’s Corner — where our industry experts from HighQuest Consulting provide insight on the latest activities in the ag investing and agtech space. Enjoy!

By Philippe de Lapérouse and Mark Zavodnyik, HighQuest Consulting

The ongoing trade war begun with China last summer has prompted interested parties in the U.S. agricultural sector to question the impact this has already had on the U.S. and global agriculture sector and the implications for the future.

To date, the impact of Chinese tariffs on the U.S. agricultural sector has been significant. For the first five months (Sept. 2018 – Jan. 2019) of the new crop year, U.S. export sales and weekly inspection reports indicate a 38 percent decline in accumulated shipments. The U.S. has exported 21.5 million metric tons of soybeans through the end of January, compared with 34.7 million metric tons for the same period last year.

Since last summer, China, which accounts for more than 60 percent of global soybean trade, has covered its needs almost entirely from Brazil, to avoid the 25 percent duty placed on soybeans imported from the U.S. The U.S. in turn has been supplying soybeans to the rest of the world.

There is not enough soybean import demand in other destinations to fully offset the interruption of demand from China. Through end of January, U.S. shipments to other destinations have increased by only 8.2 million metric tons, compared to last year, while shipments to China have decreased by 21.4 million metric tons. To date, the net decline of U.S. soybean exports amounts to 13.2 million metric tons. In December 2018, the USDA projected marketing year exports of 51.7 million metric tons (1.9 billion bushels), which represents a 6.2 million metric ton decline from the previous year. Thus, for the balance of the 2019 marketing year, U.S. exports will need to achieve a pace that gains on prior year shipments by 7.0 million metric tons just to achieve the USDA’s estimate of marketing year exports.

China has begun purchasing a second round of 5.0 million metric tons of U.S. soybeans, partly to improve the trade negotiating environment, and partly to rebuild stocks. If the U.S. has an opportunity to increase soybean sales to China, other destinations will likely increase their coverage from Brazil. It therefore will be challenging for the U.S. to regain its global share without production problems somewhere else in the world.

While U.S. soybean producers are hard to read with respect to planting intentions for the next crop, some reduction in acreage can be expected. However, after a half dozen years of expanding exports driven by Chinese demand, and price levels supported by seasonally tight pipelines, grower concerns are surprisingly muted, despite the fact that interior basis levels and futures spreads remain weak.

As 2019 begins, this situation raises a number of key issues for stakeholders across the food and agricultural value chain (producers, exports and investors, etc.):

-Are U.S. soybean and corn producers likely to decrease their 2019 planting intentions in order to mitigate future exposure and limit losses?

-How are volumes of soybeans and other soft commodities exported from major origination markets to major destination markets likely to change to make up for the decrease in U.S. exports, and what are the long-term ramifications for trade flows?

-What is the likelihood, assuming that U.S. growers reduce their plantings of soybeans and corn, that the trade war will lead to a build-up of excess stocks of agricultural products in the U.S. as China shifts its purchases to competitive origins such as Brazil and Argentina?

-How is the current trade war likely to affect commodity prices in the medium and longer-term?

-What is the likely impact on the profitability and financial position of U.S. producers over the coming year?

-What impact will this development have on farmland prices in the major U.S. soybean and corn growing regions and will it drive institutional investor appetite for farmland in South America?

-How will the prospect of reduced exports of soybeans and corn in 2019 from the U.S. affect the ability of producers to access credit to finance this year’s crop?

-What is the likelihood the trade war will result in an increase in farm bankruptcies in the U.S. in 2019?

For help examining the ever-changing ag world through consulting and due diligence projects, please contact HighQuest Consulting. www.highquestconsulting.com

ABOUT THE AUTHORS

Philippe de Lapérouse is a managing director at HighQuest Partners, a leading global strategy advisory and consulting firm. HighQuest advises strategic players operating in and financial investors allocating capital to the global food and agricultural value chains on making informed decisions on strategy and resource allocation. Lapérouse chairs the Global AgInvesting conference series. He can be reached in St. Louis at +1 978.887.8800 x365 or via email at pdelaperouse@highquestpartners.com.

Mark Zavodnyik is project manager for HighQuest Consulting. Previously, he was the lead tropical oils trader at AAK USA with responsibility for all palm, palm kernel, and coconut oil sourcing, trading, and risk management for AAK facilities in the United States. Zavodnyik has spoken at a number of industry conferences on the supply/demand factors impacting tropical oil markets, as well as the efforts the industry has undertaken to make palm oil more environmentally sustainable. He can be reached at  +1.574.274.3099 or mzavodnyik@highquestpartners.com.

The post CONSULTANT’S CORNER: The Impact On Ag From The Trade War appeared first on Global AgInvesting.

New Brunswick, Canada-based Cooke Inc., the parent company of Cooke Aquaculture, has completed the acquisition of Seajoy Seafood Corporation Group, one of the largest vertically-integrated shrimp farms in Latin America. Financial terms of the deal were not released.

With operations in Honduras and Nicaragua, Seajoy has 8,650 acres of shrimp farms producing Pacific white shrimp. It also owns a large-scale processing plant located in Choluteca, Honduras, and owns hatcheries, breeding programs, and cold storage facilities with the ability to store up to one million pounds of finished product. Through these assets, Seajoy produces a range of organic and value-added shrimp, including peeled and deveined, to butterfly shrimp, to fully cooked shrimp and skewers.

With a business that has activities along the entire supply chain, from “egg to plate”, Seajoy’s attention to environmentally and socially responsible seafood production has gained the company certification from the Global Aquaculture Alliance (GAA); 4-Star Best Aquaculture Practices (BAP); EU Organic; the Aquaculture Stewardship Council (ASC); SMETA; and the UK British Retail Consortium (BRC). Backed by these credentials, Seajoy sells its shrimp products to customers across Europe, the Americas, and Asia.

“Seajoy is a world-leading shrimp producer utilizing the highest quality and food safety standards and newest available technology,’ said Glen Cooke, CEO, Cooke Inc. “This aligns perfectly with our existing aquaculture and wild seafood fishery divisions. We feel Seajoy’s entrepreneurial drive, industry knowledge and care for their communities has made them successful and a big reason why we feel this is an incredible cultural fit.”

Giant Shrimp Potential

Growing  at a CAGR of 6.2 percent, the global shrimp market is expected to reach a value of US$133.43 billion by 2025. In 2017 global production topped 9,061.6 kilo tons, and of this production, 56.2 percent was generated through aquaculture.

Within an industry poised for such growth, it is a strategic move by Cooke to establish a presence in Latin America, which the UN Food and Agriculture Organization (FAO) targeted as the region to see the fastest growth in per capita fish consumption over the next 10 years, in a four-part report issued last year.

Indeed, there is climbing demand in exports markets as well – as U.S. shrimp imports continue to rise, reflected in the numbers posted for January 2018 when imports reached 61,593 metric tons – a 21 percent jump over a year before.

“We founded Seajoy in Ecuador in 1979 just six years before the Cooke family started Cooke Aquaculture in New Brunswick in 1985,” said Peder Jacobson, former CEO of Seajoy. “Our families’ drive as pioneering entrepreneurs and our employees’ determination over the years has resulted in two successful independent seafood companies, and now I am extremely pleased to have Seajoy join the Cooke family of companies.”

-Lynda Kiernan  

The post Cooke Inc. Acquires One of the Largest Vertically Integrated Shrimp Farms in Latin America appeared first on Global AgInvesting.

Ketos, the developer of the world’s first water intelligence platform, announced it has raised $9 million in funding from list of venture capitalists, impact investors, and industry leaders.

Participating in the round were existing investors, Rethink Impact and Better Ventures; new investors, Broadway Angels and Plum Alley Ventures; along with strategic angel investors from Water.org, and the semiconductor industry, as well as an investor represented by Energy Innovation, an energy and environmental policy firm.

Founded in San Francisco, and led by tech executive and entrepreneur Meena Sandaran, who serves as company CEO, Ketos’ platform offers actionable real-time water monitoring and analytics, with the goal of creating a more efficient water management system for agricultural and industrial businesses.

“Clean, safe water is essential. However, a host of activities—including fracking, mining, landfills, pollution, runoff, excess pesticides and fertilizers—are potential dangers to our water resources. Leapfrogging the incomplete and fragmented water testing and monitoring technologies of the past, KETOS will help ensure we can meet water safety needs and standards,” stated Hal Harvey, CEO of Energy Innovation.

Through its platform, Ketos can precisely detect and measure more than 20 parameters to laboratory requirements, and has analyzed more than one million water quality tests across more than one million gallons of water from 130 deployments across India, Mexico, and the U.S.

“Water is both the most powerful and most important compound on earth, and access to clean water is fundamental to health, education and economic development,” stated Tony Stayner, an active investor in clean water initiatives, and Water.org board member. “Bringing novel scientific and technological advances into every pipe and grid within our evolving water infrastructure, KETOS is the future of a clean, sustainable global water system.”

Its real-time water safety management solution includes an early warning system that flags for a comprehensive list of contaminants and heavy metals. It also offers insight to operators on the best filtration and remediation actions; how to manage crop yields efficiently; the cost effective measures to take on process control; and with predictive maintenance capabilities, is able to prompt users to proactively repair pipes at appropriate times.

Additionally, Ketos’ Wave Fabric, an innovative software fabric house in-line within pipes, offers real-time water utilization data, leak detection, and remote water supply management. Ultimately, Wave Fabric is able to give operators a deeper understanding of consumer behavior, water distribution, flow and pressure parameters, and utilization forecasts.

Breakthroughs in data analytics and remote sensor technologies allow us to reimagine how to manage, protect and treat our water supply,” said Heidi Patel, partner at Rethink Impact. “KETOS will reshape the global water supply as it increases efficiencies, reduces risk and improves sustainability—providing incredible benefits for its commercial customers and the planet.”

The company plans to use the funds raised to drive the emergence of a new era in water safety and efficiency. Toward this end, Ketos will accelerate the global market penetration of its patented sensors and machine learning analytics platform, and to expand its team.

“The first step is to measure and understand what is actually in our water at any given moment – it might sound simple, but it is incredibly challenging, and water testing solutions have been unable to give the full picture for decades,” said Sankaran. “Water intelligence that immediately reveals the presence of hazardous toxins, delivers actionable warnings for live decision making while providing proactive metrics and insights is the foundation for smart water management. Our secure cloud-based solution empowers our customers, from industrial and agriculture to civic and commercial, with the water data they need to effectively measure, control and optimize our most precious resource … water.”

-Lynda Kiernan

The post Ketos Secures $9M in Funding for Water Intelligence Platform appeared first on Global AgInvesting.

UK-based Wheatsheaf Group, the investment unit of the Grosvenor Estate, has acquired a 90 percent stake in Purfresh, a provider of specialized climate control technology designed to reduce food waste during shipping.

Based in San Francisco, Purfresh reduces the risk of high-value cargo loss through the combination of controlled atmosphere and active atmosphere with ozone technology. Through this platform, Purfresh is able to delay ripening, reduce decay, extend the shelf-life of high-value crops, and reduce the presence of pathogens that can result in as many as one-in-fifteen food shipping containers being rejected at their destination port.

“Purfresh aligns very closely with our strategy of investing in companies that drive efficiencies in the food supply chain while also providing a tangible social benefit,” said Grahan Ransbottom, CEO, Wheatsheaf. “The technology is proven to increase food safety without the need for any harsh chemicals and reduce waste in the global shipping of perishable goods.”

Intellipur®, Purfresh’s proprietary cloud-based cargo monitoring software, gives the company’s customers the ability to have real-time visibility, and remote control of, the conditions within containers shipping various foods and commodities – an ability that is especially needed in the case of some of the more high-value or climatically fragile crops such as blueberries, avocados, and mangoes. However, it also offers technology that helps preserve non-climacteric fruit cargoes such as pineapples, grapes, and citrus.

A Critical Point

Solving issues associated with agricultural and food waste is becoming a more common theme among agtech and food tech startups and their investors, not only in the U.S., but in global markets, as the stakes of not doing so become increasingly critical.

This need is being addressed by startups and their investors along the entire food supply chain, as food waste is a challenge at every stage, from the farm level to end consumer.

Up to 40 percent of food produced, processed, and transported in the U.S. ends up never being eaten, according to Feeding America, and more food finds its way to landfills and incinerators than any other type of municipal solid waste. This loss represents a fiduciary hit of $218 billion to U.S. farmers, businesses, and consumers each year, according to ReFED, which also found that 20 billion pounds of food is lost at the farm level each year. Of this loss, the Natural Resource Defense Council estimates that between 10 and 30 percent is discarded due to its appearance.

In August of last year saw two notable investments: Swedish investment firm Kinnevik led a $12 million Series A for Karma, a tech company working to reduce food waste across Europe; and Full Harvest, an agtech platform providing a new food supply chain model to mitigate waste through a B2B marketplace providing end-to-end logistics solutions for surplus and imperfect food, announced it closed on $8.5 million in funding led by Spark Capital.

This was followed in October of last year by two more, when NBA All-Star Kevin Durant made an undisclosed investment in Imperfect Produce, a startup working to mitigate food waste by generating and fostering a market for cosmetically imperfect fruit and vegetables, and Boston-based Spoiler Alert, a tech platform that aids large-scale food manufacturers and wholesale distributors manage and control unsold inventory, announced it had secured a strategic investment from international logistics company, Maersk.

More recently, in January of this year, FoodMaven, a food waste mitigation technology platform that integrates both for-profit goals with an impact aspects, announced it has raised $10 million in capital through a round backed by Tao Capital and members of the Walton family, the founders of Walmart.

The growing demand by consumers for a more responsible, sustainable, and efficient food supply system is not only a driver for the development of novel agricultural and food technologies, but is also driving capital to the category.

“Wheatsheaf were the obvious partner to support Purfresh’s growth,” said Christian DeBlasio, CEO, Purfresh. “Wheatsheaf has committed significant funding to support a rapid roll out of our technology to meet growing customer demand.”

-Lynda Kiernan

The post Wheatsheaf Acquires Climate Tech Company to Reduce Food Waste in Ocean Shipping Containers appeared first on Global AgInvesting.

Tyson Foods has announced its agreement to acquire the European and Thai operations of Brazilian meat giant BRF S.A. for $340 million.

The deal includes four vertically integrated processing facilities in Thailand, supported by a feed mill, a hatchery, breeder farms, and contract growing operations that supply live birds for the four poultry processing plants.  These plants provide a range of fresh and frozen, value-added raw and fully cooked poultry products including specialized cuts for retail and food service customers across Asia and other export markets.

Additional assets acquired through the deal include one processing facility in the UK, and one processing facility in the Netherlands – both of which have in-house innovation capabilities for the development of further-processed chicken products for sale across Europe.

“It’s estimated that approximately 90 percent of global protein consumption growth will occur outside the United States, with 60 percent of the volume growth coming from Asia over the next 5 years,” said Donnie King, group president of International for Tyson Foods. “Increasing our international footprint with in-country operations and export capabilities will help Tyson Foods strategically access new markets and better serve the growing global demand for our value-added protein.”

Both Sides of the Fence

Tyson Foods’ has read the writing on the consumer wall, and noted the growing upswing in popularity of protein – both plant-based and animal-based proteins – and has taken steps to advance its presence in all areas.

In October 2016, Tyson, which is the largest meat company in the U.S. by sales, became the first global meat company to invest in a meat alternative startup when it acquired a five percent stake in plant-based meat alternative producer Beyond Meat.

In December 2017, Tyson became a repeat investor, partaking in a $55 million Series F for the company along with venture capital firm Cleveland Avenue, which was founded by former McDonalds CEO Don Thompson.

“We’re enthusiastic about this investment,” said Monica McGurk, Tyson Foods’ executive vice president of Strategy and New Ventures & president of Foodservice at the time, adding, “which gives us exposure to a fast-growing segment of the protein market. It meets our desire to offer consumers choices and to consider how we can serve an ever-growing and diverse global population…”

However, Tyson has remained committed to animal-based proteins as well, investing $850 million in capital in May of last year to acquire the poultry rendering and blending assets of American Proteins and AMPRO Products.

Only one week later, the company announced it had agreed to acquire Tecumseh Poultry, one of the leading organic branded chicken producers in the U.S., and maker of the Smart Chicken brand.

Founded in 1998, Tecumseh produces air-chilled, fresh organic chicken as well as deli chicken products and chicken sausages through its facilities in Tecumseh and Waverly, Nebraska, as well as its live operations.

Very soon after the Tecumseh deal, Tyson went on to announce another bold move: its agreement to acquire Keystone Foods from Marfrig for $2.16 billion in cash.

Headquartered in Pennsylvania, Keystone supplies value-added chicken, beef, fish, and pork products to some of the top global quick-service restaurant chains, as well as retail and convenience stores.

Although the sale of protein products to restaurants is less profitable than selling branded products to consumers, Market Watch points out that the business is rather stable, and will provide Tyson Foods with an insulation against market difficulties currently being faced by the wider U.S. meat industry. In addition to this strategic advantage, it is also through Keystone’s strong presence in key high-growth markets that Keystone can act as a conduit of growth for Tyson.

Indeed, Tyson states that like Keystone, the deal for the BRF assets builds on the company’s growth strategy to expand its value-added protein offerings across international markets.

“As noted when we acquired Keystone Foods on November 30, we believe some of our biggest growth opportunities are in value-added foods and international markets,” said Noel White, president and CEO of Tyson Foods. “In addition to domestic benefits, the Keystone acquisition provided us with a scalable production platform in the Asian poultry market. The acquisition of these BRF facilities will help complement and strengthen our presence in Thailand, and provide new capabilities in Europe, enhancing our ability to serve growing global demand for value-added protein.”

-Lynda Kiernan

The post Tyson to Acquire the Thai and European Operations of Brazilian Meat Giant BRF for $340M appeared first on Global AgInvesting.

Agtech startup Agersens’ revolutionary virtual fencing technology was highlighted at last fall’s Women in Agribusiness Summit, a sister event to the Global AgInvesting series, where the company’s Sally Haynes prevailed over the Ag Innovation Hour panel, which showcased disruptive innovations that are changing the future of agriculture and food.

As chief scientist of animal behavior and welfare at the Australian company, Haynes was instrumental in the development of the company’s eShepherd^TM product, the world’s first livestock virtual fence. The new technology is deployed via GPS-enabled, solar-powered neckbands for cattle, and managed through a smart device app. It automates grazing, fences cattle, and helps protect the environment. The software enables beef and dairy farmers to virtually monitor, muster, and move their cattle to desired locations, providing a myriad of benefits.

Haynes started with the company in 2015, joining founder Ian Reilly in the initial team of two that has grown to more than 50 employees. Since its launch, the company has been recognized as one of Melbourne’s top startups to watch for 2017, and one of the world’s top disruptive brands of 2017.

GAI News caught up with Haynes to learn more about this disruptive technology.

1. First, can you please explain how eShepherd^TM works?

It’s a virtual fence for livestock that enables cattlemen (and women) to remotely fence and move their animals, and monitor them 24/7 wherever they are in the world using a smartphone, laptop, or PC. The animals wear a neckband that includes a device that is solar-powered and contains an algorithm that trains the animal as to where the fence is. It’s an algorithm that is very clearly based on animal behavior and teaches the animal to respond to the virtual, GPS-enabled fence through an audio sound. The farmer actually draws the virtual fence on their computer with their mouse, and GPS satellite imagery activates the fence. This information goes to the cloud which goes to the base station, and the message is sent to each neckband. Each neckband is autonomous – each individual neckband trains each individual animal and records information and behavior about what each animal is doing. And being solar-powered, there are no battery changes needed and the neckband can go a week without sun, and even then only requires a small amount of sun.

The farmer can draw fences over tough physical terrain or rivers or crops to train animals to stay out of areas you don’t want them to be in, without a physical fence. It can be used for cell grazing for various breeds of cattle. The training algorithm is a smart device, not a blunt instrument, as it’s really important that we don’t invoke a fear response in the animals. The animals always get an audio cue as they approach the fence before they would get a pulse so they have an opportunity to turn away. We’ve found that within two to five experiences, 80 percent of the cattle pair the audio with the pulse and realize they have to turn around when they get the audio. The cattle are curious though and we see them explore the fence line to find holes, which is helpful because if the farmer changes the fence, he wants them to move through that area to new pasture, and we’ve found they do that within a few hours.

2. How did the company get started? And what is your role?

People have been trying to do virtual fencing for years and years. About 10 years ago, a research organization in Australia came up with a welfare and animal behavior approach rather than an engineering approach, and they succeeded because they put the animal first. They developed a simple algorithm, which while not commercially viable, the knowledge and direction was set. My boss came upon this and did some background research and negotiated an exclusive license to the intellectual property, which we discovered needed much more finesse to be successful.

My role is to be the conduit between the developers and the cows – to show them how an animal learns and behaves, and to recommend training methods so they can continue to improve our product. I also spend a lot of time communicating what we’re doing to animal welfare organizations and government regulators.

I’ve never worked in a startup environment before. It’s one of those roles that I have never been bored with – everyday I learn something new. As someone who is obsessed with how animals learn and interact with us and each other, I am suddenly learning about software, hardware and more and experiencing the planning that goes along with it. It’s pretty exciting to see the development now. It’s not a product that you just make and walk away. It’s a constant cycle of learning.

3. How has this innovation created a new market and value network, displacing market leading products? What are the key benefits?

The virtual fence does not displace other products. It’s so transformative that there’s nothing else that it competes with. This is a product for those livestock producers who are on the cutting-edge, looking to monitor their animals very closely.

The product provides those cattle producers with the tech that they need to offset two major barriers for achieving greater productivity. One of them is the cost of labor required for fence installation, and the second barrier is scale. eShepherd allows farmers to scale up pretty quickly without having to put a lot of effort into dividing paddocks or worry too much about the logistical challenges of scaling up.

As far as benefits, reducing labor costs is extraordinary; more efficient grazing is realized, which is good for the farmer and the environment, and also allows for ecological grazing and environmental land management; and it is an environmentally-sustainable solution.

You still need good animal management – this is not the end of that. It’s a brilliant tool that allows livestock producers to focus on what they really need to do to increase productivity, knowing their animals are herded in a most humane way.

4. IoT technologies are still in their infancy in agtech applications. How has eShepherd been received by the industry?

We currently have neckbands on cattle in four different countries – Australia, the U.S., New Zealand, and Canada – and we have a massive waiting list.

We have had to keep quiet a bit about it to ensure testing in smaller applications before moving to larger opportunities. We are careful to understand the social behavior of a herd before we apply something that will affect that. So we test in-house extensively before we release any technology to our customers. That is part of our process – this is not an off-the-shelf product – this is an ongoing relationship with us as a company that includes training, data, monitoring, and feedback. We are very much a company that cares about our customers and their animals.

We started very small, with about a dozen animals so we could monitor each individually. We’ve built up to handling about 50 to 250 animals, and expect to increase that quite dramatically in the not-so-distant future.

Our next challenge will be managing the demand as it’s more of a market pull, than a technology push. This solution addresses such a broad range of problems that people have been having, and with the stronger push from consumers to know where their food comes from, as well as to know that the entire herd has been taken care of, we are seeing a lot of global interest.

Initially this was not the cheapest product to make in-house, however, our customers have said “it’s a no-brainer”, that this product delivers much more than it costs. Our producers are saying we want this, this is going to benefit us and it far outweighs the cost. And the neckbands are reusable so it begins to pay for itself.

5. Is there a time for commercialization of the product? And what is on the horizon for funding and product growth?

We have been manufacturing in-house for some time now, but the global distribution is set for mid-2019 through our distribution partner Gallagher, a New Zealand-based company that is very well known in the traditional fencing market. They have been one of our great supporters and investors, as have those in the private sector.

We’ve already raised more than $10 million to-date, and are currently raising further funding.

Data collection from the neckbands is going to be really big, and every time I talk to someone, whether in government or a stakeholder, they always have a new idea of how we can use this product. So though we’ve made great strides so far, I feel like we are just scratching the surface of the products’ capabilities about what it can offer to agriculture and the environment.

ABOUT SALLY HAYNES 

Sally Haynes is chief scientist of animal behavior and welfare for Australian agri-tech company Agersens, bringing world-first virtual fencing technology to cattle ranchers globally. Haynes’ position as first employee has seen her wear many hats – research scientist, government lobbyist and media liaison – and enabled her to see Agersens grow from a two-person start-up to one of Melbourne’s most innovative companies, employing over 50 people across R&D, product development, data analytics, and manufacturing. Haynes is completing her PhD at the University of Melbourne, whilst also delivering lectures to undergraduate students as an expert on dog and cat behaviour. She is competitive with her own dogs in agility, obedience, and retrieving. She can be reached at shaynes@agersens.com.

ABOUT THE AUTHOR

Michelle Pelletier Marshall is managing editor for Global AgInvesting’s quarterly GAI Gazette magazine and a regular contributor to GAI News. She can be reached at mmarshall@globalaginvesting.com.

The post 15 Minutes With… Sally Haynes, Chief Scientist at Agersens appeared first on Global AgInvesting.

Contributed Content
By Michael DeSa of AGD Consulting, and George Varvarelis of Augmenta

Imagine you’re at the county fair with your date, casually strolling the grounds, watching ring toss games and listening to the joyful screams from the kids on the ferris wheel. Inevitably, you stumble across the fortune tellers and palm readers. Some people are passionate professors of this craft, while others are strict non-believers. Most, however, are willing to try it out of sheer curiosity, so long as it’s not too expensive. The adoption of Variable Rate Technology (VRT) technology — an application allowing farmers to apply different rates of crop inputs at each location across their fields — appears to have evolved in a similar fashion; some being true believers, but most only willing to put their toes in the water. We’ll take a deeper dive into VR tech, the headwinds facing a more widespread adoption, and what the future may hold.

What Problem is VRT Trying to Solve?

One of the indisputable facts we’ve learned in the last 15 to 20 years is that field variability is a real thing. Every farmer’s field has different agronomic needs, weather patterns, and soil profiles. As a result of this field variability, most farmers suffer some form of loss due to underperforming crops and overspend in inputs. VRT describes any technology that enables producers to vary the rate of crop inputs using a combination of variable-rate (VR) control systems with applications equipment, to apply inputs at a precise time and/or location to achieve site-specific application rates. However, if VRT was designed to solve a problem most of us agree exists, why have adoption rates been so slow?

VRT Adoption – How Does it Compare?

Like most things in agriculture, economic incentive and immediate need are two primary drivers for precision ag adoption, including VRT. By the end of 2017, for example, nearly 80 percent of U.S. ag retailers had adopted some form of GPS guidance[1]. Given that most U.S. farmers access new agtech through retailers, it’s safe to say guidance systems have been generally adopted by mechanized farmers worldwide. Why? Because the immediate benefits were very clear, the technology was easy to use, and the ROI was short and compelling. To the contrary, farmer up-take of VRT has been comparatively lower, rarely exceeding 20 percent anywhere in the world for cereals and oilseeds. These adoption rates indicate an “experimental” level of acceptance[2]. In spite of the widespread availability for VRT services indicated by Figure 1 and intense publicity and subsidies in some countries and states, VRT use by farmers has rarely broken this threshold.  

Figure 1 – Dealers Offerings of Precision Services, Variable Rate Technology

Figure 2 – VRT Adoption Purposes by Crop 1998- 2013

Challenges with Current VRT

Many of these headwinds to VRT adoption stem from the inadequacies of the technology and/or methodology used. First, ag retailers who offer Variable Rate Application (VRA) mapping generally do so as an add-on service to soil sampling. The problem with this methodology is that soil sampling data used to create VR prescription maps does not accurately consider nitrogen levels throughout the farm. In fact, nitrogen in nitrate form is evaporated by the time many of these samples reach the lab.

Drones and satellites are also commonly used today to create NDVI maps from which variable rate prescription maps are derived. NDVI maps tell a farmer how much more near-infrared light is reflected compared to visible red light. When translated into actionable data, it can provide insight into a variety of agronomic issues, but doesn’t specifically pinpoint why the crop is stressed (poor nutrition, disease, lack of water, or fertilizer, etc.). Further, the quality of the NDVI map is directly related to the sensor’s altitude and resolution. Logistics, high technical skills requirements, data transmission latency, and weather limitations all impact the use of drones/satellites for VR prescription mapping. While the use of VRT on tractors to enable mechanized input applications is a well-developed landscape, their effectiveness is still limited by the quality of the NDVI sensor.

Finally, many prescription maps today rely on a combination of soil samples (often taken only once per every acre or two) and drone/satellite NDVI imagery to create accurate enough maps in which to base agronomic decisions. With nitrogen fertilization windows being narrow and unpredictable, neither of these solutions allow the grower to capitalize on these maps in real-time.

What Must Change?

In order for VRT to break through the 20 percent adoption ceiling, it must make economic sense for the farmer. It must consistently illustrate that it helps increase yields and reduce input costs, ideally in the double-digit range. It must be easy-to-use and compatible with existing GPS systems. It must eliminate the high cost of site-specific information requirements (soil sampling) and developing individual prescription maps. The technology must be scalable and customizable to read more than one crop type without complicated configuration or retrofitting. Higher resolution, camera-based systems utilizing computer vision and machine learning are likely steps in the right direction. The solution must be able to be applied in real-time, and for commodity growers, grain prices may also need to improve before many will consider adoption.

Finally, the cost of being wrong must be cushioned by incentives for early adopters. Trial lease periods with free support, integration at grower co-ops and ag retailer levels first, and economic incentives from the downstream use of farmer data are just a few examples. In order for this to work, the bold must be rewarded by early fortune.

Find out more about Augmenta at www.augmenta.ag

About the Authors:

Michael DeSa is the founder/managing director of AGD Consulting, a U.S.-based, strategic advisory and business development firm servicing the agricultural and resource sectors in emerging and OECD markets. Services include farmland and agribusiness due diligence, project origination, market assessment, and competitive analysis for precision ag technology and international project management. DeSa can be reached at michael@desaconsultingllc.com.

George Varvarelis is the founder/CEO of Augmenta, a precision agriculture technology company. Varvarelis was a Ph.D. candidate in computer and embedded systems engineering while managing his family farms before deciding to put his engineering expertise into action to create scalable solutions for large-scale farming. Augmenta’s mission is to connect the dots of the global agriculture ecosystem and to augment the capacity of the arable land. Varvarelis can be reached at george@augmenta.ag.

SOURCES

[1] Bruce Ericksonet, James Lowenberg-DeBoer, and Jeff Bradford. (Dec 2017).  2017 Precision Agriculture Dealership Survey. Retrieved from the Departments of Agricultural Economics and Agronomy, Purdue University. http://agribusiness.purdue.edu/files/file/croplife-purdue-2017-precision-dealer-survey-report.pdf

[2] Professor Lowenberg-DeBoer, James. “Economic Considerations for Agricultural Big Data.” PowerPoint, Identifying Obstacles to Applying Big Data in Agriculture Conference, Houston, TX USA, August 20-21 2018.

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Paraway Pastoral and Viridis Ag, two units of Macquarie Infrastructure and Real Assets (MIRA), are moving to divest certain assets acquired from Hassad Agriculture last year.

In early September 2018, Macquarie’s Paraway Pastoral agreed to an acquisition that would be the largest farmland deal since the sale of S. Kidman to Gina Rinehart and China’s Shanghai CRED for A$386.5 million in 2016.

Through the deal, Paraway Pastoral acquired the remaining farmland assets of Hassad Australia, a unit of the Qatari sovereign wealth fund – The Qatar Investment Authority – for nearly $300 million.

The nine properties spanning Victoria, New South Wales, and Western Australia included in the 2018 deal, which exceeded 100,000 hectares and ran more than 47,000 head of cattle, were split between the two MIRA farming companies, Paraway Pastoral and Viridis Ag. These included:

Old Bundamar – a 22,562-hectare sheep, wool, and grain farm

Gindurra – an 8,516-hectare sheep, wool, and grain farm

Englefield Plains – a 7,4468-hectare  wool and grain farm

Barton Station – an 8,244-hectare sheep, wool, and grain farm

Amarinya –  a 14,672 grain farm

Bindana Downs – an 8,483-hectare grain farm

Yupiri – an 8,340-hectare grain farm

And Urawilkie – a 25,932-hectare grain and livestock farm

Being sold are five groups of holdings, with Paraway Pastoral expected to be selling grain growing holdings, while Viridis is expected to be divesting grazing land. The first auction is expected to take place in South Australia on February 22, reports Farm Online, with agent expectations for bidding ranging from $4,400 per hectare to $7,000 per hectare.

The combined Laura Downs group of four properties and the 3,365-hectare Paddys River parcels are being sold with expectations of fetching $21 million and $17 million respectively.

“These are strategic investment decisions by the two businesses,” said CBRE Agribusiness director, Col Medway, who is marketing the New South Wales holdings.

“The decision to sell was made because the properties just do not fit the investment mandates and long term plans of each fund, and the vendors recognise there’s keen market demand for well developed, prime quality holdings with scale.”

Expressions of interest for either individual farms, multi-farm parcels, or associated water entitlements are being accepted by March 7.

-Lynda Kiernan  

The post Macquarie Divesting Certain Hassad Assets Acquired Less Than Six Months Ago appeared first on Global AgInvesting.

California-based early-stage tech investor CerraCap has made an undisclosed investment in AgShift, the developer of the world’s first AI food inspection system.

Founded by company CEO Miku Jha, AgShift is working to instill objectivity and consistency, and to remove bias in the food safety space. Employing computer vision and cloud-based deep learning models, AgShift’s technology platform is able to inspect produce and commodities for quality and defects such as bruising, and to then make judgments based on either an organization’s requirements or specifications put forth by the U.S. Department of Agriculture.

The ratings generated through this platform are able to augment physical inspection processes, and can mitigate food waste, disputes between suppliers and buyers, inconsistent food quality, and brand reputation damage.

“In Agro-tech, there is hardly any company that is embarking on the journey to change the landscape of food inspection. AgShift offers a completely unbiased, objective, quality assessment for commodities, protecting the quality, sourcing, pricing and brand – every single time,” said Ritesh Agarwal, managing director of CerraCap Ventures.

This is the second funding secured by AgShift in the past year. In March 2018 Exfinity Venture Partners, a “frontier technology fund backing enterprise companies in India and across the India-U.S. business corridor” made its first pure-play agtech investment, committing  $2 million in seed funding to the startup.

“We have proven out our core technology working with these great partners,” said Jha at the time. “Now, with new capital, we will work towards strengthening our development team and maturing the product for specific enterprise and use cases.”

CerraCap is a global fund focusing on B2B solutions in emerging technologies associated with AI, healthcare, and cyber security. Through its Sales and Scale model, the fund takes an active stance in regard to commercializing its portfolio companies’ technologies – something that AgShift sees as instrumental to its growth.

“For young technology startups in food technology – one of the key challenges is accessing the right advisors, stakeholders and strategic partners in the food supply chain,” said Jha. “Technology startups have a tough time maneuvering through this complex ecosystem. In this regard, partnership with CerraCap Ventures has been instrumental for us. They have helped us open the doors with their existing network and right sponsors, at the right time. Their belief and support in our overall vision is truly encouraging. We are extremely pleased to have a strategic partner in CerraCap Ventures.”

-Lynda Kiernan  

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Nordic Aquafarms, which is currently in the process of building one of the largest salmon farming operations in Belfast, Maine, has announced it will invest up to another $400 million to build a second recirculating aquaculture system in Eureka, California.

Through its subsidiary, California Marine Investments, Nordic Aquafarms has entered into an agreement with the Humboldt Bay Harbor District to lease 30 acres for the state-of-the-art fish farm, which will be located 270 miles north of San Francisco, and will generate up to 80 jobs. As is the case with the company’s project in Belfast, Maine, the location aligns with its strategy of positioning its facilities in proximity to its targeted regional markets, according to Bernt-Olav Roettingsnes, CEO of Nordic Aquafarms.

“As we did on the East Coast, we conducted a thorough search over the past few months to find the right location for our West Coast expansion,” said Nordic Aquafarms’ U.S. President Erik Heim. “This site meets all of our criteria for building a safe, clean, and sustainable fish farm, and we have been welcomed by local authorities who are excited about the many benefits this project can bring to the area.”

“The Humboldt location will enable us to reach more than 50 million people within a 12-hour drive or less, which reduces the cost and environmental impact of transportation while supplying the market with super-fresh, sustainably raised local fish,” said Marianne Naess, commercial director, Nordic Aquafarms.

The Belfast project is currently in the permitting phase, and construction at that site is scheduled to begin in the coming months of this year, while the California facility, which will produce either salmon or steelhead trout, will take over a location previously held by the Samoa Pulp Mill that closed in 2008. The site offers access to both seawater and freshwater, and already has an established outfall pipe reaching 1.5 miles out to sea, both a 20-megawatt substation and a 730,000-kilowatt solar system for power, and aquaculture licenses in place, reports Seafood Source.

The Nordic Aquafarms facility will be located close to other seafood producers, including Taylor Shellfish and Coastal Shellfish, however, Undercurrent News states that there is ample capacity at the location for more seafood farming operations, as Nordic will only use 6 million of the 30 million gallons of approved ocean outfall.

“Humboldt County is a leader in the fisheries industry, and our community recognizes that it must continue to build on these strengths in order to achieve further economic success,” Scott Adair, director of economic development for Humboldt County told Salmon Business.  “This project fits well with that strategy.”

“Nordic Aquafarms is an innovator within their own industry,” he continued. “Their project will create an opportunity to improve local job quality and career potential, add to the overall vibrancy of the community and enhance the quality of life for our residents. We are very excited about the potential of this project.”

-Lynda Kiernan 

The post Nordic Aqaufarms to Invest up to $400M to Build Second U.S. Land-Based Fish Farming Operation appeared first on Global AgInvesting.

Japanese conglomerate Mitsui & Co. has recently made two significant moves; one in the U.S. and a second in Vietnam.

Mitsui in Massachusetts

In the later days of January, the group partnered with Japanese food manufacturer KENKO Mayonnaise Co. to fully acquire prepared foods company Hans Kissle Company, for a total approximate investment of $108 million.

The deal was conducted through a special purpose company, MKU Holdings – of which Mitsui owns 80 percent, and KENKO Mayonnaise owns the remaining 20 percent.

Headquartered in Haverhill, Massachusetts, and founded in 1984, Hans Kissle develops, manufactures, and markets a range of high-quality, wholesale deli main and side dishes, and lines of prepared foods that are sold through supermarkets throughout the Northeast region of the U.S.

This acquisition expands Mitsui’s offerings of value-added, prepared foods, and strengthens its standing in the large and rapidly growing U.S. market.

Driven by shifts in consumer tastes, population growth, and a desire for more convenience in the face of changing lifestyles, Mitsui said that the U.S. prepared food market is growing at around 8 percent per year.

Indeed, prepared foods was the top growing food category of 2017, according to data from Nielsen, which found that the category grew by nearly 140 percent that year to a value of $36 million.  In second place that same year, ranked by sales, was combo meals, which are also considered prepared foods – seeing 68.9 percent growth and a value exceeding $153 million.

Underlying these figures, reported Nielsen, is the fact that sales of food eaten outside of the home have exceeded sales of foods eaten at home for the first time, while consumers turn away from fast food options in favor of more healthy choices, and quick-casual dining locations in favor of more convenience.

As such, Mitsui has marked “Retail Services” as a strategic growth area in its Medium-Term Management Plan announced in May 2017. Amid this market landscape, Mitsui plans to reinforce Hans Kissle’s market position, expand its reach, its channels, and its territory as the U.S. food market continues to evolve.

Shrimp in Vietnam

Within weeks of its investment in Hans Kissle, Mitsui announced another large play in food, investing $100 million in Minh Phu Seafood Corporation, the largest vertically integrated shrimp processor and exporter  in Vietnam.

This is not Mitsui’s first investment in Minh Phu. In October 2013 the group worked with the company on the management of its affiliate Minh Phu Hau Giang Limited Liability Company (MPHG), in which Mitsui now holds a 31 percent stake through a third-party allocation.

Minh Phu has operations that span the entire shrimp supply chain from farming and rearing, to processing and exporting. Last year the company realized a net profit of US$44.78 million – reflecting a 44 percent increase over the prior year. Expectations for this year are that the company will see total production of 77,400 tons, creating turnover of $850 million, and pre-tax profits of US$100 million, of which US$86.95 million will be generated by its exporting business.

In addition, Vietnam’s shrimp exports are expected to grow to a value of more than US$4 billion this year, driven by new trade agreements, according to the Vietnam Association of Seafood Exporters and Producers (VASEP). Of this value, shrimp exports are expected to be valued at $1 billion.

With such strong numbers behind it, the company in on the cusp of a U.S. expansion. Under the plan, Minh Phu will be building two 10,000-pallet, refrigerated warehouses in Los Angeles and New York, in conjunction with its main port. The two additional warehouses are to ease congestion and handle overflow, as the company’s current warehouses in the U.S. are to capacity, slowing the import of more product.

The company is also planning for its domestic expansion, with the construction of a breaded shrimp processing plant with annual production capacity of 40,000 tons, on land at its Minh Phu Hau Giang facility.

-Lynda Kiernan  

The post Mitsui on the Move: Two Deals Exceeding $200M on Two Continents appeared first on Global AgInvesting.

Israel food tech startup Tastewise has announced the launch of its AI-powered intelligence platform designed to predict rapidly changing food trends and consumer tastes.

The company’s platform leverages machine learning to determine future culinary trends by analyzing billions of consumer food and beverage touchpoints through the consideration of more than 1 billion online shared food photos every month, 153,000 U.S. restaurant menus, and more than 1 million online recipes. Through the application of AI, Tastewise is able to work with restaurants, hospitality groups, and food brands to isolate market opportunities, identify consumer likes and dislikes, and to earmark new ingredients to be better able to quickly respond to changing trends.

Founded by former Google exec Alon Chen, and Eyal Gaon, Tastewise is able to “capture food innovation in real time”, and to give industry professionals a jump-off in being able to select what dishes or products would be best received.

“Today, many of us are adventurous eaters, constantly searching for new food experiences, while prioritizing our health,” says Chen. “In this new environment, all CPGs and restaurants whatever their size have to become as dynamic as food trucks and pop-ups. Tastewise provides the freshest analytics to help them stay at the forefront.”

Historically, restaurants would change their menu every few years, and new food product launches would be tied to focus groups and questionnaires that would lack “food insight at speed”, creating a lag for packaged good companies.

Today, the internet and social media have created an accelerated globalization and heightened consciousness in regard to how consumers relate to their food choices, and the food choices linked to those views.

“Trends and consumer insights need to be a lot more dynamic in the food industry because otherwise there is going to a be lot of missed opportunities,” Chen told Food Dive. “If it will take you six months to run a survey and then, based on the survey, analyze it and then get insights, and only then go for production or change your menu, then all of this planning, you are building for a trend that already happened six months ago.”

Connected with the launch of its technology platform, Tastewise has also released a free Consumer Food Trends Report including a map that indicates where the top health food opportunities are for both brick and mortar and virtual restaurants in each U.S. state.

The report reveals key insights, including unmet demand for healthy food in the U.S. valued at $9.18 billion. Diving deeper:

• There is a 246 percent gap in demand for vegan food in Boston, translating to $41.9 million.  
• In Denver, there is a 325 percent gap in unmet demand for fitness-related foods, valued at $33.5 million.
• Shoppers in Philadelphia want more organic food options, where there is a 387 percent gap in unmet supply translating to $53 million.
• In San Antonio, there is a 767 percent gap in unmet demand for handcrafted foods, translating to $362 million.
• And ingredients such as musubi, Zhoug, bone marrow, ube, and truffles, are moving into the mainstream.

“Diving far deeper than simply understanding consumer preferences, their insights help us select target audiences, catch micro-trends as they sweep from neighborhood to state level and design menus to suit our guests’ tastes, even pinpointing exactly what it takes to concoct a sensational cocktail,” said Guy Heksch, global vice president of Marriott International-owned Pure Grey Culinary Concepts Hospitality Group.

“Tastewise brings science to the art of creating innovative food experiences and propels us to act faster than ever before. Their technology is a complete game changer for us, and I suspect it will be for the hospitality industry as a whole.”

-Lynda Kiernan  

The post Tastewise Using AI to Predict Rapidly Shifting Food Trends appeared first on Global AgInvesting.

Flow Kana announced the completion of a $125 million Series B led by Gotham Green Partners – representing the largest private funding round for a cannabis company to-date, surpassing the previous record set by Acreage Holdings’ $119 million Series E in July 2018.

This is the second round led by New York-based Gotham Green for the company, after it led Flow Kana’s $22 million Series A in July of last year. Additional unarmed private investors also participated, bringing total funding for the startup to $175 million to-date.

“We strongly believe the cannabis industry is a catalyst for social change and are grateful to have found investors and partners aligned with this vision,” said Michael Steinmetz, CEO, Flow Kana.

Founded in 2015, and centered around Northern California’s Emerald Triangle region (Mendocino, Humboldt, and Trinity Counties), Flow Kana is building the first sustainable cannabis supply chain, partnering with craft farmers who focus on sun-grown, organic production, to build out a socially and environmentally-conscious and independent farm ecosystem. As of 2018, the company was partnering with 200 partner farmers. 

“Throughout our supply chain, partners and customers have all committed to the sungrown movement and are dedicated to building an industry that has a positive impact on the great challenges that we confront in the world today,” said Steinmetz.

In April 2018, just before Flow Kana announced its Series A, the company had just begun the first phase of operations at The Flow Cannabis Institute, its 87,000 square-foot facility in Mendocino County. Through this site, Flow Kana offers a wide range of processing, co-packing, white label, and distribution services to its ever growing network of partnering brands, dispensaries, distributors, and manufacturers.

“Flow Kana’s vision and dedication to building the backbone of the California cannabis industry with a supply chain focused on small heritage farms that built this industry in the United States, are differentiators in the space and will be critical to this market’s success,” said Jason Adler, managing member of Gotham Green Partners, in July of last year.

Today, Flow Kana is at pace to complete the build-out of its Mendocino County headquarters. Flow Kana manufacturing also will expand its white label and co-branding services to a full portfolio of products, including a full range of oil-based vapes, topicals, tinctures, and  a list of value-added services using cannabis inputs sourced from Flow Kana’s ecosystem of growers across Northern California.

“We are excited to participate in this recent raise, which will enable the company to leverage its unique position in the Emerald Triangle and broaden its reach and message across the state,” said Michael Henderson-Cohen, principal, Gotham Green Partners.

“We, as cannabis brands, farmers, companies and consumers, have the opportunity to collaborate in a truly meaningful way to foster a healthy cannabis industry,” added Steinmetz. “Let’s learn from the mistakes of industries past and come together to be the change we want to see.”

-Lynda Kiernan 

The post Flow Kana Raises Record Breaking $125M Series B for Sustainable Cannabis Supply Chain appeared first on Global AgInvesting.

Dutch banking and investment giant Rabobank announced a new commitment of 80 million Euro (US$90 million) into Rabo Frontier Ventures. This latest funding brings the venture fund’s total capital to 150 million Euro (US$170 million).

Originally launched by Rabobank in January 2018, Rabo Frontier Ventures focuses on investment opportunities related to high-potential, early-stage food and agricultural companies, as well as fintech companies. Under its strategy, the fund supports startups, spin-offs, and scale-ups, leveraging partnership relationships with Rabobank, and offering knowledge, expertise, and access to the Rabobank network to achieve collective value.

“RFV provides Rabobank with an added vehicle for working more shoulder-to-shoulder with innovative businesses with the aim of transforming the Fintech and Food & Agri sector and building a sustainable and future-proof banking model,” said Harrie Vollaard, managing partner at Rabo Frontier Ventures, at the time of the fund’s January 2018 launch.

To date, the fund has made 10 investments, including investments in European blockchain platform We.trade; komgo, a global blockchain-based solution for commodity trading; a and fintech startup Tellow. Its most recent investment was in October 2018, when it participated in a $14 million Series B for ProducePay, a company that provides fresh produce farmers with financial resources, tech tools, and data insights that address the lack of access to short-term financing and transparency within the agricultural supply chain.

With this additional capital secured from Rabobank, Rabo Frontier Ventures plans to expand its investment strategy.

“After two years with more than ten investments in a row, it is time to broaden our horizon further. We see many opportunities all across the globe to invest in companies who align with our strategy of sustainable growth,” said Vollaard.

This strategic shift will see the fund turning its attention to global innovation hubs such as San Francisco, Tel Aviv, and Singapore.

“We see that innovation is definitely accelerating in cities known for their innovative mindset,” said Vollaard. “We can add value in these innovation hotspots with the assets of the Rabobank.”

“ As the strategic investment fund of Rabobank – one of the largest Food and Agri banks globally – we have the opportunity to leverage our position and to connect entrepreneurs to markets anywhere,” continued Vollaard. “A decisive element for companies with the ambition to grow.”

-Lynda Kiernan

The post Rabo Frontier Ventures to Expand Investment Strategy With Further US$90M Commitment appeared first on Global AgInvesting.

Australia’s LGIAsuper is capitalizing upon consumer demand for high quality fresh food, and has committed $112 million to Equilibrium Capital’s newest fund – a vehicle focused on investment opportunities in fresh food production in North America.

Chief executive of LGIAsuper, Kate Farrar, told Super Review that the investment will give Australians the ability to capitalize upon shifts that are occurring among U.S. consumers looking for higher quality and variety in their fresh produce choices.

“Australians who have visited the United States often comment that the fresh produce doesn’t taste as fresh as it does at home,” she said. “Fruit and vegetables in the U.S. have traditionally been imported from as far away as Mexico or shipped long distances across the U.S., which reduces freshness and impacts taste.”

As an investor, Equilibrium views greenhouse production as a category that is not only poised to answer these shifts in taste, but one that is also poised for private equity.

“We see a tremendous opportunity for the future of controlled environment foods,” said Equilibrium Chairman David Chen, who will be delivering a presentation on Institutional Scale Controlled Environment Agriculture at Global AgInvesting 2019 in New York this coming April.  

“What we see is that the growth has accelerated in the U.S, following a growing market demand,” said Chen. “The expansion is no longer five hectares, ten hectares, the expansion is now twenty, thirty hectares, maybe fifty hectares. In this accelerating industry, growers are discovering that access to all forms of equity capital is a competitive advantage.”

Putting words to action, Equilibrium has recently made two stand-out investments in horticulture production.

In December 2018, the fund made a $11.3 million investment in the Minnesota-based greenhouse operations of Revol Greens.

Growing a range of leafy greens in protected greenhouse environments, including baby arugula, baby spinach, red and green leaf lettuces, romaine, and butter leaf lettuce on a year-round basis, Revol Greens has seen demand in the U.S. Midwest outpace its production.

“The heightened awareness around food safety has only increased the appetite for greenhouse grown produce,” said Jay Johnson, president of Revol Greens. “We look forward to expanding our greenhouse operations so that we can serve the growing number of consumers seeking out fresh, great-tasting lettuce that is safe to eat.”

Less than two months later, in early February 2019, Equilibrium announced a partnership via equity investment with Houweling’s Group, an advanced greenhouse grower of tomatoes, bell peppers, and cucumbers. Together, Equilibrium and Houweling’s will modernize and expand Houweling’s advanced technology greenhouse facilities located in California and Utah.

Not only is the company an industry-leading grower, propagator, and marketer of greenhouse vegetables with more than 200 acres of greenhouse farms, but is also a pioneer in sustainability and waste-heat management.

“Houweling’s state-of-the-art greenhouse in Utah captures waste heat and CO2 from the neighboring power plant, reducing the amount of fossil fuels consumed compared to a traditional greenhouse operation, and recycling CO2 that would otherwise enter the atmosphere,” said Chen. “This is exactly the kind of economic and sustainability impact we look for in our strategies.”

Combined, the investments being made by Equilibrium in these large-scale greenhouse operations across California, Utah, and Minnesota exceed $100 million, and will support Houweling’s and Revol in doubling the size of their operations over the coming two years.

“Our objective is to acquire or build a set of greenhouses and hold onto them for a long period of time,” said Chen. “To growers, we operate like a landlord. We give the grower, the operator of the farm, more options to accelerate and manage their growth.”

Operating “like a landlord”, Chen explains to HortiDaily means that Equilibrium does not own a portion of Revol. Instead, the fund owns the greenhouse and finances the expansion of the business, allowing for growers to remain independent. It also allows Equilibrium a level of security in remaining an equity investor with close debt equity ratios.

Drive by climate change, horticulture and indoor agriculture hold such promise, according to Chen, that in the near-term, Equilibrium has plans to invest a massive $2 billion in the sector.

“Over the next decade, we’re going to see acquisitions, mergers,” he said. “You’re going to see food companies outside of horticulture begin to invest in this area. We not only want to participate in that movement, but to be a leader and pioneer in the financing of that growth.”                                                                                                                                                                                                                 ~ Lynda Kiernan

The post LGIAsuper Expands Investment in Fresh Food Production; Commits $112M to Equilibrium Capital appeared first on Global AgInvesting.

Austrade, Australia’s national promotion agency for trade and investment, has launched Australia for Agriculture 4.0 – a new initiative with the goal of transforming overseas interest in agtech and food tech into capital investment in the country’s startups.

“Australian agricultural and food producers are quick to harness cutting-edge technologies to deliver high-quality, traceable raw materials and products to export markets,” said Karen Caston, senior investment specialist at Austrade. “Our agtech and foodtech solutions are turning heads around the world, and we are seeing increasing interest from foreign investors and research partners who see Australia as a testing ground or regional base for further development.”

Although Australian innovators have been developing solutions to a variety of challenges facing the country’s growers, including drought, animal management, and disease and pest control, the Australian government notes that an existing lack of capital is hobbling the advancement of these developments. As recently as 2017, 80 percent of all agtech investments made in Australia were less than $1 million, according to Australian Financial Review, and of these investments, most were in the form of government grants or through accelerators.  

“Australian farmers and food producers are recognized globally for their innovation, using technology to drive consistent productivity growth, develop better quality products and build globally competitive businesses,” said Caston. “Despite facing some of the harshest environmental and climate conditions on the planet, they have made the country a top five producer of barley, oats, chickpeas, almonds, beef, sheep and wool.”

The launch of Australia for Agriculture 4.0 is one form of answer to the findings of a report commissioned in 2016 by StartupAUS, KPMG Commonwealth Bank, and the Queensland government called Powering Growth: Realizing the Potential of AgTech for Australia. The report determined that agtech is a critical factor if Australia’s agricultural sector will reach the goal set by the National Farmers’ Federation of becoming a $100 billion industry by 2030. However, the report went on to state that there exists a dire lack of investment, national strategy, and domestic opportunity.

Australia for Agriculture 4.0 aims to establish Australia as a global hub for both agricultural and food tech innovation, acting as a platform to place focus on the country’s ag and food tech capabilities, its excellence in research, its strong record of innovation, its strong government support, its robust export channels, and its technological advances.

“Australia has the potential to be a powerhouse in agrifood tech and we want to help the sector reach its full potential,” said Simon Birmingham, Minister for Trade, Tourism and Investment.“Our farmers are some of the most innovative in the world but we’re behind the pack when it comes to commercialising [sic] our food and farming technologies.”

Given its variety of climates, its stable business environment, and its proximity to some of the fastest growing Asian markets in the world, the platform will highlight insights and developments from the country’s agtech players, and will serve to connect investors, researchers, and exporters with Australia’s government, private sector, academic leaders, and its ag and food tech stakeholders.

“This initiative is about connecting investors with Australian farmers and AgTech start-ups as well as creating more collaborative research and development opportunities,” noted Birmingham.

Austrade marks how Australia is gaining global prominence on the ag and food tech stage, noting how some of the largest companies in the world – including Cisco and Bosch – have chosen Australia as a hub from which to expand.

“Bosch is investing in Australia as an Agriculture 4.0 development hub for three major reasons: its rich history as a world-leading producer of agricultural commodities; the strength of its agricultural research and scientific capabilities; and the food and agriculture industry’s willingness to trial and adopt new solutions,” said Gavin Smith, president of Bosch Australia, adding,“Our investments in and partnerships with Australian institutions is testament to Australia’s strengths in technologies that will lead the next revolution in agriculture.”

-Lynda Kiernan 

The post Australia Launches Ag and Food Tech Digital Platform to Attract Investment appeared first on Global AgInvesting.

FluroSat, an Australian agtech startup leveraging AI technology to improve agricultural yields, has been awarded A$3 million (US$2.15 million)  in funding through the country’s Cooperative Research Centers (CRC) Program – the key program to manage Australia’s $29.9 million investment in AI for the period 2018-2022.

FluroSat and its commercial partners – Agworld, a farm management software company, and the Commonwealth Scientific and Industrial Research Organization (CSIRO) – will match the funds awarded from the CRC, bringing the total backing to A$6.6 million (US$4.73 million).

Born out of the “Inventing the Future” course at the University of Sydney, and founded by Anastasia Volkova and Malcolm Ramsey, FluroSat employs remote sensing technology and hyperspectral cameras in conjunction with hand-held devices, drones, or satellites to closely monitor crop conditions, generating information that can be critical to agronomists and farmers. Images are analyzed to determine crop health, diagnose problems before they become unmanageable, and to detect water or nutrition deficits, weed or pest issues, or heat stress.

In January of last year the company announced it had raised A$1.5 million (US$1.07 million) in funding through a round including  CSIRO Main Sequence Ventures, AirTree Ventures, and the Cotton Research and Development Corporation (CRDC) of Australia. The startup had also secured a number of grants with the assistance of Cicada Innovations and its Growlab accelerator.

“We believe that receiving the actionable insights required to manage a farm should be as easy as viewing your morning news feed. Our goal is to give growers and agronomists the cues to make decisions that directly affect ROI,”  said Anastasia Volkova, co-founder of FluroSat at the time.

The latest funding gained through the CRC will be used by FluroSat and its partners to aggregate currently siloed, disparate agricultural data gathered across farms so that opportunities and trends can be better identified, and farmers can raise their productivity.

The company is aware that as AI and data science play a larger role in farm management, there is spreading concern among farmers over security and information protection. To that end, Volkova told Australian Financial Review that the company does not own or sell any primary data gathered from farms, rather it only owns the derivative data generated through its platform.

Indeed, the goal of the company is to augment, or “supercharge” the work being done by agronomists, not eliminate them.

-Lynda Kiernan 

The post Australian Agtech Startup FluroSat Awarded $3M in Funding for AI Technology appeared first on Global AgInvesting.

Open Prairie announced that its Open Prairie Rural Opportunities Fund, a vehicle operating as a USDA-licensed Rural Business Investment Company (RBIC), has completed its final close at $81 million.

The Open Prairie Rural Opportunities Fund was established as a vehicle geared to capitalize upon projected world population growth to 9 billion; a 70 percent increase in caloric demand; and crop demand growth of more than 100 percent by 2050.

The launch of the fund was originally announced in May 2016 by then U.S. Secretary of Agriculture Tom Vilsack. At the time Vilsack said, “What excites me about this particular fund is (that) one of its focuses is on precision agriculture and data management. As we become more sophisticated in agriculture, we need to become more precise, and we need information and data to be collected and analyzed properly.”

Open Prairie partner and vice president Jason Wrone also commented, “We live, breathe and believe strongly in rural America and are pleased to be working with USDA, the Farm Credit System, and other entities that share our passion for building successful companies that have a meaningful impact on their respective business sectors and the communities in which they do business.”

A Dynamic Partnership

The $81 million raised for this fund has been secured from a diverse investor partnership including 12 Farm Credit institutions, 14 commercial and community banks, and multiple strategic agriculturally related organizations.

“The dynamic partnership of this investor group, consisting of Farm Credit institutions working alongside commercial banks that focus on rural and agricultural lending, creates an unparalleled opportunity for Open Prairie to provide both capital and market access to our portfolio companies,” said Jim Shultz, managing partner and founder of Open Prairie. “With extensive expertise in the agribusiness field, our management team and advisors have the insights and relationships to develop unique investment opportunities that will allow us to assist in accelerating growth for the companies in which we invest.”

Under its mandate, the fund has identified multiple key sub-sectors along the agribusiness value chain that represent investment opportunities, including soil, water and crop technologies, monitoring, sensor and data analytics platforms, food safety, and value-added processing and manufacturing.

Open Prairie expects to build out a portfolio of between 12 and 15 investments in growth and later stage companies in the agribusiness sector, with initial investment size of between $2 million and $5 million. Additional reserves will be held for follow-on investing.

The first investment completed by the Open Prairie Rural Opportunities Fund was announced in August of last year, when it committed $5.2 million to Tillerman Seeds, a Michigan-based seed company focused on non-GMO product lines.

“The Open Prairie team brings significant value to Tillerman Seeds as we accelerate our agribusiness platform,” said Remos Lenio, partner in Tillerman & Co. at the time. “They have a strong understanding of the industry and the growing momentum for experienced investors to contribute to global demands and dynamics.”

In the ensuing months, the fund has made two more investments, one in MyAgData, the developer of a pioneering acreage reporting solution in the form of a revolutionary cloud-based platform that allows for the collection of layers of geospatial data from precision ag technologies present in today’s farm equipment; and another in Green Dot Bioplastics, a Kansas-based manufacturer of bioplastics and biocomposites that is also working to reduce the environmental footprint of traditional plastics.

“Rural America is experiencing a wave of growth from new and innovative companies. Much of this expansion is coming across a broad spectrum of agribusiness from farm through supply chain,” said Patrick Morand, president of Open Prairie. “The Open Prairie Rural Opportunities Fund is uniquely positioned to further catalyze sustainability, productivity, profitability and prosperity for today’s agriculture and to serve as a valued partner in the current rural-American renaissance.”

-Lynda Kiernan  

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The Ontario Teachers’ Pension Plan has acquired Broetje Orchards, one of the largest privately-owned apple orchard operations in the U.S. Although the purchase price has not been disclosed, public records with the Washington Department of Revenue indicate that the real estate portion of the sale was valued at $288 million.

Founded 35 years ago by Ralph and Cheryl Broetje, Broetje Orchards has grown into one of the largest vertically integrated apple companies in the country, growing more than 15 varieties of apples (including its proprietary Opal apple) and cherries. Located near Prescott, Broetje spans more than 6,000 acres, and employs more than 2,800 employees at peak season to pack and ship nearly 7 million boxes of apples per year.

“Broetje Orchards is a strong strategic fit for our natural resources portfolio, providing a large-scale asset with direct exposure to a staple component of the food basket,” said Pav Jordan, senior manager, OTPP.

Based out of Toronto, and managing pensions for approximately 323,000 active and retired teachers in Ontario, Canada, OTTP has C$194 billion under management, which includes investments in farmland and food production.

Agricultural assets previously acquired by the pension fund include:

• Almond assets totaling more than 2,800 hectares, acquired from Macquarie in 2015;

• Prince Edward Island-based Atlantic Aqua Farms, which was acquired from San Francisco-based Encore Consumer Capital in November 2017. Although financial details for the acquisition were not released, this deal, which was reportedly valued in excess of C$100 million, represents the first foray into aquaculture for the pension fund, which stated that the acquisition falls under its “…natural resources mandate to invest in the global food basket, with an eye on sustainable sources of food production,” according to a statement released at the time.

• And Jasper Farms, the second largest avocado producer in Australia, with 82,000 trees planted across 220 hectares, which was acquired in December 2017 in a deal reported to be valued at $180 million. Commenting on the deal, Andrew Claerhout, senior managing director, infrastructure and natural resources for Ontario Teachers noted, “Avocados are difficult to substitute and their unique flavor and nutrient profile have helped them benefit from the growing demand for health foods in Australia and internationally.”

In addition to these assets, the pension fund also holds AustinOn Corp., an Australian agricultural asset manager, and Goldcrest Farm, an owner and manager of U.S. row crop farmland.

As the newest addition to the Ontario Teachers’ portfolio, former Broetje Orchards executive Jim Hazen has been appointed president and chief executive moving forward.

“The success of the company over the years has been due in large part to the dedication of our employees,” he said. “Our future success also depends on them. We are working to avoid disrupting any services or programs for our employees or our customers.”

-Lynda Kiernan 

The post Ontario Teachers’ Acquires One of the Largest Private Apple Orchard Operations in the U.S. in $288M Deal appeared first on Global AgInvesting.

Macquarie Venture Capital Studio (MVCS), a fund launched in partnership by Macquarie Capital and R/GA Ventures, has announced a commitment to Teralytic, a soil analytics company working to help farmers grow more while using less.

With the goal of “driving innovation at the intersection of infrastructure and technology”, MVCS announced investments in three companies: Teralytic; AirMap, an airspace management platform for drones; and Envoy Technologies, a vehicle-sharing service.

Founded by company CEO Steve Ridder, Teralytic is a precision ag and soil health company whose platform streamlines connections between soil research and actionable insight. As developer of the world’s first wireless NPK soil sensor, from Teralytic’s technology has come the move comprehensive soil probe to date, able to constantly monitor 26 data points including air temperature, humidity, light, soil moisture, salinity, pH, nitrate, potassium, and phosphorus levels, aeration, and respiration.

Using LoRaWAN, a long-distance transmission network, this gathered data can be transmitted up to 10 miles away. The company’s gateways then aggregate all data and send it to the cloud where through machine learning and AI, analytics are run based on government and university soil condition data, as well as farm-specific criteria. The resulting report, including predictive insights and readable charts, is then provided to agronomists and farmers, resulting in a reduction of fertilizer and water usage by between five and 45 percent.

Each company, which will be part of the third module of MVCS,  was selected for its ability to increase efficiency, sustainability, and efficacy across infrastructure and real assets. As a chosen company, each will receive approximately $1 million in cash, while Macquarie Capital and R/GA will offer specialist knowledge, help in networking, and assist in advancing commercialization, distribution, and brand building. Future possibilities exist for each company to secure a follow-on investment of between $10 and $20 million.

-Lynda Kiernan 

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