By Roza Gazizova, Founder and Managing Director, Sogdiana Advisory
Growing global population (from 7.8 billion(1) as of March 2020 to 9.1 billion by 2050(2)) drives the growth of the global demand for food. It is estimated by various sources, that the global demand for food will increase between 50-100 percent(3) by 2050. Such growth may increase ecological and social issues we face today.
Thus, ecological economists are concerned with finding the ways of how to produce more food, tackle climate change, and minimize social costs.
Food production players are also looking for ways to ensure sustainability both for business and for the environment. Livestock (poultry and cattle) feed production players, being affected by the volatility of price and supply of key raw materials for animal feed, are challenged to switch to low-cost options without reducing their production returns.
More and more companies are concerned about resilience to long-term ESG risks. “E” standing for Ecological concerns like climate change and carbon emissions, air and water pollution, deforestation, waste management, etc.
Approximately 5 percent of greenhouse gas emissions in the world come from agriculture (livestock such as cows, agricultural soils, crop residues, and rice production), and an additional 3 percent from land use and forestry.(4)
Options to face ecological and social challenges exist, but they need to be properly considered and implemented.
In Uzbekistan, well-known for its favorable climate for vegetable and fruit production, a technology was invented that provides a solution for rice crop residue management, thus ensuring sustainability both for the business and for the environment.
The patented innovative technology allows for the transformation of rice husks using bio-fermentation into a complete animal feed component, branded as CBFeed. CBFeed replaces a portion of expensive plant components (including feed grains) in traditional animal feed rations (other things being equal), thus producing ecological and social benefits to the country and financial benefits to livestock feed production players. Ecological and social benefits are expressed as the reduced pollution originated from burning rice residues as well as the reduced use of scarce land resources for feed grains. Financial benefits to livestock feed production players are expressed in terms of savings derived from expensive plant component replacement with CBFeed. According to the founders, based on preliminary estimates, and depending on the country, the potential animal feed cost reduction for poultry stands at approximately 5-8 percent, and for cattle and dairy cows at 10-19 percent.
When processing paddy rice to obtain polished rice, large quantities of rice husks (about 20 percent) and rice bran (about 10 percent) are produced as a waste material. Out of 713 million metric tons of paddy rice produced in the World in 2019 rice husk amounted to 143 million metric tons. Whereas commercial production and sale of manufactured feed products (that takes place in 145 countries as surveyed by Alltech(5)) in 2019 generated an estimated annual turnover of over 1,126.5 million metric tons in volume.
The environmentally friendly ways of rice husk disposal are crucial for the countries where rice is cultivated and processed. Open-air burning of rice husk continues to be the easiest and least expensive way to eliminate the volume of combustible materials produced by agricultural activities. Rice husk’s micro component composition, rich in silica and lignin complicates its utilization process, as rice husk does not decay in the ground and in the process of its combustion it releases harmful components to human health, as well as increasing the concentration of greenhouse gasses in the Earth’s atmosphere. Also its chemical composition complicates its application as an animal feed component.
Since 2015 while researching more effective solutions to the problem of agricultural waste management, CBFeed inventors (agricultural scientist and serial entrepreneur) managed to produce a technology that transforms rice husk into a complete animal feed component using bio-fermentation.
CBFeed inventors started its production at the pilot plant in Uzbekistan. Since inception they have financed their business development with their own capital and capital commitments from their family and friends.
“Entrepreneurs have founded Natural Ventures Pte. in Singapore to hold technology patents and to manage international activities. They have also mandated Sogdiana Advisory to help raise equity capital.” – said Roza Gazizova, managing director, Sogdiana Advisory.
As of today, the founders of Natural Ventures Pte. have filed an application with WIPO. The application has entered into national phases in 47 countries in accordance with PCT procedure. It is expected that the patents will be granted within 2020 – 2021. As of today, patents have been granted in Japan, Malaysia, and in a few CIS countries such as Russia, Kazakhstan, and Uzbekistan.
Studies evaluating CBFeed in diets of livestock and poultry have been successfully conducted in Uzbekistan under the supervision of the local representative of independent Swiss Company SGS S.A. Safety tests were also conducted in Japan. All studies proved the effectiveness of the product and production technology and its safety.
This year the company began selling CBFeed produced at a test plant at $200 per metric ton.
“Today Natural Ventures Pte. is raising Series A round financing from the sole or multiple Investors [ESG/impact/financial/strategic (feed and rice mills) investors] to help expand its production in Uzbekistan and embark on a global expansion in rice-producing countries,” said Roza Gazizova. “Natural Ventures Pte. has its eye set on Japan and Malaysia [overall there are 21 countries of interest and they can enter any one upon partner’s interest] for starters, as they have done preliminary preparation works in those countries.” Additionally, the founders are open to modify their business model to align with the interests of potential investors.
“This technology has a unique potential especially in rice-growing countries,” added Roza Gazizova. “Taking into account 2019 data, there is a potential in 21 selected rice-producing countries to process about 35 million metric tons of rice husks (per annum) into compound feed (for four targeted animal segments), which is equivalent to 30 percent of rice husk in the market. This could result in significant savings for farmers – up to $5 billion per annum and, importantly, could help in the sustainable utilization of rice husks. The technology helps to produce more with fewer resources.”
The invention makes it possible to expand the raw material base for the production of feed for poultry and cattle and to obtain a full-fledged nutritious feed from rice by-product and waste. According to the company’s founders: “Rice husks processed by our technology not only increases eatability and profitability, but also significantly increases nutrition through the breakdown of non-digestible components (protopectin, cellulose, hemicellulose and other polysaccharides of rice husk) to simple digestible sugars, thus enriching the processed rice husk with proteins and other nutrients. At the same time, the rice husk processed by our technology, creates in the ruminant animal’s rumen favorable conditions for the vital functions of bacteria that affect the digestion of nutrients. The harmful effect of nitrites on the blood, which has a high content of these substances, can be eliminated by adding CBFeed to the traditional feed rations. Feed including CBFeed increases the nutritional adequacy, digestibility, and eatability of other feed, as well as the safety and productivity of livestock.”
Notes:
1) https://en.wikipedia.org/wiki/World_population
2) World population projected to reach 9.8 billion in 2050 (https://www.un.org/development/desa/en/news/population/world-population-prospects 2017.html#:~:text=News-,World%20population%20projected%20to%20reach%209.8%20billion%20in,and%2011.2%20billion%20in%202100&text=The%20current%20world%20population%20of,Nations%20report%20being%20launched%20today.)
3) United Nations (FAO) forecasts that global food production will need to increase by 70% if the population reaches 9.1bn by 2050 (estimate of 2017 year).
4) Source: http://www.fao.org/3/CA1553EN/ca1553en.pdf
https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions#agriculture ANNUAL GREENHOUSE GAS EMISSIONS BY SECTOR, 1990–2014
5) AllTech, 2020. https://www.alltech.com/feed-survey
ABOUT THE AUTHOR:
Roza Gazizova has over 20 years of experience in operational financial management holding key roles (CFO at Hayman Capital / Myanmar and Singapore, Deputy CFO at MegaFon / Russia), and in advisory with the international firms in Russia, Central Asia, and South East Asia (Chiron Capital, Andersen, and Ernst & Young).
Roza has a successful track record in encouraging local projects (Central Asia, South East Asia, Russia, and Europe) and raising investments ranging from one million US dollars up to 100 million US dollars for each project and a successful operational track record of overseeing over one billion US dollars annual investment budget (capital and operating expenditure).
Key expertise areas are mergers and acquisitions, corporate finance and controlling, strategy, valuation, improvement of operational efficiency, risk management, business development, the launch of startups.
Roza is the graduate of the TRIUM Executive MBA – London School of Economics and Political Science, New York Stern School of Business, and HEC Paris. Currently, she is based in Moscow and in Tashkent.
Sogdiana Advisory is a boutique advisory firm assisting startups and mature companies to reach a new and global level of development and helping to expand the horizons of their operations. The firm’s experts come from various industries and backgrounds and have worldwide experiences. Key expertise areas are corporate finance, mergers and acquisitions, strategic and financial advisory, business valuation, start-up launch, business development, partner search. https://www.sogd-advisory.com/
*All views, data, opinions and declarations expressed are solely those of the author(s) and not of Global AgInvesting, GAI News, GAI Gazette, or parent company HighQuest Group.
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