Agriculture 2.0 Conference: Fertile Ground for Investment

This post was written by Matt de la Houssaye, 2nd Green Revolution’s New York City Associate. He attended the event yesterday September 14th.

For the third time in less than a year, investors and entrepreneurs met for an Agriculture 2.0 Conference, this time in New York City. The goal of the event was to foster growth in sustainable agricultural investment. Presenters included representatives from John Deere*, International Finance Corporation, Coca-Cola, Acumen Fund, US Department of Agriculture and Anna Lappé, author of Diet for a Hot Planet. Agriculture 2.0 is produced by NewSeed Advisors, an investment banking and consulting firm that connects agricultural entrepreneurs (some featured companies below) and investors with a focus on sustainable practices. According to Janine Yorio, Managing Director of NewSeed Advisors:

“Agriculture 2.0 is a special conference for most attendees because it is the first time they’ve walked into a crowded room and been reassured to see that they’re not alone–that a universe of agriculture investors and entrepreneurs exists and is very active.”

There was no shortage of international problems facing the agricultural sector on the agenda at yesterday’s event. Some of the problems addressed were the increases in drought caused by climate change, rising energy costs, and international disagreements over trade policy. Despite the many challenges facing the agricultural sector, there was a decidedly optimistic tone to the conference as a whole. Presenters conveyed a sense of opportunity in investment related to sustainable agricultural practices. These opportunities ranged from unexpected, value-added propositions such as the use of waste orange peels as an ingredient in tires, to presentations by analysts from JP Morgan and Deutsche Bank describing global agricultural investment markets and risks.

Rarely are so many different viewpoints and divergent strategies presented in one room.

These are some of the companies that presented a combination of sustainability goals, and interesting business models:

Agraquest develops and manufactures biopesticides and “low-chem” pest and disease control products. The company uses fermented sugars as one of its raw materials. The vast majority of their sales go to the conventional agricultural market. Agraquest made a decision few years ago to focus on big conventional agribusiness over the organic agriculture market. This emphasis has resulted in collaborations and/or partnerships with large multinational companies such as BASF and most recently Monsanto.

Converted Organics, a publicly traded (NASDAQ: COIN) compost and organic waste management company, described its proposal to its shareholders to acquire vertical farming pioneer TerraSphere Systems. This followed an earlier presentation on vertical farming by Dr. Dickson Despommier, a Columbia University professor and thought leader on the topic. The discussion changed from a hypothetical idea to one of a business acquisition–a refreshing progression.

Driptech is a silicon valley start-up company that makes drip irrigation products tailored to small farms. The company recently sold its first 200 systems in China, and made the front page of the Economic Times in India, which is another key market for their products. Driptech’s strategy is to work with local partners to leverage existing distribution networks.

In many cases, the innovation that was presented at Agriculture 2.0 was not a technology, but a different way of doing business and philanthropy, sometimes in combination. AgDevCo is an example of a mixture of these worlds. The organization is a not-for-profit distribution agricultural development company operating in sub-Saharan Africa. In a case study presented from Zambia, AgDevCo aims to address local poverty among small holder farmers by using donor funds to develop the conditions for commercially viable agribusiness to partner and lease land from small farmers. This land is subsequently consolidated and developed by a commercial company. In exchange, the commercial company develops irrigation infrastructure for the consolidated area and the original small farms. The small farmers in turn receive a lease for this land and equity in the commercial-farm operating company through a cooperative. Once the investment is paid back, the farmer cooperative owns this commercial farm operation.

The case study above appears to be at first glance the best of all worlds. Still, the attendees at Agriculture 2.0 pushed presenters to think bigger both financially and in sustainability terms. One conference attendee commented quietly that the problem of salt accumulation on irrigated soil was not being addressed.

Most of the problems of agriculture are not new, and at a first glance neither are the solutions. What is new is the way the building blocks of solutions can form into a new DNA. Non-fossil fuel based pest control is not new. However, an investment opportunity in a biopesticide company that is working with the big global agrochemical players is innovative. New ways of combining social capital, patient capital, philanthropy, and venture capital, are being invented all the time. This process is being pioneered by the agricultural sector. This is indeed new. This is Agriculture 2.0.