May 15, 2012

KATE WESTFALL Director of Content & Client Relations Global AgInvesting

On Monday I had the pleasure of attending a summit on agriculture technology investment opportunities at Mikveh Israel (Israel’s first agricultural school, built in 1870), just outside of Tel Aviv. Along with the historic setting, the summit projected a sense of hope about the solutions that will be available to us in the coming years to face the world’s most dire scarcity issues. These solutions will also provide investors with massive opportunities if they have the appetite and courage to invest at the early stage.
 

Israel has acted as a sort of global sustainability beta site for the last 140 years, according to Eugene Kandel, Head of the National Economic Council of the Israel’s Prime Minister’s Office. He made comparison of Israel 140 years ago to the scarcity issues facing the world today. He was followed by Professor Yoram Kapulnik, Director, Agricultural Research Organization, The Volcani Center, who took that comparison further teaching us that Israel has 420,000 hectares of arable land, with very little water, little rain, small agricultural labor force, and great distance from global markets, among other challenges. Technology was born here out of necessity, and that truth continues today on a global scale.
 

Rich Kottmeyer, Global Agriculture and Food Leader for IBM, said that as average incomes rise worldwide, people will be spending $500 more per person per year for food—“that’s the opportunity, and that’s why you should be excited,” he said. IBM might not seem like the most natural fit for an agriculture conference, but Kottmeyer said that “agriculture is basically a math problem, and (IBM) is fundamentally a math company.” They are using a team of 3000 researchers to optimize the synchronization of science and technology at the farm gate and beyond. IBM has a track record for getting technology to the market, and they are specifically looking at production agriculture and decision support for farmers, as well as innovations in ingredients and higher nutrition.
 

Mark Kahn, Managing Director for Omnivore Capital, an India-based ag tech venture capital fund, is looking to Israeli technologies to evaluate whether there are possibilities to transfer innovations to India, where there are extraordinarily difficult bottlenecks, but also huge opportunities to scale. The main bottlenecks in India are lack of arable land (land fit for farming is often lost to mass urbanization), lack of water (India will be in a “Mad Max-style” water deficit by 2025 if nothing is done), dead soil from years of rice and wheat monocultures following the first green revolution, supply chain constraints (radically inadequate infrastructure), and lack of labor (labor costs have quintupled over the last 50 years, along with the abandonment of the rural economy). Agriculture technology will have a huge part to play in ensuring the food security of the Indian population of 1.2 billion.
 

We’ve all heard the global supply and demand numbers to 2050 over and over again, and I won’t restate them here. We know that we have to produce more with less. Professor Haim Rabinowitch from The Hebrew University of Jerusalem gave a staggering statistic when he said that during his one-hour panel discussion, 4000 people would be dead because of hunger and malnutrition. The innovators who attended the summit, conceived by Nitza Kardish of Mofet Venture Accelerator (a Trendlines company), are taking these challenges on with exciting new technologies that are ripe for investment. But which technologies provide the most promise?
 

Mitchell Presser, a founding partner of Paine + Partners, a food and agribusiness focused private equity firm based in the US, thinks the most compelling tech will be in the fields of:

• Aquaculture
• Precision Ag and Drip Irrigation
• Sustainability
• Specialty Fertilizers
• GM seeds

Mark Kahn stresses the importance of technological convergence between existing successful research (e.g. medical research or material science) and agriculture technology, and prioritizes advances in:

• Mechanization
• Protein Production Innovations
• Enabling Technology Focused on Soil and Water Conservation
• Information Services
• Supply Chain Technologies
• Sustainable Inputs

Professor Rabinowitch stated the importance of:

• Reduced Beef Production
• Ceased Production of First Generation Biofuels
• Improved Efficiency of Grain and Fish Production
• Affordable Enabling Technologies for Mid-Sized Farmers
   

The Summit was an extracurricular event associated with Agritech, a huge trade show that takes place every three years and attracts over 30,000 attendees from all over the world. With so many compelling technologies on hand, the only question that remains is “who will provide the funding to get them to commercialization?”

In my next entry, I will highlight some of the technology companies who presented at the Agrivest Summit, as well as some of the ones that I’m seeing at the Agritech conference.