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Clean Seed Capital Group is pleased to announce it will be attending the Agriculture 2.0. conference at the Four Seasons Hotel in Palo Alto, California.

A flurry of activity among Bay Area investors points to surging interest in sustainable agriculture investment. On March 24, hundreds of entrepreneurs, investors, and industry experts will convene at the Four Seasons Hotel in Palo Alto, California for Agriculture 2.0, the first event of its kind on the west coast. Firms sending delegates include Kleiner Perkins, Khosla, Black River, Foundation Capital, Venrock, Mohr Davidow, Rockport, Redpoint, Flagship, Slow Money Alliance, among others. “Creating a sustainable food system will happen one company at a time. It’s encouraging to see that investors are taking notice of this space, the fastest-growing niche in agriculture.” says Janine Yorio, Managing Director of NewSeed Advisors. As co-host, US Venture Partners is securing its place as a thought-leader in sustainable agriculture, “Because feeding nearly 10 billion people by 2050—without destroying the planet—poses both a daunting problem and an enormous investment opportunity,” remarked Paul Matteucci. Co-hosts NewSeed Advisors and SPIN Farming also launched the first Agriculture 2.0, which was held in September 2009 in New York City. The overwhelming response indicated a need to expand to the West coast. “Rebuilding a more sustainable food system will take as much innovation and investment as the digital revolution,” says Roxanne Christensen, co-founder of SPIN-Farming. A jury selected entrepreneurs to present their investor-ready ag-business opportunities to the audience. Company presenters include 18 Rabbits; AeroFarms; Capay Valley Growers; Cityscape Farms; Estancia Beef; FoodLogiQ; Inka Biospheric Systems; Itronics; Marrone BioInnovations; NextGen Illumination; Pasteuria Bioscience; PurFresh; Solum; TerraGreen Biologics; Vestaron; Verdant Earth Technologies; Wild Idea Buffalo. Due to the overwhelming number of applicants, a separate track (sponsored by Aquacopia) will highlight investment opportunities in aquaculture. Company presenters include Blue Ridge Aquaculture; Hawaii Oceanic Technology; Kona Tuna; Litchfield Farms; Montana Microbial Products; Oberon FMR; and Open Blue Sea Farms. In addition to investors, industry professionals from organizations like Dow Chemical, Toro, the USDA and Food Alliance are on the agenda. Speakers include Jason Matheny of NewHarvest, Patrick Pohlen of Latham & Watkins, Michael Dimock of Roots of Change, Jeana Hultquist of US AgBank, and Derek Yurosek of Bolthouse Farms. Information about the event, including registration details and the agenda are available at www.agriculture20.com. A sellout crowd is expected, and all registrations must be processed online, in advance. ABOUT NEWSEED ADVISORS NewSeed Advisors is both the founder of Agriculture 2.0 and an investor in and advisor to sustainable agriculture companies. ABOUT US VENTURE PARTNERS U.S. Venture Partners (USVP) is a leading Silicon Valley-based venture capital firm, dedicated to helping entrepreneurs build world-class companies that are leaders in their industry. ABOUT SPIN FARMING SPIN-Farming publishes the SPIN-Farming® and SPIN-Gardening™ online learning series and conducts workshops in partnership with leading farming, gardening, environmental and investment organizations.

Clean Seed Capital’s primary initiative is predicated on identifying solution-driven, sustainable, environmentally responsible, agricultural based companies that need a strategic partner to facilitate progress. As a value added group, CleanSeed Capital Group provides strategic capital, business advisory services, and marketing strategies that yield both positive impact and significant investor returns from this rapidly growing sector.

While at the show Clean Seed Capital will be introducing Vesco Agricultural Technologies Inc:

Vesco Agricultural Technologies has developed superior No-Till farming equipment that produces higher yields, combats soil erosion, reduces seed, fertilizer and fuel costs and qualifies for carbon-offset credits, tradable on the growing number of carbon credit markets emerging worldwide as part of the fight against Climate Change.

We look forward to meeting with Janine Yorio and all the participants of  Agriculture 2.0.

The Topsoil Crisis

The Topsoil Crisis
By Chris Mayer
Gaithersburg, Maryland

“All life is a process of breaking down,” the great F. Scott Fitzgerald once wrote. “But the blows that do the dramatic side of the work…don’t show their effect all at once.” These other blows you don’t feel until it is too late to do anything. Fitzgerald was writing about his own famous crackup in the 1930s, but his comments also apply to the agricultural scene circa 2010.

We return to a theme in last month’s letter. The world will need to boost its production of food. The UN estimates that the world will need to boost investment in agriculture by $83 billion a year – that’s a 50% annual increase – to feed a growing population. Its estimate may prove an errant shot from an uncertain bow into an unpredictable future. But it doesn’t matter. Investing is more like horseshoes and hand grenades, as the old saying goes – close counts.

If the UN is half right – others have done similar work with similar conclusions – then we’re talking about a healthy bull market in all things green. The question is where does the boost in production largely come from? The answer is Brazil, as we discussed last month. We’ll explore the idea a little further here from a different angle.

In my last letter, I noted how lack of electricity in India leads people to heat their homes and cook with dung cakes, crop residue and firewood. Why is this a bad thing?

Because the soil needs that precious manure and crop residue. It nourishes the soil and allows it to hold water. Without this natural replenishment, the soil deteriorates. It compacts and turns to dust. When the next monsoon season rolls around, it washes away. And the burning of firewood, on such a scale as the Indian population requires, leads to the disappearance of forests. A similar cycle ensues.

This is the “topsoil crisis” that we first talked about more than a year ago. The world continues to deplete its base of arable land. Though it’s been going on for some time, the dramatic blows are only now showing their effect. In East and North Africa, in the plains of India all the way to Turkey, the story is the same. Some of it is just human carelessness about the land. Some of it is climate driven: the declining snow melts of the Himalayas and more frequent crop-killing heat waves in places such as India.

Climate change has been going on for a long time, too. As Peter Matthiessen points out in The Snow Leopard, the Gobi Desert was once fertile. In Central Asia, he writes, “broad lakes vanished in dry pans and grasslands turned into shifting sands.” Many of these changes happened in only a few hundred years. “The death of a civilization can come quickly; the change in climate that dried up rivers and destroyed the savannas of the central Sahara scattered the great pastoral civilizations of [Africa] in just a few centuries after 2500 B.C.”

Such changes impact economics as well. Already, we are close to passing some giant milestones of our own. China, you may recall, is now the largest net importer of soybeans in the world. A mere 15 years ago, it made more than it needed and exported soybeans. Now India may import rice. Some think that India could import as much as 2 million metric tons, the most in the world. Traditionally, India has been the world’s third largest exporter. (It’s already banned overseas rice sales in an effort to keep rice at home.)

The Philippines, thanks to typhoon damage, will also be a net buyer of rice this year. South America will produce less, and there is potential trouble with the crop in the Mississippi Delta. Yes, Thailand and Vietnam appear to have healthy rice supplies. But it won’t be enough.

All of this puts Brazil in the catbird seat, as more people are starting to figure out. “Superpower Is Ready to Feed the World,” reads a Financial Times headline. You may quibble with the FT’s exuberant labeling of Brazil as a superpower. But Brazil is now the top exporter of chicken and beef, orange juice, green coffee, sugar, ethanol, tobacco and the soya complex of beans, meal and oil. It is No. 4 in maize and pork. It is, agriculturally speaking, deserving of the superpower label.

However, expansion is not so easy, and here lies the treasure for investors. As the FT reports: “In Brazil, analysts say [that] output is reaching its limit and the investment needed for growth, especially in transport infrastructure, is falling short.” This jibes with the UN’s report I mentioned above.

On-the-ground reports from farmers in Brazil add further confirmation and make the hurdles clear. There is a lack of rail and water transport infrastructure. As author and traveler Roy Nash wrote in 1926 – and it is still true today – “Space is Brazil’s pride. Space is equally Brazil’s weakness.”

Most of those crops must make a tortuous 2,000-kilometer trek over bad roads to congested ports. (Brazil has the world’s third largest road network, but only 12% is paved.) The cost of transportation is often north of a $100 a tonne, more than three times what farmers pay in the US to bring their goods to market.

The Brazilians have a national history that ought to give them hints that infrastructure is critically important. The history of the city of São Paulo is one example.

Founded by Jesuits in 1554, São Paulo was one of the few cities that did not sit on the coast. Instead, São Paulo was inland, perched on the confluence of four rivers. From here Paulistas would search inland for gold. But the city didn’t really boom until the end of the 19th century. Then coffee became the cash crop. The coffee boom set off an investment boom in railways and ports. São Paulo soon passed Rio de Janeiro as Brazil’s most important metropolis. And wealthy Paulistas and coffee barons invested in the city. Today, São Paulo is one of the largest cities in the world, with some 20 million people.

So perhaps the new boom in all things agricultural will spur similar investment boomlets in Brazilian cities and towns.

This is why Roberto Rodrigues, an agribusiness consultant and former Brazilian ag minister, says: “If I were an investor, I would put my money in logistics and fertilizer. The opportunities are fantastic.”

We are amply represented here with our fertilizer stocks, though only one remains close to my buy price as I write: Mosaic (NYSE:MOS). This one is particularly fitting for the Brazil angle because it is the world’s largest producer of phosphate, of which Brazil is in particular need. Mosaic has phosphate plants in Florida, in places such as Riverview and Hopewell and Wingate. It ships these to Brazil, where it has seven warehouses and blenders and two production facilities. It also has a major office in Brazil – in São Paulo.

Unlike the crackup Fitzgerald describes, it’s not too late for agriculture to do anything about its long process of breaking down. Prices of grains and agricultural commodities will rise to attract the needed investment. That will be good especially for the fertilizer companies, who sell a product needed to replenish the world’s tired soils.

Original Post CVCA

Good news abounds for the Canadian private equity industry.

Just last week, Onex just closed on a new US$4.3 billion fund, called Onex Partners III, of which US$3.5 billion came from third party institutional investors. That US$3.5 billion is 75% more than had been raised for Onex II. According to CPP Investment Board’s website, it committed US$400 million to Onex Partners III in 2008; this commitment is more than double their US$150MM stake in 2003-vintage Onex Partners I.

CPPIB’s 2003 vintage investment in Onex I earned a 124.7% return on the capital invested (see prior post “CPPIB Canadian general partner Q2 2009 performance numbers” Nov 14-09).

Oncap, the small and mid-sized buyout arm of Onex, has also come through the recession with flying colours. $575 million Oncap II has been prudent about capital deployment during private equity’s “Golden Era”, and still has plenty of dry powder to invest. In a lower-valuation environment, having a chequebook is everything. Particularly when many U.S.-based PE funds are marketing their own new funds, and likely out of the market for new deals.

Birch Hill Private Equity Partners had a fabulous first close of $425 million in November. Considering the state of the pension fund universe and the negative impact that the drop in the public equity markets has had on the allocations that pensions have to “alternative assets”, this $425 million number is blockbuster. The fundraising target is $850 million in total. Their Sleep Country and Shred-It investments stick out as recent successes.

Clairvest Group Inc. had a $200 million first close on Clairvest Equity Partners IV, with one Ontario-based pension fund subscribing for $100 million at the outset. The balance of the $200 million comes from Clairvest’s own public company cash, a majority of which is owned by the management team and board of directors. Given their success with back-to-back PE “Deals of the Year” (see prior post “Clairvest makes it back-to-back “Deal of the Year” awards” Sept 23-09), you can be sure that $200 million figure will grow larger with subsequent closings in 2010. CPPIB’s $50 million commitment to 2001-vintage Clairvest EP Igrew by 51% in value as of the last reported quarter.

For its part, Torquest Partners has been busy closing new investments and financing tuckunders for portfolio company FirstOnSite. They even recruited the well-respected and popular Michael Hollend away from the excitement of the venture capital industry; Michael officially became a merchant banker in December. Every time I take my Nikon D300 on the road, I take a piece of Torquest with me via their Lowepro investment.

Canada’s private equity industry is definitely on a roll.

The Initiative

 

Our primary initiative is predicated on identifying solution-driven, sustainable, environmentally responsible, agricultural based companies that need a strategic partner to facilitate progress. As a value added group, CleanSeed Capital Group provides strategic capital, business advisory services, and marketing strategies that yield both positive impact and significant investor returns from this rapidly growing sector.

We work in partnership exclusively with companies that share our vision of a sustainable future in agriculture and that will have a meaningful effect on the current system.

www.cleanseedcapital.com

Technology driven world of Agriculture, Zero-till or No-till farming has been the direction many producers in the state have been heading.

(Alan Ness, Manitoba-North Dakota Zero Tillage Association) “Zero Till used to be a practice that you’d do on an annual basis now zero till has really turned into a system.”

A system that started as a way to conserve top soil and help guard against run-off and groundwater contamination

Now it’s a viable, economically driven system that pairs technology with science to help farmers produce better crops while sustaining the viability of their land.

(Alan Ness, Manitoba-North Dakota Zero Tillage Association) “Where it’s bunch of crop rotations, rotating the proper crops for disease and insect control, rotating crops for nutrient management and those types of things. So consequently we’re looking at a bigger picture than we used to look at.”

That big picture is also on the agenda of the United Nations

Theodor Friedrich with the UN Food and Agriculture Organization says zero till is a proven practice

His mission is traveling the world and showing how conservation agriculture helps sustain farm land while feeding the world.

(Theodor Friedrich, UN Food and Agriculture Organization) “We are promoting world wide as part of our strategy to combine sustainability of farming with the high production. Because we are facing still an increasing number of hungry people around the world.”

Friedrich says the zero till practice is catching on around the world but is still in the minority in farming practices

He says more underdeveloped countries tend to adopt it quicker with the lack of fertilizer available and big machinery to till land.

(Theodor Friedrich, UN Food Association Organization) “The laggers on Europe. Europe is actually the last area to catch up not because they wouldn’t have technology in theory but they don’t have it in practice and there’s a lot of resistance.”

And Friedrich says much of that has to do with mis-information about zero till.

For farmers in North Dakota group like the Man-Dak Zero Till association continue to promote the idea here

With tried and true results of sustainability, economic and environmental benefits, it’s a practice that is showing a win-win for farming in the future.

(Alan Ness, Manitoba-North Dakota Zero Tillage Association) “Bottom line is from our organizations standpoint as long as there’s cover on the field, we’ve taken care of the erosion problem, increased the efficiencies and we’re happy.”

Carbon trading executive sees doors opening in the United States.


The Environmental Protection Agency’s findings earlier this week could be a green light for cap and trade as the government agency has declared carbon dioxide emissions can pose a threat to human health. The statement by Lisa Jackson, head of the EPA could start a wave of carbon trading as the agency moves to further regulate businesses that release the compound into the air.
Dan Braun, head of the new carbon trading division at Knight Capital, calls the EPA’s decision on greenhouse gases “a logical way to cap and trade.” Now that the EPA has finalized its carbon endangerment finds, the organization has to begin working on lowering emissions to avoid lawsuits from non-governmental organizations, Braun says. The Copenhagen conference could be another step toward cap and trade as well.
Knight Capital launched its carbon trading division earlier this month to get ahead of the global trend the firm foresees in trading this commodity. Knight’s operations are already starting in Europe, where the carbon trading market has progressed further than in the U.S.
Founded in 1995, Knight Capital makes most of its money in equity trading. Carbon markets could well be dominated by the alternative trading systems that have sprung up around stocks this decade. Investment banks, particularly Deutsche Bank ( DB – news – people ), are also interested in these markets. The IntercontinentalExchange ( ICE – news – people ) already has a robust energy futures trading platform that could work in these markets. Other players could be veteran energy traders like Duke Energy ( DUK – news – people ) and Dynegy ( DYN – news – people ).
The European carbon trading markets have been active for the last two years, Braun says. He describes that market as “a very liquid market with good price discovery.”
Braun sees a “huge opportunity” in the U.S. market once carbon trading has been defined. The U.S. market could even progress without a federal program. Some companies and other organizations could put together voluntary carbon trading programs while before a federal program begins, he says. What might be standing in the way of private carbon trading programs is a lack of technology. Braun says the U.S. doesn’t have a commercially viable form of technology yet.

Alexandra Zendrian

vesco

 

Carbon Offsets:

The UN-administered Clean Development Mechanism (CDM), which allows companies and governments to meet part of their emission reduction targets by financing carbon-cutting projects in the developing world, accounted for a further 947 million tons of carbon trading in 2007, valued at approximately US$18.7 billion (Point Carbon, 2008).   This Kyoto sanctioned carbon offset protocol validates and measures projects to ensure they produce authentic benefits as a way for governments and private companies to earn carbon credits which can be traded on established marketplaces.  Organizations that have difficulty meeting their emissions quota are able to offset by buying CDM-approved Certified Emissions Reductions.

Carbon Trading:

The European Union’s Emissions Trading Scheme (EU-ETS), launched in 2005, has a binding target to reduce the overall greenhouse gas emissions of the European Union by 20%, compared to 1990 levels, by 2020, by imposing caps on emissions from energy-intensive industries.  To date, EU members have achieved a 2 percent reduction in GHG emissions.  Current targets expire in 2012, with new EU-ETS targets expected to be much steeper if the 20% target by 2020 is to be achieved. 

State and regional initiatives in the United States and Canada continue to gain momentum, with 10 north-eastern U.S. states committing to a multi-state cap-and-trade program in a bid to reduce greenhouse gas by 10 percent compared to 1990 levels by 2018, under the Regional Greenhouse Gas Initiative.   Voluntary markets, where companies or individuals concerned about their carbon footprint can choose to buy emission credits, continue to grow; the largest being the U.S.-based Chicago Climate Exchange, where 2007 trading volume doubled to approximately 25 million tons.

In March of 2008, the Canadian Federal Government announced plans to establish a national carbon emissions trading market, including a carbon offset system, to provide incentives to reduce GHG emissions with a target to reduce overall emissions in Canada by 20 percent by 2020.  Canada has allocated CDN$66-million to develop the necessary certification and regulatory structure to establish the carbon emissions trading market.

Terrestrial Carbon Sinks:

The U.S. is the world’s largest emitter of carbon dioxide with China in second place.  Annual greenhouse gas emissions in the U.S. are projected to increase from 7.2 gigatons carbon dioxide equivalents in 2005 to 9.7 gigatons in 2030, an increase of 35 percent (U.S. Energy Information Administration’s Annual Energy Outlook 2007; U.S. Environmental Protection Agency; and USDA).  This growth in emissions is accompanied by a projected decrease in absorption of carbon by U.S. forests and agriculture land (McKinsey & Co, 2007).  After rising for 50 years, carbon absorption by U.S. forests and agriculture lands is forecast to decline by 7 percent, from roughly 1.1 gigatons in 2005 to nearly 1.0 gigatons in 2030. 

In December 2007, McKinsey & Company released a report titled Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost? analyzing resource costs and abatement potential for more than 250 opportunities to reduce or prevent GHG emissions.  With a goal of reducing GHG emissions in 2030 by 3.0 to 45 gigatons of CO2e the report identifies agriculture and forestry as important terrestrial carbon sinks, with the potential to reduce between 440 to 590 megatons of GHG emission through 2030, at costs significantly below $50 per ton carbon dioxide equivalent associated with other potential carbon sinks.

Working with major U.S.-based companies, industry experts, leading academics and environmental NGOs, the McKinsey’s report identifies improving soil management practices as relatively low cost options requiring linkages to carbon-offset mechanisms to access needed capital, plus improved monitoring and verification.  Within the 440 and 590 megatons of annual emissions offset (absorb carbon emissions), forestry and land-use changes account for 320 megatons of sequestration, enough to increase net carbon absorption by 30 percent over present levels; with opportunities for the further expansion of agriculture sequestration to provide the remaining 120 megatons of annual emissions offset. 

Vesco Agricultural Technologies (Terra Glide) No - till Technology will play a meaningful role in improving soil management practices and will qualify for carbon offset credits.

Vesco

Conservation tillage practices store carbon by preventing the disruption of organic matter in the soil, allowing the organic matter to accumulate in the ground rather than be released as carbon dioxide, as occurs through traditional tilling practices that are still widely used today. Additionally, conservation tillage helps improve soil and water quality, reduces on-farm fuel burn and emissions, and also enhances the ability of food producers to withstand climate extremes.

Management practices that allow soils to move carbon dioxide from the atmosphere to agricultural soils are explicitly cited as an important greenhouse gas (GHG) mitigation option in the United Nations Framework Convention on Climate Change (UNFCCC), in the Kyoto Protocol to the UNFCCC, and in the most recent report of the Intergovernmental Panel on Climate Change. Activities that increase on-farm soil carbon are explicitly included as credited activities in U.S. proposals to legislate a GHG cap-and-trade program, for both early action and inclusion going forward. In Canada, agricultural soil carbon crediting is also included in existing GHG reduction initiatives.

For more information on Vesco Visit: www.vescocanada.com

 

 vesco

Marvelle Media continues to  feature this company. Today we are focusing on Soil erosion and how Vesco can play its part.

Soil erosion:

The world is facing an agricultural crisis of pandemic proportions: the catastrophic loss of topsoil. After covering the earth for thousands of years, the world’s topsoil is being lost at an alarming rate. In reality, for the past 100 years, our land has been more ‘mined’ than farmed. Historically farmers used the soil, depleted the soil and moved on. Even with current farming methods more topsoil disappears each year than is created.

Soil erosion1

Such poor management of the topsoil is not the failure of a single farm or even a single region. It’s a problem of worldwide dimension. Across the globe, world agriculture faces a growing crisis. The world’s four top crop-producing areas (U.S.A., the countries of the former USSR, China and India) are all losing topsoil at an alarming rate of over 13 billion tons per year.

Sediment from soil erosion is the single greatest pollutant of the world’s oceans, lakes and rivers. Scientists estimate that before intensive agricultural cultivation began, approximately 9 billion tons of topsoil was carried into our waterways annually through runoff. Today the volume has tripled, exceeding 27 billion tons every year, and continues to increase.

erosion

“Our problem with erosion was very serious and it was very damaging to the environment to the extent that, in these crops, to produce one ton of grain in Brazil, we lost 10 tons of soil per hectare per year. We solved this problem by eliminating tillage,” says Almir Rebelo, grower advisor and president of Friends of the Earth, a Brazilian grower organization influential in the adoption of no-till farming in Brazil.

With conservation tillage, farmers leave the stubble or plant residue on the soil’s surface, rather than plowing or disking it into the soil. The new crop is planted directly into this stubble, and genetically modified (GM) herbicide-tolerant plants make it possible and practical for growers to control weeds in the crop by applying an herbicide rather than plowing.

Vesco No till

“As a result of us keeping crop residue on the ground, we have a new foraging opportunity for wildlife,” says U.S. cotton, corn and soybean farmer Jay Hardwick. “So we’re seeing a new happening on the landscape in terms of wildlife emergence. Not only top of it, but underneath. Earthworms are coming back to play, and earthworms are strategic in getting water into the soil structure.”

The impact of no-till farming and soil erosion control has been just as significant to farmers in the developing world. “We do not have to burn the residue in our harvest anymore,” says Jerry Due, a Filipino corn farmer. “We just allow the residue to decompose in the field to become fertilizers.”

For more infprmation please visit: www.vescocanada.com

The Vesco Technology

With the exception of the Vesco Terra – Glide no-till technology, there has been limited improvement to no-tillage equipment in the last 20 years and metering systems have remained virtually unchanged for the last 50 years. Officials at the United States Department of Agriculture (USDA) have informed the Company that they believe the market will readily accept the technological advancements offered by the Vesco no-till system. Comprised of a suite of patented technologies, the Company’s strong competitive advantage is the combination of precision opener, T-Slot seeding with precise metering of deep and/or side banding fertilizer and complete close of surface soil.

Extensive testing under numerous soil, surface residue and weather conditions confirmed superior agronomic benefits including increases in crop yields, reduced soil erosion, reduced seed and fertilizer usage and soil moisture retention.

“My 15 year interaction with the principals of the Terra-Glide Technology leaves me no doubt: The Terra-Glide products will significantly help farmers around the world benefit from modern agriculture production and conservation methods. I see in the Terra-Glide technology, the opportunity to participate in an exciting and enduring commercialization of a wide variety of modern machines and methods which will serve agricultural farm lands over a scale, from single subsistence farmers to advanced large scale food producers.”

Dr. Keith Saxon, Agricultural Engineer, United States Department of Agriculture Research Station, 2003

The Vesco Terra-Glide no-till technology was designed for mass production, resulting in fewer moving parts, ease of replacement part installation and streamlined manufacture and assembly.

For more information visit www.vescocanada.com

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