Back in June, I wrote the first part of a blog post called: “TerViva: Why We Do What We Do” (http://bit.ly/18WIC2j). In that post, I identified three sub-topics: (1) why marginal land matters (2) why new crops are necessary for marginal land; (3) what is TerViva’s unique approach to new crops for marginal land.
I discussed topic 1 in the previous blog, and in this blog, I will tackle topics 2 and 3.
To recap on topic 1 – why marginal land matters…
Put simply, the amount of marginal agriculture land is growing every year. According to a recent Oxford University study, future environmental hazards such as climate change, land degradation, and water scarcity could eliminate as much as $8 trillion in agriculture assets annually (http://bit.ly/11Z2NeQ).
We use agriculture to make food, feed, fiber, and fuel. To meet future demand, we will need to farm lots of new acreage, increase production on existing acreage, and also find ways to use underproductive acreage.
On to topic 2 – so why new crops for marginal land…
New crops aren’t the only option for marginal land. Indeed, companies such as Monsanto and Pioneer are using genetic modification techniques to improve the ability for existing crops such as corn, soybeans, rice, and wheat to grow better in harsher conditions. Other companies, such as Drip Tech and New Leaf Symbiotics, are improving the viability of marginal land itself –through advancements in areas such as in soil fertility and irrigation.
We commend such efforts. But there are places where, no matter the extent of GMO or land improvement, existing crops like corn, soybeans, rice, and wheat simply will not grow. Where we work in Florida citrus country is a good example: weeds, sandy soils, high water table, bedded rows, high humidity. In other words, it’s land that’s excellent for citrus but not for most other crops. And now, with citrus greening disease wiping our hundreds of thousands of acres, it’s increasing difficult for citrus, too
But this land can potentially be farmed with alternative, hardier crops that can still produce similar food, feed, fiber, and fuel.
On to topic 3 – TerViva’s approach…
A few years ago, we convinced ourselves of the need for new crops for marginal land. We then began to evaluate many different “new” crops, from the well-known to the not-so-well-known: sorghum, miscanthus, castor, jatropha, camelina, moringa, simaruba, yellowhorn, etc., etc. At TerViva, we describe these crops as “semi-domesticated” — they have had varying degrees of advancement by humans over generations, but not nearly to the extent of large-scale commercial crops like corn and soybeans.
Our search process led us to three conclusions, or better said, three pre-requisites for the success of new crops on marginal land:
(1) Hardiness: the new crops have to be versatile, capable of withstanding the “new norms” of soil salinity, water availability, and pests. Ideally, these crops will require fewer inputs than their predecessors in terms of fertilizers, pesticides, and irrigation.
(2) “Drop-in”: the new crops have to utilize a region’s existing agriculture skills, labor force, equipment, field setups, and processing infrastructure. New crops are risky, and if growers cannot leverage existing capabilities, the rate of new crop adoption is likely to be low.
(3) Disruptive economics: by definition, marginal land is not generating a good return. High, sustained returns require both high income per acre and scalability. $50 net income per acre doesn’t excite a lot of growers (I’m looking at you, camelina). Similarly, It doesn’t help to have a $5,000 net income per acre for a crop with a market of only 5,000 acres. For these niche crops, supply eventually exceeds demand, driving down revenue and returns.
Not many crops can check all three of these boxes. But we have found one: pongamia. It’s the crop of fervent devotion on this blog: a legume species of tree that produces oil and seed cake of similar quality to soybeans, which is used heavily for the biodiesel and animal feed markets.
Pongamia is extremely adaptable: droughts, waterlogging, sand, clay. Where tree crops are cultivated, it drops right in to the existing agriculture system. It can serve the huge markets for biofuels, biochemicals, and animal feed, at a return per acre of over $1,000 per year.
For these reasons, pongamia is rapidly gaining traction with large, leading landowners in Florida, Texas, and Hawaii.
Naveen Sikka is TerViva’s CEO.