Island Independence

Island Independence

For some time now, islands have ben romanticized in human culture, placed at the apex of potential vacation destinations, often with good reason.

Maui

Islands present the opportunity to disconnect oneself from the familiar, culturally, geographically or otherwise. Those lucky enough to visit an island while on holiday will likely be impressed by any number of environmental, culinary or adventurous delights. But what of the machinery and infrastructure that maintain such idyllic locales, and the people who live there? With this blog post I will pull back the curtain, and provide a glimpse of what it takes to keep an island paradise running from an energy standpoint, using Hawai’i as a case study.

HIFirst, some quick, pertinent facts about Hawai’i. As of 2012, census data indicate there are a little less than 1.4 million people living in the state; with ~70% residing in the city of Honolulu on the Island of Oahu. All told, Hawai’i contains 6,422 square miles of land – the Island of Hawai’i makes up over half, at 4,028 mi2 – spread out over an archipelago of 130 islands that stretches over 1,500 miles. At ~2,400 miles from North America, the closest continent, Hawai’i is the most isolated population center on Earth.

Powering a population of this scale and geography is a serious undertaking, and requires substantial energy supplies and infrastructure. There is no appreciable production of fossil fuel energy in Hawai’i, thus 94% of all Hawai’i’s energy is imported. The Hawai’i Electric Company and its subsidiaries provide 95% of the electricity used by the state’s residents; a little over 73% of this electricity is generated from burning oil. This pie chart provides further information on energy consumption based upon the sector of the end-user:

HI Chart

Needless to say, if there was an interruption in this supply, the effects on the Hawai’ian economy could be devastating. In the interest of brevity, and not depressing readers of this post, I won’t use space here to catalog the potential for catastrophic environmental impacts associated with transporting oil.

In recognition of this dependence on imported energy and environmental hazard, Hawai’i has passed legislation mandating that 40% of all electricity and natural gas shall be generated from renewable sources that can be produced on the Islands (Hawai’i Revised Statutes §269-92 Renewable portfolio standards (a)(4)). This action sets the state on a path toward a future where the Islands of Hawai’i could become energy independent.

The transition from fossil fuels to renewable energy supplies is already underway. Hawai’i currently produces ~11% of its electricity from renewable sources, including biofuels, geothermal, solar, and wind among others. This percentage is primed to increase substantially, as entrepreneurs and established companies alike recognize the market opportunity. HAWAI’IGAS, which supplies synthetic natural gas and propane to varied customers throughout Hawai’i, operates a pilot plant that converts up to 1 million gallons of renewable feedstocks such as used cooking oil into natural gas; this pilot plant is slated for expansion. Pacific Biodiesel got started producing biodiesel so early that they were able to buy the domain name www.biodiesel.com. BdslPacific Biodiesel was conceived in 1995 with a single facility that converted used cooking oil into biodiesel. Since then they have successfully built 12 production facilities on the mainland US and Japan, and continue to grow: the company’s newest venture is Big Island Biodiesel, a plant able to produce 5.5 million gallons of biodiesel per year.

Significant progress has been made incorporating increasing quantities of renewable energy and fuels into the portfolio of Hawai’i, but there is more to be done: the State’s energy plan aims to have an agriculture industry that will be able to provide 350 million gallons of biofuels by 2025. TerViva, the company that I work for, is currently planning for the deployment of its first commercial pongamia orchard in Hawai’i. Pongamia trees produce a bountiful seed crop; when crushed, the seeds yield oil that is well suited for conversion to biodiesel and natural gas, among other products. By producing a robust biofuel feedstock, TerViva and other industry leaders like Pacific Biodiesel and HAWAI’IGAS will help Hawai’i make progress down the road to an independent future, free from the constraints of imported oil.

Genetic Testing: A Common Thread in Breast Cancer and Agriculture

TIME Magazine, May 27, 2013

TIME Magazine, May 27, 2013

By David Harry, TerViva

Angelina Jolie’s personal decision to undergo a preventative double mastectomy became a very public discussion topic after she published an op-ed piece in the May 14, 2013, New York Times (http://www.nytimes.com/2013/05/14/opinion/my-medical-choice.html?_r=0).  TIME magazine (May 27, 2013) followed suit by featuring the story on its cover.  Ms. Jolie’s story is valuable because it provides an instructive example to help others begin to understand how genetic testing can help assess risk.  But it also provides a learning opportunity for better understanding how genetic testing can be applied in agriculture.

Ms. Jolie sought out genetic testing because her family history presented strong evidence of an inherited predisposition for hereditary breast and ovarian cancer (HBOC, http://www.cancer.net/cancer-types/hereditary-breast-and-ovarian-cancer):  her mother died of breast cancer at age 56; her maternal grandmother died of ovarian cancer at age 45; and within weeks after Ms. Jolie’s announcement, her maternal aunt died of breast cancer at age 61 (http://en.wikipedia.org/wiki/Angelina_Jolie#Cancer_prevention_treatment).   Ms. Jolie’s genetic test revealed that she carries the defective (cancer causing) version of the BRCA1 gene associated with HBOC.  Ms. Jolie subsequently opted to undergo a double mastectomy dramatically reducing her overall risk of developing breast cancer.  The overwhelming public reaction has been an outpouring of support, coupled with praise for Ms. Jolie’s decision to go public in order to help others.

Extrapolating from medical genetics to other applications such as agriculture requires some explanation.  First, it’s important to realize that the same rules of inheritance apply equally to plants, animals, and humans.  Likewise, the process of interpreting these rules, and coupling family history with genetics, follows incredibly similar rationales and offer similar predictive opportunities in both medicine and in agriculture.

Ms. Jolie’s journey illustrates how, in light of her family history and genetic testing results, her medical advisors estimated she had an 87% chance of developing breast cancer.  Such predictions are not always as straight forward. Over the past two decades, the roles of certain genes in breast cancer have been increasingly understood.  BRCA1 and BRCA2 play particularly significant roles in cancer because they affect DNA repair, but the involvement of other genes (http://www.cancer.gov/cancertopics/factsheet/Risk/BRCA) means that completing a battery of  genetic tests does not ensure accurately predicting the likelihood of developing cancer.  Genetic counseling is typically recommended since a large number of factors must be considered, including the interaction of an individual’s personal history in conjunction with complex environmental influences.  Needless to say, amassing the resources to evaluate overall risk is no trivial matter, and deciding how to act on this information involves balancing many factors.

All medical decisions, with or without genetic testing, are made from the perspective of an individual.  In light of all pertinent medical information, and after balancing all other factors, what course of action is best for an individual patient?   Each decision, whatever its outcome, is highly individual, being made by a patient in consultation with his/her medical advisor and family.

In contrast to human medicine, agriculture decisions are typically neither individual nor personal.  In agriculture, decisions typically involve evaluating alternatives affecting groups of plants or animals (e.g. populations, herds, fields, orchards, etc) to select the most economical means to achieve a given commercial or environmental outcome.   For example, the typical mission of breeders and geneticists is to somehow shape the genetic trajectory of a population so that it best conforms to a targeted goal—commercial or otherwise.  Genetic predictions can be influenced by family history (e.g. field performance of siblings), and increasingly, augmented using results from DNA-based genetic testing.

Two young pongamia trees with contrasting phenotypes.  Which might perform better in the long-run?

Two young pongamia trees with contrasting phenotypes. Which might perform better in the long-run?

Genetic screening, using methods akin to human medical genetics, is being widely used in diverse agricultural applications.  Some of these involve assessing the role of one or a few genes, combining perhaps dozens of markers.  Other applications are being developed that simultaneously evaluate hundreds to thousands of DNA-based differences, and then combine this information with massive datasets on plant or animal performance.

For pongamia, we are constantly on the look-out for cost effective ways to evaluate which trees to select, propagate, and distribute, using genetic markers as one of many inter-related approaches.  Genetic testing will rarely supply unambiguous predictions, so our goal is to stack the odds (i.e. like a winning hand in a card game) to provide the most likely collection of pongamia varieties for a given set of circumstances.

David Harry, Ph.D., is Director of Research and Development for TerViva.  His background encompasses research and management positions in the public, private, and academic sectors, working primarily to integrate novel genetic applications with applied breeding in plants and animals.  David has a B.S. and M.S. in forestry, and a Ph.D. in Genetics from UC Berkeley.

Ag, Robot

Robot. What does that word evoke? Something boxy, metallic, and humanoid from a science fiction movie? An arm-like apparatus used to build cars on an assembly line? Perhaps a little disc that vacuums your carpets? Whatever it is, I’m willing to bet that most people don’t think of “agriculture” when they think of robots.

Yet robots, and automation in general, have been making significant inroads into commercial agriculture at a pace and scale that may surprise even the most jaded techie. Did you know, for example, that several ag equipment manufacturers offer  GPS-guided tractors and combines with the capability of steering down a row of crops to an accuracy of within two inches? Check out the following video for more:

There’s more than just whiz-bang hands-free trickery, though. An automated sensing system developed by venerable ag equipment maker John Deere allows for the near-real-time identification of organic material such as sugar, starch, protein, and fiber, while the crop is being harvested. Based on near-infrared spectroscopy, this system allows livestock farmers to optimize their herd’s performance, and bioenergy feedstock providers to calculate the optimum quantities of biomass material to be harvested, by varying chop lengths by as little as 1 mm (0.04 inches).

We’re not done yet. The two examples we just discussed are applicable to harvesting row crops that operate in a relatively linear manner. What about more complex tasks, such as spacing plants in a nursery or greenhouse? No worries, because Harvest Automation has you covered. See below: 

And these barely scratch the surface. Blue River Technologies is developing a robot expected to physically remove weeds on organic farms (which are limited in their use of pesticides). Vision Robotics is developing one that can prune grape vines. Researchers at the Massachusetts Institute of Technology have been working on a robot that can pick cherry tomatoes.

At this point, it may be reasonable to ask: Why robots, and why now? I’d venture that there are multiple factors at play, including trends in both supply and demand. Let’s take a look at some of them:

1. An existing technological analog. It turns out that the technology for self-driving robots shares much in common with that for self-driving cars. Generally speaking, it’s much easier to adapt an existing technology for a new application than to come up with the technology for that application from scratch.

2. An open-source culture. The software architecture on which much of the modern Internet is based relies heavily on the “open source” philosophy, which encourages universal access and unlimited distribution of a particular type of technology (e.g., the Android smartphone operating system). Open source allows product designers and engineers to spend less time reinventing the wheel and more time on building up on the work done by others.

3. The availability of cheap miniature chips and sensors. Even the coolest technologies with world-changing potential are just science projects until they can be commercialized. Advances in the miniaturization, robustness, and accuracy of off-the-shelf chips and sensors, as well as in manufacturing capability (especially by Asian component manufacturers), mean that a variety of components can be cheaply sourced – leading to a product that can be sold at an attractive price.

4. Rising labor costs in industrialized countries. Japan and the European Union countries are no stranger to high labor costs, and so pursuing automation may be a cost-effective route for farmers in these countries. In the United States, too, an increased awareness of immigrant labor has led to an interest in ag robots.

5. The incentive for emerging economies to move up the value chain. According to this article, China is starting to install an ever-increasing number of robots for various applications – which seems incredulous at first. After all, isn’t the country known for its inexpensive labor? As it turns out, wages are rising, as a result of which China is incentivized to move up the value chain to provide its workers with higher-wage opportunities (or else see their jobs be moved to even lower-wage countries and be left with a big skills gap). The use of robots to perform routine tasks is a step in this direction.

In summary, the intersection of a number of complex global factors is leading to the continued revolution in the “robotization” of agriculture that is as significant as it is low-profile. What impact will this have on conventional row crops? On horticultural crops? On industrial crops grown on unproductive land? Only time will tell.

Now if you’ll excuse me, I have to go. My robot chef just sent me a text saying that dinner’s ready.

Bowman vs. Monsanto Supreme Court Case: How do we balance protecting intellectual property with maintaining competition among businesses?

Author: Claire Kinlaw

At TerViva, we’ve been following the recent buz around an important patent case:  Bowman vs. Monsanto (http://www.agweb.com/article/monsanto_supreme_court_case_stirs_social_commentary/).  This case centers on the underlying conflict between intellectual property protection and antitrust policy.

What is the context for the case?surpreme-court

Monsanto, a major agriculture and biotechnology company with annual revenues of more than $13B (2012 annual report), is a major player in the production of genetically modified seeds (GM seeds), and has essentially a soy seed monopoly.

Glyphosate, first discovered and patented by Monsanto in the 1970’s and sold under the brand name Roundup® is now off patent and produced by numerous chemical companies (Dow, Bayer, Syngenta, for example).  Glyphosate is the most widely used herbicide in the US today.  Monsanto’s full Roundup Ready® line of products, including genetically modified seeds (that remain on patent), represent about half of Monsanto’s yearly revenue. (Wikipedia). Other Roundup Ready® crop seeds sold by Monsanto include: corn, cotton, alfalfa, and sugar beets (with sorghum on the way).

Genetically modified crops dominate the agriculture industry in the United States. For example, in 2010, 70% of all the corn that was planted was herbicide-resistant; 78% of cotton, and 93% of all soybeans.

gmo cornRoundup Ready® crops, the intellectual property of Monsanto, have been genetically modified to contain introduced genes that allow them to withstand the herbicide glyphosate.  When planting glyphosate tolerant crops, a farmer can spray the entire crop with glyphosate, killing only the weeds and leaving the crop unharmed.  Thus glyphosate tolerant crop varieties in concert with glyphosate spraying provide for effective weed management and lead to increased yields, thereby increasing farm revenue.

Roundup Ready® soy seed are a particularly challenging case from an intellectual property point of view for Monsanto as the inventor.  This challenge results from the biology of soybean.  Soybean plants self-pollenate and are generally homozygous, meaning that for most genes, they have two identical copies.  Outcrossing crops like corn or alfalfa tend to be more heterozygous, meaning they have two different versions of each of their genes.

Therefore, offspring from purchased soybeans will be essentially identical to purchased seeds. In particular, glyphosate tolerant parents created by Monsanto will produce a high percentage of glyphosate tolerant offspring seeds. The biology of soybean is central to the court case in question.d_aerial spraying (4)

What are the basics of the case?

In order to protect its intellectual property, and benefit from its multi-million dollar investment in research and development over the last two decades, Monsanto requires farmers to sign contracts under which farmers agree not to save and replant the seeds produced from the plants that grow from Monsanto seeds.  Farmers return to Monsanto to buy new seeds every year.

Mr. Bowman having previously purchased Monsanto’s Roundup Ready® soy seeds for his major planting then purchased seeds from a local grain elevator for off season planting.  He reasoned that most of the aggregated seed from the multiple sources would be glyphosate resistant.  He was correct in his reasoning and was able to avoid the higher costs of purchasing additional Monsanto seeds while reaping the benefit of glyphosate resistance for weed control.  The soy plants that he grew from the grain elevator source seed were glyphosate resistant because they “self-replicated almost entirely from Monsanto GMO plants containing Monsanto’s patented transgene.

Monsanto sued Mr. Bowman maintaining that he had infringed on their patents.

What impacts will this case have?

Far beyond its impact on farmers and Monsanto, at issue in this case before the Supreme Court is the fundamental balance between intellectual property protection and antitrust policies (http://www.pbs.org/newshour/bb/law/jan-june13/scotus_02-19.html).   Although patent laws and antitrust laws are both designed to help bring innovation into the economy, the issue is how.

Patent law and case history provide for the protection of an investor’s intellectual property in the following way.  When an invention is sold (say a plant) the buyer has the right to “use” that invention in essentially any (legal) way he/she wants.  The buyer does not however have the right to produce more copies or replicate that invention.  But, what if the invention replicates itself, as in the case of soybean seeds that make plants that make more seeds?

On the other hand, because Monsanto has a virtual monopoly on soy seeds in the US and is heading toward monopolies on other crops, competition in vital agricultural commodities is at risk.

Ironically, even if the Supreme Court rules against them in the case in question, Monsanto may be able to turn to a new technology to further block farmers from getting around their intellectual property by replicating their own glyphosate resistant soybean.  Through this technology, called terminator technology, Monsanto, would produce seeds that could grow properly and provide high yields of soybeans suitable for all the downstream products currently made from soy.  However these soy seeds would fail to germinate, thus failing to produce a second generation of plants. (http://www.nature.com/news/seed-patent-case-in-supreme-court-1.12445)

How the Supreme Court rules in this case involving a self-replicating invention will have implications far wider than agriculture for industries like nanotechnology, biotechnology, and software where products can make copies of themselves.  Stakeholders among all these industries will be watching carefully for the Supreme Court’s ruling, expected by June.

 

Projecting the next ten years in agriculture

Looking into the future is often as difficult as it is necessary, especially for a domain as diverse as agriculture. Difficult, because one seldom has enough information to make a highly accurate prediction. Yet necessary, because so many farmers, businesses, consumers, and taxpayers are affected by long-term agricultural trends, and having an informed baseline can serve as the basis for a better understanding of these trends.

Our friends at the United States Department of Agriculture (USDA) regularly take up the task of providing such a baseline. Earlier this month, the USDA published the 2013 edition of their projections in agriculture for the next ten years, i.e., through 2022. These reports are extensive, detailed, and global in their outlook. They are put together by the USDA’s Interagency Agricultural Projections Committee, and cover agricultural commodities, trade, and aggregate sector-specific indicators such as farm income and food prices.

Let’s take a look at a few of the highlights of this report.

1. Global production of most major crops is expected to increase in 2013 and beyond. This is partly due to “organic” (no pun intended) growth in consumption due to ongoing increases in population and well-being, and partly due to a response to high prices for many farm commodities that was driven by weather events such as the 2012 U.S. drought. However, these factors are countered by long-term trends such as limited land availability, water scarcity, and slowing population growth. Indicative projections for global trade in wheat, coarse grains  (i.e., corn, barley, sorghum, and others), and soybeans/soybean products are shown in the chart below.

GlobalTrade

2. The drivers for agricultural growth are changing. Rising per capita incomes in several countries are supplementing traditional population gains in terms of the demand for vegetable oils, meats, horticultural and dairy products, and grains. For example, world per capita use of vegetable oils is expected to rise 17%. Compare this with 8% for total coarse grains, 7% for meats, and a decline of almost 1% for wheat and rice.

3. China is remaking the global soybean landscape. World soybean trade is projected to rise 37% over the next ten years. A major factor in this growth is China’s domestic agriculture policies. The projections assume that the country will pursue corn production at the expense of soybean production (to some extent); still-rising domestic soybean demand will be met through increased imports. How important is this policy to the global soybean market? The chart below says it best. Shown in green, China’s soybean imports are projected to rise 52% over the next ten years, accounting for 90% of the projected growth in these imports.

ChinaSoyImports

4. Global meat consumption is being driven by emerging markets around the world. Over the next ten years, imports of beef, pork, and poultry are expected to increase by 30%, 16%, and 21%, respectively. Exports of lower-priced beef from India and Brazil to several low/middle income countries are expected to account for almost two-thirds of the projected increase in the global beef trade. Separately, Mexico continues to import pork and poultry at high rates, with projected growth rates of 32% and 50%, respectively. Finally, poultry imports by Africa and the Middle East grow more than the rest of the world combined over the ten-year projection period. The chart below shows trends in poultry; Sub-Saharan Africa is represented in blue, while North Africa and the Middle East are together represented in black.

PoultryImports

5. U.S. prices for corn, wheat, and soybeans will remain historically high. The drought of 2012 led to a significant run-up in prices, as seen in the chart below. While prices are expected to come down from those levels, several long-term factors such as global increases in population and per capita income, depreciation of the U.S. dollar, and increasing biofuel production, are expected to keep prices high.

USPrices

To summarize, these are all interesting findings that can serve as a starting point for further analysis and discussion. It is worth reiterating that these projections do not purport to predict the future; rather, they show trends in a “business-as-usual” world. For example, the U.S. farm-level price projections shown in the chart above do not account for the impact of increasingly frequent weather events – events that contributed to the actual price spikes seen in recent years.

The next ten years in global agriculture are going to be very interesting indeed.

International Land Grab

On February 5, the New York Times published an op-ed called, “The Global Farmland Rush” (http://nyti.ms/XQqFfG), which discusses the intense land grab in emerging economies.  An example cited in the article:  a Saudi-led group’s recent attempt to acquired 4,600 square miles of land in Indonesia.

The rationale for this land grab?  Well, as Mark Twain said:  “Buy land — they’re not making it anymore”.  With increasing pressure on our global agriculture system to feed the world’s growing population, there’s a rush to find arable land — whether for production today or as an investment for the future.  On that note, we’ve been amazed by the sophistication with which certain investment groups are analyzing this space.  As an example, look no further than the treatise on African agriculture put forth by Renaissance Capital  (http://bit.ly/YWOQ10).

Perhaps because of my background in energy, there’s something familiar about this story.  A few decades ago, it was popular for established US and European oil companies to go into Asia, the Middle East and Africa to secure land for drilling.  Over time, those countries’ governments slowly clawed back on those deals, effectively knocking down the project returns.

We’ve already seen governments do this with land (think Zimbabwe).  As the value of arable land goes up in the coming decades, we believe there will be populist pressure to “re-negotiate” these current land deals.  Of course, I’m sure that investors have “priced” this possibility into their land purchase calculations, and they’ve still concluded that it’s worth it.

And that, to me, says a lot about how valuable land is becoming.