Pecans, Pongamia, and Water

Near Austin, Lake Travis sat at 54 feet below its full level as of January, 2012.

Near Austin, Lake Travis sat at 54 feet below its full level as of January, 2012.

If you live in Texas, water has been the biggest agricultural issue for the last several years. The coastal bend of Texas – where we are growing about 150 acres of pongamia – has historically been a big region for rice production. But that’s been on the decline, due (among other reasons) to less available water. As cities like Austin continue to grow, and rainfall remains erratic, it’s becoming increasing difficult to grow crops that are dependent on irrigation.

Water in TX -- not a good situation

Water in TX — not a good situation

Further up North, near Lubbock, the situation has gotten so bad that some pecan farmers are losing their trees. In this article – http://bit.ly/Y3Ff1w – we read about a family that’s selling its land because of lack of water for its pecan trees. Pecans need lots of water. Anecodtally, we heard from one farmer that it takes 40 gallons of water to make one pecan. More concretely, one of our colleagues at TerViva took a course on pecan horticulture and learned that, during a 6-month period, one acre of pecan trees requires 1 inch of irrigation per week (about 27,150 gallons). Over those six months, that’s over 706,000 gallons per acre, or 14,700 gallons per tree.

As a comparison, we have planted pongamia near the Phoenix area in Arizona – where it’s often very hot and always extremely dry. Our project is with a water treatment facility. Although the facility ends up producing very clean water, that water cannot be used for consumption or agriculture. So we partnered with this facility to try out some pongamia trees. Using drip irrigation, we’re applying about 5 gallons of water per tree per day. Over the course of a year, that equals 260,000 gallons per acre, or about a third of the water required by one acre of pecan trees over 6 months.

Pongamia in AZ -- waste water, drip irrigation, and some good looking saplings.

Pongamia in AZ — waste water, drip irrigation, and some good looking saplings.

Pongamia seeds are not pecans. For one, pongamia seeds don’t taste as good. But oil from pongamia seeds can be extremely useful for making bio-pesticides, lubricants and working fluids. And because pongamia is a legume, the seed cake left over from expelling the oil is also usable as an animal feed.

We’re not making the case that pongamia trees should replace pecan trees. But we do believe that new crops being used in non-food applications, like pongamia, should exhibit water footprints that improve upon water usage by existing crops.

That can be hard to prove concretely. Pongamia is known to grow well in dry areas of the world, producing bountiful harvests under rain-fed conditions 25 inches annually. But even we haven’t done the work to precisely measure optimal pongamia production under irrigation. We’re committed to obtaining the answers, in support of a common agricultural goal – the optimal use of water.

The Lettuce Revolution

Who would’ve thought this would be the title of a blog post? In the last few years, we’ve seen significant changes in the market for — lettuce. We’ve observed three trends:

(1) Shift to local production: urban population centers consume the most lettuce, but lettuce is mostly grown far away from urban areas. More than 90% of the US lettuce supply is grown in California and Arizona. Now, several companies – including Go Green Agriculture (http://www.gogreenagriculture.com) and BrightFarms (http://www.brightfarms.com) — are growing lettuce closer to where it’s consumed. Go Green has established a system of small-scale hydroponic facilities. BrightFarms is going even more local, with a deal with Gristedes supermarkets in New York CIty to grow lettuce right on supermarket roofs.

Go Green's model for distributed lettuce production

Go Green’s model for distributed lettuce production

(2) Shift to less intensive production: hydroponics, and now “aeroponics”, are all the rage with lettuce. Whereas hydroponic agriculture uses nutrient-rich water as the growing media, aeroponics uses almost no growth media (just air and nutrient mist). In addition to the aforementioned Go Green and Bright Farms, other companies to get their name out there are Aero Farms (http://www.aerofarms.com) and Pod Ponics (http://www.podponics.com).

(3) New “varieties”: now commonly available in California are lettuces with the root balls attached, which preserves freshness and shelf life. I can personally attest to this — I left such a head of lettuce in my fridge for two weeks and when I went to use the lettuce, it was fresher than if I had bought a regular head of lettuce from my grocery store that day.

"Living" lettuce with roots attached, available (soon) at a grocery store near you.

“Living” lettuce with roots attached, available (soon) at a grocery store near you.

Also, recently Monsanto released “Frescada”, a cross between iceberg and romaine that’s packed with vitamins. Unlike Monsanto’s corn and soybean seeds, Frescada lettuce is not genetically modified.

So why the all the focus on lettuce recently? Truthfully, we’re not sure. We don’t see cost being a major driver — we don’t know of people who have been complaining about the price of leafy greens (aside from President Obama — http://lat.ms/dzsZqm). We’re not even sure if hydro- or aeroponics will produce a lower cost lettuce.

Our guess is that the Lettuce Revolution is largely predicated on the belief that consumers want higher-quality and more sustainably-grown lettuces. Today, lettuce grown in the traditional manner can be of mixed quality. No one likes limp, slimy lettuce with browning edges. These hydro/aeroponic companies are certainly making a great product that uses far less chemicals and water than the lettuces grown outdoors in the California and Arizona deserts.

Another noticeable thing about the Lettuce Revolution — investors are getting on board. A few of the companies mentioned in this post have received VC funding. We’ve been a bit surprised by that. VCs typically like to say that they want to fund companies that can be “huge” (definition never clear when you talk with a VC), with an “enduring competitive advantage” (jargon that’s been forced down my throat many times). Based on some USDA data, the domestic market for iceberg and leafy lettuces are approximately $1 billion each. That’s nothing to sneeze at, but I wouldn’t call that huge. In addition, it already seems like there are low barriers to entry and a lack of differentiation in technologies from one new lettuce company to another.

Monsanto's new lettuce - Frescada

Monsanto’s new lettuce – Frescada

Lettuce is growing in popularity outside of the US, in places where it might be difficult to otherwise grow lettuce (i.e., the Middle East). The core hydro/aeroponic technologies are also extendable into other vegetables.

But still — VC funding for lettuce companies? No knock on the lettuce companies — they have some pretty significant talent. I personally met the young founder of Go Green Agriculture (a sharp, charismatic guy) and I recently learned that a very smart college classmate of mine with an investment banking background has joined Bright Farms.

We’re not sure how this will all play out. Consumers definitely stand to gain from the Lettuce Revolution, but I’m not sure if investors will. Lettuce farmers in California and Arizona are most at risk from the Lettuce Revolution. We could easily find that, in ten years, more lettuce is grown through hydro and aeroponics than in outdoor fields.