Is This the Crop That Saves Florida Agriculture?

by Tom Schenk

If you’ve driven through central and southern Florida over the last several years, you may have wondered why much of the land that used to grow oranges and grapefruit in central and southern Florida now sits fallow and choked with weeds? Most people are aware of the fatal citrus greening disease that has caused one of the greatest agricultural disasters in US history. Almost every remaining grove in the Sunshine State is infected with this disease as researchers struggle to find a cure with little to show for results.

In 2017, the growers who were still in the game were spending between $1,500-$2,500 per acre in expenses to coax a profitable citrus crop out of their dying groves. These efforts were met with almost ideal growing conditions and by all accounts it appeared that their efforts would be rewarded with one of the best crops they’d seen in years.

Until the arrival of Hurricane Irma which went through Florida like a chainsaw leaving no grove untouched.

Damage reports indicate that half or more of the unripen fruit is now laying on the ground while what remains in the trees is bruised or will eventually drop off in the coming weeks.  And if that wasn’t bad enough, many groves were left standing in water far beyond the critical 72 hours which is almost always fatal for citrus trees.

Directly and indirectly, Florida’s citrus industry creates almost 45,000 jobs which translate to almost a $9 billion contribution into Florida’s economy. Today’s citrus industry has shrunk by well over half from its peak in the late ‘90’s leaving rural towns and communities distressed and struggling to survive as families and individuals move away to find work elsewhere.  There are only 7 remaining processing plants in the state and it is highly questionable how many will remain open and viable when ultimate crop losses may be as high as 80%-90%.  There’s a point where it does not make economic sense to salvage the remaining fruit in a grove or open a processing assembly line for the smallest harvest since the 1940’s. Like any commercial real estate, ag land is generally priced as a function of its income earning value plus any development potential. Citrus grove and that used to be valued at $10,000 – $15,000 or more per acre now sells for less than half to a third of that.

But why can’t some other crop fill this void?  It’s not for lack of trying.

South Florida’s hundreds of thousands of acres of sandy, shallow soils and rainy climate narrow the field of viable crops that can be profitably grown in those conditions.  Afternoon rains continually flush fertilizers and chemicals out of the soils, into the drainage canals, and ultimately Florida’s coastal estuaries and Everglades. In spite of these challenges, many growers and outside investors have ventured into some alternative specialty crops such as peaches, blueberries, tomatoes, and strawberries.  Establishment costs, however, are very high.  In the case of blueberries, it could exceed $15,000 per acre! To make matters worse, growers have found themselves struggling with a diminishing supply of farm labor. And finally, whenever prices spike higher from either early season prices or if there is a production shortfall, floods of cheaper imports arrive in a matter of days from Mexico and South America.

  • So what can work in Florida’s unique agricultural ecosystem?

There is one ray of hope that shows great promise of restoring ag land values and revitalizing business in South Florida’s rural towns.  In 2011, an enterprising group of entrepreneurs from a company called TerViva began approaching some of the state’s largest citrus growers to establish some trial sites with a tropical/subtropical tree crop called pongamia. Pongamia is an oilseed tree that is native to Australia and India.  Conceptually, the crop is like growing soybeans on trees, but at yields 8x-10x over the best Iowa farmland. Pongamia is not new to Florida.  At the turn of the last century, it was introduced as a landscaping ornamental and today a few of these trees can still be found along the turnpike, shopping centers, and in parks in south Florida.

Creating a viable agricultural industry from scratch is not an easy task, but it has been done.  Soybeans were unheard of until they were introduced in the early 1930’s and palm oil trees were developed from the rubber plantations in Southeast Asia after WWII.  Interestingly, products from pongamia are thriving industries in India where the oil is used for industrial applications like fuel, lubricants, paints, surfactants, biopesticidal horticultural sprays, and more.  The “cake” or “meal” that remains after the oil is extracted is coveted as a great fertilizer that releases its nitrogen slowly so a plant can utilize it better. In India it is used to suppress soil-borne pests like nematodes that are the arch enemy of many of our food crops.

So what is the path to prove the viability of a new crop in the US – especially in such a challenging geography as Florida? Below is a checklist of the gauntlet it had to run.

  • Will the tree grow here?

This was the first order of business TerViva set out to prove to growers when they arrived in 2011.  The first grower who would listen to them was Ron Edwards CEO of Vero Beach – based Evans Properties. Edwards, former COO of Tropicana and co-founder of SoBe Beverages and Blue Buffalo Pet Foods, has a track record of spotting a good management team, a good business model, and an idea that had a good shot of succeeding.  Skepticism was high so Terviva offered to split the costs of the first trials.

The result was beyond expectations.  Growers such as Graves Brothers, US Sugar/Southern Gardens, DNE, Alico, Mosaic and others soon followed.  Around the state, the tree grew well in diverse sites with sandy soils, toxic soils, saline soils, and even Mosaic’s challenging clay reclamation soils. In 4 years the trees were 10’ to 16’ in height.

 

FSG_June2017-1

Pongamia orchard in Florida – Photo by TerViva

The trials have shown that these trees survived hurricanes Mathew and Irma, 2 weeks in standing water, frosts, non-irrigated fields, poor soils, higher-salinity irrigation not suited for most other crops, sand, clay, pests, and heat. Indeed, pongamia can deal with Florida’s challenging climate and soils..

  • What are the costs to grow it?

Establishment costs are very similar to citrus.  Indeed, the first thing that growers noticed was that the tree could literally be dropped right into the existing citrus infrastructure. The trees cost about the same as citrus and the planting densities are equal to or slightly less than citrus. Some growers literally planted between the stumps of former orange trees. To date in Florida, no pesticides have been used.  This hardy tree has grown through a laundry list of tropical and subtropical pests that growers spend millions of dollars on to control.  The biggest annual expense is weed maintenance until that young tree can get some height and eventually shade out a lot of the undergrowth which can subsequently be managed with mowing. So annual maintenance costs tally to about $400-$500 per acre – about one third or one fourth of what citrus currently spend.  Some growers used a small amount of fertilizer, and many used none at all.  Pongamia is a legume so it enriches the soil by making its own nitrogen.

  • How is it harvested?

Almost all of the fruit and vegetable crops grown in Florida need manual farm labor and every year that has been more difficult and costly to come by. Conversely, a crew of 2 and a nut tree shaker like those used on pistachios or almonds can harvest a pongamia tree in 3-5 seconds.  Those cost benefits accrue directly to the bottom line.  For the past 2 years as some of the young trees have produced pods early, Terviva has put on grower demos to show how easy and fast the tree can be harvested.

  • Who’s going to process it?

The beauty of the pongamia industry is that everything about it is low-tech. The tree puts out a pod that is easily shelled with a nut sheller and crushed with conventional soybean crushing equipment.  It doesn’t require elaborate $100 million processing plants or exotic enzyme formulations to make it work. The bean inside that pod looks about the size and shape as a lima bean.  It consists of about 40% oil and the 60% balance is the remaining seedcake. In 2017, the forward-thinking Hardee County IDA and its head, Bill Lambert, unanimously voted to build the first pongamia crushing plant in Florida. Because of the elite varieties that Terviva is cultivating at various commercial greenhouses in the state, an acre of their trees is conservatively estimated to yield about 400 gallons of oil and almost 3 tons of seedcake!

  • Who’s going to buy the products?

This is where it gets interesting. There is a long buffet of diverse markets for this oilseed tree crop and therein lies one of its greatest advantages.  These profitable markets range at the low end from a feedstock for industrial oils, to feed, and all the way up to highly-valued biocontrol products for the organic agriculture.  Organic growers have long been familiar with the benefits of pongamia’s oil and meal products under the Indian name karanja.

Like soy, pongamia oil is a long-chain C18:1 compound that can readily be refined into biodiesel or bio-jet A fuel.  Those tests have been tested and validated by Shell, Valero, REG, and ARA Labs. Refiners view a pongamia crop in Florida as a new oilfield that faithfully produces oil every year. Fuel is the base-case end market and can produce fine investment returns.

Classified as a politically correct “non-food” feedstock it can be used to make biodegradable polymers such as fracking fluids, plastics, detergents, paints, and other industrial products.  Secondary compounds found in the oil have documented and long used in India as extraordinarily effective biopesticides as good as or more effective than more commonly known neem products that are widely used by organic farmers, gardeners, and in the fast growing cannabis industry.  Because of the lack of need for inorganic chemicals used in growing pongamia, these high-value end-products are in growing demand by organic feed and growing operations. Sales into these channels alone can double or triple the value of the cake and oil.

The seedcake or meal can be further refined to produce a (30%) high-protein animal feed, or simply be used as an environmentally-friendly, slow-release 4-1-1 fertilizer that plants can better utilize.  Because the backbone of the oil shares similar properties to various food oils, scientists have told Terviva that the secondary compounds could be stripped out to upgrade the oil to “food quality” which could be of great value in parts of the world where pongamia could be grown on a footprint not adaptable to traditional oilseed crops.

  • Bus 101

The arrival of the pongamia farming model into the staggering agricultural void created by the citrus greening disease could be a classic business school case study.  The trail has been blazed.  A deeper dive into this business model reveals some very unique attributes.  The trees high yields offer an extraordinary margin for error in any given crop year.  For many alternative oilseed row crops planted elsewhere in the US (often as a new rotational crop), the entire growing season can tolerate few hiccups or else the yields will have a difficult time justifying the risks of planting and new machinery investments.  Pongamia’s low annual maintenance costs also allow a lot of margin for adverse weather surprises.  Pongamia’s diverse downstream markets mitigate marketing risks.  Low-tech processing that can create products from fuel and feed to fertilizer and biocontrol horticultural sprays can allow plenty of flexibility to target up-cycling markets and reduce dependency on single consumer markets.  And depending on those markets, Terviva estimates that at maturity, the groves could generate a net income between $700- $1,500 per acre.

What would the ideal replacement crop look like if it showed up at growers’ doorstep? Probably something like pongamia.

Reproductive Biology and Cash Flow: What’s the Connection?

Author: Dr. David Harry, Phd Forest Genetics

TerViva’s aim is to increase the value of under-utilized agricultural land by growing the leguminous tree pongamia (Pongamia pinnata) for its valuable oilseed crop. Pongamia was introduced into the US decades ago, and subsequently planted primarily as a landscape tree. In urban landscapes, pongamia is valued for its deep shade and ability to tolerate the tough urban environments. One of pongamia’s drawbacks in such environments is that it is considered a “messy” tree, brought about by shedding of its profuse flower petals and pods. Ironically, these same traits considered undesirable in an urban setting are exactly what are considered valuable in an agricultural setting. In order to better understand pongamia’s reproductive biology (timing of floral and fruit development, pollinators, fruit drop, etc.), we approached a few urban organizations about examining the reproductive biology of mature pongamia trees in their care. Unfortunately, our overtures were not well received (“Let me get this straight, you want to do what?”). Needless to say, we were thrilled to observe flowering on some of our 2-year-old trees in Texas. Finally we had an opportunity to make some first-hand observations.

The connection between flowers, fruit, and income is likely obvious to many agriculturists, but this significance may be less obvious to others. Simply put, pongamia’s oilseed yield is linked directly to its yield of pods (fruit), which are in turn linked to all of the factors influencing pongamia’s reproductive biology, including: overall amount and timing of flower production, pollinators (mostly bees and insects), pollination efficiency, fruit set, fruit retention, pod and seed development, fruit maturation, fruit drop, and finally, harvest efficiency. In order to optimize yield, we must understand the basics behind each of these important factors, and moreover, how they interact. Detailed observations in field conditions play a key role.

So far our observations of young Texas trees have demonstrated several key points, some of which confirm opportunistic observations of mature landscape trees from elsewhere.
1. The timing of flowering and flower development varies considerably among seedling offspring. Pongamia trees do not all flower at the same time—this is something we have observed repeatedly on trees growing around the world. This is significant because several key studies suggest that pongamia’s ability to set fruit and produce seeds is greatly enhanced when pollinated with pollen from neighbor trees. Effective pollen exchange can only take place among trees with overlapping windows of flower production. Hence pongamia orchards (aka groves) established using clonal varieties must be planned to optimize the individual flowering windows in the varietal mix. We recognize that the timing of flowering among young trees may change as they mature, so we plan to continue monitoring flowering in the years ahead.

flowers

Figure 1. Flowers on 2 yr old pongamia seedlings at Terviva site in Texas

2. Local pollinators in Texas visit pongamia’s flowers. We were pleased to observe numerous bees visiting flowers (which bodes well for future crop years. Continued growth and development of some pods suggests that at least some flowers were pollinated.

pods vert

Figure 2. Young raceme with lots of floret scars (Photo Credit Jennifer Den)

3. Of the many individual flowers within each of pongamia’s floral clusters, relatively few develop into mature pods. Based on observations of many other trees in Australia, India, Florida, and Hawaii, we know this developmental pattern is simply pongamia’s normal MO. Nevertheless, we had been unable to deduce when this lost reproductive potential happens. We are now fairly convinced that the majority of this loss is due to poor fruit set, but we still don’t know how or why this happens (Figure 2).
4. Very young pods suffer attrition, but as yet our sampling scheme is too sparse to offer meaningful generalizations.
5. Remaining pods rapidly increase in both length and width within about 6 weeks after fruit set. During this same time, immature seeds within

Figure 3. Young pongamia pod developing.

Figure 3. Young pongamia pod developing. (Photo Credit Jennifer Den)

pods appear to increase in size at a much slower relative rate.

What have we learned?

A key to improving yield (and cash flow) for pongamia will be to better understand how to optimize fruit set and pod retention. Unless these critical steps take place, overall oilseed yields can be much reduced. Much of what we’ve recently observed coincides with our earlier observations of mature trees. But now we have a better sense of what to expect in Texas. Futher observations, certain to come in the years ahead, will continue to guide our evaluation and selection of elite pongamia varieties. Increasingly, we will integrate reproductive biology to help us develop specific varietal combinations to maximize oilseed yield and minimize lost reproductive potential.

Dr. David Harry is chief of R+D at Terviva Inc.

Looking for Value in Farmland Investing

By Tom Schenk, Director of Business Development for TerViva

Back in 2006, when people were trading the stock and the real estate markets like rock stars, few people cared about a quietly obscure asset class called farmland.  However, the economic collapse that began in 2008 changed all of that. At the same time, grain prices soared to a new plateau at 2x the prices seen in the 80’s and 90’s due to increased demand from middle class consumers in emerging markets and ethanol production, as well as supply shortages created by crop failures from violent extremes in weather patterns globally. On the demand side, the industrialization of emerging market countries has brought millions of people into the middle class in those countries who demanded – and could afford – better diets of meats, vegetables, and grains.

At the beginning of the farmland investment boom in the US, every $1 of farmland value only carried about 5¢ of debt.  Ownership was in strong hands. It was this obscure statistic relating to the low levels of farmland debt that was one of the greatest factors that contributed to the fact that this asset class being a wonderful placeholder for wealth during the financial hurricane that slashed stock and residential and commercial real estate in half in a period of months.  Asset classes that were highly-leveraged were the same ones that deflated the hardest.  When collateral for loans decline in value, lenders demand more collateral.  If that other collateral is falling, it creates fire sales in a rush for liquidity and thus a vicious feedback loop ensues.

Today, debt-to-asset ratios in some of the major farming states are back to 30% and higher.  These are levels not seen since 1979 which, along with sharply rising interest rates and falling commodity prices, led to the great farm crisis of the 1980’s.  Today, alarms are being sounded that we are in a similar setup and an imminent crash could be ahead.

However, few things in the financial world are that linear in reasoning.  There are many moving parts involved in calculating the future stability of this asset class if we enter a period of rough financial weather.  For example, while debt levels in dollar terms may have increased 2x, land values (on paper) have gone up 3x to 4x times in many instances.  Another major variable in this calculus is that production costs for farmers have come very close to doubling in this period also.  Additionally, farmland has historically had a very high inverse correlation to the 10-year US Treasury rate.  The enormous impact on farmland values from the Federal Reserve’s financial engineering of interest rates cannot be overstated.  Where investors could find 7% – 9% cap rates back in 2006, today those rates have dropped to a range of 2% – 4¾% depending on the quality, yields, and location in the US.

Nevertheless, traditional farmland investing is considerably more vulnerable to adverse shocks than it was in 2006.  Creighton University’s Farmland-Price Index is a monthly survey of 200 rural communities in major grain growing states.  The most recent survey show that the rate of farmland price appreciation is has been decelerating since late 2012.  Clearly land prices are flattening out.  Unfortunately, commodity prices and land values can drop by the speed of light compared to any declines in production costs , and this can put a farm’s balance sheet in a bind almost overnight.  A strong case can be made that interest rates may have hit a long-term (30+ years) cyclical low.  If rates begin to rise, there is little question that farmland prices can come under immediate pressure.  There has always been a historically strong inverse correlation between 10-year Treasuries and farmland prices.

US farmland prices were on the steady rise last year (above), but according to the recent Fed Reserve studies in KC and St. Louis, prices are plateauing (http://bit.ly/1b5Wzxe)

US farmland prices were on the steady rise last year (above), but according to the recent Fed Reserve studies in KC and St. Louis, prices are plateauing (http://bit.ly/1b5Wzxe)

The purpose of this article is not to sound alarms about the imminent demise of farmland asset values. In this past decade, we have seen “bluechip” stocks and “AAA-rated” bonds  go to zero, as well as commercial real estate like shopping centerss can become vacant or obsolete.  But what was unique about farmland is that it has an imbedded put option; if you lose a crop, you still have the land and you can try again.  In this crazy world of abstract derivatives with notional values priced at hundreds of trillions of dollars worldwide, there will always be a demand for an real asset like farmland; it cash flows and the demand for its output is relatively inelastic.  People have to eat.

However, it should give investors pause before they pay $12,000 for that next Illinois acre.

Large scale/institutional farmland investors have always diversified geographically and with different crops, but in cyclical commodity downturns, the income streams of these “diverse” yet traditional agricultural properties will have as much non-correlation as a squadron of Blue Angels at a summer air show.  In other words, that cotton property in Mississippi will go in the same direction as corn land in Iowa or the potato farm in Idaho.

So what’s a farmland investor to do in what appears to be a relatively deflationary economic climate?? One idea is to borrow a page out of what traditional money portfolio managers have done for decades which is to apply the principals of Modern Portfolio Management – namely, diversify into property types with diverse return profiles in order to reduce overall portfolio risk.  Over the years, I have seen small cap and micro cap managers rescue overall portfolio returns by exploiting those overlook and under-researched companies where fundamental analysis ran circles around index managers by finding those opportunities that returned comparatively out-sized returns from some overlooked niche. In the 80’s, Microsoft was one such company.  The underlying attraction in small cap stock investing is that few, if any, analysts are researching these companies.

TerViva pongamia trees thriving in Texas

TerViva pongamia trees thriving in Texas

To that end, there is a quiet little company out of Oakland, CA called TerViva that has been establishing plantations of a hardy tree crop called pongamia. Pongamia trees are native to Australia and India.  They produce a nut crop that is virtually a first cousin of soybeans – but grows on a footprint where soybeans generally cannot.  An annual harvest of the nuts can produce over 400 gallons of oil and a couple of tons of residual “seedcake” that can be used as a high-protein animal feed or as a high-nitrogen fertilizer.  In a given year, a producer has the ability to direct that oil to biodiesel, bio-jet-fuel, bio-chemical (it is high in oleic acid and other valuable long-chain carbon compounds), or even biopesticides markets, depending on what is determined to be the highest best use downstream markets. Pretty cool.  The oil has been tested by Dynamic Fuels, REG, and Shell as a great feedstock worth about $3.50/gal.  I recently spoke to an organic grower who has successfully used pongamia oil as an adjuvant in his pesticide sprays for the last 7 years.  His supply comes from India.  He proudly informed me that he had recently got the price of his oil “down” to $17/gallon!

However, the most compelling aspect of this tree crop is that these trees can thrive in marginal soils such as south Texas or the challenging sandy fallow soils southern Florida where citrus trees used to grow before HLB disease marched through the state.  Instead of passively collecting x in revenue like typical farmland investors, you can proactively generate 5x-10x on these lower grade properties. And as a result, you will obviously get a sharp appreciation in the underlying land value in addition to the improved income stream that is arguably on par with the richest Iowa or Illinois farms.

Is this too far-fetched of an idea?  Not for three major citrus growers in Florida (plus a fourth grower planting this month) who conducted extensive research on the tree and this concept before planting on their own properties.  So far, they are more than pleased with what they are observing. The trees are growing almost twice as fast as citrus and require a fraction of the inputs.  Moreover, for investors who want to grow this tree crop, these citrus companies will act as the operators for planting, maintenance and harvesting.

Sometimes is you cannot find any gems in the rough, you just have to make your own.

Tom is TerViva’s Director of US Business Development, and works every day with agriculture growers to explore opportunities with new crops.

Why Pongamia will triumph

Fair warning, this blog post is going to sound like a business school strategy class (thanks Wharton!).

In 1990, Michael Porter released a landmark study called “Why Nations Triumph,” in which he identified four key drivers of competitive advantage that explain why certain industries in certain countries thrive while the same industry somewhere else fizzles.

Image

These four drivers, collectively known as “Porter’s Diamond,” are a good starting point from which to understand why pongamia pinnata has the potential to be the most cost-effective, sustainable energy crop in America.

Demand Conditions: In the U.S., very strong demand for sustainable, domestic sources of energy are driving innovation and capital formation in wind, solar, biofuels, etc. At the same time, certain large agriculture communities are facing “generational” problems with existing crops, which is stimulating demand for new crops like pongamia. Florida citrus growers, TerViva’s largest customers, are confronting falling demand for orange juice and higher production costs caused by a citrus greening blight that has no cure.

Image

According to an estimate by the Florida Department of Citrus, more than 450,000 acres of citrus have come out of production in the last 10 years. The New York Times highlighted the issue on its front page in May. Domestic demand for sustainable energy sources and energy self-sufficiency, coupled with a changing citrus landscape make conditions in the U.S. ripe for pongamia.

Factor Conditions: Pongamia “drops in” to the existing agriculture infrastructure, meaning that it leverages existing distribution networks, equipment and labor. This is far and away the most important driver of pongamia’s success in the U.S. As a result, pongamia benefits from advancements in agronomy practices and the existence of a highly skilled agricultural labor force. TerViva works with citrus growers who have the know-how to grow large-scale tree crops and who have access to the labor, land and resources needed for the cultivation of pongamia. In addition, there are millions of acres of marginal and/or underproductive land in the U.S. including diseased citrus land, mined land and pasture land.  With the infrastructure to grow pongamia already in place and ample land suitable for pongamia harvesting, the U.S. is an ideal setting for scaled plantations of pongamia.

Additionally, processing and refining suppliers for pongamia already exist. Pongamia can be cultivated using existing fruit/nut tree equipment and oilseed processing infrastructure, which materially limits the amount of capital expenditure required.  In contrast, new biomass crops such as switchgrass and miscanthus cannot be processed into valuable outputs using conventional equipment. They require new and expensive bio-refining infrastructure. There are billions of gallons of existing refining capacity throughout the U.S. that can convert pongamia’s vegetable oil in to fuel without additional capital expenditure.  We work with Renewable Energy Group and Dynamic Fuels to make biodiesel and renewable diesel, leveraging the latters’ capital investment and expertise.

Company Strategy, Structure & Rivalry: The U.S. government’s strategy to reduce its reliance on foreign oil has spurred a number of innovations and collaborations among previous rivals (e.g. big oil vs. everyone else). Porter writes “industries thrive when they are forced to overcome high labor costs or lack of natural resources, when their customers won’t accept inferior or outmoded products…” This is true of the agriculture communities in Florida and Texas and all around the country. The citrus community has not given up and will continue to innovate and adjust. Our business model is to partner with these growers to deploy pongamia using jointly developed agronomy best practices.

Related and Supporting Industries: Pongamia cultivation is buttressed by a number of related and supporting industries in academia, agriculture and finance. For example, pongamia has attracted the attention of several U.S.-based academic institutions, which have been the source of many of this country’s greatest innovations. TerViva has pongamia development programs in partnership with UC Davis and Texas A&M for genomics and co-product development. It also has partnerships with existing commercial greenhouses and plant propagators, with whom the company has developed techniques to optimize the clonal propagation of pongamia. These partnerships avert the need to build expensive large scale nurseries.

All four of the elements identified in Porter’s Diamond point to pongamia being a major source of domestically produced clean energy in the U.S. Next time, I’ll discuss how these factors lead to crude pongamia oil production cost at less than $70 per barrel.

Sudhir Rani is TerViva’s CFO. 

Terviva: Why We Do What We Do — Part I

Whenever I introduce Terviva as a company at conferences or events, I always start off by saying, “Terviva develops new crops for marginal land”.

Very few people ask me why that’s important, or why anyone should care about new crops for marginal land.

And yet, for the people who work at Terviva, that “why” factor is at the heart of what we do.  It’s what motivates us and drives us to work intensively toward our goals.

So I’d like to share “why” we develop new crops for marginal land.  I’ll break our logic down into three parts, to be covered across two blog posts.

(1)  Why marginal land matters

(2)  Why new crops are necessary for marginal land

(3)  What is Terviva’s unique approach to this opportunity

First – why marginal land matters….

In agriculture, the big picture goal is to increase food production.  The often-cited UN statistic is that, over the next 40 years, global population will increase by 2 billion people, and the world will require 70% more food production.

To meet this challenge, we need to farm more acres, farm more per acre, and – even more basically – maintain the viability of existing land.

It is estimated that 1 to 2% of all agriculture land becomes indefinitely fallowed every year due to soil salinity issues.  Now, add in other factors, such as desertification, declining water availability, extreme weather conditions, new crop diseases, and volatile macroeconomics.  The result:  a significant amount of land that was once valuable for farming is now longer so.

Marginal agriculture land in Florida, with TerViva pongamia trees now planted on it

Marginal agriculture land in Florida, with Terviva pongamia trees now planted on it

There are numerous examples of this marginalization of agriculture land.  We specifically work in three affected areas:

Florida:  citrus greening disease has wiped out nearly 50% of citrus tree acres in the last decade (almost 500,000 acres).

Texas:  extended droughts have triggered irrigation water cutbacks and declining productivity in rice, corn, and cotton farming

Hawaii:  sugar and pineapple farming, once mainstays of Hawaiian agriculture, have almost completely ended, due to competition from lower cost geographies in Asia.

It’s unlikely that any of these three areas will recover to the point where their land will once again be farmed for their traditional high value crops.  But there may be alternative crops for these areas – ones that can meet the demand for food, feed, fiber, and fuel more efficiently than traditional crops such as corn, soy, and sugarcane.

Abandoned citrus field in Florida -- another victim of citrus greening disease

Abandoned citrus field in Florida — another victim of citrus greening disease

No matter what, the amount of marginal land in the world is going to continue to grow.  Solutions are needed to improve the usability of marginal land, and at Terviva, we think we have some great answers.

Next week, I will write Part II of my post, discussing the need for new crops on marginal land and Terviva’s approach to developing these crops.

Naveen Sikka is Terviva’s CEO.

Where have all the bees gone?

Author: Sudhir Rani

ImageTo bee, or not to bee. Unfortunately, that’s not the question. The question is: what is killing entire colonies of bees?  Recent articles in the New York Times, NPR, PBS and others have highlighted the mysterious mass disappearance and death of millions of honey bees. (http://www.nytimes.com/2013/03/29/science/earth/soaring-bee-deaths-in-2012-sound-alarm-on-malady.html?pagewanted=2&_r=0)

As a kid, everything I knew about bees had to do with honey and trying not to get stung at pool parties. But now that I have worked with TerViva on oilseed crops, it’s hard to overestimate the importance of bees to the human ecosystem. According to the USDA, honey bees pollinate over 100 crops, flowers, nuts, fruits and vegetables, representing nearly 33% of all food items we eat annually–directly or indirectly.

The problem is that bees are disappearing and dying on a massive scale. There has been a major escalation of Colony Collapse Disorder (CCD), in which bee hives are found deserted with no sign of what happened to the bees, resulting in a 50-70% loss of bees in the hive. Typically, only the queen bee and a few nurse bees remain in the CCD-affected hive. Thousands of worker bees normally occupying the hive are gone. There are many theories as to what is causing CCD (climate change, monoculture farming, mites, stress, pesticides, etc). USDA’s Animal and Plant Health Inspection Service (APHIS) says that “numerous causes for CCD have been proposed, but it now seems clear that no single factor alone is responsible for the malady.”

But there is something else going on here. There have recently been a large amount of dead adult bees found in and around hives, which may or may not be related to CCD. These bees are found with abnormally high levels of neonicotinoids pesticides.  For exabeekeepersmple, in Germany there was an incident (May 2008) where bees were inadvertently exposed to a pesticide used in corn. Corn is typically planted before canola blooming attracts bees. But early rains delayed the corn planting that year, which meant that the seeds were sown later than usual, when nearby canola crops were in bloom and bees were present. This caused massive bee deaths.  In the US, these pesticides are typically applied directly to a corn seed, which should theoretically not affect bees; but farmers discovered that harvesting corn releases pesticide-filled dust, which carries to nearby fields where honey bees are foraging.

But it is not clear that CCD, which is the disappearance of large numbers of bees from a hive, and recent high levels of honey bee deaths are linked or have the same cause. Neonicotinoids have been used since the 90s, but CCD has only become an issue in the past seven years. Maybe the effects of pathogens took decades to manifest; or maybe the worker bees finally got fed up of the queen bee’s demands and bounced. The point is, we don’t know. More research is needed to fully understand CCD. So let’s focus on what we do know, which is that certain pesticides are harmful to bees. Some industry players are taking steps to address that problem, replacing powdered pesticides with a sticky alternative that reduces the likelihood of pesticides becoming airborne. Let’s hope that new techniques such as this will start to reverse the startling decline in bee populations while continuing to meet pressing agricultural needs.