Identifying the Problem in Industrial Agriculture Is Easy; Identifying a Solution that’s Truly Sustainable in Every Way (Including Profitability) Is Extremely Tough
I’ve seen quite a few business plans recently that propose to take a significant amount of investors’ money and build some really cool sustainable agriculture project, i.e., sustainable fish farming or aeroponics used to offer locally grown, organic produce. I just wrote to the person submitting them:
I have no doubt in the basic five tenets here:
1) The world approach to farming is extremely wasteful and harmful to the environment in dozens of different ways: chemical run-off, over-irrigation, transportation of product thousands of miles, soil depletion, etc.
2) Climate change is in the process of making a bad situation worse, principally through desertification
3) Indoor farming under carefully controlled conditions that minimize the use of water and eliminate the use of chemical pesticides and fertilizers will someday be quite important
4) All this applies in spades to the inner-urban environment with its food deserts, where children grow up on fast food, headed for obesity, diabetes, and several other health hazards
5) Someone, someday will have the right solution at the right place at the right time, and will begin to make all of this happen profitably.
Unfortunately, these concepts alone don’t mean that all business plans that are built to provide solutions to these problems are destined for success. My heart goes out to those who have wonderful ideas but who cannot capitalize on them because investors:
• Want the developer to have significant “skin in the game”
• Want to see a profitable business operating at a small scale that they can help to expand
• Fear that there may be technical risk (and/or market risk) associated with the developer’s claims
• Perceive that the developer may be “ahead of his time”
• Fear that there is really no barrier to entry into this business, i.e., that once it proves itself, it will be inundated with competitors
• Do not want to get into a non-productive argument over the value of a company the majority of whose capitalization comes from the investor
I note that one of these fellows incorporated in 2003, and I’m sure he’s invested an incredible amount of effort over the intervening 12 years, and encountered a great deal of disappointment. Again, I’m sympathetic.
I’d like to see a business plan that does all this in a very low-risk way, featuring: plenty of money from the developer on the table, unique technology, backed by a moneyed philanthropic organization, and run by a dedicated and fantastically seasoned team.
In any case, you may know that I promote investment in aeroponics on my site. I am, in fact, a big fan of getting this done, but that means that the risk and reward have to be in line.
Craig,
I believe that the future will rely on vertical urban farming – and most of the farms across the Midwest will have to be glassed in over the next hundred years.
But I think that the true gains here won’t be found without massive integration of technologies and demand.
The efforts that would be required to move forward here would never be palatable for a standard investor. Far too much capital would be required at an unproven model, and a small-scale model would have too many inefficiencies and too poor a ROI to attract bigger investors.
That leaves either government investment or crowdfunded investment as the only plausible routes by which this can really be explored.
But the integration factor is crucial to making it cost effective… Consider this: Texas has too much wind power, and cannot effectively manage their variable wind load without resorting to extreme negative pricing and curtailment schedules… They have a century worth of natural gas, and they periodically have a desperate lack of water which makes farming and ranching… and their cities all have plenty of sewage that needs treated.
A natural gas power plant – say ~1 GW – could be made to be outfitted with a CARMA fuel synthesis plant that had 1 GW worth of electrolyzers. The exhaust would need to be heavily scrubbed to protect the catalysts, so now you have clean waste heat, clean CO2, clean water, electricity, thousands of tons of ultra-pure liquid hydrocarbons. the ability to balance a GW of variable energy, and millions of tons of pure liquid O2.
The means of balancing up to 1 GW of variable energy, means that you could eliminate curtailment and negative pricing while enabling further wind power build-out.
The millions of tons of liquid O2 and large waste-heat resource as a bi-product would enable you to set up a sewage processing capability at a major city using waste heat and waste O2. This gives you a mountain of fertilizer, and tons of methane that you could scrub and feed back through your power plant (or oxy-combust separately and scrub the exhaust separately)…. So you have clean water, rich fertilizer, waste heat, and endless clean CO2… Now you could set up either a glassed-in farm or a 40-story vertical aeroponics garden with 50,000 ppm CO2…
You could then oxy-combust the silage or other bio-waste from the farm or aeroponics tower, and generate bio-char for the farm while generating more electricity and CO2 for the other functions… or you could have a massive field of tilapia ponds that you pipe fresh O2 into and dump some of the farm waste… etc…
The more that is integrated, the more net savings you get by enabling the product of one system component to be the feedstock of another.
But indoor farming really would benefit from a much higher CO2 level, and the biggest costs for all farming are fertilizer, water, and insurance. Indoor farming could be possible if you could lower the cost of fertilizer and CO2 sufficiently (via integration with some source of already-captured and scrubbed CO2 and already concentrated fertilizer)…
It will take investing in multiple, massive-scale projects at once to really see a tempting ROI from indoor farming – which is exactly the kind of thing that investors run screaming from.
But I think that eventually government and philanthropy will invest in something like this… probably by 2025-2030… and I’m certain it would work, at which point the second massively integrated park of that type would easily find people willing to throw their money at it.