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Global Agtech Investors Network Cultivating Innovation
Cultivating innovation • Strategic partnerships and affiliations
– BRDG Park, Danforth Plant Science Center, Canadian Consulate, iBIO, MHIN, Missouri Technology Corporation NVCA, RCGA, St. Louis Economic Council,
• Meetings and networking forums • Member-exclusive resources:
– GAIN Innovation Cache™ – Ag Explorer™
• Other public resources – GAIN 50 Stock Market Index – GAIN Insight™
GAIN cultivates innovation and Promotes capital formation for Agtech
Mega-Trends in Agriculture
• Yield losses due to adverse weather
• Requirement to reduce greenhouse gases
• Increasing meat consumption, need for feed
• Decreasing stocks
• Increasing demand for biofuels and renewable energy
• Increasing demand for food
• Decreasing amount of land per capita
Growing world
population
Increasing need for alt.
energy feedstock's
Weather variability
Growing wealth
Future investments in agriculture will largely be driven by four trends
Meta analysis, Crop America, Elanco, WJS, other readings
Global Challenges – Population Growth
Bill
ions
More Developed Regions
By 2050, population will grow by 37%, reaching more than 9 billion or … three more Chinas
United Nations, World Population Prospects: The 2004 Revision (medium scenario), 2005.
Global Income Growth Per Capita
North America 27%
China 14%
South America 7%
Africa 2%
India 3%
Eastern Europe/Russia 11%
Middle East 9%
EU-‐27 23%
Other Asia 4%
2000-‐2030F Growth Shares
6.37
-‐0.05
5.00
0
2
4
6
8
10
12
1970 1970-‐2000 2000-‐2030F
Thou
sand
real 200
5 US$ Per Year
Source: IHS Global Insights, Agriculture Division
Revenue Growth Sub Segments
CAGR of 37% 2003-08 Expected to continue at 21% 2009-13 (to revenue of $90B)
Capgemini
The Demand - Supply Gap Area of land under cultivation
M’s
hec
tare
s
Year
USDA
The Demand - Supply Gap Cultivated land per capita
USDA
The Demand - Supply Gap
Food Demand Today
Food Demand 2050
70% of this food must come from “efficiency - Improving” technology
Biomass
U.N. FAO
2X
Plus
Population and Income Drive Food Demand
0
20
40
60
80
100
120
140
160
180
1975 1980 1985 1990 1995
Grain Vegetables Meat Milk
Taiwan Council of Agriculture, China Statistical Yearbook and Nomura Global Economics
Challenges
• New Challenges – Variable stringency of legislation
in various countries – Changing and possibly divergent
perception of GMO’s and agrichemicals
– The need for product differentiation between expanding markets
– Shifts from product to service based offerings
In addition to the traditional challenges in agriculture such as weather and prevailing economic conditions, agriculture in the future will face new and increasingly complex hurdles.
Meeting Challenges
• Success will require…. – Capacity to be flexible
• Adjust from measurable plans
– Planning methods that allow for multiple outcomes
– Working with all stakeholders including political decision makers, retailers, consumers and importantly growers
– And……
Companies must be able to adapt to their increasingly complex environment and capitalize in established and emerging markets.
INNOVATION!!!!!!
Innovation
The need for innovation in agriculture requires capital which can come from corporations, venture capital and of increasing importance angel investors
Venture Capital Investment in Agriculture
PWC Moneytree, NVCA
Animal Health as a Component of Agriculture
• Animal health is of growing importance to the world – Meat and dairy production to double by 2050
• Meat consumption in China doubled from 1985 (44lb/person) to 2000 (90lb) and is expected to dbl again by 2030
– Concern over Zoonotic diseases! • Not well publicized, but a huge threat • 80% of animal pathogens are multihost* • Ex. The next smallpox (cowpox)
– Food safety, “farm to fork” tracking, new handling and packaging,
• NVCA – industry tracking spotty at best, fragmented investor segmentation, reporting incomplete or inaccurate
*Michigan State University
Animal Health as a Component of Agriculture
• $13B spent on animal health products – 40% companion, 60% production
• Animal health product FDA submissions and approvals are down. – 2007 – 12 of 18 submissions were approved – 2010 – only 2 of 6 approved
• R&D lacking, large companies cutting back, looking to start-ups for innovation
• Structural changes in industry include emergence of generics, changes in distribution, the internet
Brakke Consulting, FDA
Innovations Importance to Animal Health/Production
• Examples of innovations impact on food production and agriculture – Milk production now requires
65% less water and 90% land than in 1944
– 76% less manure is being produced/gallon of milk
– Genetic selection and improvements in nutrition has increased the slaughter weight of chickens 4-6x since ‘57
Innovation has been important to the production of meat and dairy for centuries, however, over the last 70 years huge advances have been made and need to continue.
Elanco report
Market Change
• Companion animal industry is changing rapidly – Vet practices trends 2001 -2009
• # of clients/vet down 17% (1299 – 1070)
• # of patients seen/week decreased 12% (75 – 66)
• Decreases cause vets to increase fees to cover fixed costs
– 30% of pet owners use internet to self diagnose pets symptoms
• Vets are seeing much sicker animals • Owners get “sticker shock” at the cost
of care – Internet medical supply/pharmaceutical
providers impacting business
There is a lot of change going on in both companion and feed stock animal health. These changes should represent opportunity for innovators and investors
Food Animal Changes
• Food animal market changes – Food shortages (high prices) and dry
conditions are causing cattle and calves to be slaughtered at record numbers
• Short term supply issues, husbandry opportunities
• Meat prices projected to remain high • Stress on herds increases disease and
infection
• Pressure to reduce use of antibiotics in feed and other ”un-natural” additives creates animal growth, food safety and market issues
Increasing demand for meat and dairy products is place new stresses on the market which causes changes to occur. Weather variability also forces change
Companion Animal Opportunities
• New animal uses for “old” human therapies – Human pharma seems to be largely
ignoring this opportunity
• Conversion of well known and effective drugs to OTC
• Technologies to help Vets analyze practice trends to maximize revenue opportunities – Most Vets do not analyze practice
trends and missed revenue opportunities!
• Nutritional products with another function, such as…. – Joint, cardiovascular, ophthalmic and
coat quality health
Despite changes in the provision of care for companion animals, many opportunities for innovation and new products abound
Food Animal Opportunities
• Genetically engineered meat animals – Higher protein, vitamin content,
other healthy components
• Cloned animals – FDA guidelines 2010
• New packaging, convenience, keep fresh
• Food safety – Tracking, POP diagnostics
Increased demand for meat and dairy are presenting both challenges and opportunities for growers, innovators and investors
Reasons to be bullish
• Agriculture is not an optional industry!!! – Every person on earth must
eat and drink, hopefully, clean water
• Favorable demographics • Increasing wealth • Innovation is required! • Food prices increasing,
more income to spend on innovation
There are many reasons to be excited about the future for investing in agriculture
Join GAIN
• Become a member of the Global Agtech Investors Network.
• Visit aginvestors.com/join-us. OR • Contact Dan Broderick, president
and founder, at [email protected].
