Organic Food Production: “A War is being Waged for its Soul”

Last week, Washington Post reported Laura Reiley reported that, “As organic food shifts from utopian movement to lucrative industry, a war is being waged for its soul.

“Record organic sales in the United States totaled nearly $50 billion in 2017 according to the Organic Trade Association. Although organic food still represents only 5.5 percent of food sold, its year-over-year growth has been meteoric — taking a cue from conventional agriculture’s mantra: ‘Get big or get out.’

“This has resulted in organic growers and food companies that, although technically adhering to the definition of organic — no chemically formulated fertilizers, growth stimulants, antibiotics or pesticides — are a far cry from the idealism and high standards with which the movement began.”

The Post article stated that, “Now the Cornucopia Institute, a farm policy research group best known as an organic industry watchdog, is trying to promote higher standards among the accredited certifying agents hired by organic farmers, processors and handlers to ensure that their practices comply with regulations established when Congress passed the Organic Foods Production Act of 1990. Organic farmers’ original intent was to create a level playing field in the market and to provide consumers assurance about a minimum uniform standard for organic production.

In a scorecard set to be released this week, the Cornucopia Institute ranked all 45 domestic certifiers on their adherence to the spirit and letter of the organic law. The institute found significant variation in how certifiers interpret regulations, variation that frequently benefits huge corporate farms and competitively disadvantages those comporting themselves ethically.”

The Post article added: “‘Organic is the only federally set label that has legal meaning. It’s not perfect, but I know what it is,’ said George Kimbrell, legal director of the Center for Food Safety. He suggested that ‘organic’ may best be seen as a floor, and that socially just foods and climate-friendly foods are needed.”

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Some Real-Estate Startups Are Adjusting Their Business Models

Wall Street Journal writers Konrad Putzier and Eliot Brown reported last week that, “Five months after the co-working firm Bond Collective signed a 42,000-square-foot lease in a Brooklyn office building, the property’s owners flipped it for a hefty profit.

“‘Hey, we can essentially do the same thing,’ Bond Collective founder Shlomo Silber recalled thinking after learning of the sale.

“Four years later, the firm is co-managing its own real-estate fund. The fund owns stakes in properties in Miami, Nashville, Chicago and New York City and is in contract to buy two more.”

The Journal writers explained that, “Bond Collective is one of several real-estate startups that has tweaked its original business model in hopes of boosting revenue and creating new opportunities.

“For their main business, these firms sign long-term leases or management agreements, turn the space into furnished offices, apartments or hotel rooms, then rent it out to tenants under flexible terms.

Now, several of these property companies are also raising money to launch real-estate investment funds. That includes the co-working giant WeWork Cos., which recently rebranded as the We Company. It has one of the biggest of these funds, having raised $745.4 million from investors as of March 8, securities filings show.”

The Journal article noted that, “But these investment funds bring other risks and potential conflicts, especially at times when the interests of the main business and the fund diverge, real-estate analysts and attorneys warn.

“For instance, if a co-working company defaults on its lease and an affiliated investment fund is the property’s owner, the two entities could be pitted against each other.”

Last week’s article added that, “Moreover, big landlords, already skittish about the rising clout of co-working companies, could become more reluctant to partner with startups if they perceive them as rival investors.”

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Nebraska Lawmakers Seek to Expand Startup Program in the State

Paul Hammel reported yesterday at the Omaha World-Herald Online that, “Evan Luxon says his small but growing startup company would still be in San Francisco rather than Omaha but for an innovative eight-year-old state program that helps entrepreneurs.

“The Nebraska Business Innovation Act, Luxon said, helped persuade him that he could relocate to his hometown and still attract the investment and skilled workers he could easily find in the Silicon Valley area to take his medical equipment firm beyond the idea stage.

Grants from the program, he said, helped leverage private funds and federal grants that led to production of a prototype of a ‘digital drain,’ which automatically clears chest tube blockages following heart surgeries. The invention now has FDA approval and is in clinical trials, and the firm he co-founded, Centese, has 6.5 employees in Omaha.”

Mr. Hammel noted that, “On Wednesday, Luxon was among a handful of successful entrepreneurs who testified in support of a bill in the Legislature that would increase funding in the Business Innovation Act by $4 million, to nearly $10 million a year.

Backers of Legislative Bill 334 said the extra state funding would encourage more startups in Nebraska.”

The World-Herald article added that, “When the act was passed, Nebraska ranked 49th in the nation in access to venture capital. Now, the state has risen to 31st.

“The Innovation Act provides matching seed money for companies, as well as funds for production of product prototypes, research and microenterprises.”

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Food Start-Ups Focusing on Protein Sources

Earlier this week, Financial Times writer Nikou Asgari reported that, “Entrepreneurs and investors are increasingly focusing on algae as an alternative protein source to help feed a global population that the UN forecasts will rise from 7.7bn today to 9.7bn by 2050.

“In the EU, the algae biomass sector is valued at €1.69bn and employs 14,000 people in research and development and the supply chain, according to a 2018 European Commission report. ‘The increased inclusion of algae in western diets could help fill some of the food production needs associated with expected human population growth,”’the report notes.”

The FT article explained that, “Northern European entrepreneurs are leading the way with expertise in algae. Last year Corbion, an Amsterdam-based ingredients supplier, announced plans to roll out its algae cooking oil to more than 2,000 Walmart stores in the US.

“Entrepreneurs recognise that persuading consumers to try algae may be difficult and take time. The development of mycoprotein derived from fungus began in Petri dishes in the 1960s, yet Quorn, the now-popular meat substitute brand, first sold the ingredient to UK customers more than 25 years later.”

This week’s article added that, “Investors have noted growing demand for alternative proteins. Data from start-up research company Beauhurst shows that the amount of money raised by private UK companies that either produce or use seaweed or algae in food and drinks has risen by almost 2,000 per cent in the past eight years. In 2011, three deals raised a total of £314,200 while in 2018, seven deals raised £6.4m.”

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Government Shutdown Showcased “Alternative Data” Platforms by Ag Startups

Financial Times writers Gregory Meyer and Emiko Terazono reported last week that, “The longest government shutdown in US history was a marketing bonanza for the ‘alternative data‘ industry, and nowhere more than in agricultural markets.

“The closure of about a month, which lasted until late January, halted a stream of important reports from the US Department of Agriculture, which for decades has been the premier data source on world crops. Many US growers and traders depend on the free USDA estimates to make decisions on planting, purchasing and marketing.

Alternative data platforms operated by agri-tech start-ups including Gro Intelligence, Indigo Ag and Farmers Business Network (FBN), relying on computing power and non-traditional sources such as sensors on farm machinery, stepped in to fill the void. The shutdown was a live test of a question nagging government economists: do we still matter?”

The FT writers noted that, “Despite government economists’ concerns, the alternative data providers are not looking to replace USDA releases. Both Gro and Indigo incorporate USDA numbers for their data operations. ‘The USDA allows us to do everything we do,’ said David Potere, who heads up Indigo’s geospatial innovation unit.”

Last week’s FT article also pointed out that, “FBN has provided national yield estimates on corn and soyabeans to its 7,800 members since the start of the year, said Charles Baron, its co-founder. The network’s numbers are based on satellite as well as precision agriculture data from member growers covering 30m acres in the US and Canada.

“FBN’s numbers around planting and harvesting ‘can basically be within 1 per cent of what the USDA eventually said,’ Mr Baron said.”

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Streaming App Startups Latest Booming Tech Business, Farmers Become Stars

Bloomberg writers Alfred Cang and Lulu Yilun Chen reported yesterday that, “Streaming apps have taken China by storm with short videos of dancing teens, lip-syncing and all kinds of weird antics. Now traders are using them to predict the future of grain prices.

“For example, a farmer in the rural northeast is using his phone to film trucks lining up to load mounds of golden corn. Some 2,000 miles away in his Shenzhen office, Honda Wei watches attentively, scrutinizing the producer’s excited utterances and images of his fields for clues on supply and demand.

“‘It provides intuitive information about the domestic markets,’ 33-year-old Wei said of his experience on the Kuaishou app, a short-form video platform backed by tech giant Tencent Holdings Ltd. ‘Traders are seeking correlations between farmers’ sentiment and futures price fluctuation.'”

The Bloomberg article stated that, “With more than 700 million users combined, Kuaishou and Bytedance Ltd.’s Douyin offer a vast potential source of intelligence in an opaque Chinese market where government data isn’t always the most reliable or efficient. Along with social media such as Weibo, traders are gathering information on crop plantings, harvests, stockpiles and sales in real-time, instead of the hours of telephone surveys and physical travel that were once necessary.”

The Bloomberg writers explained that, “While traders internationally have used Twitter to track opportunities, acting on everything from refinery fires and ship groundings to equity market sentiment, that’s not an option in China, where the U.S.-based social network is blocked.

In their thirst for data, many in China have turned to streaming apps as farmers started filming themselves to connect with others and help improve productivity, manage costs and maximize profits. That trend has been helped by changes in the domestic market for commodities.”

Kuaishou, which gained a reputation for stunts performed by streamers, was one of the first to focus on growth in lower tier cities and rural areas. That helped it become the streaming app of choice for farmers, as smartphone use rises and demographics work in its favor,” the article said.

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Smithfield Loses Another Neighbors’ Lawsuit Regarding Hog Production

The Associated Press reported last week that, “Smithfield Foods was found responsible Friday for a fifth time for nuisances neighbors suffered from waste generated by thousands of the company’s hogs. Jurors determined the pork giant should pay $420,000 after four previous juries awarded nearly $550 million in penalties.

“Most of the damages awarded were intended to punish Smithfield Foods for its actions, but a state law limiting the size of punitive awards means they are automatically capped.

“Friday’s verdict was the second time a jury heard about intense smells, clouds of flies and other conditions around the same Duplin County [North Carolina] operation that raised about 5,000 of the company’s animals.”

The AP article indicated that, “Agricultural interests and sympathetic politicians have warned the lawsuits threaten all farmers if whopping penalties can be slapped on operations that are regulated and annually inspected as North Carolina hog operations are.”

“Environmental advocates have cheered the big penalties as finally forcing pork producers to acknowledge long-standing complaints from neighbors and claims that animal waste has polluted waterways,” the AP article said.

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Iowa Considers Bill to Ban Deceptive Trespass on Agricultural Facilities

Des Moines Register writer Stephen Gruber-Miller reported earlier this week that, “With Iowa’s controversial ‘ag gag’ law on appeal in the courts, lawmakers are considering a narrower bill that would create a special trespassing crime for agricultural facilities.

“Supporters say the law is necessary to protect farmers from people who intend to hurt their industry while opponents say it harms free speech.

If the bill becomes law, it would be a crime to use deception to gain access to an agricultural production facility that is not open to the public ‘with the intent to cause physical or economic harm or other injury‘ to the facility’s operations, animals, personnel, business interests or customers.”

The Register article noted that, “A first offense would be a serious misdemeanor, punishable by up to one year in jail, while a second offense would be an aggravated misdemeanor, which carries a two-year sentence. The bill advanced unanimously out of a three-member House subcommittee Tuesday morning and an identical measure passed a Senate subcommittee Tuesday afternoon.

“The 2012 ‘ag gag’ law was struck down in January when a judge said it unconstitutionally violated free speech protections under the First Amendment. Iowa has appealed the ruling.

“That law made it a crime for journalists and advocacy groups to operate undercover at meatpacking plants, livestock confinements, puppy mills and other ag-related operations to investigate working conditions, animal welfare, food safety and environmental hazards, among other practices.”

Mr. Miller added that, “Rep. Bruce Bearinger, D-Oelwein, said he appreciates the narrowness of the new proposal.

“‘I think it is important to recognize that dishonest access to those properties is a huge risk,’ including the potential spread of diseases and bio-terrorism, he said.

“Iowa leads the nation in pork and egg production. It ranks seventh for beef and 12th for milk production.”

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State Regulators Brace for Another Year of Dicamba Injury

DTN writer Emily Unglesbee reported yesterday that, “State pesticide regulators are responsible for overseeing a lot of chemicals, but some expect to police only one this year — dicamba.

“‘So many resources are dedicated to dicamba that it has made my program a one-issue program,’ said Tim Creger, a pesticide regulator with the Nebraska Department of Agriculture. As his agency has spent the past two years investigating roughly 200 complaints of off-target dicamba injury, they have had to delay or abandon routine pesticide inspections, Creger told regulators, scientists and agrichemical companies gathered for the annual meeting of the Association of American Pesticide Control Officers in Virginia this week.

“‘We have a lot of other [pesticide regulation] problems — I’ve had to push those off for two years,’ Creger said. ‘Other issues that don’t have the priority this product has are not getting the service they deserve. And that’s what it looks to me again coming up in 2019 — it’s deja vu.'”

The DTN article noted that, “With 60 million acres of dicamba-tolerant Xtend crops expected this spring, many soybeans and cotton fields will be protected from damage from dicamba drift and volatility, noted Dan Kenny, herbicide branch chief for EPA’s Office of Pesticide Programs. ‘We don’t want that to create a false positive,’ he said. ‘We want to focus not just on [soybean] acres this year, but also other crops that might be sensitive … and also focus on effects on perennial crops. Vineyards, orchards, things like that.’

“Several state pesticide officials assured Kenny they expect the federal agency to get plenty of data on dicamba injury this year. ‘We don’t have an apparent end in sight,’ Creger said of off-target dicamba movement. ‘And I’m not alone in this — it just seems like there is no end in sight to the problems this will generate for us.'”

Yesterday’s article added, “Leo Reed, pesticide licensing manager for the Office of Indiana State Chemist, agreed. For two years in a row, Indiana has fielded record numbers of dicamba injury complaints. The OISC spent $1.2 million in 2018 alone investigating dicamba injury claims. The agency’s laboratory is still processing injury claims from 2018 and is braced for more. ‘How long we can sustain that is anybody’s guess,’ Reed said. ‘This devalues our agencies in as much as it’s literally all we’ve done for the last two years. Routine inspections have plummeted.'”

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Farmers Business Network Now Selling its Own Seeds

Bloomberg’s Elizabeth G Dunn reported earlier this week that, “Farmers don’t have a reputation for skewing to the political left, but just get them talking about seeds. At an expo center on the outskirts of Memphis one gray February day, several dozen of them make for a receptive audience as Charles Baron expounds over plates of scrambled eggs and home fries on the inequities of Big Ag. ‘On either side of your family business are these massive oligopolies,’ the 35-year-old says, gesturing toward a PowerPoint slide bearing the logos of agrichemical companies and commodities traders. ‘You, as growers, should have the power in the industry. There’s no reason you should have the lowest incomes when you do all the work and take all the risk.’ Around the room, baseball caps wag in agreement.

Baron is co-founder of Farmers Business Network Inc. (FBN), a five-year-old startup that says it can do for corn and soybean seed what Warby Parker has done for eyewear. For most farmers of such grains, genetically modified seeds with patent-protected advantages (weed resistance, insect immunity) have become the largest variable expense—and one over which they have little control given consolidation in the market. U.S. farmers spent $22 billion on seeds last year, 35 percent more than they did in 2010, and that increase can’t be explained by additional acreage. The product is sold through local dealers or retailers—almost never online—and prices typically aren’t posted.”

The Bloomberg article explained that, “To keep prices down, Baron’s company is developing seed directly with plant breeders, cutting out a string of middlemen. Today, FBN’s non-GMO corn seed, sold under the brand name F2F Genetics Network, ships directly to farmers for $115 a bag, compared with an average price of $270 a bag for GMO seeds. But FBN isn’t opposed to GMO products. As Bayer’s and DowDuPont’s patents begin to expire over the next few years (a lucrative one just did), Baron says he’ll incorporate those GMO traits into FBN products, too.”

Ms. Dunn added that, “FBN, which has raised almost $200 million from investors including Temasek, Kleiner Perkins, and GV (formerly Google Ventures), started out as a sort of Glassdoor Inc. for farmers: Members upload their own farm data in return for access to aggregate information from the rest of the network, which numbers almost 8,000 farms across the country covering acreage the size of Pennsylvania. The wealth of data has added some rare transparency to the seed industry. Farmers can now see they’re paying vastly different prices for the same product, with some laying out twice as much as others depending on scale, location, haggling skills, and other factors. They can also check how well a variety performs across hundreds of real farms. Baron, previously a program manager at Google, and his co-founder, Kleiner Perkins partner Amol Desphande, got the idea after talking to a group of farmers who were working on a data-sharing project.

Farmers need every advantage they can get. Despite rising productivity, their incomes have slid 46 percent in the past five years as worldwide gluts in commodities such as corn and soy have driven prices down. FBN members say the site’s pricing data have given them new negotiating power. As many as half of U.S. seed retailers expected FBN to hurt their business last year, according to Bank of America Corp.”

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