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Mega-Trends in Agriculture
- 1. Global Agtech Investors Network Cultivating Innovation
- 2. 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 GAIN cultivates • Member-exclusive resources: innovation and – GAIN Innovation Cache™ Promotes capital – Ag Explorer™ formation for Agtech • Other public resources – GAIN 50 Stock Market Index – GAIN Insight™
- 3. Mega-Trends in Agriculture • Increasing demand • Increasing demand for food for biofuels and • Decreasing amount renewable energy of land per capita Increasing Growing need for alt. world energy Future population feedstock's investments in agriculture will largely be Growing wealth Weather variability driven by four trends • Increasing meat consumption, need for feed • Yield losses due to adverse weather • Requirement to • Decreasing stocks reduce greenhouse gases Meta analysis, Crop America, Elanco, WJS, other readings
- 4. Global Challenges – Population Growth By 2050, population will grow by 37%, reaching more than 9 billion Billions or … three more Chinas More Developed Regions . United Nations, World Population Prospects: The 2004 Revision (medium scenario), 2005
- 5. Global Income Growth Per Capita 2000-‐2030F Growth Shares Africa India 2% 3% South America Middle East 7% Eastern 9% Europe/ Russia 11% 12 Thousand real 2005 US$ Per Year China 14% 10 5.00 EU-‐27 8 23% North America 6 -‐0.05 27% 4 6.37 Other Asia 2 4% 0 1970 1970-‐2000 2000-‐2030F Source: IHS Global Insights, Agriculture Division
- 6. Revenue Growth Sub Segments CAGR of 37% 2003-08 Expected to continue at 21% 2009-13 (to revenue of $90B) Capgemini
- 7. The Demand - Supply Gap Area of land under cultivation M’s hectares USDA Year
- 8. The Demand - Supply Gap Cultivated land per capita USDA
- 9. The Demand - Supply Gap 70% of this food must come from efficiency - Improving technology Food Demand 2050 2X Food Biomass Demand Today Plus U.N. FAO
- 10. Population and Income Drive Food Demand 180 160 140 120 100 Grain Vegetables 80 Meat 60 Milk 40 20 0 1975 1980 1985 1990 1995 Taiwan Council of Agriculture, China Statistical Yearbook and Nomura Global Economics
- 11. • New Challenges – Variable stringency of legislation in various countries – Changing and possibly divergent perception of GMO’s and agrichemicals Challenges – The need for product In addition to the traditional differentiation between challenges in agriculture such expanding markets as weather and prevailing economic conditions, – Shifts from product to service agriculture in the future will based offerings face new and increasingly complex hurdles.
- 12. • Success will require…. – Capacity to be flexible • Adjust from measurable plans – Planning methods that allow for multiple outcomes – Working with all stakeholders Meeting Challenges including political decision Companies must be able to makers, retailers, consumers and adapt to their increasingly importantly growers complex environment and capitalize in established and – And…… emerging markets. INNOVATION!!!!!!
- 13. Venture Capital Investment in Agriculture Innovation The need for innovation in agriculture requires capital which can come from corporations, venture capital and of increasing importance angel investors PWC Moneytree, NVCA
- 14. 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 *Michigan State University investor segmentation, reporting incomplete or inaccurate
- 15. 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
- 16. • Examples of innovations impact on food production and agriculture – Milk production now requires 65% less water and 90% land than in 1944 Innovations Importance to Animal Health/Production – 76% less manure is being Innovation has been produced/gallon of milk important to the production – Genetic selection and of meat and dairy for centuries, however, over the improvements in nutrition has last 70 years huge advances increased the slaughter weight of have been made and need to chickens 4-6x since ‘57 continue. Elanco report
- 17. • 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 Market Change cover fixed costs There is a lot of change going – 30% of pet owners use internet to self on in both companion and diagnose pets symptoms feed stock animal health. • Vets are seeing much sicker animals These changes should • Owners get “sticker shock” at the cost represent opportunity for of care innovators and investors – Internet medical supply/pharmaceutical providers impacting business
- 18. • 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 Food Animal Changes infection Increasing demand for meat • Pressure to reduce use of antibiotics and dairy products is place in feed and other ”un-natural” new stresses on the market which causes changes to additives creates animal growth, occur. Weather variability food safety and market issues also forces change
- 19. • 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 Companion Animal opportunities Opportunities – Most Vets do not analyze practice Despite changes in the trends and missed revenue provision of care for opportunities! companion animals, many opportunities for innovation • Nutritional products with another and new products abound function, such as…. – Joint, cardiovascular, ophthalmic and coat quality health
- 20. • Genetically engineered meat animals – Higher protein, vitamin content, other healthy components • Cloned animals Food Animal – FDA guidelines 2010 Opportunities • New packaging, convenience, Increased demand for meat and dairy are presenting both keep fresh challenges and opportunities • Food safety for growers, innovators and investors – Tracking, POP diagnostics
- 21. • Agriculture is not an optional industry!!! – Every person on earth must eat and drink, hopefully, clean water • Favorable demographics Reasons to be bullish • Increasing wealth There are many reasons to be excited about the future • Innovation is required! for investing in agriculture • Food prices increasing, more income to spend on innovation
- 22. Join GAIN • Become a member of the Global Agtech Investors Network. • Visit aginvestors.com/join-us. OR • Contact Dan Broderick, president and founder, at dan@aginvestors.com.
- 23. Thank you Dan Broderick dan@aginvestors.com