Cultivate 10

Innovation in Food and Agribusiness – the key ingredients

Publication February 2016

Last November, the Norton Rose Fulbright Amsterdam office hosted its annual ‘Risks and opportunities in the global food & agri sector’ seminar. Leading industry experts from Cosun, Biobest, ‘FMO and Monsanto shared their thoughts with a lively audience.

Ben van Doesburgh, Member of the Board at Royal Cosun, started the evening with a few stories from his successful career at Procter & Gamble (‘P&G’) and Mattel. He then moved into Food and Agribusiness (‘F&A’), discussing Paques, a family owned bio methane business.

At Paques, innovation was thought to be ‘innovation and reinvention,’ The sub-manufacturer, out of necessity, redesigned silos (a structure for storing grain) to become one of the leading independent suppliers in the biomethane sector.

Lastly, Ben touched upon Cosun, a leading sugar co-operative in the Netherlands where innovation was deemed ‘innovation for change’. Cosun moved from being price leaders in the sugar industry to being leaders in the value add sector, such as the bio plastics, bio methane and ‘thick juice’ commodities, which are all a basis for third party sustainable products. These are all examples of companies who stayed on top of the market utilising innovation through smart thought and production re-design.

Ben emphasised the importance of companies harnessing the right environment. This requires shareholder support, a long term view (as sometimes, a short-term perspective forced on listed companies can challenge innovation) and a culture of entrepreneurship.

Bart Sosef is General Manager at Biobest in the Netherlands. Biobest produces bumblebees for pollination and pest control which has revolutionised farming in the Netherlands through saving on labour costs and removing the need for hormone injection. This has become the new standard market practice. Biobest has spent the past year focusing on cost leadership and will continue to make improvements in this sector.

The newest issues of high density populations and global warming pose new pressures on agricultural companies to come up with innovative ways to solve these problems. The questions that need solving include: how to transfer Europeans’ best practices globally? How to introduce green or sustainable products? Examples of innovative solutions to these issues include low chemical residue food or entirely residue free food and chemical free pest prevention.

As a result, Biobest has moved from cost to product leadership with a growth in global R&D activities producing innovative products such as the ‘flying doctor’. Botrytis is greymould that kills a number of crops. Traditional prevention to get rid of this mould usually requires chemicals that are expensive, time consuming and not within a ‘green’ tradition. Biobest identified appropriate insects called ‘beneficials’ and designed a custom ‘hive.’ This hive applies a droplet of chemical as each beneficial leaves the hive to allow micro-precision application to the crop suffering from the botrytis.

Bart has said that he sees more collaboration in the future between companies. He foresees the key areas for innovation in F&A as the combination of technology and nature (in his case, beneficials) and evolution of production methods.

Marjolein Landheer is Manager of Agribusiness, Food and Water at FMO, a Dutch development bank. FMO’s strategy is to become the leading impact investor. By 2020, the bank aims for its investments to double the impact through creating more jobs. The bank also aims to halve its footprint through emitting less greenhouse gas emissions.

FMO’s key value is ensuring that profits of the bank reflect society’s changing social and economic impact. When FMO was established in the 70’s this concept was the cutting edge of innovation. Now FMO leverages its own expertise and finance to help others invest in innovation.

Another key priority for FMO is to identify how to increase food output through maximum impact. Their focus remains on improving in land cultivation, agricultural practices, resource efficiency, inclusive development and local value add.

Marjolein told the audience interesting case-studies including Usher Agro,an Indian rice miller that is based in Uttar Pradesh in Northern India. India is a major rice producer even though the state has significant energy shortages. Usher Agro hopes to come up with innovative methods to solve the energy shortages India faces. An innovative idea they came up with is a fully ‘closed loop’ process which saves energy through extracting value from every stage of the rice production process. Usher Agro is amongst the largest producer and processor of non-basmati rice and mills approximately 1.3m tonnes of rice p.a. With the support of FMO, the company has the opportunity to extract up to 90% of silica from ash and use the remaining ash for fertilizer. This innovative practice means that there will be less waste being produced during the agricultural production, benefitting society and the economy as a whole.

Mark Buckingham, Public Affairs, at Monsanto started his session by reminding the audience that innovation in food and agri is centuries old. For example, selective breeding of the original mustard plant resulted in the modern cauliflower and broccoli. Monsanto is well-known for its developments in F&A and plans to invest around €500m in its row crops business in Europe. Even though Monsanto has been connected to Genetically Modified (‘GM’) products in the past, Mark has said that the future of Monsanto is to focus on non-GM production in Europe.

Mark also agreed with the other speakers, that increase in global demand from a rising population and a growing middle class is a trend that cannot be ignored. However, he pointed out an interesting fact that crop stocks today are relatively low compared to historical averages.

Mark used the case-study of Monsanto’s Fieldview software as an example of innovative techniques utilised by Monsanto. This Fieldview software enables farmers to accurately visualise and plan the soil characteristics of their land. Recent trials of over 3,800 fields using traditional techniques showed that about 10% of farmers used too little nitrogen and 40% of farmers used too much nitrogen. The financial and environmental savings could be enormous from this type of data-driven innovation.

The session ended with a lively debate, focused around IP rights in food and agri and whether or not an innovation in F&A should receive patent or other IP protection.

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