Market turbulence or not, North American investors plow into farm tech

Tue Sep 15, 2015 3:12pm EDT
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By Rod Nickel and Carey Gillam

WINNIPEG/KANSAS CITY, Sept 15 (Reuters) - North American investors are pouring money into agriculture technology despite turbulent financial and commodity markets, as cutting-edge advances that enhance farm production bring opportunities for profits.

Investment in this technology, which spans plant and soil technology to drones, amounted to $2.06 billion in the first half of 2015, on pace to smash last year's record $2.36 billion, according to AgFunder, which matches startups with investors.

Technology that reduces reliance on chemicals and fertilizers is one area of interest. The most widely used herbicide, glyphosate, was classified this year by the World Health Organization as a probable human carcinogen, and farmers also face scrutiny for over-applying fertilizer.

"Biologicals," which use natural sources such as bacteria, are especially attractive. In this field, researchers harness soil and plant microbes and bacteria for products that protect plants from disease and drought.

Biological solutions face fewer regulatory hurdles and are more environmentally friendly than chemicals while still yielding crop production benefits, agricultural experts said.

"This kind of capability is really what we believe is necessary for the future of food production," said Sonya Franklin, director of microbial traits at Monsanto Co, the world's largest seed company.

Some companies in the sector could see revenue growth of 20 percent per year for five years, said Todd Solow, a partner in Norwest Equity Partners of Minneapolis.

Norwest's sale of agriculture technology company Becker Underwood to BASF Corp for $1.02 billion in 2012 came after its revenue increased four-fold to $246 million from the time of Norwest's 2004 purchase of a controlling stake.   Continued...