Planting the seeds for sustainability

Agricultural companies that make sustainability the goal hope to benefit the environment and their bottom lines.

Problems like population growth, climate change and nutritionally-compromised food have inspired sustainable agriculture entrepreneurs to improve traditional farming methods. It's an uphill battle but Janine Yorio of NewSeed Advisors sees sustainability as the best way to meet the world's growing food and energy needs.

As global populations increase, resources will become increasingly constricted and farms will be expected to churn out more food on less land to meet the rapidly expanding needs of humans, livestock and the biofuels industry. That creates some openings for sustainable enterprises.

According to a recent report from Francisco Blanch, head of global commodities research at Bank of America, the world, relative to 1970, is using just 26 per cent more farmland to feed 80 per cent more people. Furthermore, most of the remaining available arable land is largely limited to inland Brazil and sub-Saharan Africa, where infrastructure constraints make market access difficult. According to Blanch, the world's agriculture supply will completely depend on the increased productivity of farmland.

Enter the scientists, environmentalists and entrepreneurs seeking to address the inefficiencies inherent in current farming methods. Overall, the sustainable farming seeks to improve food production to yield crops that are more healthful while limiting environmental impact. The movement involves conscious efforts to conserve water and land while reducing the use of synthetic fertilizers, pesticides, hormones and antibiotics. To achieve these goals, new research and companies dedicated to sustainability challenge the traditional notions of farms, fishing and waste processing by embracing new methods like urban agriculture, aquaculture and soil-less farming systems that utilize nutrient-rich solutions instead of soil.

Rise of the urban farmer

The missing component is capital, which is where Janine Yorio comes in. An investment banker with a background in real estate, Yorio sought to extend her savvy to urban croppers seeking land for small-scale farms in New York City and Brooklyn. These city farmers are proponents of urban agriculture, which sees cultivation potential in backyards, rooftops and vacant lots, and reduces fossil fuels by cutting the distance that fresh produce has to travel to reach city-dwellers. The small growing plots also eliminate the usual barriers of entry to farming: several acres of land and costly mechanized farming equipment.

Agriculture hasn't attracted a lot of attention from big investors because it hasn't been associated with the same profit-generating potential as an area like technology.

"I began noticing that no one was paying attention to these urban farmers," Yorio said. "And it was through them that I began noticing that there really wasn't a lot of overlap between agriculture and Wall Street."

Agriculture hasn't attracted a lot of attention from big investors because it hasn't been associated with the same profit-generating potential as an area like technology. Furthermore, the industry has long been dominated by a handful of key suppliers like Monsanto and Syngenta.

"All it takes is for large farms to start switching over to biopesticides and all of a sudden, it's a billion-dollar industry," Yorio said.

She founded NewSeed Advisors in 2009 to bring needed capital to companies bent on furthering "eco-friendly agriculture." Investors tend to be high-net worth individuals and the fund works closely with government small-business start-up programs and regional business development groups to put investments together.

"The biggest challenge has been finding the right investment opportunities," Yorio said. "Since it's such a new area, a lot of these companies don't have proven track records and that can be scary for investors."

On Sept. 17, the firm co-hosted the first investor conference devoted entirely to sustainable agriculture where presenters emphasized that the rising costs of inputs like oil and petrochemicals will make it economically imperative for farmers to adopt more sustainable practices in the future.

"Since sustainable practices are generally more cost-effective when they're done in scale, the rising cost of oil in the long-term will necessitate a change," Yorio said.