The $150-billion organic food industry has a major fertilizer problem that could hinder its growth. Massive livestock operations from Europe to North America have an even bigger problem: They're producing catastrophic volumes of polluting waste they have nowhere to put, and it's a damage-control cost they have to deal with.
Image by EKM-Mittelsachsen from Pixabay
The solution to both will have to come from the tech world, and that crossroads of opportunity where farming, fertilizer, and low carbon energy could finally meet. Mentioned in today's commentary includes: Tesla, Inc. (NASDAQ: TSLA), NextEra Energy, Inc. (NYSE: NEE), Enphase Energy, Inc. (NASDAQ: ENPH), TOTAL S.A. (NYSE: TOT), Suncor Energy Inc. (NYSE: SU).
One answer very well may come from a Canadian junior called EarthRenew (ERTH, VVIVD), which is now planning to showcase a new, patented technology that helps solve both of these problems, while producing its own electricity along the way for added revenue. The patented technology turns livestock waste--a critical environmental problem--into a new organic fertilizer that hopes to change the game for the booming, $150-billion organic farming industry.
That alone would be fantastic, but EarthRenew also plans to use the waste heat from its electricity production using natural gas to generate more electricity. That electricity is then used in its own fertilizer operations, with the surplus intended to be sold to the grid in an additional revenue stream. In fact, in January alone, EarthRenew raked in $100,000 just selling natural gas fired power to Alberta's grid.
That makes this a low-cost operation: They are producing their own electricity, and most of the raw material for their patented new fertilizer process is free for the picking because EarthRenew's processing plant at Strathmore, in Calgary, sits on a 25,000-head cattle farm.
The coup de grace is this: EarthRenew's tech solutions are all about modularity. That means they can provide livestock operators with their own scalable facilities to turn a massive--and expensive--manure problem into an electricity-generating cost-saver.
Solving a Big Manure Problem
Livestock production continues to expand to meet the insatiable needs of the market, but the waste from these operations is also an environmental and logistics concern. Farmers from America to Europe have massive herds of cattle that produce huge volumes of manure which contains levels of phosphorus that end up rivaling the worst of our carbon emissions. That phosphorus also gets into our groundwater and pollutes our waterways extensively.
Some 80% of these farms produce more cow waste than they can ever use. The farmers end up paying an estimated $621+ million to get rid of it. It's even led to the creation of what can only be described as an organized crime ring around cow dung. In 2019, the United States had 94.8 million head of cattle. A 1,000-pound cow produces an average of 80 pounds of manure every single day. That's 7.6 billion pounds of toxic poo.
It's a win-win situation for everyone from farmers drowning in poo, to communities with threatened waterways, to sustainable investors who want to see someone turning healthier food into money-making environmental victories. But there are even more victories to be had here:
The $150-billion organic farming market is flourishing, with health and Natural Foods now becoming a mainstream lifestyle supported by mountains of evidence, as well as a much more climate-friendly way to farm.
Market Research estimates that the global organic food and beverage market will grow from US$124.7 billion in 2017 to around $323.1 billion by the end of 2024, good for an impressive compound annual growth rate (CAGR) of 14.6% and more than 4x the total food sales growth of 3.6% predicted over the same timeframe.
The Key to the Patented Technology
Filling the fertilizer gap is the key to solving multiple energy and farming problems, and EarthRenew's patented, low-cost production process is being created to do just that.
Located on a 25,000 head cattle feedlot, EarthRenew's Strathmore Plant will produce heat-treated organic fertilizer that may end up being far superior to the composted manure full of hormones and antibiotics that are common in the market. The company's thermal treatment is set not only to drive off the unwanted contaminants but will also be richer in the key nutrients as well as being a slow-release compound.
EarthRenew's product is being built so that it only needs to be applied in a single pass alongside seed planting compared to three passes with the conventional organic fertilizers (passing, tilling, and seeding) leading to up to 80% cost savings for the farmer.
Indeed, in October 2019; EarthRenew received key US and Canadian approvals for its organic fertilizer products. These important product certifications mean that in future the company will be permitted to sell its organic fertilizer products across those huge markets. The company's predecessor invested about $70 million in the product development.
Sustainable Investing
Resolving a huge environmental problem coming from massively polluting livestock operations. Offering a new fertilizer solution to the fastest-growing food industry. And coming up with a modular, scalable fix for livestock farmers who can't get rid of their volumes of manure in a cost-effective manner. This is exactly what Big Capital is looking for today: Risk-mitigating, sustainable businesses.
When you bring these things all together under one umbrella you get a new player that opens up a vast expanse of growth opportunities. Call it what you will--sustainable investing, impact investing or the formal ESG (environmental, social, and governance) investing--this megatrend already topped $30 billion in 2018.
Green investing no longer merely associated with a warm moral glow, or even political. It's mainstream investing based on market sentiment and where Big Money is moving.
- 74% of global investors plan to increase their ESG allocations over the next year
- One-fifth of investors plan to increase their allocations to between 21% and 50% of their portfolios over the next five years.
- Money managers are feeling the ethical squeeze keenly, with BlackRock, the new king of Wall Street and the world's biggest asset manager with more than $7 trillion in assets under management (AUM), has pledged to grow its ESG and green portfolio from $90 billion to more than a trillion dollars in the space of a decade.
- Backlash against companies that fail to integrate environmentally and socially conscious practices in their business has grown into a raging tide.
EarthRenew's business model consisting of clean organic fertilizers and reduced carbon energy really encapsulates what ESG is all about, and has earned the accolades of both Canadian and American authorities.
It's a big reason why the shares have soared up to 400% over the past 12 months despite some very choppy trading. Bigger companies are getting involved too. From automakers to energy giants, going green is really paying off with investors.
While Tesla (TSLA) is one of the top car companies on the planet, it is much more than just that. Tesla's CEO, Elon Musk, is known to put the future into focus. As the mind behind SpaceX, he's taken his vision of sustainability and future tech and run with it. Though Tesla is at the cutting edge of electric vehicle design, it's real influence on the future might just be its solar business.
Tesla's Solar Roof project aims to change the way houses function. It replaces traditional roofs with stronger, and arguably more aesthetically pleasing, solar panels that can power your entire home. It also comes in as the lowest-cost-per-watt solar option in the American market.
Enphase Energy (ENPH) has had an incredible year. While it doesn't produce solar panels or windmills, it is definitely a major player in the renewable energy revolution. It's a pure tech play that has paved the way for new possibilities in the industry. It's hardware and software help regulate and utilize energy in the most efficient way possible.
Over the course of the past year, investors finally started to catch on to Enphase's true value. Its stock rose from $18.23 last June to $52 this June. That's a 185% increase. It's 5 year returns are even more impressive, boasting a humbling 779% increase from June 2015 to today.
As one the world's leading renewables producers, NextEra Energy (NEE) is literally building the path towards a clearer tomorrow. Even more exciting, the company was the number one capital investor in green energy infrastructure, and the fifth largest investor across all sectors.
In addition to its already massive impact combatting the world's looming climate crisis, it has ambitions of investing an additional $55 billion in infrastructure in the next two years in the United States. And while it helps deploy the world's new energy reality, it has also committed to weaning itself off foreign oil. And shareholders are all in. Over the past 15 years, shareholders have seen 945% returns.
No other oil major takes the green revolution more seriously than Total (TOT). Total maintains a 'big picture' outlook across all of its endeavors. It is not only aware of the needs that are not being met by a significant portion of the world's growing population, it is also hyper-aware of the looming climate crisis if changes are not made. In its push to create a better world for all, it has committed to contributing to each of the United Nations' Sustainable Development Goals.
Total checks every box in the ESG checklist. It is promoting diversity and safety, making massive changes in its day to day operations to ensure that its business is environmentally sound, and has even committed to going carbon neutral by 2050 or sooner. It's no surprise that shareholders are loving its forward-thinking approach. As one of the biggest names in energy,
Suncor Energy (SU) has adopted a number of high-tech solutions for finding, pumping, storing, and delivering its resources. Not only is it big in the oil sector, however, it is a leader in renewable energy. Recently, the company invested $300 million in a wind farm located in Alberta.
If the next shale boom truly is to be in the oil sands then giants like Suncor is sure to do well out of it. While many of the oil majors have given up on oil sands production – those who focus on technological advancements in the area have a great long-term outlook
