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Apple's sustainability push and biostimulants with Sound Agriculture's Adam Litle
136 Plays2 years ago
Mike, Karthik and Anthony render judgement on Apple's recent sustainability claims and discuss the possibility of UN regulation on the plastics industry. Then, Adam Litle, the CEO of Sound Agriculture, joins to discuss biostimulants and the challenges of innovating in the agriculture industry.
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Transcript
Introduction to the Podcast
00:00:10
Speaker
Hello, and welcome to Innovation Matters. It is the Sustainable Innovation Podcast brought to you by Lux Research. I am Anthony Skiavo, your host, Senior Director at Lux. As ever, I am joined by my two co-hosts, Mike and Karthik. Mike, how are you today? Doing great. Ready to talk some Tim Apple, I guess.
00:00:34
Speaker
Tim Apple is once again in the crosshairs of the Sustainable Innovations podcast.
Apple's Ecosystem and Product Launch
00:00:40
Speaker
I'm sure this is doing real damage to his reputation, their brand, etc.
00:00:47
Speaker
How are you doing? Yeah, I'm doing all right. I was quite excited to see the, uh, the unveiling of the new Apple products because I have, I'm immersed into the Apple ecosystem. So, uh, but it was not about the products. I would say that got nothing special. Are you, are you a real like hardcore Apple fan boy?
00:01:06
Speaker
My dad is a big Apple fan boy, but he gets a lot of free Apple products from the company he works for. So that's how I got into the ecosystem. Now I can't get out of it. Being an Apple fan boy is just such like a 2007 coded behavior. Like I don't understand, it's like how people are like, yeah, it's the year of our Lord 2023 and I am an Apple fan boy. It's like, what is going on? I mean, no disrespect to your dad, but like,
00:01:33
Speaker
So I guess Apple, they released a bunch of new products. They released one of the most painfully cringy corporate videos in a while.
Apple's Sustainability Goals
00:01:43
Speaker
And it was all about sustainability, right? It's all about the sustainability of their products. And you look into this card deck, so maybe you can tell us what's going on.
00:01:52
Speaker
Yeah, I wasn't expecting what they put out to be honest. I think it was about 20 minutes of their entire one hour 20 minute presentation, sorry. So it was quite a big chunk. Essentially in this part of the video, Tim Cook and the rest of the Apple employees are talking to Mother Nature. His name is Tim. Let us be clear. It's the position of this podcast.
00:02:17
Speaker
Tim Apple is talking to Mother Nature, explaining how Apple is moving towards a more sustainable future, how their products are getting more sustainable. Their first product they unveiled, which was the Apple Watch, is supposedly 100% carbon neutral. They account for scope one emissions, scope two emissions, and scope three emissions on their products. They're completely moving away from virgin materials.
00:02:41
Speaker
And they also said they're going to be planting a lot of trees. They're going to build rainforests in Paraguay. I guess they've already built.
00:02:51
Speaker
According to their claims, they also have saved about 68 billion gallons of water since they have introduced this initiative. And this is part of their big initiative called as carbon neutral by 2030. And they say that all their products are going to be carbon neutral by 2030, which was, it's quite a stretch, but that's what they said. Yeah, it's interesting.
Critique on Apple's Sustainability Strategies
00:03:15
Speaker
And I know I, maybe we were talking about this and I presaged that Tim Apple was in the crosshairs.
00:03:22
Speaker
Apple actually is probably the most sustainable electronics maker. I mean, you can argue that electronics at a baseline is not very sustainable. The Apple Watch is not really fulfilling a critical need in human society. But for a lot of their, they're really on the cutting edge of not just the carbon footprint stuff, which is honestly
00:03:42
Speaker
some of the weakest thing that they do. But in terms of chemical sustainability, they are the first to eliminate a ton of different harmful chemicals. They have a really extensive chemical maintenance list.
00:03:55
Speaker
They also are one of the few electronics, maybe the only electronics maker that is actively investing in and giving out loans to their suppliers for their suppliers to switch to green electricity. I think they have like over a $500 million loan program the last time I looked to build wind farms and solar panels in China and stuff.
00:04:15
Speaker
legitimately, Apple is probably one of the most proactively sustainable companies in the world in terms of the structural actions they're doing. Not a lot of people are out here building wind farms for their suppliers, let alone for themselves. But Tim Apple dropped the ball because
00:04:34
Speaker
He's planting trees and this is like the worst. This is like probably like the worst thing. Like I respect like, okay, building rainforest, preventing deforestation. That is one thing. But like anytime a corporation says we're going to plant X number of trees in response to a sustainability problem, it's just like the stupidest thing in the world. It doesn't actually save that much carbon, if any. In some cases, it could actually increase carbon emissions overall because the plants will ultimately re-release them.
00:05:03
Speaker
Uh, if they get chopped or burned down and it's probably just the least cost-effective like way to actually manage. I mean, it's cheap, but in terms of what it actually does for the environment, it's just, it's just really throwing money away. And it's, it's so stupid. Tim Apple, I know you're a listener, um, knock it off with the plant tree stuff and knock it off with the terrible videos. Come on. What are we doing? Don't disappoint your mother. This is weird. It's not good.
00:05:34
Speaker
Oh, my God, Mike, what do you think? You've got the you're rocking the Casio, you know, I mean, I do, you know, your point is right about the fact that Apple and on the materials and and electricity front has done a lot of good sustainability stuff. I remember being at like a bioplastics conference in 2009 or something like that. And people were saying like, oh, like one of the companies that like
00:05:59
Speaker
either one of the only applications where people are actually like out there legitimately paying a premium for these bio-based plastics. It was like Apple using it in like the charging cords, the phones and stuff like that. So that's true. I feel like, yeah, everybody's kind of hip to the fact that a lot of these nature-based tree planting sort of carbon offset
00:06:23
Speaker
solutions are not particularly reliable or credible. I do wonder if we've swung a little bit too far in the other direction because certainly nature-based solutions, like you said, if you're actually preserving, and some of the credits I guess they're doing are based on preserving wetlands and restoring wetlands and things like that, there is stuff that you can do that
00:06:48
Speaker
um on the nature and particularly the land use side that is like legitimately pretty good for for the climate it's just there's so much you know there's so many low quality credits out there in that in that same sort of space that that you know like you said you hear planting trees and you just assume it's bs but you can do some good stuff there and hopefully apple is like actually doing their homework and and and really using projects that are
00:07:16
Speaker
more legit on the nature-based side and that they are monitoring and verifying them and all the stuff that you really need to do.
00:07:29
Speaker
the video was still pretty cringe. Yeah. I think that's the biggest issue for Apple, right? I mean, even though they're doing all these good things, I think they're making, exactly. I think it would come across as green washing rather than anything else, even though they're doing a lot of good things and they are commendable. So yeah, Tim Apple, I guess is, he's on the fence at this point.
UN's Draft Regulation on Plastic Waste
00:07:55
Speaker
Well, speaking of possible greenwashing, we also had some pretty somewhat significant news, I guess, this last week, which is the United Nations, our globalist overlords have released the zero draft of the instrument to end plastic waste. It has a slightly longer and more complicated name than that, but basically it is a very, very initial and very, very tentative draft of
00:08:21
Speaker
what is potentially a really impactful international regulation on plastic production, as well as plastic waste. You can kind of think of it as a parallel to the carbon emissions regulation that exists. Yeah, this is potentially the Paris Agreement of Plastics, basically. Yeah.
00:08:40
Speaker
It can be really big. It could be a really big deal. And we got the Zero Draft, and I don't know, I'm a nerd for this kind of thing. And it was really interesting. A couple highlights. There's an outright ban or restriction on plastic production in there. Not all plastic production immediately, but
00:08:59
Speaker
there are basically caps in there proposed on total plastic production, along with taxes potentially on primary plastic production. And this is a lot of stuff that was in the initial documentation around the
00:09:15
Speaker
the agreement and that people were discussing. And I was sort of surprised to even see it get this far into the process, right? Like, this is pretty controversial stuff. This is pretty extreme stuff. It treats all plastics as a pollutant, basically, at the source, whereas, you know, the the chemicals industry. And I think people's kind of perception generally is that plastic, you know, plastic waste is the issue, right, as opposed to just all plastic production everywhere.
00:09:45
Speaker
And it's pretty substantive, right? Like there's not a lot of materials where we go out and say, yeah, like legally, you know, or internationally legally, you're sort of capped on production, right? Like we don't have this for steel. We don't have this for cement. It's a pretty shocking type of law now. Yeah, that's the thing. We were arguing about this yesterday, right?
00:10:09
Speaker
How realistic is it that that's actually going to make it, that like legit caps on plastic production would
Challenges in Global Plastic Regulation
00:10:16
Speaker
actually make it into a final regulation? I mean, you know, the US is not going to go for that. Saudi Arabia or China is probably not going to go for that.
00:10:25
Speaker
Even if you put a cap in place, I mean, the UN doesn't really have a mechanism to enforce that type of thing. I mean, they barely have a mechanism to enforce some of the more enforceable stuff like the Basel Convention on the bans on plastic waste trading. Like the US is still exporting plastic waste to people who will take it because we just don't care. We don't follow international law. I think there's a couple of things that I would sort of say about it.
00:10:51
Speaker
including plastic production as part of the scope of the agreement is important. It allows us to do stuff like get better documentation and reporting on what types and kinds of plastics are produced and where globally. And it's a step towards, you know, these restrictions, right? Like you wouldn't imagine the Kyoto Protocol, you know,
00:11:14
Speaker
20-some-odd years ago, that was not a very strongly worded or intense set of actions around climate. The Paris Agreement went a lot further. It included, for example, mechanisms for wealthy countries to pay out money to less wealthy countries on the basis of damage caused by climate change.
00:11:37
Speaker
climate reparations is not something that you would have expected, but that's like something that we got there. And it's still controversial and it's a lot of work and it's underfunded and all this stuff, but that's kind of where we're at with climate is like climate reparations are on the table. The UN is aware of pushing that kind of thing. So the fact that we're starting here with plastic bands or, and there's a lot of other different levels of gradation. I mean, it just paints a
00:12:06
Speaker
directional picture for where this regulation is going that is pretty intensive and pretty transformational for the chemicals industry. Yeah. Yeah. And I think it's always, you know, as with the climate stuff, right, that people are not going to fully, probably fully live up to their pledges. The UN doesn't have good enforcement mechanisms and all that. It would be the blue helmet UN soldiers like
00:12:31
Speaker
storming the beaches in, like, Houston and, like, taking over refineries. That would be incredibly wavy. Shutting down the flamethrackers. Probably unlikely. Probably that's going to happen. But I mean, I do think it's, you know, while countries like particularly the US, you know, it's not going to feel very strictly round by these things. Like, I do think
00:13:00
Speaker
you can be too cynical about it also and say, you're saying it doesn't matter at all. If a company sign up for these agreements, countries sign up for these agreements, they're gonna make some effort to just not completely blow them off. I think, and I'm just, it'll be interesting to see how much of this language they can actually get through because, I mean, that's the other thing that'll happen. It's like if,
00:13:28
Speaker
if the US or other players know that they just have no intention of following some of these stronger restrictions, then they're probably just not going to let them get through into the final agreement. Yeah, just a question I had, Anthony, to both of you, because you follow the chemicals in the plastic space mode. So based on the zero draft and my understanding of, you know, from what I read,
00:13:54
Speaker
was that they're focused on capping the production of plastics, right? And I'm guessing the objective is to
00:14:01
Speaker
reduce production in a way to affect demand. Reduce demand because you don't have enough production of plastics. Maybe I'm wrong in that assessment. There's a lot of things going on, but part of it is making plastics more expensive relative to other materials or particularly relative to reuse. We're actually going to be talking to the CEO of Muse, a startup that is focused on reuse in a future interview segment.
00:14:31
Speaker
the UN in their sort of vision of the future, this document called turning off the tab, which is like a long-term roadmap for plastics production and use, they actually see like 30% of plastic being reused, which is like an insanely high figure, right? Because right now it's basically 0%, it's close to 0%. So they really see that as being
00:14:56
Speaker
where the direction of the industry will go. And I mean, they see global plastics production basically dropping in half by like 2040.
00:15:06
Speaker
you know, like really substantially reducing the total production of plastics, which is a thing that's never happened since plastics started being made. The production of plastics has always gone up. We've never tried to make the production of plastics go down. There's not a ton of precedent for that kind of industrial action. Not a lot of precedent for the production of oil going down either. That's going to happen. I mean, that's the big question, right?
00:15:33
Speaker
What actually got me thinking was, is there going to be a reduction in demand for plastic?
00:15:37
Speaker
something, I guess that should be the bigger driver than with using the production. A demand flattening for plastic this decade because of recycling and because of weakness in some of the core market. It's like we don't, you know, a lot of it depends on what you think global GDP growth is going to be. And if you are like me and you think it's closer to like two percent, one and a half percent and plastic demand tracks a little bit more closely with that.
00:16:06
Speaker
And that by itself could really weaken out plastic demand. And then it doesn't take much recycling to totally eliminate demand growth. You double global recycling. You go 7% to like 14%, 15%. And you eliminate demand growth pretty completely.
00:16:21
Speaker
So in a lot of ways, it's easier to get the peak plastics than it is to get the peak oil, actually. And that can happen a lot more quickly, in my view. It just depends on what happens with like China in particular, right? Because China was such a huge recycler. Now they're trying to tackle their own domestic waste. They could end up recycling a ton of their own domestic waste and exporting products with recycled content.
00:16:57
Speaker
All right, we are back here talking now to Adam Lytle of Sound Agriculture.
Innovations in Sustainable Agriculture with Adam Lytle
00:17:03
Speaker
Sound is a startup company that's been having some really interesting initial successes here in developing microbial biostimulants. So maybe, Adam, you can kick us off by telling our audience, or for those who aren't already familiar with that,
00:17:22
Speaker
what those are and what's been driving the interest in this area. Absolutely, Mike. Thanks for having me on. Appreciate it. At Sound, we are a biotech company at Core, and what we do is look at both inputs and traits in agriculture to create more sustainable food. We actually have a couple of different business lines. One is on the microbiome, as you mentioned, where
00:17:49
Speaker
We're distinct from a lot of the biological companies out there that create microbes, the actual bugs that go into the soil and they augment it by adding a few of those microbes that are beneficial. We are a chemistry product that will stimulate hundreds and hundreds of microbes already in the soil in order to do what they do better. And those microbes already fix nitrogen, which is essential for plant growth.
00:18:13
Speaker
and soluble phosphorus, which is the second most important fertilizer for most crops, as well as a number of micronutrients. And so we're essentially saying, hey, nature works great at this. We're going to leverage it and increase the rate of that natural effect and thus replace up to 30% of the synthetic fertilizer that growers have to use at a much cheaper cost. So better for the environment and better for the cost structure of growers.
00:18:41
Speaker
Yeah, it's kind of interesting because I know we've covered a lot of these companies that do the micro-based approaches as you use. So I think the analogy that occurs to me, you can tell me if this is fair, it's almost a little bit like a probiotic where you might take for your own human gut health, you might take a probiotic that has the actual live bacteria on it.
00:19:06
Speaker
What you guys are doing is instead a little bit more like a prebiotic, right? You're not supplying the actual bacteria. You're just enhancing the health and the activity of the bacteria that are already present or the microorganisms that are already present in the soil. Spot on. That's right. That's a good analogy. Another one we like to say, which is pretty accessible for folks, is it's like caffeine by the microbes. It's like caffeine makes us- My coffee here is heavy. Yeah, there you go. Think smarter, faster, maybe run a little harder.
00:19:37
Speaker
We do a similar thing for the metabolic activity of the microbes. You can do that with a very, very, very low volume of chemistry. It's a pretty nice use case in effect. You mentioned that's better for the planet, better for costs.
00:19:57
Speaker
and for the crops. What do you see as the major drivers of the interest in this from your customers? Is it really heavily driven by the sustainability? Either we want to be able to claim to be more sustainable or we got to comply with regulations versus more of the cost savings and increased yield or output?
Benefits of Sound Agriculture's Biostimulants
00:20:19
Speaker
It's definitely a dual value prop in that regard. So you've hit both of them. One is sustainability, one is cost. But it's primarily cost. If you are a grower, you will care about sustainability, but sustainability means different things to different people. And for them, it's about sustainability of their operation. They're often multi-generational growers who might be fifth generation and want to make sure that it's still around for their grandchildren.
00:20:44
Speaker
And farming is a very difficult industry, both in terms of the work involved and then the financial risk. So fundamentally,
00:20:54
Speaker
The profit and loss and having a good ROI in products is the constant battle. And then I'd say secondary for most is going to be that environmental benefit. And where we come in, and it depends on who you ask, some people really care about the water quality piece. Some people care about the soil health piece, stopping degradation of the soil itself and topsoil. And some people care about the carbon impact because nitrous oxide coming from nitrogen
00:21:22
Speaker
is 300x more potent than CO2. So really, if you abstract from this, you've got your customer-based growers who want to do this because it saves money and it's easier to use. Four gallons of our product replaces a semi-truck of nitrogen fertilizer that comes from natural gas. And for a lot of the other interests, government, a lot of the urban centers is agriculture can be a force for climate good instead of climate bad. So it's a nice win-win in that regard.
00:21:53
Speaker
Right. Speaking about the win-wins, I don't specifically cover agriculture. As I mentioned, I love eating food. I think everyone lives to eat. But looking at specifically, an analogy that came into my mind was when I look at agri-voltage, which is one application I look at, all of the ag businesses that want to get into agri-voltage, their biggest concern is
00:22:18
Speaker
You know what, I don't mind adding solar panels on top of crops as long as they don't affect the yield and the quality of the crops that come in. So when you introduce a new solution like this, what's the perception that the consumers, by consumers, I mean your customers specifically have, are they thinking about harmful side effects? So what's the first thing that comes into their mind and how does your solution address those things?
00:22:45
Speaker
Yeah, that's a good analogy. I think that off-target effects or the indirect effects is certainly one question. It's not the primary one though, Karthik. The primary one is, does this thing work? Is it snake oil or is it really going to work on my fields?
00:23:06
Speaker
hundreds of claims to impact yield and agronomics in agriculture. And there's a lot of skepticism because it's not that they don't work or it's really snake oil. It's that they usually don't work everywhere. And there's so many different conditions that a grower usually thinks that his or her fields are
00:23:27
Speaker
bespoke unlike anyone else's. And so there's a barrier to say, how do you prove that it works? How do I make sure I'm not losing money in order to get adoption of the entire farm?
00:23:41
Speaker
And there's a few techniques that we've employed that tend to work quite well, and they're a little different. We have a performance guarantee, which is beyond just like words on a box, where we actually will cut a check to the grower if it doesn't get them net positive ROI. And we've done that in the past. We had to do it with less than 1% of our sales, which was great because the efficacy was so good. And it gets people to buy higher volume because then instead of saying, hey, I'm going to try it on 50 acres, which might be
00:24:10
Speaker
1%, 2% of a typical production ag farm. I'll try it on a third of my farm. And then you get the benefit to the grower much faster over a couple of your adoption curve while reducing your risk. And as a company that's venture backed, you can get past a lot of the challenges which are ag is too slow to get venture capital money.
00:24:30
Speaker
Yeah, it's funny. It's funny you mentioned that because I was I was reading one of our colleagues deep issue, you know, had written a report about bio stimulants a few months ago, I was going back and rereading that and preparation for this interview. And he used the exact same words, snake oil perception around around the challenge. So that was something people really say out there. Oh, yeah. I was curious to follow up on that. Because one of the things I've I've also been been looking at myself a lot over the last
00:25:00
Speaker
You know last six months or so has been alternative business models in manufacturing and and I think in like agriculture and agricultural chemicals and You know, there's been a lot of interesting examples of that of people who are getting like pay-for-performance business models or you know as you said here you're doing a little bit of a version of that where you're offering people the rebates if they don't they don't see the see the results is that something that you've
00:25:27
Speaker
you've thought about or explored into kind of other ways to get into more explicit pay for performance or other business models where you're linking up more with precision agriculture and kind of charging people by the hectare instead of by the amount of product, right? Is that something you've looked at or what do you see as the challenges with trying to pursue some of those more involved alternative business models?
00:25:56
Speaker
Yeah, absolutely. I mean, you hit on a big interest and passion of mine. So first off, I was at Corteva, which is the largest PRPL.ai company for several years leading the digital business on the commercial side. Several years before that, I was in the founding team of Granular, which was the leading SaaS company for growers. And so we looked a lot at enabling those alternative business models using data.
00:26:24
Speaker
They haven't really worked at scale yet, to be honest, but a lot of the bigs have tried them as well as startups, and it's going to work. It's a question of how or when, because there's so many variables in agriculture, more than almost in the industry. Think of it like a manufacturing plant outside with all the additional variables that manufacturing have.
00:26:46
Speaker
And so how do you isolate what causes something? That tends to be the key when also you only have one data point per year because of a growing season too if you look at both hemispheres. So that's the nut to crack. How we look at it is
00:27:06
Speaker
First of all, we have a very good understanding of our mechanisms of action and how this works because we've used it now for six years in the field. We're a commercial growth stage company, right? We're getting over 20 million of sales now. We passed a million acres a couple of years ago. So we're one of the top companies in AgTech startups in terms of scale and revenue and all that. So we have enough heft to actually de-risk this.
00:27:31
Speaker
And we came out with a fertilizer reduction guarantee this year. We're actually just launching it in the last few weeks and today at Farm Progress Show, which is happening, where we will cover up to $100 per acre of potential yield loss if you use our product to replace 25 pounds of nitrogen and phosphorus.
00:27:53
Speaker
because it stimulates enough to replace at least that. So what that does is it says, I'm going to take away the skepticism and allow behavioral change. And this is for a product that sells for $18 an acre max. So we are underwriting up to more than 5x the value of what we're selling. So now we're not just selling an input anymore. We're selling a solution on the nutrient efficiency side and soil health side.
00:28:18
Speaker
that has an embedded underwriting project, that product that we're giving away for free as part of what we're doing because we're so confident in this. And I really want all the companies in the industry to start doing this because it's more incumbent on us who knows our product, our technology, and have the balance sheets and investors to take that risk than it is to ask a family farm
00:28:40
Speaker
to do that when they don't know anything in terms of the product really, and only have 40 chances of profit. So I really think this is the future. I think the trick is how you execute those. We can go into more detail there, but we're starting to really scale this on our end at least. Yeah. You mentioned, well, you mentioned the balance sheet for one point. So you guys, despite, as you pointed out, maybe some challenges with ventures
00:29:06
Speaker
venture capital investing in agriculture.
Scaling Sustainable Agriculture through Partnerships
00:29:10
Speaker
You've been successful on that front. You, I think, most recently closed to $75 million in Series D. And you've also, so buyer, I think, is one of the strategic investors. You've mentioned there's a number of other strategic partners that you have. Is that kind of
00:29:31
Speaker
As you see it for a startup in this area, is it really important to be able to work with those sort of large companies and to win that trust of the customers? And what is it that makes a good corporate partner for you?
00:29:51
Speaker
We are lucky enough to have a really great slate of investors and capital partners, and that is one of our strengths. I should knock on wood, but I say our challenge is more just continuing to scale the business in a way that makes sense and getting the profitability than it is raising money right now because the potential is there.
00:30:11
Speaker
$200 billion worldwide market in terms of your, your, your Tam. So it's a huge opportunity on this fertilizer nutrient side. And, and then also what we're working on with plant breeding gets the investors pretty excited. So we actually have Syngenta as well as Bayer. We have Wilbur Alice is venture arm, who's the number four ag retailer worldwide. So
00:30:31
Speaker
And then we've got a lot of pure plays like S2G and Cultivian and Fall Line and a number of others. And even some of the recent interests, recent entrants who led our last round, BMO Capital and Chan Zuckerberg coming more from the climate tech angle. So it's a really nice consortium. And I think that's necessary in this space because it does take longer than typical software or tech in order to get the impact. It's a physical business with all the challenges we've talked about.
00:31:01
Speaker
And two, it's really hard to fully disrupt the industry. I'm not saying it's impossible, but you actually, you literally haven't seen it yet.
00:31:10
Speaker
No one has disrupted agriculture. People have evolved agriculture. So while there might be a day that someone does that, I believe a better tactic is to work with the incumbents and help evolve them faster because they want to work with partners like us who are going to innovate fast with them and they know it, and then they can bring in that innovation and help scale it.
00:31:32
Speaker
So that's been our tactic. We're more of a, call it fast evolved and disrupt mindset. And so far so good because we've had partnerships with Syngenta. We do this in China. We've got a partnership with Mosaic, which is a top fertilizer company to do this. Look at LATAM. There's partnerships on the on-demand breeding side with
00:31:52
Speaker
group out of Mario and a lot of others I can't name, both on the food and the ag side. So we're very much a partner-driven approach in addition to selling direct in the US.
00:32:04
Speaker
Yeah, so because you also have to directly deal with farmers and, you know, customers, even though it's sort of B2B, I would look at it sort of like B2C because, you know, the farmer essentially has to, you know, sub-sell food to people. I call this a pro-sumer market, not a consumer because we are not selling to the consumer, but it's sort of an SMB type if you want to classify it as a market.
00:32:29
Speaker
Yeah. So looking at that specifically and because this is very consumer centric and this is the Innovation Matters podcast. So just wanted to quickly ask you on your thinking and your thought process behind how you factor in consumer perception and farmer perception when it comes to taking decisions that are in line with sustainable innovation.
00:32:55
Speaker
We have the consumer who influences all of this, and we use that and are responsive to it in terms of the sustainability side
Impact of Consumer Demands on Agriculture
00:33:07
Speaker
fundamentally. So the consumer, while it's not always top of mind, really does care about where the food comes from, from a soil health perspective. There's a lot of truth and increasing awareness that a better nutrient density
00:33:21
Speaker
for your fruits and vegetables is healthier for you and that comes from healthier soils and nutrition programs. And when you have too many synthetics on your fertilizer side,
00:33:34
Speaker
It actually can kind of kill or depress the microbiome. It's like a muscle that atrophies and that results in worse things for the food itself as well as the environment. So from a combination of broader impact the consumer cares about, climate change, et cetera, water quality where we will reduce the amount of nitrates and phosphates in water by up to 50%.
00:33:55
Speaker
And then that soil side for for plant health and nutrient density, it's a big factor. And that helps us sell because growers recognize their customers are the consumer. And this is a tailwind that's not going to end. Yeah, I think the other thing I was I was curious to ask about on on that front is what you see as and how you see kind of the policy drivers here, right, either on the sort of the demand side and incentives for
00:34:24
Speaker
greenhouse gas reduction or sort of on the supply side, right? There's a big industrial biotech, biomanufacturing push from the Biden administration. Do you see those type of policy moves as driving this area forward in ag?
00:34:41
Speaker
We do, absolutely. So as part of the money that flowed through on the inflation reduction act, there's a lot of climate smart investments from government. So I think it's at this point up to 3 billion that was allocated for climate smart activities. And that includes nitrogen reduction, given how
00:35:03
Speaker
how harmful that is for the environment. It also includes broader regenerative ag practices of which we are a tool or an enabler, because if you could have a healthier soil microbiome and more vibrant microbiome, you can go to full regenerative faster and have a healthier food production and everything else we've talked about. So there's monies going through from the federal government. There's also a lot of local money at the county level and otherwise with watersheds at the state level.
00:35:33
Speaker
because agricultural runoff leads to carcinogens and dead zones and waterways that Chesapeake or Nebraska watersheds or Illinois, other areas. So there's different angles for sure. And we try to tap into those. Fundamentally though, I think in terms of scalability that takes time. So I view that as icing on the cake, not a core thing that I'm dependent on with our business model. Yeah, absolutely. I think it's,
00:36:03
Speaker
you know, obviously with a lot of the things in the IRA, you know, the green hydrogen subsidies or whatever, you're creating these markets that are very, you know, I won't say purely, but very heavily subsidy driven. So I think it is, it's good. It's a strength that, that your, your business isn't as reliant on those.
00:36:21
Speaker
Yeah, I, I won't turn it away. I wouldn't mind it if they put a little more, I actually do think it's pretty low in agriculture relative to the energy side and infrastructure and given the carbon and other impact, it's, it's disjointed in that way. So I, I, I think to really scale that is more of that is required, um, because it is behavioral change, but. You know, as a, as a private startup on, we're going to do everything under control to do it regardless of that. Yeah.
00:36:52
Speaker
Yeah, well, I think we'll be on the lookout for more action on that front and be continuing to follow the progress that's sound. But thank you very much for the time. I appreciate it. Enjoy the conversation and we'll keep in touch. Likewise, great questions and conversation. Thank you, Mike and Karthik. All right, thank you very much. And we'll talk to everyone next time on Innovation Matters.
00:37:25
Speaker
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