The views expressed in this guest commentary are the author’s own and do not necessarily represent those of AFN.
Manure tech is massively underhyped, but that’s going to change in the coming months and years. Why? Let’s dig in.
Fertilizer prices are out of control
Firstly, the major news right now is that fertilizer prices are soaring – and there’s no real relief in sight.
All fertilizer prices have increased substantially in 2022, with most exceeding January 2021 prices by over 100%, according to DTN. The Russian invasion of Ukraine is not helping matters; according to Reuters, in 2021, Russia and Belarus together produced 40% of global potash exports, and Russia alone was responsible for 22% of global ammonia exports, 14% of urea exports, and 14% of monoammonium phosphate exports. Russian export suspensions hit Brazil and the EU earlier this month.
This is a massive problem. But it’s also a solvable one that I believe presents a long-term opportunity for farm operations.
Government interventions have started. The US Department of Agriculture (USDA) has committed to invest $250 million in independent, sustainable, farmer-focused, US-made fertilizer. Brazil launched a new 30-year national fertilizer plan in early March.
Poop is a problem for the planet
According to the UN Food & Agriculture Organization, manure storage and processing is responsible for 25.9% of greenhouse gas (GHG) emissions associated with the livestock supply chain: in particular, substantial emissions of methane and nitrous oxide – two GHGs that can cause greater ‘warming’ over the short term than the more notorious carbon dioxide.
A 2005 assessment by the US Environmental Protection Agency (EPA) suggested that an estimated 238,000 working farms and ranches in the US can be considered as animal feeding operations, generating about 500 million tons of manure each year. “This equates to the weight of over 1000 Empire State Buildings,” says Bianca Bailey, CEO and founder of Agriwater, an early-stage company leveraging electrolysis to mitigate contamination in cattle slurry.
All that feces represents a massive opportunity for recycled resources: we should be looking at livestock operations as fiber processing systems that yield renewable ‘mines’ of nutrients — especially phosphorus — and irrigation sources (and animal-based food products, of course.)
According to the EPA’s calculations — using the USDA’s 2007 farm census and estimated manure nitrogen and phosphorus contents from 2006 — the US produces about 6.2 billion kilograms (~6.8 million tons) of nitrogen and 1.8 billion kilograms (~2 million tons) of phosphorus per year. According to Jordan Phasey, CEO and founder of Phinite, “the recoverable nutrients in the US manure supply alone are worth over $5 billion. Animal farms offer an unlimited supply of raw material for a renewable fertilizer mine. This is a massive recurring revenue opportunity.”
Manure management is nothing new – but factors are aligned for its transformation
The silver-lining of this fertilizer price pressure is that it enables high quality manure-based fertilizer products to compete with synthetic fertilizers. Over the past few years, I’ve seen many manure-management technology companies struggle to come up with a business plan that can reasonably market fertilizer products beyond the high-end organic niche. We’ve been trapped in a chicken-or-egg cycle that has resulted in sluggish investment in the manure processing space.
Implementing a manure nutrient management protocol has been shown to have significant impacts on the surrounding watersheds.
Soil health trends will further drive the appeal in manure-management technologies. Manure-based fertilizer products tend to be richer in organic content (ie, carbon) and have the promise of being slower-releasing and more bioavailable; plus, they’ve got a reduced risk of killing the biodiversity of the soil. Why would anyone buy imported synthetic fertilizer that degrades soil when a superior, domestic product that supports a fellow farmer competing in a different commodity can be purchased at the same price point?
The technology exists to transform manure into high quality, consistent, dehydrated fertilizers. What has been missing are business models that work for both livestock producers and crop producers.
Price pressures on the fertilizer end are going to enable forward-looking livestock producers to get ahead of the environmental regulations that are nearly inevitable, with the Global Methane Pledge to reduce methane emissions by 30% by 2030 (111 countries — including the US and most EU countries, but notably excluding China, Brazil, and Russia — have committed to the pledge.)
As agrochemical prices skyrocket, so do investments in biological alternatives – read more here
The livestock operations that are able to invest in manure processing solutions that provide returns will be able to diversify their income streams and contribute to fertilizer price stabilization by decentralizing production. Most importantly, the communities around these livestock operations will suffer fewer environmental consequences.
As Michael Lynch, CEO and founder of CHONEX says: “Cavemen were using manure as fertilizer technology 8,000 years ago. The future of manure tech will be using a microbiological process to selectively eliminate [any] pathogens, then screening and selecting for the beneficial microbes that improve soil and crop health.”
“Farmers will be multiplying those beneficial organisms exponentially at the time of application while using the manure’s NPK [nitrogen, phosphorus, and potassium] for the microbes’ feedstock. This manure tech will fundamentally change the way we farm, allowing farmers to restore the biology of their soil inexpensively, improve their soil health [and] crop yields, and reduce their chemical and fertilizer inputs up to 50%.”
Capitalize on this opportunity
I don’t usually make VC-futurist-type predictions, as I’m not really into contributing to hype-cycles. That said, I feel so strongly that manure tech is massively underhyped, that I’m making one here: 2022 is going to see a turning point in this emerging category.
Here a few specific innovation cases that I’ve got my eyes peeled for:
- Low-cost, mechanized processing systems that produce high-quality organic, high carbon fertilizers (which in this new world of fertilizer prices and soil health prioritization, can and will compete with synthetic fertilizers.)
- Next generation soil health companies that leverage NPK-dense manure as feedstock for microbes.
- Effective filtration systems that separate liquids and solids, enabling water reuse in water-scarce, dairy-heavy regions.
- Low cost, compostable fiber-based products (especially for packaging – the first meat or dairy company to figure out how to repackage their products leveraging waste is going to get my consumer dollars!)
- Biodigesters: we’ve seen a lot of investment in these systems, and it will continue. It’s important to understand that many of these technologies can work in series with one another. The waste product of many filtration and nutrient extraction systems can still act as feedstock for methane digesters.
- Systems that can demonstrably prove that better management results in offsetting or insetting methane, nitrous oxide, carbon dioxide, and other GHGs and pollutants.
- Things that I don’t know about yet! Let me know what I’m missing on Twitter @ConnieBowen_.
The year 2022 is going to be the turning point in manure tech investment. It’s going to be a messy journey that will unfortunately be driven by massive stressors to farm operations. If the coming interventions encourage technology adoption to address this problem, we’ll all be better off: row crop farms, livestock farms, fertilizer companies, and people eating and living on this planet. The sooner we get serious about capturing the value of livestock manure, the better.
Special thanks to Jordan Phasey of Phinite, Michael Lynch of CHONEX and Strong Soil, and Bianca Bailey of AgriWater for their thoughtful contributions and their tenacity in building game-changing companies in this less-than-sexy space.