Eric Rey, the CEO of Arcadia Biosciences based in Davis, California, is a veteran of Calgene and Monsanto who considers himself a staunch environmentalist. In 2002, he started his company to do something concrete about helping the
environment. His technology should help farmers cut their costs and improve the environment thanks to plants that need less nitrogen fertilizer.
What is the problem you are trying to solve?
We have more people and less and less farming land. Agriculture has reacted by using more fertilizer, mainly nitrogen fertilizer. Nitrogen fertilizer is literally the fuel that makes agriculture go; it represents a $50 billion annual market. The problem is that up to half of the nitrogen ends up in the air or the water as a pollutant because plants can't absorb it all. Not many people are aware that agriculture is the second contributor to the emission of greenhouse gas (GHG) with nitrogen fertilizer the biggest emitter in agriculture. That's because nitrogen is transformed into nitrous oxide which has 300 times more global warming potential than carbon dioxide.
What solution have you come up with?
We have an exclusive licence on a technology developed at the University of Alberta. It consists in making the gene responsible for absorbing nitrogen think it is hungrier for it. We turn up the activity of that gene and the plant absorbs more nitrogen. We have demonstrated our technology in several plant species, including corn and rice. We have shown that you can reduce fertilizer use and maintain crop yield. We have also shown that the plant structure and protein content are not affected. Many companies have been working on this, but we are the only ones who have publicly disclosed the results of our field trials. It makes us think that there was no way to do it except with a genetically-modified gene. We think we have one solution, but it is not the only one.
How does the technology get to market?
We are not a seed company. We licence our Nitrogen Use Efficiency (NUE) technology to seed companies who then incorporate it in their seeds which requires several more years of work, including regulatory requirements. We are like Intel selling its chips to computer manufacturers. We have worked out deals with several seed companies. We just announced an agreement with Pioneer Hi-Bred, a DuPont company, which is a global leader in corn. We will be announcing a deal with a grass seed company for the home and golf grass business and another one in India for multiple crops. In addition, we have a no-cost technology donation partnership with the African Agricultural Technology Foundation (AATF) for rice in Africa. Our goal is to get this technology in the hands of as many people as possible.
You have another project on the drawing board. Tell us about it.
Because agriculture is a big emitter of GHG, we believe that farmers should be able to sell carbon credits like other industries [since the 1997 Kyoto Protocol, carbon credits have blossomed into a $30 billion market in which companies buy their way into compliance with emissions-reduction requirements without actually cutting their own output of GHG]. We are working with the Intergovernmental Panel on Climate Change to set up a methodology. It will take a few years. But we are already working with the province of Ningxia in China. There are several benefits: it allows poor farmers access to the technology, it gives farmers extra revenue and it works as an anti-piracy measure in China.
You are also interested in bio-fuels. What can you bring to the table there?
Producing ethanol from corn ends up being a worse emitter than actually using gasoline. If we can cut down the use of nitrogen fertilizer in that process, it would be an important point in the bio diesel debate.
What else can you tell us about the company?
We are based in Davis because we can hire researchers or work on partnerships with UC Davis, one of the main agriculture universities in the US. We have 80 employees who come from 20 different birth countries. We have a number of shareholders and have received funding from three VCs. We also get revenues from contract research and grants. In Q4, we will get our first sales revenues from an oil product we have developed.
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