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Verdesian Life Sciences |
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March 27, 2017 Issue |
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CEOCFO MAGAZINE |
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Plant Health Nutrition Micronutrient, Seed Treatment and Fertilizer Products that make Nitrogen and Phosphorus more Available and Consumed by the Plant |
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Chief Executive Officer
Verdesian Life Sciences
Media Contact: Matt Lail 919-825-1901
Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – March 27, 2017
CEOCFO: Mr. Avery, would you tell us about Verdesian Life Sciences? Mr. Avery: Verdesian is an accumulation of companies that were acquired over the last couple of years, first starting in 2012. These companies have been around for a number of years and the strategy was to roll up companies that had a place in the plant health, nutrition and micronutrient space that had patented technology and were either regionally focused or had not expanded beyond the U.S. We then combined these companies, into one company and created a new marketing and go-to-market approach to really leverage those assets and offer unique solutions for farmers. That started in 2012 with the first acquisition and then ran all the way through 2014 to the final acquisition to get the six companies we have today.
CEOCFO: How is it working out so far? Mr. Avery: So far, it is working out well. I think the uniqueness of our product offering, where we really focus, has provided great opportunity and validated return on investment for farmers. The reality is that farm economy and farm income have been down over the last few years. To say it is without challenges would be an understatement because farmers are making less money than they made in a long time and then are having to make difficult choices. The good news is that our products provide a strong return on investment whether corn is at $7.00 or $3.50 a bushel.
CEOCFO: Would you tell us about the range of products you offer today? Mr. Avery: All farmers use different forms of fertilizer, whether nitrogen, phosphorus or potassium. We have a suite of products particularly for nitrogen and phosphorus that stabilizes the fertilizer in the ground and makes it more available for the plants, whether for soybeans, corn, wheat, cotton or other crops, and thus utilize the fertilizer more efficiently during the growing season. More than 50 percent of all of the nitrogen and phosphorus applied does not end up in the plant; it ends up running off into the water, volatizing in the air or moving through the ground via water sources. This is an issue and an opportunity for the farmer because anytime you pay 100 percent of something and you only get 50 percent of it utilized that is not a good exchange for money. It also has an environmental impact, and we are seeing a lot of activity and discussions across the United States, particularly in Chesapeake Bay, Lake Erie and the Gulf of Mexico, where you have the dead zone at the end of the Mississippi due in part to high levels of nitrates, and in Iowa and the Water Quality Consortium, as well as what is going on in California around nitrates in the soil. Farms are certainly not the only source of where these nitrates are coming from; they are coming from many different sources. Our initial testing shows that our products can reduce nitrate levels in water. Principally as you make the nitrogen or phosphorus more available to the plant, more is consumed and less ends up unused.
CEOCFO: How are you able to make it more stable? Mr. Avery: It is basic chemistry. When you put phosphate in the ground, if left untreated it will bond with other minerals. Our products make it more available to the plant because once it is bound to other minerals it is not available to the plant anymore. What our products do is essentially bind with the fertilizer and prevent it from being bound up to other minerals in the ground and then it is therefore available for the plant to be taken up. One of our products for phosphorus is called AVAIL because it means the phosphorus is Available for the plant.
CEOCFO: What else are you offering? Mr. Avery: We also have a product that we market called Take Off®, which is a compound that works inside of the plant. It can be applied as seed treatments, and it can be applied foliar or in the soil applications, depending on the application the farmers want to use. There is a pathway in plants called the glutamine pathway, which is a lifeline and the main artery for plant life. What Take Off does is help accelerate the absorption of nitrogen into the plant throughout the growing year. When you think about the first suite of products we sell (NutriSphere-N and AVAIL), they make the fertilizer more available for the plant. Take Off helps accelerate absorption of that more readily available fertilizer. You are making nitrogen available and then you are helping the plant take it up. What we have seen with testing across the U.S. and Europe is a boost in yield. What it comes down to, from a farmer’s standpoint, is our products are all additive and they are optional, but they are beneficial to the farmer in terms of increased yield. They have to make a decision about the cost and the benefit every single year. They are paid on the number of bushels and our products have provided additional yield for corn, soybean, wheat and canola. We have a Seed Treatment and Inoculants business where seed treatments have been a rapidly growing segment of the farm economy over the last couple of years, and they help protect that seed when you put it in the ground. The seed purchase is an expensive choice for the farmer and a very important choice, so the most important thing is for that seed to get out of the ground as healthy and as quickly as possible. Our Seed Treatment and Inoculants business has a rhizobia bacteria as well as our Take Off product. From a marketing standpoint, our Take Off product helps the plant take off. It is important for a farmer to get early vigor. The other thing is that you also want a very good plant root mass at that time as well, so the bigger the root mass you can establish early, the better chance the plant is going to have for flourishing over the growing season.
CEOCFO: How does your range of products compare to what else might be available for farmers today? Mr. Avery: A farmer makes roughly 50 decisions each growing season. Some of those are very big decisions like land and equipment, whether to irrigate or not to irrigate. Every year they are determining, depending on their soil conditions, how much nitrogen, fertilizer or phosphorus to apply. Our focus is around that period of application and those decisions they are making. There is a cost evaluation that a farmer uses throughout the year, but it is one that we want to be a part of because it is elective. Foreign countries like China have issued moratoriums that seek to cap the nitrogen applied by 2020 and they are actually going to seek to reduce nitrogen applications during that period. So, there are some governments that are making some decisions about rate and use today on an international basis, but in the U.S. that has not been enacted yet.
CEOCFO: How do you reach out to farmers and help them do the math for ROI? Mr. Avery: We have a number of direct opportunities through our website, through educational opportunities, and through field days. We go through distribution and Ag retailers on a global basis. There is a large distribution network that farmers count on and rely on for advice every year. Those are the front lines from a relationship standpoint. Our goal is to provide as much data and training as possible to the advisors that are on the farm once or twice a week, and to provide that information so that they can replicate that to the farmer. The ROI calculation is a fairly easy calculation to go through because if you can get an additional four bushels yield per acre of corn, and that is worth $3.50 an acre right now, then you do that math and take how much it costs to acquire our products and you get to a nice six- or seven- or eight-to one ration on ROI. We provide that as well. The four-bushel test is based on numbers and years of testing over a large swath of land, but each farmer has to have that demonstrated on their farm; they are not going to just count on our testing on what happened two farms away.
CEOCFO: Are many farmers looking for newer ideas today? Mr. Avery: Farmers are always looking for innovation. If you go to virtually any farm in the U.S., there is always the test strips, always a section of their farms they set aside to try new hybrids or a seed treatment or fertilizer application, but farmers have always had a lot of information and data points that have been collected for years. Only in the last five years has technology really caught up to do something with that data. In our experience, farmers are always looking for something new. The greatest single asset that farmers have is their land, and they want to be good stewards of that land because they want to leave it clearly better for the next generation. One of the ways they can do that is through more precision agriculture and more prescriptive agriculture, which is where we fall in from the prescription standpoint. By and large, the farmers we deal with across the U.S. and the globe, are second, third or fourth generation farmers, so there is a high degree of stewardship out there. They want to leave it better than they found it, and in today’s environment it requires being more technologically savvy, understanding application rates and utilization of fertilizers and how in our case you can get out of every dollar you spend on those applications.
CEOCFO: You have been CEO just under six months. What is your goal, what were you brought in to do and what did you find when you started at the company that maybe did not come through with the due diligence? Mr. Avery: My background is in large-scale operations, and in dealing with farmers around the globe. We have moved past the phase of accumulating these six companies, now we are in our next phase of how we get closer to the customer, how we create on-farm demand, and how we do that in a technology age on a repeating basis. If you look, less than 12 percent of all of the nitrogen applied in the United States is treated with our products or our competitors’ products. That leaves 88 percent of the nitrogen applied as a growth opportunity. This gives us an opportunity to expand, and the same thing holds true for phosphorus and potassium as well. The white space inside the business is enormous, but it has been based on farm-by-farm discussion. What we started with was, “how do we have a better strategy around getting to our customers and farmers and how do we enable those retailers to create business and repeat business?” My biggest surprise coming in to Verdesian Life Sciences was the technology that we have and the capabilities that we have from a scientific basis; though we are a small company, we are farther along than I thought. I saw the information and did the research ahead of time, but coming from a company with 22,000 people to one with 220 people, it is clearly a different scale. I was impressed with the technology and impressed with intellectual property. From the other side, I was surprised that, despite having a high repeat rate from a customer base, our products are more like selling seed. Seed is a value-based proposition, and a farmer makes that decision every year, but you start it over every year reselling that seed. Our products are more like selling seed than they are selling another technology product that has been out there a long time and, because of that, we have to be able to communicate our value to the customer and the end user, which is the farmer, through our retail and distribution partners. That is an incredible opportunity but it is also a challenge.
CEOCFO: Would you tell us about your manufacturing? Mr. Avery: We have a manufacturing facility in Cape Girardeau, Missouri, Pasco, Washington, and in Kentland, Indiana, as well as a smaller one in Ohio. We are asset light. Some of our products are synthesized offsite, and then we then we do the final formulation packaging in-house at different locations. Our products are primarily made in the U.S. From a shelf-life standpoint, it depends on the product. We try to do as much just in time as possible so if the shelf life is sitting in a tank, it is about 12 to 18 months. In addition, the shelf life of seed treatments are more than a year. Our products do well in the same storage conditions as seed. We store our products in good, dry conditions.
CEOCFO: Why pay attention to Verdesian Life Sciences? Mr. Avery: The most important thing from our standpoint is we feel very connected to the mission of being a part of feeding the world and doing it sustainably. I think if you look at how we are going to feed another 2.5 billion people and the productivity that is going to be acquired off the farm is not just in the U.S. but also around the globe. There are many people doing things about it, but if you have never been hungry, you are not as passionate about feeding the world or understanding that hunger is an issue. The scary reality is that according to the UN numbers, there are about 300 million people at starvation level today, which is less than one meal. A large portion of those are actually farmers, so you think of the irony that you are a farmer and you cannot feed your family. Ultimately, to feed a growing population we will have to get more production out of every acre of farmland. I saw a report just the other day that said agriculture production would have to increase 70% over the next 30 years to feed the world. Our products help from a yield standpoint and have a very strong ROI, so they increase more out of every acre. You also think about doing it sustainably. You can get to the point where you apply less nitrogen and fertilizer and get the same yield by applying our products and reducing the amount of nitrates in the waterway. We are a part of many solutions out there today, but I think we are going to be an important part of that future. |
“In our experience, farmers are always looking for something new. The greatest single asset that farmers have is their land, and they want to be good stewards of that land because they want to leave it clearly better for the next generation. One of the ways they can do that is through more precision agriculture and more prescriptive agriculture”- Kenneth Avery
Verdesian Life Sciences
Media Contact: Matt Lail 919-825-1901
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Crop Inputs, Verdesian Life Sciences, Seed Treatments and Inoculants, CEO Interviews 2017, Kenneth Avery, Plant Health Nutrition Micronutrient, Seed Treatment and Fertilizer Products that make Nitrogen and Phosphorus more Available and Consumed by the Plant, Consumer Goods Companies, Industrial Company, Healthcare Company, Crop Health Chemistry and Biologics, Nutrition and Micronutrients for Corps, Soil Surfactants, prevent diseases and weeds in cereal and specialty crops with naturally-selected, biological control products including bio-fungicides and bio-herbicides, Bloomtime®, suppresses fire blight in apples and pears, Fungi-Phite, fungicide for the suppression and control of Phytophthora, Pythium and downy mildew, Minimize phosphorus fixation, AVAIL, NutriSphere-N, More Than Manure, protect phosphorus and nitrogen in manure, Take Off® technology, nitrogen management, Verdesian Life Sciences Press Releases, News, Consumer Goods Stock, Companies looking for venture capital, Angel Investors, private companies looking for investors, crop inputs companies seeking investors, seed treatments and inoculants companies needing investment capital |
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Kenneth
Avery