When the market for microcaps gets ugly; where is the best place to be? It’s called getting back to the fundamentals.
This is why our firm, The RAYA Group, has
headed into a safer harbour called “Agriculture”; after all, you’ve “gotta eat”.
There are 85 million people, net, added to the world’s population every year, not to mentioned the 7 billion already walking the planet.
The challenges will be huge feeding the people with healthy and nutritious foods………climate change, unprecedented droughts, urbanization that cannibalizes farmland, water shortages and pollution, logistical issues (like India’s terrible road infrastructure) and energy issues like fuel for transportation to markets (including energy for the refrigeration while on the road).
One major issue you don’t hear about is the cost, in dollars, and a major environmental negative of all the CO
2 created from the
energy used in plowing the fields. To plow Iowa, the big state corn producer, every year takes the equivalent of 4000 Nagasaki bombs worth of energy!
Some environmentalists like James Lovelock say the agricultural environmental footprint is on a par with the destruction caused by the oil and gas industry. The way the “industrial agriculture food complex” is run today is highly unsustainable.
If you are interested in reading about the big picture enviro-sustainability issues as it relates to agriculture drop us an email and we will send you an article from “Scientific American” outlining the challenges faced by humankind feeding everyone including livestock and pets.
The agricultural/food system is broken and is in a major change mode driven by a consumer demanding less processed food stuffs and people wanting GMO free and pesticide free foods. Two months ago, the World Health Organization (WHO) declared that their research determined that Monsanto’s “Round-Up” pesticide is a potential carcinogen.
In China, as a result of serious industrial pollution created by coal-fired plants, battery factories, incinerators etc.
growing in a polluted world leads to produce and crops having contamination levels that are making the population ill.
Globally, one person in nine goes to bed hungry. In the affluent world and the less affluent world such as Mexico there is an epidemic of “diabesity”. Chronic illnesses and cardiovascular diseases related to obesity are making many societies much less productive than they could be if they were eating in a healthy fashion.
The book “The Ultra Mind Solution” written by Dr. Mark Hyman, states the need to eat healthy carbohydrates which include vegetables, fine herbs and microgreens which comprise one third of a very short list of super healthy foods he recommends. We will send his healthy food list upon request.
What are some of the trends driving a solution? The first that comes to mind is organic food, especially leafy green vegetables. Fifteen years ago the “organic” business for the upper end of the mass market was negligible. Now sales in the US are in the $30 billion dollar range.
Almost all organic produce is grown with traditional field farming. Soil has to be tested before certification takes place and I believe it’s having farm land three years in fallow to wash out the pesticides, herbicides and insecticides residues before you can get organic certification for growing organic on old crop land.
Then there is the problem of pesticides and insecticides and GMO crops blowing onto the organic fields. Another big problem is the Walmart’s, Kroger’s, Target’s and the Costco’s of the world ramping up their emphasis on organics demanded by the public creating a serious shortage of supply. Most of the policing of the organics is done by the industry itself; the result of government cut backs on inspectors.
There is big temptation to spray an infested crop with pesticides and hope that when the produce is washed “three times” by the brander and processor, it is removed. Plowing crops under when they become infested is part of the costs of growing organics.
“Whole Foods” is also known as “whole Paycheck” and there are many families who would love to buy organics but they simply can’t afford them. There will be huge demand for a grower who can undercut organics’ high prices. “Big lettuce” is beginning to see the many benefits of controlled indoor environment agriculture (CIEA) and it is conceivable that CIEA could have a growth profile similar to organics over the last 15 years. This would be great for investors who can visualize the potential and get in early.
“The salad bowl” of North America is the Salinas Valley of California. It is in this valley (located south of Silicon Valley, near Monterrey) that multiple crops are possible. They ship vegetables, worth eight billion, to 22 countries.
It takes one to two weeks, before the restaurant, institutional food service provider or retail grocery outlet has the produce displayed. A large percentage of the produce is near the expiration date.
A lot of the taste and nutrition is gone and 40% or more gets thrown out by the grocer. About 80% of the leafy green vegetables, fruit and nuts consumed by Canada and the US come from California. California has the largest food surplus for export of any region or country in the world.
California, the world’s number one food powerhouse, is experiencing theworst drought in 1200 years with NASA predicting a long term serious drought in the western US. The water table (i.e. the drinking water aquifer) is being exploited at an unsustainable level with surface land “sink holes” forming; the worst sink hole I have read about dropped by 30 feet. California is a desert with a coastal Mediterranean fringe. It has gone from 300,000 First Nations ‘people to 39 million.
There is a book called “Cadillac Desert” that gives the history of the settlement of the western US and the huge conflicts over water rights, etc. The low snow pack on the Sierra Nevada Mountains and the experts say California has lost 20 to 25% of their agricultural production. Governor Gerry Brown will be pressured to reduce grand-fathered water rights to the farmers.
What is and what will make up for the slack in production of vegetables, fruits and nuts? It is called a number of names: “vertical farming”, “roof top gardening”, “container farming”, urban farming in vacant lots etc. and
the best, “controlled indoor environment growing”.
I have represented a company called
Urban Barns Foods Inc. for over two years and I am convinced that their concept for growing leafy green vegetables, fine herbs and microgreens, is the best on the market today (they have what they call “Cubic Farming”
TM in a facility very near Montreal, Quebec). The company has been written up by the National Post, Canadian Geographic and Canadian Business.
Investors from North America and off-shore see the common sense, well thought out design plus state of the art science and the unique high yield mechanization (patent-pending) of the Urban Barns “Cubic Farming”
TM system. Quite a few who have seen many competitors and have said our system is the best they have seen and have commented that it can
scale up to serve the very large needs of big hotel chains as well as national grocery chains, whereas the competition can’t.
A lot of things in today’s world are counter intuitive, for example, you would think that having windows in a growing facility such as ours would make sense. However, even though the sunlight (photons) is free, the heat from sunlight creates a problem. In the greenhouse industry they solve the problem by opening the windows to cool the greenhouse building envelope as air conditioning would be prohibitively expensive. Open windows also lets in insects that eat the produce. The usual solution is to spray the produce with insecticides. Heating costs are high in the winter for greenhouses. On cloudy days the plants grow very slowly in a greenhouse.
Urban Barns Foods creates a perfect environment (a spa for plants) for leafy greens to thrive, grow quickly (have 16 crops a year for leafy greens and 50 crops for microgreens) and maximize nutrition. Leafy greens and fine herbs are difficult to grow outdoors and up to 50% of the energy in growth goes to surviving the ups and downs of the environment; too little water, too much water, too little heat, too much heat, etc. With controlled indoor “Cubic Farming”
TM the temperature is constant to whatever the specific plant requires.
Each cultivar has their own specific requirements for optimal yield, taste and nutrition. The Ph level of the water (plants are grown hydroponically without soil) has to be at the right level. There are no windows in their big box facility. The air conditioning costs would get out of hand with windows. LED lights provide the photons necessary for photosynthesis. The plants don’t care if they get the photons from the sun or an LED light; a photon is a photon.
Urban Barns Foods has 12 scientists from McGill University doing research on a five year collaborative research agreement. These bio-engineering scientists and PhD students are world-class experts in controlled indoor environment growing. They do LED lighting wave length selection for maximum growth and production. They are also involved in high intensity LED testing as well as narrow spectrum LED testing. They are testing various growing mediums i.e. substrate testing (hemp and coconut).
The scientists and PhD candidates are also involved in cultivar (R & D is being done on over 200 plants and herbs etc.) selection. Urban Barns is particularly interested in producing leafy green vegetables, herbs and microgreens the top chefs like. As Richard Groome, the CEO of Urban Barns Foods said, “if you don’t have the chefs onboard, you are nowhere.” The company has repeat business from the Ritz-Carlton hotel, Montreal, five Fairmont hotels, the Hyatt, Intercontinental and twenty-five of the top Montreal restaurants.
Many of the chefs are French-trained and, until they came to the Mirabel facility, 20 miles from Montreal and saw for themselves leafy greens grown hydroponically, without soil using LED lights; they were skeptics that vegetables that looked and tasted that good could be grown in that fashion. One week in transport, including truck time and distribution center time from California, degrades the quality. The top chef’s main criteria is “consistency” of the highest quality and taste. Our produce is picked at the peak time and delivered that day to the end user.
How does an operation like Urban Barns Foods Inc. keep their costs down? They do it with
logical assembly line type mechanization aka Henry Ford. The plants grow in channel trays and move mechanically through a conveyor loop within a “cube” that houses the nutrient delivery system and the LED lights. Further to the California drought situation is the need for only 6% of the water of regular field farming.
All the water needs can come from dehumidification of the outdoor air. Unlike most vertical farming, where plants are gown on large flats supported by heavy-duty vertical rack shelving, which creates two problems, first, excessive LED lighting costs (each layer typically has their own strata of LED’s and second, additional labour costs to do the harvesting. With the Urban Barns’ “Cubic Farming”
TM system, planting is easy as all plants return to ground level, visual monitoring is easy and harvesting is both easy and safe, reducing labour costs. Labour and energy costs are estimated to be about 8% each of the wholesale price for the Montreal location.
Business is about productivity….production…..yield. All things being equal, with the Urban Barns Foods “Cubic Farming”
TM system, their costs will be low; they will have consistent high quality, local, with; just in time delivery, while being able to guarantee no GMOs, no pesticides, no insecticides etc. Urban Barns Foods’ produce has superior nutrition (30 to 100% more nutrition than field grown produce; tested independently in Quebec).
Business is also about being first to market. If you have something first, new, different and better….voila…you benefit from a temporary monopoly. This is giving Urban Barns pricing power, especially when customers realize the product is not a commodity but is a truly premium product. It’s the best on the market. Organic producers cannot and will not guarantee no GMOs, no pesticides and no insecticides, as the nasties can blow onto their fields.
The bulk of the competition has to ship their organics or regular produce from California; 2500 miles plus to Toronto, Montreal or New York City in a refrigerated 18-wheeler. You become Hertz not Avis (Hertz….the first huge car rental company, Avis was 2
nd) when you are first. The branding possibilities are exciting. The company will soon have new machinery (4
th Generation model)
that can grow 5110 heads of lettuce per square metre per year on the facility floor. The mechanized cube is 24 feet high, 16 feet wide and 20 feet long. For comparison, a
greenhouse will produce 215 heads of lettuce per square metre per year and a field
farm will grow 18 heads of lettuce per square metre per year. This generation of machinery should make Urban Barns Foods the most productive farming operation on the planet.
Urban Barns Foods plans 20 locations within the next five years in North America and 20 locations worldwide. They will locate
where 1. there are large populations most of which are far from long-season growing areas like California with their multiple crops, 2.
where there are water shortages, i.e. UAE, Las Vegas, Sydney, Australia, Sao Paolo, Brazil etc. as well as 3.
places where you have freezing cold winters, Boston, Toronto, New York, Calgary, Edmonton and Chicago. 4.
Serious numbers of exceptionally high end restaurants in places like London, Hong Kong and Tokyo need a consistent supply of leafy green vegetables, etc. as the chefs love consistency and the produce had better be world class. 5.
Where there are greater than normal food safety issues, which would include China’s largest coastal cities, will be profitable places to locate.
The Chinese will trust a Canadian food brand over their local production as their production has food safety problems. In terms of affording our premium product, 100 million Chinese make one hundred grand per year so price should not be a problem.
The company trades as URBF-Q, a fully-reporting bulletin board company. There are roughly 280 million shares out. The company is on a capital raising mission ($6 million USD) targeted at accredited investors, institutional money and exceptionally large vegetable producers. If you would like an investor package, NDA etc., please contact us (see below). The website is well presented and informative plus the two-minute video called “Revolution” is a must see.
Robert A Young, B.A./Heather A Conley, Bsch Geo
The RAYA Group
Representing Urban Barns Foods Inc./www.urbanbarns.com
rayagroup@shaw.ca
Tel: 604-682-5123
Mobile: 604-307-7797
We seek safe harbour from any forward-looking statements. The above are the opinions of the authors only.