Without crop protection, including pesticides, more than half the world’s crops would be lost to insects, diseases and weeds. The EU directive on the sustainable use of pesticides promotes integrated pest management and favours alternative methods of pest control to minimise the synthetic pesticides and fertilisers needed to maintain agricultural productivity.
So farmers are always looking for efficient alternatives to regular pesticides. CHR Hansen has developed bio-pest control and bio-stimulant solutions that promote plants’ natural defence mechanisms, reinforcing the root system and allowing crops to resist stress provoked by external factors, such as drought and pests. Treatment with products developed by the Danish company can increase crop yields by up to 10%. “We use good bacteria instead of chemicals,” says Camilla Lercke, Hansen’s head of media relations. “The result is that you reduce the chemical footprint of the agricultural ecosystem in the soil and the groundwater.”
Bio-protective solutions for crops have been developed in the last five years. They have the potential to radically overhaul agriculture by reducing the need for chemicals. They can also cut food waste, which in turn saves greenhouse gas emissions created by agricultural production. For example, CHR Hansen introduces “good bacteria” into cultures that keep dairy products fresh longer, which could cut yogurt waste by 30%. With 70% of all salad being wasted, the company’s bacteria extends salad shelf life by five days.
CHR Hansen has developed bio-solutions for sugar cane, corn and soybeans, as well as for the wine and beer industries. The company also produces feed supplements that use good bacteria, or probiotics, to promote animal health. “Like yogurt, it helps promote a more healthy intestinal tract,” Lercke says. “Probiotics given to animals ensure a more natural functioning, reducing the need for antibiotics.”
Innovation for big demand
Agriculture is under enormous pressure to produce more – and more healthy – food, while also reducing its impact on the environment. The world population is expected to reach 9.8 billion by 2050, and food production will need to rise by at least 30% to meet future needs. A delicate balance will have to be struck between preserving the last of the world’s natural resources and making sufficient quality food available and affordable.
Agriculture is innovating to meet those demands. Advances in plant breeding, synthetic fertiliser and pesticides provided a framework for stable and reliable food production. The agriculture sector is now trying to replace part or all of these tools through synergies with existing natural systems, bio-based pest control and plant health promoters.
Agricultural researchers are also creating digital platforms that offer farmers the best prices for feed, fertiliser and equipment, turning farm emissions into clean biogas or producing mozzarella from grass-fed cows. The EIB signed a €120 million loan in 2019 to support CHR Hansen’s research and development. Amid all this innovation, companies are also working hard to make a business case for these new ventures.
The digital cooperative
Historically, in France and much of Western Europe, farmers sold what they produced to their local cooperative, which in turn sold them all their agricultural materials, such as fertiliser, seeds and pesticides. Sales representatives took farmers’ orders, and goods were delivered to the nearest grain silo, which was often equipped with distribution warehouses. These collection points were the centre of the local farming community.
Over the years, the cooperatives merged and got bigger. They eventually lost their agility, efficiency and responsiveness to farmers’ needs. A new generation of farmers, more digitally savvy and less loyal to the cooperative spirit, are looking for alternatives – and that alternative is often a digital marketplace.
“Farmers are becoming extremely digitalised,” says Antoine Pajot, an EIB agriculture and rural development engineer. “Today, they have a smartphone, and they want access to immediate prices. They want to buy at the best price at the best moment.”
One of the largest French cooperatives, InVivo Group, is responding to farmers’ needs with its own digital platform, which will allow them to buy products and materials online and effectively compare prices. This platform will be accessible to most of InVivo’s cooperative members. It’s a move to protect the cooperative’s market share against big tech companies like Alibaba and Amazon, which are slowly eating into the agriculture supply market in other parts of the world, and start-up digital platforms such as Agrileader or Agriconomie, which are already challenging the dominance of cooperatives.
The European Investment Bank is providing €37.5 million to fund InVivo’s €75 million project to create the digital platform, Aladin.farm, and farm management software. A guarantee from the European Fund for Strategic Investments is making the loan possible. Aladin’s advantage is that it already has a distribution network, with warehouses within a 10-kilometre radius of all the farms in the cooperative. Add its strong relationships with farmers as well as the advice it gives, and Aladin can provide tailored offerings to coop members. InVivo’s strategy, Pajot says, is to “accompany farmers in digitalisation, while maintaining their market share and proposing new digital services, such as blogs or advice.”
InVivo’s digital subsidiary, SMAG, offers cloud-based software called Agreo and Atland. They help farmers track data on crop growing, livestock breeding and wine production to meet regulatory and environmental standards. The SMAG project will enhance the software’s IT mobility and allow for data mining and exploitation to help farmers make more informed decisions.
InVivo’s projects are part of the Third Green Revolution, the use of cutting-edge technologies like artificial intelligence, robotics, block chain and high-performance computing to transform agriculture and radically improve its efficiency and sustainability. The revolution is particularly important for the European agricultural sector, one of the world’s leading food producers and a major employer.
Cutting emissions, growing revenue
European farmers are squeezed by fierce international competition on commodities. They need to adapt to climate change and, in Europe, lower direct subsidies. To compensate, they are augmenting their revenue with new, higher-margin products or side businesses completely unrelated to food production.
“It’s a constant preoccupation for every farmer, to maintain or further increase their revenue through diversification,” says Sebastien Collot, an EIB bioeconomy specialist. “There is a need to shift the current model based on commodities production to a more sustainable one.”
Biogas is one alternative source of revenue. Biogas plants take organic waste, such as manure, plant and food by-products and even sewage, and convert it into biofertiliser and biomethane gas for clean energy. Biomethane can be injected into the electrical grid or used on the farm to power or heat greenhouses for vegetables and fruit. Biogas plants contribute to decarbonisation and energy security, support agricultural income, promote regional and rural development and foster job creation. They also help farms offset their own emissions. In Europe, agriculture accounts for 9.58% of all greenhouse gas emissions related to human activity.
Biogas plants are expensive, however. The investment required may range between €2 million and €10 million, and most plants are owned by joint stock companies that involve several farms. The scale and type of investment makes it particularly risky for farmers. “We’re talking about an investment that is close to, or more than, the value of their farm,” Collot says. Biogas plants also need constant surveillance and have an embedded operational risk. “Biogas projects entail close day and night monitoring of the biological and chemical process.”
To help farmers embark on biogas or other climate initiatives, like installing solar panels, the European Investment Bank is investing in two credit facilities provided by Crédit Agricole of France: a €75 million programme aimed at farmers under the age of 41, and another €200 million programme to support climate and bioeconomy projects.
The bucolic life of the Irish cow never had such a global reach.
The Irish dairy cooperative Carbery, which has more than 1 200 members, is Ireland’s largest natural cheddar cheese manufacturer. With over 60% of the company’s cheese exported to the United Kingdom, the shadow of Brexit made Carbery rethink its exposure. The company decided to broaden its portfolio of cheeses with a new line producing food-service mozzarella used for pizzas, targeting the Asian market. A €35 million loan from the EIB signed in 2019 supports this move.
“Mozzarella is one of the fastest growing cheese markets in the world,” says Ray O’Connell, Carbery’s group controller and treasurer. “We did a long evaluation of various options and mozzarella was a very good fit.”
The Chinese like their mozzarella to stretch – at least 50 centimetres. They hold contests where “they stretch it and the victors share snaps on social media,” O’Connell says. Carbery’s mozzarella cheese is being developed with this stretch-factor in mind.
And with a view to sustainability. “Our farmers are very environmentally aware and are very focused on sustainability, from an ecological and financial perspective,” says O’Connell. “Carbery is continually working with its farmer members to develop best practice methodologies to help further reduce carbon footprints.”
To learn more about the EIB financing in agriculture, please look at our stories, stories, videos and case studies.