“When you buy medicine you know you get the same product, the same quality and usually the same price. With traditional agriculture, retail chains find themselves once getting goods, and another time not getting, once the price is low, and another time the price is sky high, once The goods are of high quality, and another time they are on the face of it. There is no room for this uncertainty in the most basic product of human beings, such as fruits and vegetables – and that is what we are coming to solve “- on the day the agrotech Future Crops reports progress on the Tel Aviv Stock Exchange In an interview with BizPortal, he sends a message that quite a few farmers may set up on it.
Farmers will be angry or not, Future does not intend to interfere with them building their business to heights. To a literal height – the company is engaged in vertical agriculture, ie instead of occupying large areas – a resource that is shrinking in the world – crops are grown in dedicated buildings. According to the company’s estimates, the global vertical agricultural market is estimated at about $ 3 billion and its annual growth rate is about 20% -27%. The company has developed in collaboration with the Volcanic Institute solutions that enable savings in the use of water and manpower, and controlled growth of the product without the use of pesticides or seasonal dependence (goodbye to the avocado season) and based on Big Data.
Future Crops will merge into the stock market skeleton Infimer, with one of the conditions for completing the move being raising NIS 35 million from the public at a value of NIS 200 million before the money. According to the valuation published by Future Corps, the company’s value is estimated at about 100-130 million euros. Against the background of the announcement, the share of Infimer jumped by about 50% yesterday.
The company currently owns one facility in the Netherlands, which covers an area of 3,000 square meters and 9 floors and in 2018 began selling its products for the first time. Future’s main customer is the Albert Heijn chain, which owns 50% of the country’s fresh herbs market. Commercial agreements with Eldai and E.Lecrec. At the facility in the Netherlands Future grows basil, parsley, dill and coriander. This year the company is expected to start growing and selling 4 more types of basil and green leaves. Future has also signed a medical cannabis production agreement for A company from Portugal called Canthirso is awaiting approval from the country’s regulator.
In the first 9 months of 2020, Future Crops’ revenues amounted to approximately 630,000 euros, with an operating loss of 4 million euros and a net loss of 4.3 million euros. As part of the merger, it will register a $ 2.5 million shareholder loan for the benefit of the buyers, for which repayments will begin when Future reaches the aggregate profit after tax of $ 1 million, so it will have to allocate half of the annual profit after tax to repay the debt.
“Ford was not the first to invent the car – but he was the first to turn it into a mass product, so he succeeded as he did,” Greenspan replies in an allegory from the automotive world to the question of why Future will succeed where others have failed in the past. “Companies that have previously experienced vertical agriculture have done so in a very small volume, unlike them, in the Netherlands we have been able to prove that it is possible to build a facility capable of supplying agricultural produce in commercial quantities.”
“The big challenge is economic, even before the technological aspect. Unlike others that grow in vertical facilities by hydroponic method (the plants are not planted in the soil but in a solution of irrigation water and nutrients – AP), to the best of my knowledge we are the only ones using the soil substrate – Geoponics. “The crops. This way you can grow taller crops, and that’s what makes the whole story more economical.”
Investors are reading headlines about food tech, cultured meat and plant protein, sounds like a technological bang, while you bring innovation to the cultivation of basil. Why would they put the money with you?
“It’s a matter of discretion on the part of every investor, but I will mention an article that was in Forbes, and in some of the most respected newspapers in the world describing the 20 technologies that will change humanity in the next two decades. Most were in the media and high-tech fields. Cultured meat, no protein and nothing else. ”
Meanwhile, this technology is still in the market penetration stages. Are the prices of your crops at all competitive with those of traditional agriculture?
“It should be remembered that prices in Europe vary from country to country. In Germany and England the prices of agricultural produce are very low, and in France the Netherlands are higher. If we look at the Netherlands, our produce is no more expensive than that of ordinary agriculture. We are cheaper than organic produce. We have a customer who can import from Africa at 10-15% cheaper prices than ours, and yet he chooses us and does not even roll the gap to the consumer. ”
Increasing the scope of your activity might not be encountered in the lobby by farmers, the Netherlands or any other market you try to penetrate?
“Every business has a challenge but I believe in one truth – the cosmic truth, and in this case is that if you can bring a better product at the same price, you have a winning recipe. So as much as there is a lobby, it will not be able to block the progress. It is impossible. Radiologists will try to delay the advancement of image processing technology.We will address any spot problem that does not arise.
“The fact is, even before we opened our first facility, we had a contract with one of the largest companies in Europe. It shows how much potential there is, and yet, it’s a gradual process and it’s not that tomorrow morning we replace all suppliers in our favor. Our customers want us to live up to our promises. The big chains have very strict criteria, once you did not deliver what they asked for – you are burned. So when they work in front of a startup they grow slowly with it. “So we do not threaten any farmer.”
Five more years from now, will you also be a penny of a penny?
“If we meet our plans, Future will be of a completely different order of magnitude, and even then most of the world’s agricultural produce will be produced in traditional agricultural areas. Think about how many facilities need to be built to change the trend, it’s a time consuming process. A significant share. ”
Future Crops began as a partnership in 2014 and two years later was founded by Greenspan, which has been operating in the food products business for two decades and previously served as CEO of a company owned by the Strauss Group and the PepsiCo Corporation. Greenspan holds 5% of Future shares. R. and other shareholders are the A&F Realty (approximately 80%) of the Lerman family, and as part of the merger agreement with Infimer, approximately 69% of its most recent shares will become Future shares.
To date, about $ 30 million has been invested in Future Crops. The company is represented in Israel by Silver Road Capital Investment Bank, owned by Lior Maimon and Danny Ayalon, a former deputy foreign minister on behalf of the Yisrael Beiteinu party and Israel’s ambassador to the United States.