We're investing at the intersection of water and agriculture.
Agriculture Technology, or Agtech, is one of the key industry verticals Echo River targets for investment. To better understand the investment opportunity landscape, here is a brief tour. Let's start with acknowledging that agriculture accounts for the biggest consumption of water in the US and globally -- about 70%. And of this, most water is used to produce feed for livestock animals, especially beef and dairy cattle. If we are to achieve sustainable water management, then we must reduce the diversion of water from the natural environment to irrigate the millions of acres growing animal feed crops like corn, soy, alfalfa and hay pasture.
The photo below illustrates center pivot irrigation of alfalfa hay, the fourth most widely grown crop in the United States, which covers 26 million acres in the United States and 74 million acres worldwide, and is used as a feed primarily for dairy cows, as well as beef cattle, horses, and sheep. (USDA)
The biggest water-related problems in agriculture today are rooted in three areas of the production of beef and dairy products.
In California, feed crops like alfalfa and hay pasture use the most acreage in California, and also demand the greatest volume of water per acre. Nationally, 77% of soy and 50% of corn go to feed livestock animals. (USDA, CDFA)
Commodity crop farming leads to the destruction of quality soil due to the overuse of fertilizers and pesticides. Soil loss leads to lower soil organic carbon and associated water holding capacity, creating a negative feedback loop that requires more fertilizer.
Crop and livestock production generates harmful waste into our rivers and oceans through overflow of untreated manure lagoons and and fertilizer runoff.
Echo River Capital is focused on catalyzing water sustainability and climate resilience in agriculture. We are investing across the supply chain into Agtech solutions to increase efficiency and productivity, to reduce impacts of production, and to decrease demand through more water-efficient alternatives. Our investments in AgMonitor and Verdi Ag, for example, improve irrigation efficiency and productivity (crop-per-drop) of farm water management. Our strategy also targets technologies to improve water management in regenerative agriculture operations and controlled environment agriculture. Lastly, we seek to reduce demand for livestock products by promoting alternative protein, and treating livestock waste before it enters our waters.