Granot Group1 and NRGene Technologies Ltd. (TASE: NRGN) are pleased to announce a pioneering partnership to develop elite indoor and vertical farming varieties to improve crop productivity (quality and yield) while reducing the environmental footprint.
This collaboration will begin with the development of seedlings for use in vertical farming facilities to feed dairy cows. Wheat will be the initial focus as it is widely used for cow feed, both as silage and grain, and wheat seedlings are expected to replace both. In the dairy industry, over 50% of milk production costs are attributed to cow feed. The new, improved seedling varieties will reduce the cost of production, leading to a lower price than grain and silage. The impact of widespread adoption of seedlings by dairy farmers will lead to better productivity of the dairy cows and improved milk quality.
The Granot Group will contribute USD 2 million to the financing of the project and provide vast knowledge in the field of animal feed as Granot Group, through Ambar, also accounts for 33% of livestock feed production in Israel. Furthermore, Granot Group will be entitled to exclusive distribution rights in Israel and other potential territories worldwide. NRGene Canada (a wholly-owned subsidiary) will lead the research and development process and will be responsible for providing any additional funding required for completing the project. The new seedling varieties are expected to be available in 2024.
Following successful completion of the development phase, NRGene Canada and Granot will establish an equally-owned (50%-50%) company to focus on wheat grain production and commercialization to dairy farms. This new company would be the sole owner of all intellectual property developed during the collaboration.
The dairy cow feed market was worth USD 68.5 billion in 2021 and is estimated to reach USD 78.3 billion by 2026*. At first, the commercialization of the project will focus on the European and North American markets, which together comprise 30 million dairy cows. Based on the value of grains for seedlings per cow (USD 1/day), a 1% market share consisting of approximately 300,000 cows would generate USD 110 million in annual revenues.
This collaboration also has a significant environmental impact: In vertical farming, crops are grown indoors in stacked layers, thus reducing the use of limited resources such as arable land, water, and fertilizer and enabling year-round production. Food quality is improved, and production is increased. Since the facilities can be situated close to the consumer market, transportation and fuel costs are diminished, in parallel with less air pollution. Further reductions in the environmental impact can be achieved by using sustainable energy sources such as solar and wind energy to operate these facilities.
To date, however, most varieties grown in vertical farming around the world have not yet been adapted to the unique growing conditions of such facilities. Hence the vertical farming system has not yet achieved its full environmental and economic potential. With the development of specific elite varieties for vertical farming, Granot and NRGene are redefining this paradigm by improving produce, increasing yields, and reducing food prices.
"Traditional agriculture poses many challenges to the environment, including the use of land, water, human resources, and the distance between the field to the customer. Thus vertical farming can address these challenges but also overcome new ones, such as genetic challenges. Genetic costs can exceed 75% of production costs for livestock feed crops. The collaboration between the two companies will allow us to utilize genetics in solving tomorrow's challenges while reducing our environmental footprint," said Oran Scott, Head of Innovation & BizDev at Granot Group. "The Granot Group wishes to promote Israeli agriculture in general and agricultural technology in particular. By cooperating with technology-leading companies such as NRGene and others, we will remain at the forefront of Israeli technology."
In parallel to the development of innovative types of animal feed, the companies are evaluating other crops and fresh produce varieties for human consumption. NRGene's AI technology computationally identifies the optimal genetic content of a specific crop that can lead to accurate, rapid, and cost-efficient development of various products. As these varieties are developed naturally without the use of genetic modification or gene editing technologies, there is no regulatory restriction on their production or commercialization worldwide.
"At NRGene, we are working relentlessly to increase food production while reducing negative environmental impacts. Vertical farming fits into this equation perfectly," said Dr. Gil Ronen, CEO, and founder of NRGene. "We are always searching for partners who share our goals, and Granot, with its market understanding and presence throughout the entire supply chain, is an excellent choice."