Farming Sustainability Series Part III: Sundrop Farms- Growing with Seawater and Sunlight Philipp Saumweber, Founder and CEO, Sundrop Farms

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1 30 August 2019 September 2013 Farming Sustainability Series Part III: Sundrop Farms- Growing with Seawater and Sunlight Philipp Saumweber, Founder and CEO, Sundrop Farms Key Points Significant cost advantages can be gained by reducing the use of nonrenewable and limited resources such as oil and fresh water. By employing solar desalination technology, Sundrop Farms has created an agricultural system that is both profitable and environmentally sustainable. The focus of food security planning in the Middle East has been on grains and maximising calorific value. Solar desalination technology is not yet cost effective for broadacre grain cultivation. At the core of regional food security goals, however, is a desire to maximise nutritional value and greenhouse technology has a lot to offer the region in this area. The Sundrop Farms technology can be adapted to be less technology intensive to suit developing countries; however for successful implementation a well-developed retail chain is necessary to enable production to occur at sufficient economies of scale. Summary Sundrop Farms has developed technologies to responsibly grow crops in some of the world s driest regions, using abundant renewable resources seawater and sunlight. The Sundrop Farms System harnesses the sun s energy to desalinate seawater to produce freshwater for irrigation, produce electricity to power its greenhouse and provide the energy to heat and cool its greenhouse. The Port Augusta farm is now moving beyond its pilot phase to undertake a twenty hectare glasshouse expansion that will be completed in mid CEO and founder, Philipp Saumweber spoke to Future Directions International about the role that Sundrop Farms is playing in the sustainable growth of the Australian intensive

2 cropping industry. He discussed the prospects for Sundrop technologies to address food security concerns in the Middle East, where some countries are exploring the potential of similar solar powered desalination technologies for agricultural production. Finally, Philipp discussed whether intensive cropping systems were an appropriate method of sustainably expanding food production in less developed countries. Commentary FDI: The protected cropping industry is the fastest growing food producing sector in Australia and exhibits high potential returns on investment for technology intensive greenhouse enterprises. What role do you anticipate Sundrop Farms will play in the expansion of the industry? Do your oil and fresh water savings provide you with a competitive advantage? PS: Yes, the industry is expected to grow tremendously over the next five to ten years and Sundrop Farms expects to play a pivotal role in its expansion. In fact, one of the first steps in that direction is a twenty hectare greenhouse expansion that we have just announced for our Port Augusta location that will be completed in This is the first phase of our expansion within Australia and we really do look to expand with the industry over the course of the next couple of years. We know we have a competitive advantage in the industry from a cost perspective. If you look at traditional greenhouses they are generally very energy intensive because in order to justify the capital expenditure of erecting all that steel and glass in the first place, you really need to control the climate inside the greenhouse to the finest degree possible in order to keep the plants as happy as possible and to get the highest yield. This justifies the cost of erecting the greenhouse in the first place. The fine-tuning of an internal climate given Australia s relatively harsh external climate is an extremely costly thing to do for most greenhouse operators as they rely primarily on fossil fuels to regulate the climate inside their greenhouses. At Sundrop Farms we take the cost of heating and cooling by fossil fuels out of our annual cost equation completely. We take that big chunk of money into our hands and we put it into capital expenditure at the beginning of the project in order to build ourselves a solar field and the necessary auxiliary equipment for desalination, heating and cooling. This provides us with free climate control and water throughout the lifetime of the project. The way we know we have a competitive advantage is that the cost of our upfront system is much lower than the present value annual cost of fossil fuels for a traditional greenhouse in a similar location to ours. So that really is our cost advantage. More importantly though, we believe that as you look at the expansion of this industry, we don t need access to high quality soils, we don t need access to an existing gas pipeline, we don t need to locate where there are good groundwater sources. Where we really want to locate is on marginal land somewhere between the desert and the ocean where there are great climatic conditions for growing. This is usually synonymous with high sunshine regions; one per cent more sunlight Page 2 of 5

3 equals one per cent higher yields. We really see our competitive advantage lying in locating away from other agriculture in marginal land. As we locate away from other agriculture, the disease and pest pressure on our facility is very low. FDI: The Middle East faces extreme arable land and water resource constraints and experiences a high risk of future food insecurity. Much interest revolves around the Qatar National Food Plan and the viability of its goal of expanding food production through solar powered desalination. What do you believe is the potential for Sundrop technology in Qatar and other parts of MENA? Could it have a considerable impact on the region s food security? PS: Sundrop Farms have a small research and development facility and farm in Qatar and it is a highly suitable area for our technology. The Qatar National Food Security Programme as you have stated, is a highly ambitious yet admirable plan. What we know today about solar desalination for broadacre farming is that it is still not really cost effective. Solar desalination technology has to be combined with other uses of that solar heat such as climate control or electricity production. If you can amortise the cost of the solar equipment over several different processes, not just desalination or electricity or heat but combine all three or all four, that can make a lot of sense and that s where we see the applicability of what we re doing, especially in the Middle East and the whole north Africa region. I spend quite a bit of time in both Saudi Arabia and the UAE where we are heavily involved at the moment in discussions about expanding there. Many of these countries have a strong focus on food security but when you dig deep down into what their goal really is, it is about calorific value and so vegetables actually feature somewhere in the middle in terms of strategic food security. Usually grains are seen as most important from a calorific value perspective. We ve done a lot of work with some of the governments out there and when you sit down, what they re really getting at is nutritional value as most important. There is a lot that you can do from a protein and nutritional perspective in glasshouses or intensive agriculture which is often overlooked. This can be just as sustainable from a food security perspective as the whole grain story and that s something that s quite interesting, I think. FDI: Given the capital intensive nature of Sundrop Farms operations is there much scope for expansion of the technology into resource suitable regions of the developing world or are market requirements unmet? PS: The technology is very adaptable but where we usually start is from a climatic perspective; how much sense does it actually make to grow food here? Because if you re about to put a greenhouse up in Iceland you know you re going to spend a ridiculous amount of money on electricity and gas for heating and lighting the place. It quickly gets to the point where it probably makes more sense to grow tomatoes elsewhere and then import them in to Iceland. So we usually start at the climatic end of the spectrum. India s actually a very good example; from a climatic perspective it makes a tonne of sense to grow there. Now the Indian market is characterised by a plethora of smallhold growers who get subsidised by the government. There is no regulation on well-drilling, and farmers also get a tremendous amount of electricity subsidy in order to pump water up from 200 to Page 3 of 5

4 300 metres underground. So vegetable prices and food prices in the domestic market are in general incredibly depressed because of the subsidies. You see this throughout many regions of the world where water and also electricity are not priced at the true cost and that makes it difficult for us as an operator who isn t being subsidised. In a market like India you have these persistent conditions but you also have a very big rising middle class who are prepared to pay more for vegetables and who want consistent quality and to know where their food comes from. In a market like India, or any developing market, what we at Sundrop Farms would usually do is to wait for the retail chain to enter the market because as soon as you have predominant retail chains in any market, you can ensure that the quality and consistency that greenhouse grown vegetables offer is guaranteed throughout the chain. Now that being said, we can adapt the Sundrop system to be less capital intensive and to provide the same number of vegetables, they just may not be of the same quality that you are used to in an Australian supermarket. The question surrounds the quality of the end product; how many blemishes does it have? Is it perfectly red? Is it five tomatoes per vine? If you don t need that quality and you re happy to take more of a field grown approach then we can adapt our technology to be less energy intensive, less capital intensive and just supply the market in terms of volume; this is more appropriate in a developing country context while still being cost-competitive. So the answer is yes, the technology can be adapted but what is always important is the retail aspect. If there is a good or well developed retail chain in the market then you can make this work. At the end of the day any greenhouse operation is one driven by economies of scale; you need to be able to put up a certain size of farm in order to make it worthwhile. You can t set up for just one family to grow its vegetables; it doesn t make sense from a cost perspective. What we re really setting up is a factory and that is how you have to view these sorts of farms, as more akin to a factory than a small greenhouse in someone s backyard. FDI: Philipp, thank you for your insights. ***** Any opinions or views expressed in this paper are those of the individual interviewee, unless stated to be those of Future Directions International. Page 4 of 5

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