indicatorAlberta Business Recovery

Alberta’s agriculture industry is boosting economic diversity with tech and carbon offset programs

By ATB Financial 15 April 2021 5 min read

ATB's Vice-President of Agriculture Jon Neutens has been working with industry leaders on pandemic crisis response and economic recovery plans since the beginning of the COVID-19 pandemic. He was one of the leaders invited to join the agriculture and forestry subcommittee of Alberta’s Economic Recovery Council and would meet weekly to develop an action plan with tangible steps to support the industry. 

“The government has already acted on some of the things we put forward, like having a concierge desk for attracting investment, irrigation infrastructure expansion and matching the federal financial support program for beef producers,” says Neutens. 

Now, with vaccinations underway in the province, industry leaders are turning their focus to recovery. To support it, ATB and MNP partnered earlier this year to develop a comprehensive content series that evaluates challenges and opportunities towards economic recovery. The series shared local perspectives on how to address challenges across key sectors, including aviation and logistics, energy and cleantech, financial services, technology and data, tourism, petrochemicals and agriculture.

In the recovery period and beyond, Neutens says the opportunities for Alberta’s agriculture industry lie in the obvious of continuing to support Alberta farms, and then combining value added services with carbon offset programs, nurturing the agritech sector and bridging the existing capital gaps that slow down economic growth. 

 

Indoor growing, value add and carbon offset

 

Indoor growing and downstream processing of agri-food products are key ways Alberta’s agriculture industry can grow. Add in aligning it with the energy industry and there’s a path to innovation that could make Alberta stand out on the global stage, says Neutens.

"Controlled environment growing is a huge opportunity for us—meaning greenhouses and or other types of indoor growing operations. We import a lot of produce, and grow some, but we could be growing a lot more. There is also the opportunity to utilize our energy infrastructure to support it because it takes energy—light and heat—to grow these plants."

Jon Neutens

Vice-President, Agriculture, ATB Financial

“Projects that put indoor growing operations next door to energy facilities offer the advantage of utilizing waste heat right off the facility and capturing carbon credits through C02 emissions avoidance that the plants require in the essential process of photosynthesis. Alberta has this natural energy and carbon play opportunity and although there are examples there is room for growth ” he says. 

One company leading the way in carbon capture for farmers is Nutrien. Last year it launched a program aimed at end-to-end support for growers to help them monetize their improved carbon performance at the farm level by facilitating the purchase and sale of carbon credits from its grower customers to value-chain partners.

The global carbon offset market is valued at more than $50 billion and growing and Neutens says it’s a market Alberta should go after. 

“We could potentially advance  the industry here in Alberta for the rest of the world if we got behind producers with the science and programs to support the adoption of technology and the market platforms. If we get the systems built to track, monitor and measure the carbon footprint, we believe there is carbon revenue potential for agriculture,” he says.

One other area where Alberta can be a leader is in value-added processing, says Neutens. There are numerous areas of opportunity,, one most people may be familiar with is the processing of peas into protein powder for use in plant-based meat substitutes. 

“If we start acting faster to attract the investment, create the infrastructure and the teams to support it, I believe  Alberta can be a global leader.”

 

Accelerate agritech

 

Investment in agritech has exploded in recent years. In 2020 alone, there was a record $30 billion worth of investment deals from seed to late stage financing from venture capital, private equity and corporate investors, according to the 2021 AgFunder AgriFoodTech Investment Report. This capital is driving innovation that will help improve production, add value throughout the production chain, as well as increase transparency for environment, social and governance policies. 

“From farm management systems, to internet of things sensors, to soil testing, to field tissue analysis, to imagery analysis of crop growth, technology can unlock new value,” says Neutens. The data captured from this tech can be leveraged to increase efficiencies, support animal health, and make traceability and sustainability easier to showcase for farmers. 

To accelerate technology in agriculture there are two main barriers that need to be addressed. 

The first is internet infrastructure. 

“Connectivity in the rural prairies has not been great over the years. While it has been improving, capital support for infrastructure would be beneficial to move that forward faster whether that's the government supporting companies that are bringing the technology to market or support for the communities looking to adopt a technology faster,” he says. 

The second challenge is the adoption rate of technology by farmers, says Neutens. Tech is not always embraced quickly when the cost-benefit is harder to measure or the ROI isn’t as clear, especially for producers that have only one attempt per year to get it right. 

“Precision agriculture has been around for over 20 years, but most adopted high-value crops because of the cost-benefit. It can take a few years for the adoption of technology to happen, so program support for the agriculture community to try tech solutions faster would support these innovations,” he says. 

 

Bridging capital gaps

 

One barrier to unlocking Alberta’s agriculture potential is a shortage of capital for companies that have outgrown venture capital investment but are not yet qualified for senior debt, says Neutens.  

“Where we find the challenge is in supporting those new types of growing operations or new technology providers. They have injected equity, perhaps through various rounds, but don't have the history of cash flow or debt serviceability to access senior debt.”

One solution may be government investment attraction or debt support programs—like investment matching or a type of guarantee program—to reduce the risk of earlier stage companies and provide a level of security for lenders. Such support would open up capital for AgTech or FoodTech companies trying to diversify Alberta’s economy. 

When it comes to recovery and the future of Alberta’s agriculture industry, Neutens is very optimistic. 

“We have a significant opportunity for improving and increasing what we do. If we can get the right support behind both primary and value-added agriculture, we believe this sector is poised for growth at a faster rate and it could very quickly start to close the gap on the diversity of the economy in Alberta,” he says.  

Alberta Business Recovery

ATB and MNP developed a series evaluating the challenges and opportunities key industries face towards economic recovery.

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