May 16, 2018

Controlled Environment Agriculture

The first five posts of this blog will introduce SAS’s business objectives – these are; to make bovine agriculture sustainable, investable, manageable, scalable and transparent.

First up – making bovine agriculture Sustainable

Sustainability is a rather ambiguous concept, but it has become popular in recent years as individuals, institutions and governments scramble to develop “sustainable” policies, products and services.

Nevertheless, when SAS talks of sustainability, we are primarily referring to the conversion efficiency of soil and water into nutrient dense red meat and dairy products. There are of course many other important agriculture “sustainability” factors to consider – namely business resilience, profitability, animal welfare and employment conditions, but resource efficiency is our key focus for this company objective.

The Mega Farm Model

Aside from the sheer number of people projected to inhabit the earth by 2050, perhaps the second greatest pressure on the global food system stems from the demand for animal source foods – red meat and dairy products in particular.

Before the Second World War, nearly all cattle production took place on extensive or pastoral mixed farm holdings. Beef ranches and small scale dairy herds owned by farming families produced most of the beef and dairy products for North American and European food consumers.

However, as the post-war population grew, the output obtainable from small-scale, extensive family farms proved inadequate to meet food demand in the latter half of the 20th century.

As a result, the North American industrial mega-farm model (commonly referred to as CAFOs – concentrated animal feeding operations) was born.

The CAFO concept took advantage of America’s vast landscapes, plentiful resources and sparsely populated rural areas.

In 1950, the global population totalled 2.5 billion people. Today it sits at 7.6 billion people – an increase of about 200%. Yet since 1950, meat consumption has increased by 500%.

The increase in the consumption of ever greater quantities of affordable animal source foods has largely been met by CAFO production.

However, the negative externalities of this model have become increasingly apparent in recent decades – primarily concerning manure pollution, the prophylactic use of anti-biotics, and questionable animal welfare practices.

Notwithstanding these problems, the industrial mega-farm model remains crucial to meeting the demand for animal source food.

The World Livestock 2011 report (14th December 2011, Rome) authored by the Food and Agriculture Organisation (FAO) of the United Nations (UN) identifies the dilemma facing livestock agriculture.

The report states “Intensive production holds key to feeding growing cities, but improvements in natural resource use and environmental performance are crucial.”

The report highlights by 2050:

  • The world will consume two thirds more animal protein than it does today (2011)
  • Meat consumption is projected to rise nearly 73%
  • Dairy consumption will grow 58% over current levels (2011)
  • The animal protein consumption projections will strain the planet’s natural resources
  • Much of the demand for livestock products will come from the world’s burgeoning cities
  • Large-scale intensive animal-rearing operations will meet the demand for animal food

The report concedes that, as it stands, there are no technically or economically viable alternatives to CAFOs for providing the bulk of the animal source food supply – however, such systems are a source of concern due to environmental impacts:

  • Groundwater pollution
  • Greenhouse gas emissions
  • Potential incubators of diseases

The report concludes that there is an urgent challenge to make intensive production more environmentally benign. Based on existing knowledge and technology, there are three ways to do this, according to the FAO:

(1) Reduce the level of pollution generated from waste and greenhouse gases

(2) Reduce the input of water and grain needed for each output of livestock protein

(3) Recycle agro-industrial by-products through livestock populations

The FAO believes increases in production will need to come from improvements in the efficiency of livestock systems in converting natural resources into food and reducing waste. This will require capital investment and a supporting policy and regulatory environment.

Pastoral Farming

A common rebuttal to the views espoused by the UN FAO, is that extensive pastoral lands unsuited to crop production should be utilised to produce animal source food.

It is true that extensive pastoral grazing operations – such as Australian cattle stations or American ranches – make use of this otherwise unproductive resource. Although many stations/ranches involve significant land area and cattle numbers, cow-calf production is a low input, low output system.

Extensive grasslands are unsuitable for dairying, due to the substantially higher nutritional requirements of a lactating dairy cow compared to a beef cow.

In some favourable climates – namely New Zealand, Ireland, and the west of the UK – pastoral dairying can be successfully practised. However, many of these dairying regions are fully developed and have limited growth potential.

In New Zealand, it is believed that the impact of irrigation and intensive pastoral dairy farming is resulting in the nitrate pollution and bacterial contamination of public drinking water. In certain catchments nitrate levels have been recorded at 12 mg N/L (nitrogen per litre) – higher than World Health Organization (WHO) drinking water guidelines.

Many agriculturalists would argue that New Zealand is a world leader in pastoral farming. According to New Zealand Trade and Enterprise, New Zealand-grown produce feeds over 40 million people.

Well, the Asia region is home to approximately 3.7 billion people and growing.

This is why industrial mega-farms exist – billions of hungry people need food produced on an industrial scale.

Providing wealthy urbanised Asian consumers with high quality red meat and dairy products certainly magnifies the 21st century global food challenge.

Many people have been captivated by the incredible transformation of China’s economy in recent decades. In 1981, the share of the Chinese population living in extreme poverty was 88%. By 2013, it was just 2%.

The fact that these wealthier people aspire to consume nutrient dense food is a human prosperity story worth celebrating. As I will explore in future posts, the consumption of high quality animal source food is essential for excellent human health.

However, it is going to be very difficult to feed a 21st century population using 20th century farming techniques – whether it be cow-calf beef production, pastoral dairying or intensive CAFOs.

Therefore, a super-efficient cattle production system fit for the 21st century must be developed.

The two essential agricultural resources – soil and water – are finite, but also reusable. One could argue that it is possible to regenerate both resources with the help of technology (i.e. desalination) or by embracing certain farming techniques (biological, no-till crop production).

However, the most obvious and practical solution is to improve resource efficiency and cease those practices that lead to pollution and waste.

SAS System Resource Management

Grain is a valuable resource. The global grain supply is governed by the capacity of soils and favourable climate conditions to produce crops. Grain is an extension of arable soil, itself a finite resource.

The USDA (United States Department of Agriculture) Grain: World Markets and Trade report for May 2018 is bullish for the barley market. Global ending stocks are set to fall to the lowest level since 1983/84.

Global barley grain production was 142.97 million metric tonnes (MMT) for the (2017/18) season according to the USDA, with ending stocks at 18.11 MMT. The USDA May 2018/19 forecast production is 147.57 MMT with consumption put at 148.43 MMT, reducing ending stocks to 17.25 MMT.

Analysts cite increased demand from China as the key driver of barley grain consumption.

It is blatantly obvious that grain utilisation efficiency must be improved. One of the SAS System’s most important aspects, as it relates to grain (soil) and water efficiency, is hydroponic feed technology.

Our feed procurement model involves the sourcing of quality barley grain from dryland or rainfed crop producers.

This grain is then sprouted into hydroponic feed using minimal water. The hydroponic growing process maximises the nutritional value obtainable from grain.

1 kg of barley grain is germinated into 6 kg of hydroponic feed. When fed to cattle, 3 kg of hydroponic feed has the same nutritional value as 1 kg of grain-based concentrate feed.

Only 2 litres of potable water is required to produce 1 kg of hydroponic barley feed. As I will explain in future posts, the improved digestibility and energy content of hydroponic feed enables the quantity of grain fed to cattle to be effectively reduced by 40 – 50%.

By using hydroponic feed technology, and therefore controlled environment irrigation, the yield increases are obtained post-harvest, rather than pre-harvest as is the norm with conventional animal feed production.

Globally, it is alleged that animal agriculture accounts for approximately one-third of the water footprint of human activity – and of this, 98% is water required for feed production.

Water smart agricultural technologies such as hydroponic feed production can reduce bovine agriculture’s reliance on fresh water. It is worth noting that harvested rainwater and recycled effluent water provides 70%+ of the SAS System’s daily water requirements.


The chief adviser to the China Banking Regulatory Commission, Andrew Sheng, argues that; “the planet simply cannot support 3 billion people in Asia living European lifestyles.”

Using current agricultural and resource management techniques, Mr Sheng is probably correct.

However, our company’s raison d’être is to develop an innovative dairy and beef production system fit for the 21st century. Through the successful execution of each of SAS’s five business objectives – to make bovine agriculture sustainable, investable, manageable, scalable and transparent – we believe that it is possible to meet the future demand for red meat and dairy products.

In future posts, I intend to expand on our other business objectives, introduce some of the more technical aspects of the SAS System, and explore the importance of ensuring future generations have access to nutrient dense animal source food.

Edward Talbot