August 7, 2012
(sacbee) – If this were
AgraQuest, which makes chemical-free pesticides and fungicides, agreed to be sold last month for $425 million – one of the richest takeovers the region has seen in years. The buyer is agribusiness giant Bayer CropScience.
AgraQuest's sale could bring more
jobs, as Bayer plans to make the
"It validates that this area can produce world-class
companies," said John Callahan, a
AgraQuest's experience offers a rare glimpse into the drama behind a successful startup. It's the tale of a company that spent years laboring in obscurity. Only recently did eco-friendly farm pesticides break out of the niche category, bringing big bucks from Bayer.
"Two years ago, this deal wouldn't have been done, maybe even one year," said Pam Marrone, AgraQuest co-founder and former chief executive.
The company's investors made millions in the sale. But as is often the case in such stories, there were some losers, too.
Marrone said she and other co-founders were forced out several years ago and will get no money from the takeover. Most of the proceeds will go to a group of venture capital and private equity firms.
"It's bittersweet," said Marrone, 55, who has
since founded another company, Marrone Bio Innovations Inc. of
AgraQuest Chairman John Pasquesi, whose firm Otter Capital is a major shareholder, declined to comment. AgraQuest declined to make current CEO Marcus Meadows-Smith available for an interview because the Bayer deal isn't final.
Officials with Bayer, a subsidiary of the German pharmaceutical conglomerate, couldn't be reached for comment.
But AgraQuest believes the sale will be good for its
Bayer expects to make
AgraQuest employs 250 workers, including 115 in
With a shortage of venture capital and other problems, the
"They're quite familiar with
Recent years turbulent
AgraQuest grew out of the early days of biotech in
Marrone, an insect scientist working in
Their goal: Develop a line of environmentally safe products to fight insects, fungus and other farm maladies. These biopesticides are made from ingredients such as naturally occurring bacteria.
AgraQuest quickly raised millions from the likes of Burrill & Co., a
Then the market collapsed. The IPO was shelved. Other sources of funds dried up.
"Everybody's wallets slammed shut," Marrone said.
For a young company with limited revenue, it was a crisis. AgraQuest was spending heavily on product development. It was about to launch a crucial new product, a fungicide called Serenade, and Marrone was reluctant to scale back operations to conserve cash. That would have sent the wrong signal to customers.
So, Marrone said, she and other founders took what's known as a "cramdown." AgraQuest got new investment funds, but under terms that greatly diluted the founders' ownership.
"I took the money – it was good for the company; it wasn't good for me personally," Marrone said. Her stake was reduced to less than one-tenth of 1 percent, she said.
In 2004, she was demoted as CEO and told by investors to train her replacement, Michael Miille, a scientist and entrepreneur from the area. He was later succeeded by Meadows-Smith but remains chief operating officer.
Marrone, however, was gone by 2006.
"It happens all the time," Marrone said. "The new shareholders wanted to bring in their own people."
Biopesticides took off
It apparently worked out well for the company. More venture capital poured in. AgraQuest revenue hit $40 million last year, according to the news service MarketWatch.
Better yet, biopesticides were about to get hot. Practically overnight, demand exploded for environmentally friendly foods.
It wasn't merely the organics trend. Big supermarket chains
The capper came in 2010, when Bayer bought an Israeli biopesticide company. Bayer blended one of its traditional chemical products with one of the Israeli biopesticides and cooked up a mostly chemical-free product that shielded corn against bugs. It was an immediate hit.
Suddenly, AgraQuest was hot.
"A lot of companies are looking to broaden their
pesticide business with natural products," said Sano Shimoda
of BioScience Securities Inc., a
Besides paying $425 million, Bayer has agreed to give AgraQuest's owners "milestone payments" –
additional fees as the
But nothing for Marrone and other early founders. Although they still own slivers of the company, they'll get no money from the buyout because several big shareholders have "liquidation preferences" – a system that inflates how much of the proceeds they'll receive.
"Everybody's ahead of me," Marrone said.
It's not unique for founders to get nothing when a company is sold, especially if they surrendered almost all their equity to outside investors. That's particularly true for companies that were starved for money after the 2001 crash, said Andrew Hargardon, an expert on entrepreneurship at UC Davis.
Marrone said she's trying not to be too upset about it and
is concentrating instead on her new company, Marrone Bio, which employs 95
workers. The company announced Friday that it's buying a manufacturing plant in
"I'm focusing on this company, making it even better, learning the lessons," she said.
The average value of all land and buildings on farms and
ranches in the 48 continental states was $2,650 an acre, according to a June
survey of farmers, the USDA said today in an annual report, up from a revised
$2,390 a year earlier. The sample was taken before the worst drought since the
1950s spread through the Corn Belt and Great Plains, which may make investors
shy away in the short term, said Brent Gloy, an
agricultural economist at
From an economic viewpoint, “one year shouldn’t have a big impact,” Gloy said in a telephone interview before the report. “From a psychological impact, people won’t be as aggressive buying land in places that didn’t have a crop.”
Farm income may reach $91.7 billion this year, second only
to 2011, according to a USDA forecast made before the drought. Corn traded in
The most expensive farmland in the
Prices rose across the Corn Belt, the heart of this year’s
drought, with values in
The Southeast was the only region where prices fell, 4.1
percent to $3,310 an acre.
(npr) – This summer's drought continues to wilt and bake
"You can see on the outer edge, these are a lot better-looking ears on the outside rows. Of course, it's not near as hot as it is inside the field," he says.
Walking deeper into the 7-foot-high corn stalks, the temperature — already in the 90s — becomes stifling. Here, the ears are smaller. Peeling back the husks on an undersized ear of corn, Hildenbrand exposes kernels that are drying up.
"It just never really matured. And [if] we got out in there farther, it's gonna be just that much less," he says.
More than 63 percent of the country in the lower 48 states is experiencing drought, leading some to compare the summer of 2012 to the droughts of the 1950s and even the Dust Bowl years of the 1930s.
A More Resilient Corn
John's father, Charles Hildenbrand, was born and raised on this land and farmed these very fields for decades — as did his father before him. The 84-year-old was too young to remember much about the Dust Bowl droughts of the 1930s — other than he and his father dragged their mattresses outdoors to sleep at night.
But he says even though this year's drought is the worst he's ever seen, today's hybrid corn is surviving better than the corn he and his father planted ever could.
"If this would've been open-pollinated, it would have been all brown, probably. And there probably wouldn't be any kernels on these ears," he says. "The cobs is about all that would be there, I'm afraid."
The development of hybrid crops that are better able to withstand heat and drought is one of the only reasons the Hildenbrands have a chance of a small crop this year. And it's one of the most important developments in farming since those devastating droughts of yore.
How To Compare
In the '30s and '40s, Charles Hildenbrand used horses, replaced today by tractors, combines and planters with high-tech gadgets and computers. So is it even fair to compare this summer's drought to the devastating droughts in the 1950s, or even the Dust Bowl years?
"Certainly from a geographical footprint, it's right up
there with the '50s and '30s at over 60 percent," says climatologist Mark
Svoboda of the
"But the '30s and '50s were multi-year droughts," he says, "and this drought, so far for the majority of the country, is not a multi-year drought yet."
In those exceptionally dry years of the 1930s, farmers and
ranchers plowed up the
That spurred the creation of the Soil Conservation Service, which paid farmers to not farm some land and to replant the native prairie grasses to keep soil in place. Svoboda says the USDA agency also encouraged farmers to change their tillage practices.
"Instead of tilling the soil over, they use what they call no-till drilling or low-till ... which doesn't disturb the soil. It plants directly into a residue-covered soil that retains a lot of soil moisture in that upper part of the profile," he says.
In addition to being better able to preserve what little moisture is in the soil, hybrid crops send roots deeper to find moisture.
Praying For Rain
"The hybrids and so on are improved now, but we certainly don't have hybrids that can do without water," he says.
Back on the Hildenbrand farm, looking over his withering crops, John Hildenbrand couldn't agree more.
"I was reading the CropWatchers in the Farm Bureau paper. He said, 'We're no longer crop watchers — we're deterioration watchers.' And that's really what we're doing; we're watching our crops deteriorate in front our eyes," he says.
Hildenbrand estimates his yields already will be less than half of normal, and if there isn't some rain and cooler temperatures soon, he may lose it all. Then he'll rely on maybe the most significant development since the 1930s in helping farmers deal with losses: crop insurance.
Until just a few years ago, this disease was severe in the
heart of the
Gilbertson and other researchers talked with 100 growers and
pest control advisors who came to a field meeting outside
"In 1980, I would only see tomato-spotted wilt virus
every other year in the
The recent spotted wilt hot spots have been near the
Yolo-Colusa county line, around Winters and north of
"Even the high incident areas do not necessarily repeat themselves. There are new fields," Miyao said.
Management begins with planting resistant varieties, but it only begins there, according to Gilbertson.
"There are resistant varieties and they have the SW5 gene. There are more varieties with this gene. There is another gene out there called SW7. It is effective but I haven't heard of it in any commercial varieties. I imagine seed companies are trying to pyramid SW7 and SW5," Gilbertson said.
The resistant varieties work, and they are the most economical way to limit the damage caused by the disease, he said. But this resistance will break down in just a few years unless other steps are also taken to manage tomato-spotted wilt.
"If we only rely on resistance, we can break that
An essential management step that is working in the
"The key is how early the plants get the disease, which is why these bridge crops are important. The disease is most vulnerable in the winter. We're very concerned about fava beans serving as a bridge crop in this area. We believe it's these bridge crops and weedy hosts that are the source of the inoculum early in the season," Gilbertson said.
In addition to fava beans, a number of common weeds can also host the virus during the months between tomato crops.
Sunflowers, onions, alfalfa and almonds are all reported as
hosts in the literature, but researchers said they are not finding
tomato-spotted wilt virus in those crops in the
Wheat does not host the disease, but it can be a source of thrips near tomato fields, and the next generation of these thrips can pick up and spread the disease. An infected tomato field can also serve as a reservoir of the disease for other tomato fields planted nearby.
"If you plant a late field next to an infected field, if it's not a resistant variety you're asking for trouble," Gilbertson said.
The disease is not seed-borne, but it can be brought into the field with transplants.
"It can get into your field with transplants, so it is very important to make sure your transplants are clean. If your transplants are infected, they will be stunted and the leaves will be necrotic," Gilbertson said. "There will probably be a few plants in a row with symptoms. This is one of the few cases we would recommend rouging."
A grower at the field meeting asked if it would be enough to hoe infected seedlings to spare the cost of pulling, bagging and removing them from the field.
"That will work," Gilbertson said.
Gilbertson added that the nurseries are doing a good job and relatively few infected transplants are found.
Early in the season, the disease causes bronzing and necrotic spots on the leaves. The fruit from infected plants is lumpy and has distinctive concentric rings.
"There are some relatively easy test
kits that cost about $5 each that will let you know in five minutes if a plant
has tomato-spotted wilt," Miyao said. Agdia in
Because thrips bring the virus to tomato fields, and once it is there they spread it throughout the field, managing thrips is another key part of the control program.
"Tomato-spotted wilt virus is transmitted by thrips. We
have been seeing much higher populations of thrips not only in
Materials that can be effective against thrips range from organic formulations of spinosad to organophosphates like dimethoate.
Yellow sticky traps are the currently recommended way to monitor for thrips early in the season but UC researchers are working on a degree-day model to simplify monitoring.
Most of the recent knowledge on how to manage tomato-spotted wilt has come from research financed by the state's processing tomato growers.
"The California Tomato Research Institute has been funding a project at UC Davis trying to look at weedy hosts, and at management practices to reduce the impact of this virus," Miyao said.
– A century of parasite research fills at least 100 boxes at the U.S. Department
of Agriculture (USDA) National Agricultural Library (NAL) in
The parasitology records are one of the more than 200 collections that NAL holds safe, each documenting the history of a USDA program. NAL is a part of USDA's Agricultural Research Service (ARS), USDA's principal intramural scientific research agency.
Such records are not just the dry dust of USDA history, but a continuing resource for researchers. With access to these original materials, scientists can better understand how programs developed and why certain choices were made, explained NAL Special Collections librarian Sara B. Lee.
In addition, writers, historians, sociologists, conservationists, and artists regularly turn to NAL's collections as first-person sources about USDA events, programs and policies.
NAL even preserves the lineage of USDA buildings, especially
those located along the National Mall, with a collection of photos and
drawings, including an unusual photo showing the original USDA administration
building and the unfinished
Perhaps the most attractive as well as historically important of NAL's treasures is the USDA Pomological Watercolor Collection, which includes 7,584 paintings, lithographs and line drawings. These technically accurate images were their day's equivalent of photo documentation of fruits, nuts and berries developed by growers or introduced by USDA around the turn of the 20th century.
With today's growing interest in heirloom varieties and others that are no longer commonly grown, the collection is an invaluable storehouse of fruit knowledge and history.
Today, NAL is making its historic collections more accessible. As funds and staffing permit, boxes of records are being more clearly indexed, and documents and images are being scanned. You can find the indexes and scanned materials on the NAL Special Collections web page by going to http://specialcollections.nal.usda.gov, and clicking on "Guide to Collections."