The trouble with local food

There’s lots to like about the local food movement. Fresh, local seasonal fruits and vegetables taste better. Farmers markets enhance the vitality of city life. Cutting “food miles” reduces carbon pollution, and money spent by locavores stays with nearby growers.

Alberto Weisser, the CEO of Bunge, a $60-billion a year global agribusiness and food company is, not surprisingly, unimpressed. His global business is built on trade. Bunge operates in 40 countries. It charters 150 ships a day to carry agricultural products. Only one terminal to export grain from the US has been built in the past 25–and it was built by Bunge, near the Columbia River in Washington, to ship grain from the US to Asia.

But Weisser, who spoke today [Dec 11] at the Johns Hopkins School of Advanced International Studies in Washington, made a good case that an expansion of global trade  will be the best way to feed the world in a sustainable way, as well as increase the incomes of millions of poor farmers. Like it or not, he said, the world is more interdependent than ever.

Alberto Weisser

“When it comes to agriculture, no country is an island–even the ones that are islands,” Weisser said, displaying a flash of humor in what was otherwise a sober look at the issue of global food security. “I remain firm in my belief in free markets, and what they, and only they, can deliver.”

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Gee whiz, algae!

Big institutions can make mistakes, as we’ve learned, painfully, lately. (See BP, Lehman Brothers, Merrill Lynch, etc.) But when big corporations like Unilever, Chevron and Bunge  invest in a algae company that is also in business with the U.S. Navy, well, that’s a good reason to take notice.

The algae company is called Solazyme and, if nothing else, it’s notable for the range of products that its algae are able to produce: They include jet fuel, diesel fuel, super-healthy vegetable oils and other algal oils that become ingredients in soap, lotions, ice cream, cookies and mayonnaise.

Jonathan Wolfson, with algaeIn March, I met Jonathan Wolfson, Solazyme’s CEO, and came away impressed with his passion and smarts. (See Solazyme’s Amazing Algae.) So I called him again last week to talk a bit about the company’s latest round of investment and its backers. Besides Unilever, Bunge and Chevron, Sir Richard Branson and a big Japanese food-ingredient company called San-Ei Gen also invested.

“What you’re seeing with these investors is a very diversified set of partners,” Jonathan told me. “You start to see blue-chip investors who are validating the breadth of our technology platform.”

Solazyme raised about $60 million in its latest round of investment, Series D. It has raised about $150 million in equity, which is substantial but not as much as some competitors. Last year, for example, ExxonMobil said it was investing about $300 million in Synthetic Genomics, a startup led by scientist Craig Venter. Bill Gates has invested in Sapphire Energy, another algae startup.

But no algae company has put together as impressive a list of backers as Solazyme.  The Wall Street Journal reported that Unilever spent months testing Solazyme’s algal oil as a possible substitute for palm oil, which is controversial, in such products as Lux soap. It concluded that Solazyme can product algal oil at sufficient scale to become a viable supplier, the Journal said:

“This isn’t just a niche application,” says Phil Giesler, director of innovation for a Unilever unit that invests in new technologies. “This is something which we believe has tremendous capability.”

Bunge, meanwhile, is a huge agricultural firm,  a major producer of sugar cane and a distributor of vegetable oils. Solazyme’s algae can turn sugar cane into vegetable oils. “We’ve already produced oils using bagasse,” Wolfson said. (Bagasse is residue that remains after sugar is extracted from sugarcane stalks.)

For its part, Chevron invested in Solazyme last year, and put it more money this summer, presumably because it likes what it sees. Chevron wants to understand if algae can be an efficient way to produce transporation fuels, such as diesel and jet fuel.

Based in South San Francisco, Solazyme was founded in 2003 by Wolfson and Hamilton Dillon, a college friend. Its technology differs from most algae startups. Instead of growing algae in ponds using sunlight as an input, the company feeds cheap sources of biomass such as sugar cane or switchgrass to its algae and grows them in big tanks, most of them in a rented facility in rural Pennsylvania.

The company is getting substantial government as well as private-sector backing. The U.S. Department of Energy has given Solazyme a $22 million grant to expand production, and the Navy awarded the company an $8.5 million contract buy marine fuel.

Solazyme may have more news this week, Jonathan told me. If so, I’ll update this post or add a new one. This company is worth watching.

The trouble with Oreos

Not only is the world flat, it is amazingly interconnected. Who would have thought that Oreos or Cheez-Its could contribute to deforestation and global warming?

Today’s Sustainability column at fortune.com and cnnmoney.com looks at palm oil, the commodity that connects hundreds of products on supermarket shelves to the disappearing tropical forests of Malaysia and Indonesia.

Enviros who take a confrontational approach (Rainforest Action Network) as well as those who prefer to consult or collaborate (Conservation International, WWF) are attacking the palm oil problem. So are big agribusiness companies like ADM, Bunge and Cargill, although they’re not moving fast enough or far enough to satisfy the activists at RAN.

Interestingly, the palm oil story appears to be following a script that we’ve seen before in such diverse industries as forestry, mining and fishing: Enviros and consumer brands join together to bring pressure on the extractive industries or Big Ag to improve their practices.

Here’s how the column begins:

What do Oreo cookies made by Nabisco, Cheez-It crackers from Kellogg’s or General Mills’ Fiber One Chewy Bars have to do with global warming and the destruction of tropical rainforests? A lot, say environmental activists.

The link between the supermarket shelf, climate change and shrinking rainforests is palm oil, a controversial ingredient that may now be the most widely-traded vegetable oil in the world.

Here’s the problem: Demand for palm oil, which is found in soaps and cosmetics as well as food, has more than doubled in the last decade as worldwide food consumption has soared. Farmers, in turn, are expanding their plantations, burning forests in Indonesia and Malaysia, where nearly all of the palm oil imported to the United States originates. Deforestation is the primary reason that Indonesia’s greenhouse gas emissions are the third-highest in the world.

You can read the rest here.