Roots Sustainable cements move into China with $US19m partnership
Food & Agriculture
Ground-heating and cooling tech Roots Sustainable Agricultural Technologies is upping its commitment to China with a $US19 million ($24 million) extension to its Chinese distribution deal.
The deal will see the company cement its place in the world’s largest vegetable production market — China already produces 550 million tonnes each year or 53 per cent of global supply.
It comes after the company announced an initial sale of $323,000 to the Chinese partner, Dagan Agricultural Automation, last week.
Now, Dagan has the exclusive rights to distribute Roots’s patented root zone temperature optimisation (RZTO) technology through China as long as it reaches the target of $US19 million in sales over an initial five-year period.
If all goes well, the agreement allows for a further two-year extension as well as addition of other patented technology from Roots and exclusivity expansion to other geographic markets.
“While China is a powerful agricultural producing country, it faces many challenges. It must feed nearly three times the number of people per area unit of land as the rest of the world,” chief and co-founder Dr Sharon Devir said.
“There is a growing middle-class demand for more protein in the diets, and local land and water resource constraints make production increases a challenge.”
Agricultural production out of China has grown to approximately $1.16 trillion, but it still can’t keep up with the population’s growing appetite.
Over the past two decades, the country’s diet has largely shifted away from traditional foods the likes of rice and wheat in favour of richer animal proteins and a wider variety of exotic vegetables… much more similar to the western diet.
But they simply don’t have the land mass to supply.
A report from Bloomberg last year showed China only had 0.2 acres of arable land per citizen while it takes 1 acre to feed the average US consumer.
That’s where Roots’ technology makes a difference – the company boasts yield increases as much as 60 percent in its Jordan testing facility where the roots are heated or cooled to an optimum temperature.
Work has already commenced to install their heating and cooling systems for eight crops such as vegetables, herbs and flowers, in eight Dagan greenhouses covering eight acres north-west of Bejing.
“This distribution agreement with Dagan is a professional endorsement of Roots’ technology and its ability to help address some of the critical agricultural production and pollution challenges this market faces,” Dr Devir told Stockhead.
“We have conservative sales targets over the five-year period, allowing the first two years to focus on establishing sales networks and showcasing proof of capability, with resulting sales activity in years three to five.”
Shares in the company have traded between 30c and 67c since listing in December at an issue price of 20c.
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