Organic Farming: Building a Healthy Future

      

We at Bayern Industries believe in pro-actively investing in the future, a healthy and environment friendly one too. Bayern Industries has set is sights on organic agribusiness. We will be looking to acquire viable farms producing certified organic produce – estimated to be in excess of a $25 billion a year market.

The future of organic agriculture is very bright with trends that show increases in organic acreage, registered organic growers, and increases in gross value for organic products. Demands from consumers for organic products and sustainable farming practices have resulted in premium prices, encouraging more farmers into entering the organic farming business. Organic produce is a niche market where global sales have risen by about 20% per year for the five years in a row making it the fastest growing sector in the agricultural industry. And this trend shows no signs of slowing down.

The popularity of organic food in wealthy nations such as North America and Europe accounted for 95 percent of the $25 billion in world retail sales of organic food products in 2004. In 2004, retail organic sales in the EU, at almost $13 billion (€10 billion), exceeded the $10.4 billion (€8 billion) of U.S. sales. However, per capita retail sales were nearly equal, approximately $34 in the EU and $36 in the U.S.

By 2005, retail sales of organic food and beverages in the US grew to an estimated $12.8 billion (Natural Marketing Institute, Health & Wellness Trends Database, March 2006). However, only 2% approximately of the U.S. food supply is grown using organic methods. Organic foods can be found at all major supermarkets, natural food stores and at some farmers’ markets. Many restaurants also now offer specialized menu using organic produce because not only does it offer better quality and taste, but consumers are more aware and demanding. Organic food is also gaining international acceptance, with nations like Japan and Germany becoming important international organic food markets.

We see an opportunity for excellent returns on investment. Organic agribusiness is a potential way to lower input costs in farming, decrease reliance on nonrenewable resources, capture high-value markets and command premium prices.

Our objectives are to identify Companies with a demonstrated track record of success and superior potential for growth. We will look to generating efficiencies through consolidation and streamlining operations, particularly administrative costs, and ultimately improve margins through economies of scale.

About Organic Farming

              

Organic farming refers to an agricultural production systems used to produce food and fiber without the use of synthetic pesticides or fertilizers. That is not all; organic farming management also relies on developing biological diversity in the field to disrupt habitat for pest organisms, and the purposeful maintenance and replenishment of soil fertility. All kinds of agricultural products are produced organically, including produce, grains, meat, dairy, eggs, fibers such as cotton, flowers, and processed food products.

Prior to World War II farming without chemicals and synthetic material was the only option for farmers. Most of the synthetic chemicals were developed during the War. As the industry progressed, most farms moved to focus on a single crop, increasing the reliance on chemicals to battle disease and pests. Continued concentration on a single crop accelerated the depletion of minerals in the soil, requiring increased reliance on fertilizers.

Organic farming recognizes the benefits of traditional ‘best practices’ in farming. Some of the important characteristics of the organic systems include: design and implementation of an “organic system plan” which is primarily for the benefit of the consumers. The system essentially describes the practices used in producing crops and livestock products; keeps a detailed record that tracks all products from the field to point of sale; and maintains buffer zones to prevent inadvertent contamination by synthetic farm chemicals from adjacent conventional fields.

This system also helps in getting the produce “certified”. Certified organic refers to agricultural products that have been grown and processed according to uniform standards, verified by independent state or private organizations accredited by the USDA. All products sold as “organic” must be certified.

Organic vs. Conventional Farming

While no definitive study has been done comparing organically grown food vis a vis conventionally farmed produce, according to various industry reports, organic food is far less likely to contain pesticide residues than conventional food. There is no doubt that pesticide residue is harmful to consumers, and requires thorough washing of produce before consumption in order to lower these risks.

There is also a common misconception that organic food could be at greater risk of E. coli contamination because of raw manure application. Interestingly, conventional farmers also commonly use tons of raw manure but with no regulation whatsoever. The difference between organic and conventional farming however lies in the strict guidelines on manure use in organic farming: either it must be first composted, or it must be applied at least 90 days before harvest, which allows ample time for microbial breakdown of pathogens.

Control of Pests, Diseases and Weeds

One of the primary features of organic farming is building healthy soils by nurturing the living component of the soil. Organic farmers build soil organic matter with cover crops, compost, and biologically based soil amendments. These produce healthy plants that are better able to resist disease and insect predation. Organic farmers’ primary strategy in controlling pests and diseases is prevention through good plant nutrition and management. Field ecology is managed by using cover crops and sophisticated crop rotations which disrupts the habitat for weeds, insects, and disease organisms.

Organic farmers rely on a diverse population of soil organisms, beneficial insects, and birds to keep pests in check. When pest populations get out of balance, growers implement a variety of strategies such as the use of insect predators, mating disruption, traps and barriers. As a last resort, certain botanical or other non-synthetic pesticides may be applied.

Organic Livestock and Poultry

           

The Organic Livestock and Poultry industry is the other primary market for organic produce. Organic meat, dairy products, and eggs are produced from animals that are fed organic feed and allowed access to the outdoors. Consumer interest and consumption patterns are showing strong growth, due to increased concerns of consumers regarding what they are consuming and fear of exposure to harmful chemicals.

Animals must be kept in natural habitat giving grass eating livestock access to pasture. While antibiotics and hormones are prohibited, medication in the absence of illness is also not allowed for organic livestock and poultry. However, they may be vaccinated against disease. Livestock diseases and parasites are controlled primarily through preventative measures such as rotational grazing, balanced diet, sanitary housing, and stress reduction. The use of parasiticide use is strictly regulated.

Our plan is to do a secondary round of financing through a private placement or issuance of preferred shares to fund the organic farming project.