At a glance, the product that OneCrop builds seems like just another plastic sheets used for agriculture.
But in order to understand how the startup can provide a solution to a problem dubbed as “white pollution” in China, we need to discuss the situation faced by farmers in rural areas in the country.
Chinese farmers are spending an estimated US$2.59 billion on conventional mulch film, a type of plastic sheets made of non-degradable polyethylene, used to improve crop yield.
Spread across 20 million hectares or 12 per cent of the country’s agricultural land, the use of mulch film possesses both environmental and health threats to local citizens. Apart from polluting the land due to its imperishable nature, the sheets also release potentially cancer-causing toxins into the soils, which is reported to be present at levels of 60-to-300 kilograms per hectare in some areas.
In addition to land pollution, farmers also tend to get rid of the plastic waste by burning them, leading to the release of toxic fumes to the air.
While the Chinese government has banned the use of conventional mulch film, a new solution is still needed to provide farmers with a healthier, more eco-friendly alternative.
This is where Australian agritech startup OneCrop comes in, by introducing a new type of degradable film technology that aims to provide the same crop yield, without the environmental damage and health risks.
Made from clear Hybrid Degradable Film, the startup claims the technology can improve germination rate and the growth of crops such as cotton and corn by up to 29 per cent. The sheets do it by trapping heat and moisture, as well as preventing the growth of pest and weeds.
“OneCrop has undertaken extensive field research with governments and local farmers in locations like North Western China where conventional plastic films are threefold the cost of OneCrop films. [They are also] too variable in quality or are very damaging to the environment,” explains OneCrop CEO David McGrath to e27.
“We realised a new approach was required to produce commercially viable degradable films, without having to invest in new application equipment. As a result, we worked extensively with top scientists, farmers, and developers in Australia, China and the US to develop a direct substitute to more expensive, environmentally damaging conventional films across these markets,” he continues.
McGrath also says that through their research, the startup identified that farmers were able to save more than RMB7 billion (US$1 billion) in film collection costs across 97.8 million rolls of films.
This is significant as film collection is the major cost in agricultural practices, and its high cost has led some farmers to cultivate the film into the soil or in-furrow burning. These are the practices that create even more negative impacts for the environment.
Apart from saving the environment, reducing cost, and preventing health problems, the problem also opens up an exciting business opportunity.
OneCrop is targetting farmers in Australia, China, and the US; these three markets have an estimated market value of US$4.5 billion. Even in China alone, the market value for the film sheets is estimated to reach US$2.9 billion.
While the prospect might seem interesting, encouraging users to change an environmentally damaging, lifelong habit is a challenge of its own. So how does OneCrop’s user acquisition strategy look like?
Apart from direct sales to the farmers, it is also important to work with key strategic partners such as the government, which is what OneCrop is intending to do.
“I anticipate change will come through the state-run farms. Once the larger and centrally coordinated farms have substituted to our technology, there will be a trickle-down effect, especially if the government mandates the change, where all farmers will be given a small amount of time to make the switch,” McGrath says.
“A blanket ban on current practice is really what is required. With this, the clean-up of the countryside can really start,” he opines.
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Investing for the Earth
Based in Brighton, South Australia, OneCrop is currently run by a lean team of four people.
In mid-October, the startup travelled to San Francisco to meet with potential investors. Already naming serial entrepreneur Robert Chaloner as an investor, the startup is looking to raise US$20 million.
It is also planning for an IPO on the Australia Stock Exchange (ASX) within the next 18 to 24 months.
Although the figures that the startup is aiming to raise through the IPO are still undetermined, OneCrop plans to use the new fundings to strengthen its presence in China and the US.
“China is a key market for OneCrop because of the huge environmental and commercial issues our technology has the ability to solve,” McGrath says.
“We are currently commercially active in three major growing countries (China, Australia, and the US) with both serious and significant interest coming out of many more countries. We see the benefit in cotton, corn, tomato, tobacco and pepper production at this time and will look to expand into broader markets off the back of our funding round,” he closes.
Images Credit: OneCrop