To just meet the demand for food the global agriculture industry is going to have to produce 50% more food by 2050 than it did in 2012. This is based on the conservative estimates given by the United Nations that the world population will reach 9.73 billion, with other estimates predicting much higher growth rates. In the past, meeting agriculture production targets hasn’t been a problem, however, given a range of factors including climate change, pressure on natural resources and underinvestment in agriculture technology, meeting the pace of required production increases is going to prove a great deal more difficult than ever before.
To solve this problem the world is relying on ag-tech companies that are focused on developing and deploying cutting edge technology, such as artificial intelligence (AI), to drastically increase agriculture production capacities while remaining environmentally friendly. In 2019, the smart agriculture industry was worth $16.7 billion, and by 2027 is projected to reach a minimum of $27.2 billion.
The global agriculture business hasn’t seen much change or introduction of innovative practices since the 1990’s, making this an industry that is practically begging to be disrupted (for the better). With the challenges ahead, combined with strong market growth, the agriculture space is generating the perfect environment for investors to join companies actively solving these problems and who also possess significant upside potential.
Company Overview
AgriFORCE (NADSAQ:AGRI) is a young and exciting company that is disrupting the broken legacy agriculture system. They are a team of scientists, growers, architects, lighting designers, business strategists and finance professionals who are working together to help plants and crops thrive in indoor farming environments. The company is focusing on developing or acquiring intellectual property (IP) and other businesses to create an all-inclusive value chain from seed-to-sale that allows for the “Per-Crop”customization of their solution, ultimately providing higher yields at lower costs while using less of the world’s natural resources.
AgriFORCE’s flagship proprietary IP leverages unique facility lighting design, operations, automation and artificial intelligence, fertigation and nutrients, and micropropagation that merges an optimized indoor microclimate with natural sunlight creating a perfectly balanced environment for pure, pesticide and herbicide-free hydroponic crops with ultimate scalability.
The company is also identifying opportunities to apply their technology and scalable process into such verticals as the field of plant-based medicines, which through small adaptations and adjustments to their process can potentially start producing highly customized vaccine crops. This new market opportunity shows the incredible versatility that AgriFORCE’s technology offers and as the company continues to grow, so too will the applications and demand for their products across multiple industries.
AgriFORCE Begins Phase 2 With New Facility and Pipeline of M&A
With the start of 2021 AgriFORCE has moved into phase 2 of their overall growth strategy which consists of finalizing the purchase of a 41.37-acre parcel of land located in Coachella, California. This land will be home to up to eight facilities with the first one scheduled to be completed at the end of 2022. As well, the company will look to complete their genetics labs for micropropagation, breeding and R&D which will help boost near term revenue through the sale of tissue culture clones.
AgriFORCE will also focus their attention on growth through multiple mergers and acquisitions (M&A), focusing on companies that can easily integrate into their current platform and allow for quick diversification across the ag-tech industry. We think this combination of organic growth combined with M&A-puts AgriFORCE in the the drivers seat to dominate the space.
The most exciting part for investors is that this unbelievably ambitious growth strategy only marks the beginning of their long-term prospects. AgriFORCE plans to initiate phase 3 of their growth strategy at the start of 2022, where they will look to solidify customer and university relationships while also completing the installations of facilities 2 and 3, further enhancing the strong recurring monthly cashflow funnel in place.
Elite Management Team Paired With Elite Partnerships
In order for AgriFORCE to execute on their growth strategy, the company will need to have not only a competent management team, but also, the right external partners that can provide support and technical expertise.
AgriFORCE’s management team brings over 100 years of practical experience to the table. The Company Recently announced Troy McClellan is now the President of AgriFORCE’s solution division. With this new title, McClellan will be leading the commercial development strategy focused on leveraging the company’s IP across multiple divisions, markets and regions. As well, he will oversee M&A acquisitions, and support the identification of companies and technologies that can be integrated within AgriFORCE’s current IP platform.
External to the company AgriFORCE has partnered with Fabritec Structures and First Circle Design. Fabritec specializes in constructing light weight custom membrane, cable and retractable structures. First Circle is a lighting design firm focused on unique signature structures and environments made possible by the use of LED and energy efficient technologies. Combined, these companies will support the technical know-how and infrastructure AgriFORCE will need as they combine real-world farming practices with their cutting-edge technology.
Competitor Analysis
While looking to revolutionize the current farming process from start to finish, AgriFORCE has positioned themselves with very few direct competitors. One company with a similar goal of transforming legacy agriculture is Appharvest (APPH), who is looking to bring farming indoors by building and operating high-tech greenhouses to grow fruits and vegetables within the US.
| AGRI | APPH | |
|---|---|---|
| Market Cap | $50.39 million | $1.15 billion |
| Revenue | N/A | $2.3 million |
| Price-to-Sales | N/A | 500.61 |
Through a quick comparison one can start to see the untapped potential AgriFORCE currently has given their strong growth trajectory and low market cap. Appharvest, with a current price-to-sales of over 500, is showing all the tell-tale signs of a company that is overvalued, while also representing what is possible in terms of upward share price movement as AgriFORCE continues to execute on their growth strategy. This presents investors with a possible short play on Appharvest as it moves back towards its fair value or allows investors to ride the wave as AgriFORCE successfully implements their phase 2 growth plan which should transfer into their share price moving forward.
Key Takeaway
To-date, the global agriculture industry has been able to keep up with the required increases in demand. Nonetheless, the current environment presents new problems with depleted natural resources, climate change and growing consumer demand for chemical free foods which is forcing the industry to adapt. AgriFORCE is at the frontlines of these changes and is building out the technology and infrastructure to solve these problems. With strong market growth, very few direct competitors and a unique product offering, AgriFORCE has rightfully earned a spot on all investors watchlists.
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