The global food system is responsible for ~30+% of annual emissions, of which rice is a huge component. Over 50% of the world’s rice is grown in the asiatic belt. Not only is rice grown in archaic & ancient ways that require huge amounts of water — an increasingly precious resource — the flooded rice-fields block oxygen from penetrating the soil, creating ideal conditions for bacteria that emit methane, a gas that has ~30x higher climate impact than CO2. Estimates suggest that rice production alone accounts for 1.5–2.5 gigatons of CO2-equivalent emissions per year, or around 5–8% of total global greenhouse gas emissions [ref].
This is the critical problem Mitti Labs is trying to solve and we are thrilled to announce our investment to support their pioneering approach to transforming rice agriculture through regenerative practices.
Investing in climate isn’t straight forward. Moreover, climate credits have had a checquered past. We, like many others, used to wonder what it really means that one can buy credits for growing forests or supporting a land-use project in another part of the world. Who keeps track of these projects, how do they do it, and for how long? For example, in the case of forest-based projects, how does one ensure that the forests ascribed to carbon credits aren’t cut down by loggers or succumb to forest fires? If they do, how do the credit-buyers find out if at all? What is the objective way to measure and track the quality of these projects? Are all forests or land projects the same in terms of carbon credit quality; do they deteriorate in carbon-credit quality over time?
Our intuition was that a very different approach was needed to solve for and scale this category globally. Specifically, to make any company here venture-investible and technologically scalable, we came to believe in the following:
- There has to be a way to (a) remotely monitor the projects and (b) objectively calculate the “quality” of a project and its carbon-credit output throughout its lifetime. Without (a) & (b), it becomes too costly and time-consuming to send field-agents to keep checking on projects and ensure adherence, and there are also a lot of ways to “game” the system in terms of project quality. This is the technology part.
- The farming behaviour shift needed for, e.g., rice decarbonization, needs to be driven top-down. Said another way, it is much harder to knock on every farmer’s door and say ‘please change how you grow rice’ — something that they’ve done for generations a certain way— but much easier if Nestle or Mars tells them ‘please change, because we can only buy sustainably grown rice’. So, a very demand-first approach is needed in the category. Not only that, a team that can crack demand from the US/EU is needed. Local demand in India/SEA moves too slow and is at low $ values to build a large business. This is the scale part.
- Finally, we need a single platform to bring together all the stakeholders. The business models in these sorts of decarbonization projects can get very complicated with multiple stakeholders: corporations who buy credit, farmers, FPOs, carbon financing orgs, credit verification agencies, and then project managers on the ground! A unified platform simplifies the business model vastly, allows transparency, project tracking, carbon credit quality, payouts — all in one place which is needed to scale the business globally in venture time-frame.
This is where the Mitti team comes in. Xavi Laguarta has a background in sustainability consulting and is very well-connected to the buyers in the US, the regulators, and climate financiers. Devdut Dalal was a former co-founder of an Indian D2C organic food company, prior to which he led business development and sustainability at a $125M+ revenue business, where he shifted over 60% farmers toward sustainable farming. He has the right temperament and on-ground ops skill-set to scale out the farm & farmer supply. And our CTO Nathan Torbick has 25 years of experience in agricultural satellite imaging, and has written some of the most well-cited works in the rice-decarbonization dMRV space. We met the team last year and it was one of the most memorable pitches of the year for me. The founders came in all muddy straight from their farm pilots to the pitch and spoke so evocatively and passionately about the problem that we decided to dig in.
The most critical piece of the tech Mitti has built is the world’s best dMRV for rice GHG emissions. The dMRV sits at the heart of Mitti and we believe owning this IP is critical to influence both the buyer and the regulator as it ensures credit-quality and process adherence. Around the dMRV, Mitti has built out the platform that takes care of (a) remote monitoring of farms via satellite tasking (b) making every pixel-representation of a farm clickable to see the process adherence historically e.g. does the water-level in these farms across the crop cycle follow the AWD (alternative wet & dry) method. Over time we will bring in the credit marketplace, financing, and disbursal into the platform.
Our comprehensive approach to the category is bearing fruits. After 1.5 years in stealth Mitti is coming out with a set of very high quality buyers and project partners. In just the last 6 months, we’ve scaled to 40K hectares & 30K farmers and are looking to 5x this in the next 12 months.
The demand for verified carbon credits is skyrocketing. By 2030, the expected demand is 1.5GT, while the current supply is only around 0.25GT, representing a $5 billion opportunity in Asia-rice alone, and we haven’t even started taking into account the methane markets. Carbon credit prices are anticipated to rise from $12–15 to $30–40 per credit due to this supply gap. Global corporations are aggressively pursuing NetZero goals, with 30% of the top 2000 companies relying on carbon credits to achieve their targets.
We believe Mitti has the best team and tech to tackle this opportunity and are thrilled to partner up with our friends at Voyager VC & Overview, and onboard several other climate angels, and partners such as Dr. Reddy Labs, Syngenta, and several others to help build Mitti’s vision to decarbonize agriculture starting with rice, together.
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