Biotechnology: disrupting the Global Asset Classes of National Security

April 11, 2017 | Jim Lane

There’s big, positive news for the advanced bioeconomy this week.

A new study, appearing in the peer-reviewed PEERJ, demonstrates for the first time that a particular single cell protein could replace wild-caught fish and agricultural crops as a key ingredient in aquaculture feeds, potentially providing a lower cost and sustainable alternative protein source.

The study looked at the efficacy of KnipBio Meal as a food for three important aquaculture species: white shrimp, Atlantic salmon, and smallmouth grunts. All three species experienced similar or better growth and survival rates when fed a diet containing KnipBio Meal when compared to fish given a diet of conventional commercial feed. In blind taste tests, panelists rated the shrimp raised on the KnipBio Meal mixtures as statistically similar to control shrimp.

Why it’s a big, big deal

Naturally, stockholders at KnipBio are cheering, and all the stakeholders in that technology set. And it means big things potentially, too, for Calysta — which has a pathway from methane to SCP, and the study helps advance the case that single cell protein has a robust future in aquafeed.

But let’s look at the bigger picture, where the impact is even more fundamental.

A mutual friend told me several times that Richard Nixon used to say that Argentina, Australia, the US and Canada were his best long term bets as sovereign nations because they produced the most food compared to their populations — and he thought that food security was the most fundamental component for long-term sovereign independence. Energy supply was a critical part of that foundation, too. Big population, high per capita GDP, insulated borders, and first access to high technology — those would likely be the other component parts.

Ultimately, the underlying asset each country in that set has is a cast oversupply of land and a generally temperate climate. But these days, technology is changing the way assets are counted. And companies like KnipBio and Calysta are right at the heart of it. These are technologies that convert energy assets into food.

For 20 years or so a handful of countries have been developing technology that creates convertibility from traditional food stocks to energy. That’s the first-gen biofuels sector. Too much of the one? Make the other. Aside from the beneficial impact on energy security, there’s the beneficial impact on price.

The energy-food shift

You see, when energy is too expensive because cartels are restricting supply, and food is too cheap because producers are dumping too much on the markets — you can shift some production from one to the other. Presto, price recovery in the asset class you do have, and price reduction in the asset class you don’t have.

For any society, an even more perfect class of technology assets would allow us to move in either direction — perfect convertibility. When energy prices are low and supply is replete, but food prices are high because supply is constrained, you’d like to be able to shift energy assets to food production.

Put it this way, when you have $100 oil and $2 corn, you’d like to make energy out of the corn asset so that the economy doesn’t fall apart — energy prices that crash industrials, food prices that crush farmers. But when you have $40 oil and $5 corn, maybe it goes the other way so that you avoid energy prices that crush Texas and food prices that bedevil consumers.

The path from producer prices at the wellhead and farmgate to prices at the pump or supermarket is a little more complex than a Digest story can detail — but you get the idea. Convertibility is power.

The national security value of spare industrial capacity

It’s also liberating to be freed in a more obvious way from shackled, ossified thinking about land use. US power stems to a great extent from the nation’s industrial output in the Second World War. It’s role as the Arsenal of Democracy is what gave the US a seat at the first table of world power — and at the heart of that Arsenal was the idea that industrial assets used to make consumer goods in peacetime could be swiftly converted to armament production in wartime.

There was no bleating of “Guns Vs Butter” in the Second World War. Sure, there is “Guns or Butter”, but having excess industrial capacity is the solution for that. That’s why Nixon liked the US, Canada, Australia and Argentina. He saw, in their land assets, “spare industrial capacity”.

Acreage and strategic power

Acreage, in its own way then, is a form of industrial capacity. Thinking that you can and should only make, say, lettuce, on this acreage. As opposed to making leather, meat, fuel, chemicals, fertilizers, construction materials, animal feed, plastics or whatever — that’s thinking that would have made no sense at all to the pioneers who established America and conquered the frontier. They made virtually everything on the farm and in the home — food, fuel, lubricants, greases, fibers, ropes, saddles, fertilizers and more. They grew it back then, because for a long time it was the only way, and for a long time after there was another way, it was still the most affordable, or the most practical way.

The American pioneer farm grew cash crops, feed, food and more. Typically, if there was corn-growing on many farms, it was to provide feed for the pigs, and pigs were then shipped for the market. They understood convertibility. If they had too much meat and leather and not enough building materials, they grew more wood. Making high prices on wheat — grow more food.

They were economic actors responding — often imperfectly — to price signals. It’s just that there were too many individual actors and too little market information, and overproduction was a common problem, and grain elevators could help but were not a complete solution to the problem of too much product hitting the market at one time.

Convertibility is power.— and the flexibility to convert underground assets to food, and above ground assets to energy — those are substantial economic assets of vital interest to all.

The fishmeal problem

As KnipBio points out, fully half of the fish that humans eat are farmed, and many of these fish require a high-protein diet. Traditionally, aquaculture feeds contain approximately 30% fish caught in the wild and ground up into fishmeal. More recently, in an effort to ease pressure on declining ocean fish stocks, aquaculturists have turned to protein-rich plant crops such as soybeans as replacements for fishmeal. The challenge is a soy-rich can lead to gut inflammation in many farmed species, resulting in lower growth and survival rates. In the study KnipBio Meal displayed none of these effects.

The background on the study

The study, entitled A Transdisciplinary Approach To The Initial Validation Of A Single Cell Protein As An Alternative Protein Source For Use In Aquafeeds, is the result of a collaboration between researchers at KnipBio, the New England Aquarium, the University of Massachusetts at Boston, Roger Williams University, and the USDA Agriculture Research Service. The study was designed to test whether a diet consisting of between 30% and 100% pelleted bacterium Methylobacterium extorquens could serve as a suitable diet for fish and shrimp. M. extorquens is a common leaf symbiont bacterium that is grown by converting methanol in standard fermentation tanks. But rather than have beer as the end result, the bacterium produces a product called KnipBio Meal whose composition of protein, amino acids and other biomolecules is very similar to that found in wild fish.

Reaction from the stakeholders

According to Larry Feinberg, CEO of KnipBio, Inc., “We conducted this study to answer an important question: ‘Is it possible to recreate the wild fish diet without using non-sustainable wild ingredients?’ The results of the study indicate that a diet made up of single cell protein can serve as a high-quality alternative in aquaculture feeds. Our work since the study was completed indicates that genetic optimization of the single cell protein can further improve these results.”

Feinberg stated, “In addition to creating healthier fish, there are other inherent benefits to using KnipBio Meal as a replacement for agricultural protein in fish feed. An estimated 100-acre KnipBio facility can match the protein production of a 10,000-acre soy operation, dramatically reducing the environmental footprint for production. The process also eliminates the need for fertilizers and pesticides and reduces energy use.”