Roots Sustainable Agricultural Technologies (ASX:ROO) lists on ASX


by Jessica Amir

Newly listed, Roots Sustainable Agricultural Technologies Limited (ASX:ROO) Co-founders Dr Sharon Devir and Boaz Wachtel discuss the company’s technology, business model and market opportunity.

Jessica Amir:
Hello I’m Jessica Amir for the Finance News Network and joining me from newly listed Israeli agricultural technology company, Roots Sustainable Agricultural Technologies Limited (ASX:ROO) Co-founders, Dr Sharon Devir and Boaz Wachtel. Sharon, Boaz, welcome to Sydney.

Dr Sharon Devir: Good morning.

Boaz Wachtel: Thank you.

Jessica Amir: First up, can you start with an introduction to Roots and your business model?

Dr Sharon Devir: Roots own the technology for microclimate and management for the root zone. We just took the very brilliant Israeli concept that used to be for drip irrigation, and we’re doing the same for the roots. We are heading the roots by cooling and heating the roots and not the canopy. In this way, we have better results in many varieties of crops.

Boaz Wachtel: We have a two in one solution. We both heat and cool the roots, rather than heating or cooling the canopy, as currently being done in agriculture. So we save a lot of energy, we increase seal dramatically. We have better quality, we can plant off-season, short and growing cycles. We have another technology in the pipeline, which is irrigation by condensation, to condense the humidity on pipes with cold water. And that revolutionises access to water and agriculture in remote locations, in different parts of the world.

Jessica Amir: Thanks Boaz, now to your technology. Tell us how it works?

Boaz Wachtel: We use ground source heat exchange principles to heat and cool the roots with very little energy, year round. We stabilise the root zone temperature, we either heat it in the winter or cool it in the summer. And the technology has been endorsed by the Israeli Chief Scientist Office; we’re a graduate of the prestigious National Incubator Program. That allowed us to mature the technology and to reach the IPO, as where we are today.

Jessica Amir: Boaz, how is the technology different to what’s in the market currently, and how does it benefit customers?

Boaz Wachtel: Currently the market climate management and greenhouse is done with air management. So either heat or cool the air with massive amounts of fossil fuel spent, to either cool or heat the air. We do microclimate management at the root zone level; we spend very little energy. And by stabilising the root zone temperature, it allows us to increase seal anyway from 20 to 100 per cent. We have better quality; we shorten time to market, so there are many benefits engraved in the system.

Dr Sharon Devir: I must say that in addition to that, we have already proven that using our system, it can decrease dramatically the amount of fertilisation, using only root zone heating.

Jessica Amir: What does it cost per square metre to install and run?

Dr Sharon Devir: So the cost per square metre is something around $AUD15 to $AUD20 per square metre. It highly depends on the crop size and environment. In terms of the running costs, they’re almost negligible. It’s very, very low and definitely compared to existing cooling or heating systems in the market.

Boaz Wachtel: Just to add to that, today either to cool or heat the area, you need two separate systems. And our system allows you to do the root zone cooling and heating, in one system. So that saves a tremendous amount of cost to install and also the running cost, on an annual basis.

Jessica Amir: Boaz, now to the market opportunity. Who have you been speaking to about the system and what’s been the response?

Boaz Wachtel: Once we finalise checking the system in 15 locations over a number of years, the farmers were very receptive to the technology. The Guardian of London, the newspaper from London, chose it among the four disruptive technologies that could affect food security issues, around the world. And the irrigation by condensation technology that is in the research and development stage was chosen by NASA Tech Brief magazine, engineering magazine, as the technology of the month. So we have an overwhelming positive response for the technologies from the relevant players.

Jessica Amir: Back to you Dr Sharon, where do you see the biggest opportunities to scale up the system?

Dr Sharon Devir: Actually the market is vast, it’s unlimited, there are millions of hectares of greenhouses. We initially want to start sales in Europe, mostly in Spain, in China and Australia as the first part of penetration of our system. Mostly to high throughput income types of crops, such as cucumbers, strawberries, flowers and leafy vegetables.

Jessica Amir: Gentlemen, turning to your IPO. How much did you raise and what does the register look like?

Boaz Wachtel: We raised $5 million from institutional investors, from high net worth individuals and from strategic Funds. It was a great event for the IPO.

Jessica Amir: Over to you Dr Sharon, maybe you can tell us how the funds will be used?

Dr Sharon Devir: The funds will be used first to scale up manufacturing and secondly, to expand our global status.

Jessica Amir: When do you expect first revenues?

Boaz Wachtel: We expect them very shortly. We have some pending discussions with major integrators and dealers in various parts of the world. So we see in the next 12 months significant revenue stream coming Roots way.

Jessica Amir: Last question now gentlemen. What’s your focus for the company over the next 12 to 18 months, and what’s your long-term ambition for the company?

Dr Sharon Devir: So for the 12 to 18 months, we’ll expand our sales force globally and we’ll scale up manufacturing. And bring additional products from R&D phase into the engineering and sales phase.

Boaz Wachtel: So our long-term vision is to help meet two major issues in the world today, food security and water shortage. With our core technologies, the irrigation by condensation and the roots zone heating and cooling. And help the farmers achieve greater yield and therefore, stabilise their income. And provide the world with the good technologies that will address major problems that are not being addressed today, by current technologies.

Jessica Amir: Dr Sharon Devir, Boaz Wachtel, thank you so much for the update.

Boaz Wachtel: Thank you.

Dr Sharon Devir: Thank you very much.