BN Danone

By Dieter Holger

Terviva Inc. entered into a deal with Danone SA amid its latest funding round to explore food made from pongamia trees, a tropical plant it says is more resilient and environmentally-friendly than soy and palm.

The Alameda, Calif.-based startup, founded in 2010, said Thursday that the Danone agreement comes after the company raised $54 million in its fifth funding round to market pongamia trees, a little-known oilseed plant native to parts of Asia, which can grow on land that is typically difficult to farm, providing a source of protein-rich edible oils from beans that can help feed the world's population.

"We are excited to team up with Terviva to co-develop important ingredients--edible protein and oil--from the pongamia tree, while also rehabilitating the soil the tree grows in," said Merijn Dols, global director of open innovation and circular economy for food at Danone.

The financial details of Terviva's deal with Danone weren't disclosed.

Terviva said it expects to raise an additional $24 million in equity and debt capital, totaling $78 million in capital this quarter. It has more than 1,000 acres of pongamia planted with growers in Florida and Hawaii.

The company declined to provide its estimated valuation following the latest funding round.

For the past five years, the company has focused on testing whether the pongamia tree can be scaled up as an agricultural crop and now has its sights on using the tree's oils for a variety of plant-based food products, with similar applications as olive oil or other cooking oils, said Naveen Sikka, chief executive of Terviva, in an interview.

"We need to change how we grow things and what actually goes on the plate," he said.

The company said it currently works with farmers who are reforesting distressed or degraded agricultural land in Florida, Hawaii, Australia and India. Next year, Terviva plans to open a facility in the U.S., where it will process pongamia beans to make foods.

An orchard of pongamia trees grown on land with poor soil or water stress can capture 115 metric tons of carbon per acre over 30 years, Terviva said, ranking pongamia highly as a sustainable source of edible oil and plant protein.

More resource-efficient farming practices could help companies and governments meet their climate-change goals, sustainability experts say. Food accounts for around 26% of the world's greenhouse-gas emissions, according to a study published in the journal Science in 2018.

Companies are increasingly touting agriculture as a way to tackle climate change. Last month, PepsiCo Inc. put its weight behind so-called regenerative agriculture to bring the burgeoning practice to 7 million acres of farmland, the equivalent of PepsiCo's entire agricultural footprint. In 2018, Danone North America said it would invest up to $6 million toward research to improve soil health.

Regenerative agriculture remains a loosely-defined concept since there is an absence of widely accepted global standards, but the practice generally involves using plants to soak up carbon-dioxide emissions, which can earn farmers valuable carbon credits, as well as lowering crops' environmental footprint by cutting water and chemicals use and managing soil in a way that slashes emissions.

Write to Dieter Holger at dieter.holger@wsj.com; @dieterholger

(END) Dow Jones Newswires

May 20, 2021 10:25 ET (14:25 GMT)

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