This Australian startup wants to raise $20 million to stop Chinese farmers polluting the soil with cancer-causing plastics

Aerial view of farm land with plastic soil cover in suburb of Wuhan, Hubei province, central China. (Jie Zhao/Corbis via Getty Images)

Swathes of white are now a common sight throughout the Chinese countryside. Farmers there have reportedly covered farmlands equivalent of half the size of California – 20 million hectares — with thin plastic sheets.

The plastic traps heat and moisture, keep pests and weeds out and ultimately boost crop production. The trouble is, these sheets do not break down and potentially cancer-causing chemicals could be leaching into the soil – a problem locally known as “white pollution”.

With the Chinese government struggling to convince cost-conscious farmers to switch to less harmful materials, an Australian startup, OneCrop, is now aiming to raise at least $6 million of capital to solve this environmental impasse.

The company has invented a degradable film that can become a dollar-for-dollar replacement for the cheap but harmful polypropylene sheets currently used in the country.

“It’s simply a case of substitution. They already have the machinery and the know-how,” OneCrop founder and chief David McGrath told Business Insider.

“It would simply be a case of stop using what they’re currently using and start using our material without any loss of speed or effectiveness.”

With the film being degradable, there are also no removal costs for the farmer – they can just let the material break down in the field without contaminating the environment.

“Removal costs are about 40% of the original [material] cost in China alone, [even] where they can do it with cheap labour.”

While plastic contamination is a problem faced by every country, China is feeling its effects especially acutely, with about 20% of its arable land recording toxin levels greater than national standards, according to Bloomberg.

OneCrop has now completed trials in both Australia and China with cotton fields, which are especially demanding of natural resources like water and heat.

“We’ve had phenomenal results. It’s the success of the Australian story that meant that Chinese have become interested,” McGrath said.

“It’s been really a game changer. They haven’t seen any material that have performed [as well as OneCrop] and the way we have tailored the product to work for them.”

Major shareholder Rob Chaloner told Business Insider that OneCrop has now trialled for three seasons in northern Chinese cotton fields, and have beaten “all comers”.

“There are starch-based products [from rivals]. But the problem with starch is to cover an acre of cotton you need to grow two acres of potato or corn, then the process uses massive amounts of heat and energy.”

Chaloner said OneCrop has just contracted a new factory in Shenzhen in southern China to ramp up production for commercial orders, and is currently looking to raise additional capital to scale.

“Bottom end is $6 million, upper end is $20 million – it really depends on investor appetite,” he said.

“Australia alone is a $1.3 billion market, the rest of the world takes $4.5 billion. There’s a big prize there and the margin on the product is really quite reasonable – it’s a great business case.”

The company hopes to close the capital raising round by the end of this year then prepare for an IPO in the 12 to 18 months after that, all while targeting the Chinese, US and Australian markets.

Chaloner said that while cotton is the initial target, OneCrop’s sheets can be adapted for any type of crop.

“If we get past cotton and meet the demand there, there’s vegetables and it just goes on and on. Anything you can grow under plastic this can be used for.”

McGrath is a former JP Morgan executive who came upon the OneCrop idea when the global financial crisis came on.

“I asked my godfather, who is the chairman of one of the largest dairies in Ireland, and it was just a no-brainer. The dairy industry really had to start growing their own corn, but corn really had to be tricked into thinking it was somewhere warmer than Ireland… That gave us our start.”

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