The decoding of the genome should produce significant medical advances in the coming years, but novel technologies – genetic or otherwise – are also transforming agriculture.

Such possibilities are not new. In the 60s, crossbreeding of plants to create hybrids allowed seeds to be produced that were more resilient than normal crop varieties. This enabled yields from these ‘super-crops’ to increase by as much as 20 per cent.

However, figures from the US Department of Agriculture show that this effect is now flattening out. At the same time, while the global population continues to grow, the acreage of agricultural land in use has remained constant over the past decade. Thus there is now a demand to increase crop yields again.

Futuragene’s market is ‘huge’
One controversial method is by introducing genetically modified (GM) crops. In the late 90s agri-giant Monsanto developed a version of corn that was resistant to insecticide. Today 80 per cent of corn grown in the US is this variant.

GM is more widely accepted in the US than Europe. Nevertheless, the major seed suppliers, who also sell fertilisers, insecticides and other items, are keen to introduce fresh products after seeing the phenomenal take-up of Monsanto’s GM corn.

AIM-quoted Futuragene is in talks with a number of large groups about licensing its techniques. Based on extensive US research into how plants survive in harsh conditions, these emphasise the naturally occurring genetic traits of plants that allow them to resist such ‘abiotic stresses’ as drought, salinity and cold. The company owns the patents to these genes.

The potential market is huge as crops could be grown on currently infertile land. Futuragene, which raised a total of £4.7 million earlier this year at 170p and 180p, has conducted scientific trials on modified tomato plants fed salt water almost as saline as seawater. Over three generations, the plants, whose crop tastes the same as established varieties, have survived and seem tolerant to the salt.

Chairman Mark Pritchard says it will take at least three years to get a product to market. But it is likely that a deal with a major seed company to use the genes will be concluded before long, possibly for a rival corn product to Monsanto’s or else one based on rice. The group is also investigating the turf grass market, since these products would not require stiff regulation (as they are not part of the food chain).

Pritchard believes Futuragene could be more palatable to the sensitive environmental brigade. ‘Strictly speaking, we are GM, since the genes in the plants are modified, but they do exist naturally in that species – we are merely over-expressing them.’

The shares have come back 40 per cent from February’s placing price leaving the group valued at £36 million. For a business with little in the way of sales and cash balances of just over £5 million, this might look like more than fair value. However, if its valuable patents prove themselves, the shares may rally.

Agricultural additives
Another US-based concern listed on AIM with agricultural interests is Plant Health Care, whose products are based on naturally-occurring Mycorrhizal fungi, which enhances root growth. In the past the company has focused on the US horticulture market, signing licensing agreements with such major suppliers as John Deere, Symbiot and Ewing.

Most interest recently has come from a new product called Pre-Tect. This substance, based on proteins called Harpins, can be applied to lettuce leaves ten days prior to picking to encourage a burst of growth. This enables the produce to remain fresh for longer and thus increase its shelf life by two to five days.

Chief executive John Brady is in talks with several major supermarket chains to convince them to insist their suppliers use Pre-Tect. In addition, growers of leaf crops, including broccoli and spinach, could benefit by increasing their yields. Brady says 75 per cent of salad crops in the UK are already grown using other Plant Health Care products.

The group, which floated on AIM a year ago at 52p raising £5.4 million net, has high hopes for another product, Myconate. This is a seed coating based on a fungi product that could boost yields in many agricultural crops. Over 60 trials are being conducted in nine countries and first results should be seen shortly.

If successful, Plant Health Care shares should sport strong growth themselves from their present level. ‘The increase in value [could] be dramatic,’ says analyst Tim Freeborn of house broker Evolution.

Nutritional supplements
AIM plays hosts to a clutch of other companies that are looking to incorporate health-giving properties in foods.

Provexis is developing a health drink called Sirco based on an additive, extracted from tomatoes, which apparently 'thins' the blood, thus preventing heart attacks. This will be launched ‘in early 2006’ and there is a ‘high level of interest from a number of the major UK supermarkets’ according to chairman Dawson Buck.

Recently listed shell Neutrahealth, backed by Indian food entrepreneur Gulam Noon, wants to build a business in the ‘functional food’ area. The company has just completed its first acquisition, natural healthcare products maker Biocare for £16.1 million, partly funded by a placing at 10.5p a share.

Finally, Australian concern Clover has developed a nutritional supplement called Omega3 derived from tuna fish oil. This is now used in a variety of items, including chicken feed that enables hens to produce eggs with additional health benefits. Nevertheless the shares have halved over the past year to 8p on weak results for the year to June, showing a 38 per cent decline in earnings. A new chief executive will shortly be appointed to try to turn things around.