Biostimulants Clamor for a Piece of the Row Crop Market

The question these days isn’t who is venturing into biostimulants — it’s who isn’t.

Or more to the point: The space’s ultra-low barriers to entry are propelling extraordinary growth, but are they here to stay?
“Everybody and their brother is going into biostimulants in row crops, whether it’s seed-applied or soil-applied,” says Pam Marrone, Founder and Chief Executive of Marrone Bio Innovations Inc.

That includes Marrone, who struck a deal with Koch Agronomic Services last summer to bring Regalia Rx to the row crop market in the U.S. and Regalia Maxx to broad-acre applications in Canada. The product is registered as a biofungicide, but she also describes it as a biostimulant in the sense that it gives a yield bump in the absence of disease. Last summer, her company also inked a deal with Albaugh to sell a Marrone microbial product.

Albaugh, which is making a big push into seed treatments, partnered with U.S. arm of Italian organic fertilizer and biostimulant company Italpollina in late 2014 to provide microbial seed treatment solutions for the U.S. seed treatment market. Italpollina will also open a new $9-million plant in Indiana to research and manufacture biostimulants this year.

There are heavyweights like BioAg Alliance, the Novozymes-Monsanto partnership, testing microbial strains on a scale never seen before. Its approach is to find a blockbuster: the Acceleron B-300 SAT inoculant will be applied to all of Monsanto’s new 2017 corn hybrids sold in the United States. Derived from a fungus found in soil, the product showed a two-year average yield advantage of more than 3 bushels per acre.

“We believe it could be applied to more than 90 million acres by 2025 and become one of the biggest biological products in the ag industry,” says Colin Bletsky, Novozymes Vice President for BioAg.

Dr. Ritesh Sheth, Chief Chemist, Stoller Enterprises

Specialty fertilizer player Stoller Enterprises is now in the process of getting its biostimulant and plant growth regulator products approved by EPA for use with the new 2,4-D- and dicamba-resistant herbicide technologies hitting the market. Stoller is aiming for full approval this season but if not, it should get it by next season, according to Dr. Ritesh Sheth, Chief Chemist.

Stoller has developed its biostimulant and PGR technologies to work for row crop farmers, and in step with their normal application timings. “The good thing about Stoller technology is it can be used on any crop … We have to make sure our products are compatible,” Sheth said in an interview at Commodity Classic.

Then there are the startups, notably Indigo Agriculture, the high-profile Boston company that’s raised over $100 million in venture capital funding and taken a unique approach by essentially bypassing the distribution channel altogether. Instead of asking farmers to pay upfront for its microbial seed treatment for cotton, it asked them to pay a fixed amount per acre post-harvest, so long as they saw a certain amount of increased lint production.

As recently reported by Indigo CEO David Perry, Indigo Cotton, a product designed to improve yields in water-stressed areas, increased lint production by 11% in the target geography of West Texas — a region that produces nearly half of all U.S. cotton. For some farmers, that meant their cotton crop was profitable.

“Partnering with growers has helped us enter the market faster,” according to a statement by Eric Jeck, Indigo Senior Vice President, Strategy and Business Development, on the company’s website. “Our business model innovation generates a level of trust that many find missing in the industry.”

Whether Indigo’s model is scalable from last year’s 50,000 acres to a million acres is yet to be seen.

SHAKEOUT COMING
Other prominent startups entering the race to find biostimulants for soil health include BioConsortia, Inocucor Technologies, AgBiome, and NewLeaf Symbiotics.

Then there are the large distributors — CPS/Loveland, Helena, WinField Solutions — that are developing their own in-house lines of biostimulants. Will the distribution channel duplicate its winning strategy for adjuvants and become the dominant suppliers for biostimulants, bundling their proprietary products with other offerings carrying more favorable pricing?

“We’ll see on that. It’s going to be very interesting how this is all going to shake out,” Marrone says.

What happens could be determined by EPA. Today, barriers to entry are low, with regulations carried out by individual states. California forbids the mere mention of the word “stimulate” on a label, for example, while in others it’s a relative free-for-all.

But all is set to change, as EPA is expected to publish a draft guideline of its view of regulations for biostimulants any day, after delaying it last year. The draft will then be open for public comment before a registration process is instituted likely between this year and 2019.

Mark Trimmer

The hope for most companies is that any regulations that come into force are in line with the risks and sales opportunities of biostimulants, and “recognize these are not $100-million products,” says Mark Trimmer, Managing Partner with biologicals market research firm DunhamTrimmer.

A $10-million sale product would be considered absolutely huge in the biostimulant space — a far cry from biopesticides and synthetic pesticides that require far larger outlays of money and time. Biostimulants currently take on the order of months to launch, compared with three to five years for a biopesticide.

The U.S. biostimulant market is valued at about $400 to $500 million at the manufacturer level, according to Trimmer. He projects it to grow 13% on a consolidated annual growth rate basis to $1.3 billion by 2025.

By contrast, the North American biopesticides market is worth about $925 million, and is expected to top $3.5 billion by 2025, and over $3.9 billion including macroorganisms.

Trimmer says if EPA provides a favorable resolution, U.S. growth could surpass its forecasts.

“The concern is that if EPA comes with a very stringent approach and applies current pesticide guidelines to biostimulants, it will definitely suppress market development in the U.S.,” Trimmer says. “If it is more in line with what the industry perceives as potential risk for these products, which are based on seaweed, amino acids, and microbials, a clear regulation on the federal level will be beneficial to the market and will probably provide clarity and harmony across all the states.”

Marrone agrees: “What we don’t want is that biostimulants become so bland and generic, that you just throw one in the tank and it’s just an extra add-on. There’re a lot of players with stuff that there isn’t science behind — a lot of ‘bathtub brews.’ We do want that kind of shakeout and some regulatory framework. We don’t want an over-regulatory framework, but some will certainly help that.”

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