Biopesticides Primed for Growth

“Big things have small beginnings,” is the famous quote from classic flick Lawrence of Arabia. For biopesticides, the maxim holds true: They are confined to the fruit and vegetable fields no longer.

Biopesticides Primed for GrowthAs more major multinationals have jumped into the biopesticides arena, more suppliers, and larger suppliers, mean wider distribution and deeper market penetration of naturally derived products in years to come – especially in coveted row crop areas like the U.S. Midwest and the Brazilian Cerrado.

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“That [fruits and vegetables] was a great starting point,” Ziv Tirosh, CEO of Israel-based Stockton Group, maker of Timorex Gold biofungicide, said in an interview with Farm Chemicals International. “But the heart and soul of our food chain is row crops, and it’s a different ball game in terms of economics and application rates. Nevertheless, Stockton and other biopesticide companies are working hard at creating biopesticides that will work economically on row crops.”

The biologicals buying spree by agchem companies large and small swept the industry almost as fast as the spread of weed resistance. From Bayer’s trendsetting purchase of AgraQuest for nearly $500 million to BASF’s $1.02 billion acquisition of Becker Underwood to Monsanto’s $300 million investment in Novozymes in their so-called BioAg Alliance (to name a few), the value and potential of these products are not only being recognized but sought after. Twenty years ago, who could have imagined the current scenario?

For biopesticide companies, multinationals’ growing appetite for their products means immediate global market access and far greater resources to support product R&D, registration, manufacturing and marketing, among other prime opportunities. Easier regulatory also makes them attractive, with the typical timeframe being three to four years versus nine to 10 years, and not even 1/10 of the $250 million cost to register a traditional crop chemical.

“The interest of global crop protection companies to invest in biologicals will certainly enhance market acceptance and market penetration, especially in fruits and vegetables, but also in row crops, for example in the U.S. and Brazil,” said Utz Klages, Bayer CropScience spokesman.

Tirosh added, “There’s no doubt that the continued adoption of biopesticides by multinationals means that penetration into mainstream spray programs will continue at a rapid pace and clearly this will add to the exploration of value into row crops.”

None of this is to say that incorporating biopesticides is an automatic easy transition for traditional crop protection companies – far from it.

Dr. Mark Trimmer; photo courtesy DunhamTrimmer

Dr. Mark Trimmer; photo courtesy DunhamTrimmer

Challenges include biopesticides’ more demanding manufacturing and logistics, and the need to learn how to evaluate, develop and market the products, according to Dr. Mark Trimmer of the consultancy DunhamTrimmer. Training field staff is key. “Traditional crop protection companies will need to adjust their sales and marketing approaches to succeed with biologicals,” Trimmer said in an interview.

“Biopesticide benefits, such as residue and resistance management, are optimized when used in programs in combination with conventional chemistry,” he said. “Those companies that integrate biologicals into their thinking and train their field sales teams to promote them effectively will have an advantage.”

Big Growth and the ‘Wal-Mart Factor’

Bill Stoneman, executive director of the Biopesticides Industry Alliance, pointed out that it would seem that few biological companies would be left to acquire, but instead, he said more have sprouted up in the wake of the buying spree. Companies are also increasingly reaching out to seed treatment players to bulk up their portfolios and boost biopesticide consumption, such as Syngenta’s Clariva biological seed treatment nematicide based on technology it acquired from Pasteuria Bioscience in 2012.

Another recent example: In March, Bayer acquired Biagro Group, an Argentinian producer and distributor of biological seed treatment solutions especially in soybeans. Bayer is set to further expand its seed treatment business, known as SeedGrowth, by offering “an attractive and high-quality on-seed portfolio based on products, coatings, equipment and services,” said Matthias Haug, head of Bayer SeedGrowth.

Biopesticides still represent only about 3.5% or $1.93 billion of the $53 billion global crop protection market, according to DunhamTrimmer. That is up from $1 billion five years ago and $500 million a decade ago. The industry is highly fragmented, with more than 200 companies operating globally and the top 20 of those accounting for two-thirds of the market. Compare that with traditional crop protection market, in which the Big 6 eat up more than 72% of total sales.

Pam Marrone, founder and CEO of Marrone Bio Innovations

Pam Marrone, founder and CEO of Marrone Bio Innovations

The biopesticide industry rose more than 15% last year, and the trend is expected to continue. Pamela Marrone, founder and CEO of Marrone Bio Innovations, said her company outpaced that growth with more than doubling of sales. “The growth drivers of using biologicals for residue and resistance management and where chemicals are restricted or not allowed, will continue,” she said. Further, she noted that biologicals can be used right up to harvest to manage residues, are produced using agricultural raw materials and aid in reducing water use in crop production. There is also the Wal-Mart factor: They can help large food companies and retailers meet their sustainability goals, and help meet consumers’ requirements for health and wellness.

The launches move along at a fast clip. Marrone is rolling out one to new products per year and expanding its existing products, including Grandevo bioinsecticide and Regalia biofungicide, which snapped up five new registrations in Latin America last year and ran a successful test launch for plant health in corn and soybeans last year. “We are expanding its acreage in 2014 and moving into canola, wheat and rice. We also found that Regalia’s mode of action for resistance management and bee safety gave it a boost in California almonds,” she said.

Following this spring’s debut of Venerate bioinsecticide, Marrone is also set to launch Haven, a product that reduces transpiration, resulting in crop yield increase. In less than a year, the company built a fermentation manufacturing plant for making Grandevo, and in June, it closed on $40 million follow-on stock offering. “These new funds allow us to accelerate moving our active ingredients into seed treatments, further international expansion and to expand the pipeline,” Marrone said.

Stockton Group’s Tirosh summed up the industry’s generally optimistic outlook: “We are still in the very initial era of penetration of biopesticides and their full adoption into spray programs … We have enough value already to make this into a solid shift.”