Q&A: Fast-Growing Biostimulant Markets, Distribution

Custis

AgriBusiness Global had the opportunity to chat with Dan Custis, CEO and co-founder of Advanced Biological Marketing (ABM), a top ag biologicals provider based in Van Wert, Ohio. Come watch Custis present at the debut Biostimulant CommerceCon, co-located with the AgriBusiness Global Trade Summit, July 30-Aug. 2, 2018, in Phoenix, Arizona. Register now.

ABG: Can you tell us a bit about the company you started, Advanced Biological Marketing? 

We started ABM 18 years ago with biological products. We did soybean inoculants and a biopesticide at the time – the first one, a biopesticide called T-22. After that we did a lot of grant work with Dr. Gary Harman at Cornell University. Dr. Harman developed three strains of Trichoderma viride for us that we’re marketing worldwide. This Trichoderma line is a root and soil inoculant, and biostimulation is part of what it does to the plant. We have a couple of people that sit on ASTA’s biostimulant committee, and we are members of BPIA.

Our goal over the next five years is to triple our sales worldwide. Growth has been slow in the last couple of years, but prior to (the commodity price crash), we were growing 20% a year. Value is there in the products. The U.S. is our largest market share from a revenue side, but our African business is growing at about 30% a year.

ABG: What do you think about the Farm Bill draft’s inclusion of a definition of plant biostimulants for the first time in the United States?

That’s nature. All of a sudden we have USDA and Farm Bill recognizing a market segment that is really growing within agriculture. What we’re trying to do is get a little bit of regulation. That scares me on one hand and yet it’s needed on the other. It’s kind of convoluted right now and we’re trying to get organization around it, because there are some companies that 18 years ago used to refer the products that are now accepted into the marketplace as snake oils, or what I like to call ‘fufu dust.’

What we have done with a concerted effort on our part, is to make sure we have credible sources. When we tell people we work with Cornell to develop what we have, it brings a tremendous amount of credibility to the table. We know how our products work right down to the systems that we change within the plant. A lot of companies bringing biostimulants to the marketplace don’t have that.

ABG: So creating a definition is an overdue step, but it still scares you in one aspect – that it could become overregulated, or they could get it wrong?

My concern is any time you start to get our federal government involved in farming, I’m a little cautious. What they do with the Farm Bill and different aspects of what they do in the farming community is great, but all of sudden when it gets to biopesticides and biostimulants, and we start to bring the EPA into it, I’m a little cautious. I’m not against them – but just a little cautious.

ABG: The definition of biostimulants as provided by the Farm Bill seems straightforward, but has such an impact. How will this be able to eliminate some of the ‘fufu dust’ products, as you described?

We know what our products do. In some presentations that Dr. Molly Cadle-Davidson makes, she puts a slide up that shows a corn plant. It has really everything they mention in the Farm Bill definition: abiotic stress, enhances nutrient uptake, increases photosynthesis, upregulates into the corn plant, and increases the plant’s internal defense mechanisms. We know which plant mechanisms our products change whether it’s corn, soybeans, rice, peanuts, cotton. That’s where I would like to see the industry go.

There are companies that put together what I will call a consortium of microorganisms. There might be 40 in there, but they don’t know which ones does what to a plant. It’s kind of a shotgun approach. We know the science behind our products. We employ a crop specific approach to our products. Our wheat product and our corn product both contain Trichoderma, but we use a process we call Smart Selection to determine what strain or combination of strains work best on each individual crop.

ABG: Are all of your products your own?

Yes, other than the patented Trichoderma strains that belong to Cornell, but we have a patent lifetime license on the strains.

ABG: What are some of the up-and-coming markets that you have seen?

Farmer in Democratic Republic of Congo showing his ABM biostimulant-enhanced corn; photo courtesy Dan Custis

This is one of my passions, getting into the countries and working with up-and-coming farmers. I have been to the Democratic Republic of Congo, and have actually seen what our products do. I was there on a missions trip with our church, but I also worked directly with members of that church to grow crops on the farm. They were given so much farm ground after (the war) stopped. My oldest son and I went, and we sent them corn product ahead of time. This was 2009. We get there, and the other half of what they are planting is what they call ground nuts – or peanuts. I treated the seed with our Trichoderma while I was there, and they sent me pictures later on throughout the season of the peanuts and corn, and it was just phenomenal.

They didn’t have any money to buy fertilizer to put on corn and you can see the difference in the greenness where they used our biological product on one part of the plot, and they didn’t use any on the other. But for seed, they went to their local market and bought 10 pounds of seed right there. The needs are there.

ABG: What was it like working with the farmers and what was their response when you told them you had biostimulants?

They described it as a magic product (laughs). Farmers are the same anywhere I go in the world. They all want to see what it does on their piece of ground. I don’t care whether you are in Thailand, Vietnam, South Korea, Philippines, the African nations, or South America – they are the same way. Those farmers want to see what your product is going to do for them.

Some people I’ve talked to here in the U.S. were kind of amazed at that. Thought they would just jump on taking anything. It’s human nature. You have a new product coming out – you want to see what it’s going to do. You go into some of these countries, and your heart just breaks, because I’m comparing what I have to what they have. I think that’s the wrong attitude when we travel. We should be able to understand where they are and what their goals are and what they want to do.

When I was in DRC, a lot of these kids live in poverty, but you give them a soccer ball and they have smiles on their faces. Farmers want to produce enough to feed their family. If we can help them to do that and produce extra, for them to start to become businessmen and or businesswomen. Women do a majority of the farm work. When we were in the Congo, the men treated the seed but the women were the ones who actually sowed the seed. That’s just the culture. I go to Southeast Asia, and it’s the same thing.

ABG: Which other markets have you seen that are the fastest growing for biostimulants?

I get to South Africa about twice a year, and my son – who is in charge of our international efforts – is there twice a year. When you take a look at the up-and-coming farmer, I was in South Africa, and that’s exactly how they described their farmers.

We started with a distributor in South Africa and then we bought them a few years ago, so we have full R&D, distribution, and packaging duplicated in South Africa. The Afrikaans want these up-and-coming farmers to be successful. Not only are we working with commercial-type farmers, and are getting into Zambia, Zimbabwe, Kenya, but we are also working with distributors there to get products into the hands of these up-and-coming farmers.

ABM South Africa is moving product up into those countries. There is a huge opportunity in Africa. The DRC sits on the equator. South of there has a lot of good farm ground. When you get up into the northern countries of Africa they are not as friendly to (American businesses). I try to keep away from politics – my goal is to feed people. The small stakeholder just wants to feed his family.

ABG: Is there a lot of competition in the biostimulant world in South Africa?

There is, and a lot are local South African companies. We have distributors there and we do some private-label products for them or custom-design products for them for their marketplace.

ABG: It seems interesting being able to meet the people that use your products.

Treating rice in Peru; photo courtesy Dan Custis

From my perspective it is always great to meet the farmers who use our products, no matter which crop it was used on or which country. Their positive reaction is what keeps me motivated. We’re not a Monsanto; we’re not a BASF. Those companies do operate there, but they are more on the chemical and seed side.

ABG: What other markets are growing?

Southeast Asia: Philippines, South Korea, Vietnam, and Thailand.

ABM is in all of them but Thailand. Thailand has been a bear to get into from a regulatory standpoint. We are trying to get our Trichoderma products into Thailand. Thailand has a lot of Trichoderma strains that are grown locally in-country, so we were running into a lot of road blocks on regulatory there. Some, as we grow, we will be able to overcome.

What I found fascinating was Vietnam. Talking to some of the government officials where we got our product registered – this was a local government official. He said, ‘Our goal is to not only help our farmers grow enough to feed their family, but to grow enough to where they have enough extra to sell on the open market and we create our economy.’ All of a sudden capitalism is a good word.

The Mekong Delta is the largest rice-growing area in the world. We don’t have a major portion of that market yet, but you’ve got to start somewhere.

ABG: The topic of your talk at Biostimulant CommerceCon is distribution. What do you want to touch on looking toward that, in a broad sense?

This topic is right down my alley, because we started out 18 years ago selling direct to farmers. It’s been an evolution of how we have changed our strategy on distribution and how we view markets. From selling direct to farmers we went to selling in dealer network here in the US. Once we got to a certain volume and wanted to expand our markets, we moved to traditional three-step distribution. Companies like WinField United, CPS, Wilbur-Ellis, KOVA of Ohio – those are examples of what we do.

Our international business didn’t start until 2009/10, and that was a different type of challenge. Our first distributor on the international side was in the Philippines – that’s a long way from Van Wert, Ohio to Manila. We worked with a company called Aldiz in the Philippines. We actually private labeled a product for them, and it’s one we designed for them, and they are doing quite a bit of business with it on corn, rice, and sugarcane.

ABG: How did you start up that relationship?

That contact actually came through the U.S. embassy and working with the Foreign Ag Service. The Foreign Ag Service has what they call a Gold Key program. We paid them a fee, filled out a farm, and they screened distributors for us in the Philippines. Aldiz was the one we settled on. On the flip side, the federal government can do a lot of good.

I believe that’s how got our distributor in Vietnam as well. We have a great distributor in Indonesia, too.

ABG: What are the biggest distribution hurdles in Southeast Asia?

It still goes back to country registrations. Some countries categorize biostimulants in the fertilizer category. Each country is different. That’s how we choose distributors there – we want those that have the expertise as well as registrations. We also want them to have boots on ground with the sales force and be financially stable. If we think there are questions, we will ask for half payment up front with their purchase order. We will require the other half before we load a container.

ABG: Where you see this category going?

I see this category starting to explode. I don’t see this biostimulant market going anywhere but up. Odd thing is a lot of these other countries have latched onto biostimulants and microbials a lot quicker than markets here in the U.S. have.

ABG: Is it because biostimulants are viewed as a more natural solution?

Some of the African countries don’t even allow GMO crops yet, although that’s changing. A lot of times use of pesticides is restricted but even more so than that, a lot of small stakeholders can’t afford them. The return on biostimulants is about 7 to 1. For the most part, we want to see a 5-to-1 or 7-to-1 return on investment.

A lot of times it’s not always yield, but also the quality of the crop – particularly if you’re talking about potatoes, yams, tomatoes, and onions, we provide a better quality product for the farmer as well.

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