In this issue: Sustainable Agriculture: Which Tools Hold Promise?

Transcription

1 Issue 98 February 7, 2014 In this issue: Sustainable Agriculture: Which Tools Hold Promise? Q&A with: Sara Olson Lux Research

2 Sustainable Agriculture: Which Tools Hold Promise? Q&A WITH SARA OLSON, LUX RESEARCH Overview Several green agricultural technologies have emerged as potential methods for increasing yields, according to a new Lux Research report. These methods include: Biopesticides: an alternative to chemical synthetic pesticides. Synthetics are associated with human health effects and impaired watershed ecosystems, and may be connected to honeybee colony collapse disorder. No-till farming: a low-impact farming method that prohibits plowing and leaves a high proportion of crop residue on the field. Biochar: carbonized biomass that presents an alternative to fertilizers and soil amendment. Not all of these technologies represent financial opportunities, however. We asked Sara Olson of Lux Research what advantages these tools offer to agriculture businesses and what disadvantages will limit adoption. Environmental Leader: Out of the three technologies, your report found the biggest growth opportunity for biopesticides. Lux predicted the market will grow from about $1 billion today to $4.5 billion in 2023, driven largely by regulation. What are some of the regulations driving this growth? Sara Olson: The biggest single regulatory driver in the coming two years will be the two-year ban on neonicotinoids that the EU passed in an effort to protect honeybees. That s the big elephant in the room. It builds on a legislative package the EU passed in 2009, called the Framework Directive on Sustainable Use of Pesticides. 2

3 In the US there is an organization called IR-4, associated with Rutgers, that is tasked with helping to smooth the way regulation-wise for developers of novel pesticides. So Europe and the US are both applying regulations in favor of biopesticides, and not necessarily against synthetics on all counts. 3

4 EL: Are neonicotinoids widely used? SO: Yes. They are very effective and relatively inexpensive, so they are used on broadacre crops as well as fruits and vegetables, soy, potatoes, turf grass, and even on flea control collars for pets. They ve been around since the early 1990s and were seen originally as a less toxic (to human health) alternative to other pesticides. EL: For agribusiness, what are the advantages and disadvantages of biopesticides? SO: There are a lot of advantages: one is the ability to claim less toxicity in your marketing. Then there are short re-entry levels. When you apply pesticides, toxic residue hangs in the air for a while. You have to set a re-entry level, which can be very long. But with biopesticides it can be very short a few hours to immediate. This decreases downtime and it allows you to apply the pesticide closer to harvest, so you can continue protecting your crops from pests right up until the moment you need to harvest. From an R&D perspective, biopesticides are much less expensive to develop and get through the regulatory system much more quickly. The company working to develop them can push through nine potential products as opposed to one for the same price. In terms of drawbacks, you have to deal with the consumer perception that biopesticides may be less effective or less active. They may be a little more expensive. If the intention is marketing to a niche such as the organic market, the price can be distasteful for some consumers. EL: Are there currently enough biopesticides available to make that a viable alternative? SO: Many of the big six agribusiness companies are working very hard to develop biopesticide alternatives and approaches. Last year there were about $2.5 billion of acquisitions in such 4

5 biotechnology, including crop growth enhancers and protection against drought, but the bulk of that money was in pesticides. Bayer acquired Agraquest, BASF bought Becker Underwood, Syngenta acquired Pasteuria - they are acquiring promising companies and paying handsomely for them. The big six see the writing on the wall that biopesticides are not a question, they re an eventuality. In general there is going to be more demand than supply for a little while at least. There is one biopesticide class, Bt, that is widely used already. It was applied to produce some of the first modified crops. But we see the use of Bt going down in the future and being replaced by many of these biopesticides on their way to market, even if they re not there yet. For example, Vestaron has developed one based on spider venom. Early this week they achieved another step in their EPA approval process the public comment period was closed without any major events so it s likely that will be approved and on the market soon. Then there s Marrone Bio Innovations, which made a rare exit to an IPO rather than a sale to an agribusiness. Those two stick out as being closer to the cusp than others. EL: Will public opposition to GMOs have a significant impact on uptake of some biopesticides? SO: I think there will be some public opposition. Just by way of background, biopesticides exist in multiple formulations. You can grow a culture of bacteria and apply that to the soil. You can purify the toxin from the bacteria and apply the toxin. And another major pathway is for a gene to be incorporated into the plants these are called plant-incorporated protectants (PIPs). So this would be the pathway that GMO opponents are concerned with. Unfortunately, I think there isn t a way around this opposition, because it s hard to bring the entire population around to a college-level understanding of biology. The unfortunate reality is that makes these PIP biopesticides a less attractive approach. And recent announcements General Mills about Cheerios ( and Post about Grape-Nuts ( show that consumer pressure is driving companies to drop at least some GMO use. 5

6 That could push adopters to the other biopesticide formulations and we may see tech developers turn to methods of making PIPs that aren t transgenic. There is an Israeli company called Morflora that s using viruses to incorporate genes into plants temporarily. They treat seeds with a virus containing the genes they want, and when the plant grows it s harboring those seeds and using those to drive resistance to the targeted disease or fungus. But when the plant fruits or flowers, the virus is not passed on to that product whether the fruit is corn, soy, tomato, what have you. Morflora is not in the commercial stage yet, they re still doing some pilot trials, but as technology goes that has a chance of bridging the gap between uncomfortable consumers and the need for PIP-level protection. EL: How significant is the $4.5 billion that you have projected for this sector in 2023? SO: That prediction of $4.5 billion that s only 7 percent of the total world pesticide market. So that s a small sliver, and it s important to keep in mind. I d note too that I heard someone from Syngenta on a panel discussion recently, and she was asked, Do you think in the space of 10 years, biopesticides could replace 10 percent of the synthetic market? and she said no. Maybe seven percent, she said, or maybe 10 percent over a longer period. EL: Are there any examples yet of major agriculture companies starting to use biopesticides? SO: As far as the big six agribusinesses go Bayer, Monsanto, BASF, Syngenta, Dupont and Dow they ve all been really involved in developing and acquiring pesticide developers. But as far as the companies growing the crops, or the food producers buying those crops, no one has come out as a champion and said we re going to use biopesticides. I hope to see gradually growing adoption but I think it will be awhile before any organization says that s it, were switching to biopesticides. I d also say that unless and until there is the same consumer pushback on all synthetic pesticides that we've seen on GMOs, I doubt you ll see major food companies making that kind of move. 6

7 EL: What are the advantages and disadvantages of no-till farming? SO: The main reasons to adopt are first, to cut down on GHG emissions; two, increase yields by building organic content in the field over time; three, increased yield stability as you continue to practice no-till farming, you improve the soil's water-holding ability, so you can better withstand drought and flood. The major disadvantage is that adoption of no-till farming temporarily reduces yields. There s one to five years when yields will decrease from where they were, depending on how little organic content was left in the soil. You re starting to build carbon in the soil, and by five or ten years yields absolutely increase, but that s a slow process. It s hard for companies to watch that impact on their bottom line. Plus, all the plowing, tilling and turning machinery the farmer owns now becomes essentially useless. So usually notill farming is a last resort for farmers whose fields are not producing any more. And from a commercial perspective, there's not a lot of drive for no-till farming. The move to no-till doesn t create much of a market because it s essentially behavior modification. One exception is seeders or planters you need a special drill that uses a puff of air to push the seed down through crop residue. John Deere, for example, has developed a no-till seeder. The only other area in which there s a financial opportunity is in herbicides. When you start using no-till, at the end of the year you harvest the portion of crop you re interested in, and the remainder gets chopped up and spread on the field. That cuts down on day-to-day weeds, but what become a problem are hardier weeds, things like small trees and bushes. So there s an opportunity there for different kinds of herbicides. EL: How widespread is no-till farming? Are any major crop consumers pushing the practice, to lower the GHG impact of their supply chain? SO: Right now no-till farming is only practiced to any relevant degree in 24 countries worldwide. The US, Argentina and Brazil are at the top of the list. Those are countries where you have 20 million or 7

8 more hectares under no-till. Most of the world is slow to catch on, and most no-till farming tends to be government-motivated or NGO-driven rather than company-driven. EL: How about biochar? Is this a viable technology? SO: Biochar s major advantages are reducing GHG emissions, increasing productivity from agricultural land and decreasing the need for fertilizer in some cases. Unfortunately, you need to apply about 10 tons of biochar per hectare to get a statistically significant, repeatable effect in terms of balancing ph and the availability of nutrients. If you till the biochar in (so you re not practicing no-till farming!), then there s research to suggest it can remain active in the soil for 10 years. But biochar runs anywhere from $100 to $200 or $250 per ton. That cost almost can t be recovered, give the potential increase in yield. Changing to half biochar and half conventional fertilizer, in many cases the farmer would about break even. EL: And just to clarify, this is an either-or situation you either use no-till farming or you use biochar? SO: Research has been done on biochar on the surface of the till field, and it's more liable to fly away. It s only residual for one to three years, so that will reduce your return. In the perfect case, you d get a load of biochar, till it deep, and then start no-till farming. 8

9 EL: What are the other disadvantages for biochar? Beyond total cost, there is the inconvenience of transporting biochar, which of course is responsible for its own share of costs. Think of biochar as ground-up charcoal: it s powdery, it flies away, in the atmosphere it essentially creates soot. It needs to be in a truck with a closed top. Based on the total costs and poor return, we predict that there will be opportunity and demand only if prices drop. If biochar gets a champion, then you could imagine more refined processes and transport techniques could bring the cost down. About Lux Research Lux Research provides strategic advice and ongoing intelligence for emerging technologies. Leaders in business, finance and government rely on us to help them make informed strategic decisions. Through our unique research approach focused on primary research and our extensive global network, we deliver insight, connections and competitive advantage to our clients. Author Profile: Sara Olson As a Research Analyst at Lux Research, Sara Olson currently leads the Agro Innovation Intelligence practice, identifying and assessing key opportunities for profit and technological advances within a broad range of agricultural topics including, among others, genetically modified crops, fertilizer and pesticide optimization, precision ag developments, and marker-assisted selection in crops. Sara received her PhD in Biochemistry from Texas A&M University after completing her BS in Biology at the same institution. Her research focused on quantitative functional genomics of crop plants with implications for advancing nitrogen use efficiency, drought tolerance, and biomass generation in both food and fuel-generation applications. 9

10 Her report, Green Dreams or Growth Opportunities: Assessing the Market Potential for Greener Agricultural Technologies, is available at Contact Information Tel: Carole Jacques URL: