A Boom or Bust 2023? Experts Weigh In on the Evolving Biologicals Industry

Date:04-08-2024

At the end of each year, AgroPages conducts a survey of our columnists, asking them to review the major trends in the agricultural industry over the past year and make predictions for the year ahead. Based on the responses we received from many experts for our 2023 survey, we produced this article: ‘Climate, Biologicals, Policy, Supply Chain, Agtech, AI’ - Key Words Frequently Mentioned in Year-End Interviews with 17 Industry Experts. Due to space constraints, this article is not exhaustive. Each expert response contains more valuable information, and we'd like to reorganize it and present their views in more detail.

The biologicals industry has experienced a remarkable transformation in recent years, marked by both significant successes and notable challenges. To better understand the current state of the sector and the trends to watch for in 2024, I had the privilege of interviewing several industry experts who provided valuable insights. 

In your view, what was the most impactful industry event or trend in 2023?

Pam Marrone: For biologicals, 2023 was a boom or bust year. Great success or big failure. On the fundraising success side, some notable deals include New Leaf Symbiotics, Indigo, Pivot Bio, FA Bio, Aphea Bio, Elicit Plant raised financing. Private equity group Paine Schwartz Partners acquired made a significant growth investment in Elemental Enzymes. Biobest bought Biotrop (Brazil) for more than $500 million USD. 

I believe three biological companies crossed the $100 million revenue threshold (Biotrop, Meristem, Pivot). The Profarm unit (formerly Marrone Bio Innovations) of Bioceres Crop Solutions reached profitability in 2023. Greenlight Biosciences received EPA approval for their dsRNAi product against Colorado potato beetle – a first for RNAi!  Micropep received EPA designation for its antifungal peptide as ″biochemical-like″ paving the way for a new generation of peptides. Platform10 was created out of the Western Growers biologicals testing project to provide a global, cross seasonal platform for testing of new biopesticides in more realistic onfarm systems. This further cements the recognition that biologicals need to be properly tested based on their unique modes of action and that customers and key influencers need more education and training how to use biologicals.  

On the failure side, AgBiome laid off all of its employees in December 2023 and Boost Biomes closed; both are auctioning off their assets. Venture capital investment climate was challenging, but biological deals in general were a bright spot for financing compared to the overall broader climate for startup financings. Valuations were in correction territory after sky high valuations in 2000-2022. An analysis of why it is feast of famine in the biologicals industry is useful (for another time!)

A problem for biologicals startup companies was the US EPA’s severe backlog in the BPPD for new active ingredient (AI) review, causing long delays in approvals, supposedly because of the high volume of new AI applications and lack of staffing to handle them. EU review and approvals remained a problem with no relief in sight as the EU voted down the legislation that contained steps for a better regulatory process or biologicals in Europe.

José Alfredo García: In 2023, the industry had to face various challenges such as fluctuating interest rates, raw material prices, and geopolitical tension, among others. Recognising the need for a unified approach to address these challenges as a sector problem became imperative to ensure sustainability and innovation. 

At Rovensa group, we responded to these industry trends by launching a groundbreaking initiative. The launch of Rovensa Next in 2023 enabled us to empower growers to drive the green transition by offering a comprehensive range of high-performance biosolutions. This initiative, which brought together ten consolidated companies under one umbrella, created a broad range of innovative biosolutions combining local technical knowledge, innovation and on-the-ground teams that work alongside growers and distributors in the field to solve their sustainability challenges. Rovensa Next aims to shape the sustainable future of agriculture and drive its biotransformation. 

Our commitment to ensuring outstanding performance in the field is backed by extensive R&D investment and a broad range of specialists in over 30 laboratories and excellence centres globally. The numerous trials and field studies we conduct worldwide and the technological inventions we have patented in different countries reflect our dedication to innovation. 

Moreover, we have a robust team of experts in the field, ready to share their dedicated crop management know-how and help growers meet their local crop needs across 90 countries around the world. 

Rafael Juncosa: In 2023, the agro-biotech industry experienced the lingering effects of 2022's challenges, notably the substantial impact of price hikes in raw materials and transportation. These increases heavily influenced the inventories of distribution channels, resulting in significant overvaluation. As a consequence, many channels encountered considerable difficulty in moving their inventories effectively. Moreover, the persistent drought across extensive geographic regions exacerbated the situation, further hindering sales growth.

Nevertheless, amidst these adversities, the industry witnessed a remarkable resilience and adaptability driven by innovation. Companies that had long focused on advancing technologies and products aligned with precision agriculture seized opportunities amidst the challenges. For instance, at Futureco Bioscience, we have dedicated years to developing solutions to mitigate adverse weather conditions, exemplified by products like Hydromaat, a microbial product effective in prevent hydric stress in plants.

The events of 2023 underscored the importance of innovation and proactive adaptation to emerging challenges. It is evident that such disruptions may become more frequent in the future, necessitating continuous innovation to ensure the primary sector's productivity, resilience, and sustainability. As such, the ability to innovate and respond swiftly to new challenges will be pivotal in meeting the growing demand while safeguarding the industry's sustainability.

Claude Flueckiger: Food value chains, politicians and other industry influencers committed to regenerative agriculture in 2023. Regenerative agriculture calls for sustainable practices that reduce the use of water and other inputs, while improving soil quality and biodiversity. This trend illustrates the demands that agriculture faces to increase food production on limited land and with a reduced environmental footprint. To address these challenges, the agriculture industry will have to transform from traditional production towards a period in which dramatic agricultural innovations will be the key to success for all industry stakeholders.

Nicolas Lindemann: Innovation as the N-fixing and P-solubilization technologies (and not only) became legion in 2023. Who does not have the best microbe to do it? It is clear that we have some market trimming coming but overall, great technologies are proposed. I would say that Bio-Nutrition has taken a strong lead on Biostimulation in 2023.

Looking ahead, what changes and trends in the industry should we pay attention to or look forward to in 2024?

Pam Marrone: Brace yourself! The speed of change will remain rapid with continued advancements in science and technology, especially AI/ML in all aspects of food and agriculture. We will see continued robust investment in biologicals; valuations will remain flat or move slightly upward. We will see investment continue in European biological companies. Funds investing in biologicals will be more climate tech funds and fewer pure agbiotech/agtech funds. 

M&A will continue, as a necessary consolidation of the biostimulant sector and as large companies round out their portfolios to take advantage of the European restrictions on chemical fertilizers. We will see more successes in the biopesticidal peptide and RNAi arena. We will see more companies submit dossiers to Brazil first instead of the USA because the market and regulatory processes in Brazil are now more favorable than the USA.

José Alfredo García: In 2024, the agricultural industry will be bouncing back, driven by increasing emphasis on biosolutions such as biofertilizers, biocontrol and bionutrition. As climate change continues to pose challenges to traditional agricultural practices, the need for sustainable and environmentally friendly alternatives will become increasingly relevant. The use of biosolutions represents a shift towards a more holistic approach to crop management, focusing on enhancing soil health, promoting biodiversity, giving additional tools to the growers. This trend is driven not only by environmental concerns but also by economic factors, as growers seek to improve efficiency and reduce labour costs while maintaining productivity. Stakeholders in the agricultural industry should also pay close attention to developments in biotechnology, regulatory frameworks and market dynamics, with biosolutions gaining momentum as viable alternatives to conventional products. Embracing these changes and investing in innovative biological solutions will be crucial to safeguard competitiveness and boost resilience in a rapidly evolving agricultural landscape.

In 2024, we will expect an evolution in terms of Bionutrition innovations: the increased geographical deployment of Biimore, the ultra-efficient biostimulant, is a milestone in bionutrition as it is now available in many regions of the world. When applied at ultra-low doses, this product enhances plant growth, nutrient uptake and stress resistance, thus improving crop yields and quality. Constant research and development in this area is expected to bring further advancements in maximising plant productivity while minimising inputs.

Biocontrol focus: there is a growing trend towards targeted, sustainable solutions. This involves the development of biocontrol agents that specifically attack pests and pathogens while minimising harm to beneficial organisms and the environment. Integrated pest management (IPM) approaches, which combine biocontrol with other strategies, are gaining traction as effective alternatives to conventional solutions. 

The use of orange oil technologies for biocontrol is expected to gain further momentum in 2024. Orange oil, derived from citrus peel, contains compounds with biocontrol properties that can effectively control pests and diseases while being environmentally friendly and safe for use in all productions systems including organic farming. As concerns over conventional pesticides remains, orange oil technologies offer promising solutions for pest management in agriculture. 

Overall, these trends underscore a broader shift towards sustainable and environmentally friendly practices in agriculture, with a focus on maximising efficiency, minimising inputs, and reducing the ecological footprint of crop production. Staying abreast of these developments and leveraging innovative solutions in bionutrition and biocontrol will be key for growers and industry stakeholders seeking to optimise productivity while meeting sustainability goals in 2024 and beyond.

Rafael Juncosa: Looking ahead to 2024, precision agriculture is poised to take center stage as a critical driver of cost savings and operational efficiency in the agrobiotech sector. 

With escalating water scarcity, the importance of technologies like Genomaat for soil health and BIO-precision agriculture cannot be overstated. These innovations will play a vital role in monitoring changes in the microbiota and achieving better balances tailored to extreme and adverse conditions.

Innovation will remain a driving force as companies tackle ongoing industry challenges. As the landscape evolves, adaptability and forward-thinking will be essential for navigating hurdles and seizing opportunities.

In summary 2024 is expected to witness a strong emphasis on adaptation and innovation throughout the agrobiotech industry. Stakeholders will prioritize sustainable growth and resilience, emphasizing the development and implementation of cutting-edge technologies to meet evolving agricultural needs and ensure long-term viability.

Claude Flueckiger: The market for biologicals will continue to grow in 2024: It will become larger than the market for chemical crop protection products in the long term. On one hand, the opportunity for biologicals to replace chemical products will be challenged by other technologies that fulfill the traditional needs for pest, disease and weed control such as biotic resistant crops, precision farming and adapted agricultural practices. However, very large opportunities for biologicals will emerge from new needs in the market, including products that support the microbiome, soil and plant health, reduce abiotic stress, provide ecological services and other benefits that go beyond the capabilities of traditional chemical crop protection products. I have discussed the trends for biologicals in more detail in the article ″Biologicals: the next agricultural technology revolution″.

Major AG Chem companies have a huge opportunity to grow, despite the decline of chemical crop protection market: Although the market for chemical crop protection products will decline drastically in the long term, the anticipated massive transformation of agriculture to increase food production sustainably will create significant opportunities. These opportunities include the integration of digital / AI and biotechnology with modern agricultural practices, along with adjacencies (e.g. carbon, biofuels, alternative farming, enhancing biodiversity, reducing food loss and waste). Major AG-chem companies that capitalize on these innovations could enjoy businesses much larger and more sustainable than in the past. I have discussed this trend in detail as part of an article ″ Chemical pesticide use will be drastically reduced in the long term″.

Ag-tech startups will be key: Deals have declined over the last few years, and support moved away from various ag-tech areas in 2023. Nevertheless, experts predict that venture capital has a bright future in the sector in spearheading an anticipated massive agriculture transformation. Startups play a critical role because major ag companies need to acquire technologies that differ from their core present competences. Investors will need the patience to focus on the significant long-term growth associated with a broader industry transformation.

Nicolas Lindemann: Climate uncertainties are still on the rise and both specialty crops growers and extensive growers need to guarantee output ($$/ha). We add to this the Bio Nutrition strategy that brings new variable in the equation of the farmer and tends to make things more complicated.

"Will the new microbe work in my field?" That’s the key question of all farmers. So, Agronomy will be a key element in the coming years. 2024 should see a rise of Biostimulation mixed with Bio Nutrition. Obliging companies, advisors, consultants, distributors to work on ″Knowledge Agriculture″. So, more knowledge… making me think that AI models to support decision and ensure all the parameters of the new equation are taken care of will be necessary.

Of course, 2024 will continue to see strong efforts in Bio Nutrients and novel Bio Control. Bioherbicides are being seriously studied and can disrupt crop protection soon. Mixture of Microbes to achieve the ″best″ nutrition patterns will continue to appear and market will select.

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