Big Agribusiness Firms Moving toward Biologicals

Published online: Jan 09, 2020 Articles, Fertilizer, Fungicide, Herbicide, Insecticide Scott E. Rupp
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Source: Multibriefs 

Is agribusiness going green? Increasingly, the sector appears trained on becoming more natural and sustainable compared to chemical alternatives. The change is driven by consumers demanding non-genetically modified foods and concerns over Big Ag’s role in pollution and chemical waste.

These changes are being made possible by innovations and developments with beneficial microorganisms in the soil, including seed coatings of naturally occurring bacteria and fungi that can do the same work as traditional chemicals. This may include warding off pests to helping plants flourish, per a global patent study by research firm GreyB Services.

Regulators continue to wrestle with tightening rules around chemical use in agribusiness, and lawsuits are leading to potential major corporate payouts to those who can convince juries that such chemical-based compounds are dangerous. There is pending litigation against Bayer AG, for example, over whether its glyphosate-containing product, Roundup, causes cancer.

The German agriculture and healthcare giant said in October that the number of cases alleging the company’s glyphosate-based herbicides cause cancer more than doubled over the past three months, to 42,700.

“Bayer has been sucked into a legal quagmire after it paid $63 billion last year for U.S. seeds company Monsanto, acquiring Roundup and other glyphosate-based weed killers as part of the deal,” Fortune reported. “Three U.S. juries have ruled against Bayer in cases brought by Americans alleging Monsanto’s popular herbicide caused their cancer, sending Bayer shares plummeting by 30 percent since the deal closed in the summer of 2018.”

News reports suggest that any settlement reached in these talks may reach as high as $20 billion. Some analysts estimate the final amount as not quite that high but still running into the billions of dollars.

In 2015, a World Health Organization body found that glyphosate could “probably” cause cancer in humans, although U.N. experts found the following year that glyphosate was unlikely to pose a cancer risk to humans exposed to it through their diet.

In April, the Environmental Protection Agency (EPA) said there were no risks to public health when glyphosate was used in line with recommendations and that glyphosate was not a carcinogen.

Bayer insists its products are safe, but the litigation is having an obvious effect on the future of its production.

“Both entrepreneurs and investors are saying, ‘Hey, the writing is on the wall, we’re entering a post-chemical world,’” said Rob LeClerc, chief executive officer of AgFunder, an online venture-capital platform in an interview with Bloomberg. “The seed companies who have billions in market cap are like ‘We need to do something,’ and everyone recognizes the opportunity.”

The global fertilizer and pesticide market are around $240 billion and grows 2 to 3 percent a year.

Walmart Inc., for example, and non-governmental organizations are following consumer demand and making their own pushes for less chemical-intensive farming methods. These entities are putting their economic muscle behind developing organic foods with environmental or animal welfare in mind.

As population increases worldwide, the demand for agricultural products is projected to grow 15% over the next decade, according to a joint report by the Organization for Economic Cooperation and Development and the United Nations’ Food and Agriculture Organization.

“There’s a growing world population and how are we going to feed all of these people?” Craig Forney, assistant director for licensing and business development at Iowa State University in Ames, Iowa, told Bloomberg. “At the same time, we want to protect the environment. We need to use land better and use the resources better.”

Forney says the outcome is “intensified agricultural production to increase productivity of land and do it with minimal chemical support.”

Companies like BASF SE, Bayer and Syngenta AG have patents on products using naturally occurring microbes to help crops flourish even when there is low water availability. The microbes can act as catalysts to encourage growth. Biological-based fungicides and insecticides can also help reduce crop damage from insects, slugs and fungi.

“Seed-applied biological products can extend the window of disease and pest protection, while some also provide alternate modes of action that can reduce the build-up of resistance, aid with nutrient management and reduce plant stress,” said Chris Judd, BASF’s global strategic marketing manager for seed treatment, inoculants and biologicals.

Per Bloomberg reporting and a review of the landscape by independent analysts and researchers, many new patents are being issued to companies like BASF, Bayer and Dow Inc. for more natural ways of managing pests including pheromones that deter breeding and reflective mulches, instead of chemical-based insecticides.

Bayer sees “high growth potential” for biologicals, citing a challenging regulatory environment for chemicals and a growing emphasis on sustainability in agriculture. Bayer has a research and development team solely focused on them

In 2013, BASF acquired seed-treatment supplier Becker Underwood to help it ensure a leadership position in biological agents to fight bacteria and fungi.

More patents and research by the agribusiness companies shows a trend toward the promotion of organic and non-GMO farming, said Nicole Kling, a patent agent with Nixon Peabody who specializes in the biotechnology field.

The hope of these organizations is to, eventually, develop organic and non-GMO products that are just as productive as those chemical-based products being used by the big agribusiness companies.

Additionally, scientists continue working on new plant varieties, with applications for new varieties up 9 percent in 2018, according to the World Intellectual Property Organization. China is leading the effort, with more than a quarter of the applications for new varieties.

Others are not far behind, biotech research in the U.S., China, Germany, Japan and South Korea. Demand for more food will be greatest in Africa, India and the Middle East.