This article is the first installment in our series on biologicals. We first touched on biologicals in our fertilizer dilemma series as an option for farmers looking for alternatives to synthetic pesticides and fertilizers. In this series, we will look more thoroughly at the obstacles and opportunities for biologicals and share our perspective on the keys to success for the industry. In this article, we lay the groundwork by looking at what biologicals are and how they are used today.
The Biological Tailwinds
Farming used to be about planting seeds and praying for rain. But since the Green Revolution, farmers have had a profusion of input options to help optimize production. Chemicals, synthetic fertilizers, and hybridized or genetically engineered seeds have become essential inputs of many farm operations. According to the American Farm Bureau, in 2020, chemicals, fertilizers, and seeds made up 17.5 percent of on-farm production expenditures, the largest share of spending.
While synthetic inputs have resulted in drastic yield increases, they also have numerous consequences that have come into focus over the last few decades. Synthetic fertilizers and crop protection chemicals are increasingly under fire for their environmental impacts, from eutrophication and soil degradation for fertilizers to ecosystem decline and increased pest and weed resistance for chemicals. The extensive use of agricultural chemicals such as pesticides and herbicides is linked to adverse health outcomes, particularly for farmers and communities where heavy spraying is common. Lastly, there is the price volatility. In the first article of our fertilizer series, we covered the reasons for price volatility and supply chain breakdowns for fertilizers. Due to supply chain issues, farmers also experienced ‘off the charts’ increases in chemical prices over the last few years, with the costs of glyphosate and glufosinate jumping more than 50% from 2021 to 2022.
The push to find solutions to reduce the use of synthetic inputs has led to a movement towards biologicals, a broadly defined term (definitions can differ or even disagree, which also lends to difficulties with regulation and adoption) that includes agricultural inputs that utilize natural sources for their ingredients, such as microbes, plant extracts, peptides, and even beneficial insects. Since biologicals are derived from naturally occurring substances, they minimize adverse impacts on soil health, water quality, and non-target organisms. They can also enhance soil fertility, microbial activity, and nutrient availability, improving long-term soil health. Biologicals can reduce farmer reliance on synthetic inputs by improving plant resilience, reducing pest and weed pressures, or improving soil nutrient availability and plant uptake. The shift towards biologicals also aligns with the growing demand for healthier and more sustainably produced food, catering to the preferences of an increasingly conscious consumer base.
But What Are Biologicals?
Biological products can be divided into three main categories: biofertilizers, biostimulants, and biocontrols. Biofertilizers consist of microbials that increase nutrient availability in the soil through nitrogen fixation, increasing levels of bioavailable phosphorous, or other growth-promoting processes. Biostimulants are used for abiotic stress management and can include several products, such as microbials, amino acids, plant extracts, organic acids, and seaweed extracts. The line between biostimulants and biofertilizers is blurry, as biostimulants are also used for improved nutrient uptake efficiency.
Biological control products encompass macroorganisms, such as insects, mites and nematodes, and biopesticides which includes biochemicals and microbials. Biochemicals are mostly composed of plant extracts while over 90 percent of commercially available microbials are bacteria and fungi.
State of the Biologicals Market
We are at a pivotal moment for biologicals. According to some estimates, biological control agents and biostimulants are growing at over 10 percent a year, and the market size is estimated to be worth $24.7 billion by 2027. Even more critically, biologicals are expected to gain a more significant market share. According to Canaccord Genuity Research, the long-term annual growth rate for the biologicals market will be more than 2x that of the conventional crop protection and fertilizer markets. And according to Corteva Agriscience, the share of biological crop protection will reach 25 percent by 2035. Additionally, while there are many new companies, there are also 20-year-old biological companies that are very mature and trusted by agronomists and farmers, putting biologicals on both sides of the hype curve. At S2G, we believe that while there is much work to be done, biologicals will play a vital role in the path to more sustainable crop inputs over the next decade.
Biologicals hold a lot of promise for the future of sustainable agriculture, and the tailwinds are only increasing, but the biologicals market is still relatively small. According to research from LEK Consulting, biopesticides represent just eight percent of the $65 billion total crop protection market, and biostimulants and biofertilizers comprise roughly two percent of the more than $299 billion global fertilizer market. Growers' adoption rates of biologicals for crop protection and nutrition are about the same, with some 18-20 percent of growers using biologicals at scale or trialing them to use them at scale. But about 30 percent of the growers interviewed trialed biologicals and decided not to roll them out at scale.
The recently released Tracking Biostimulants Survey from Stratus Ag provides a rare window into how biostimulants specifically are performing according to farmers and retailers. In his Upstream Ag substack, Shane Thomas does a great job of breaking down the results and highlighting the opportunity for greater understanding and adoption of biologicals. In 2022, of the almost half of US retailers surveyed who sold at least one biostimulant, fifty-two percent of them have a positive attitude towards biostimulants, while 23 percent have a negative attitude. For farmers across North America, 23 percent used a biostimulant in 2022, but as Thomas points out, farmers do not always use biostimulants across the majority of their farms. Fifty-five percent of all farmers were satisfied with the biostimulants they used in 2022, while a third were unsure, and 12 percent were dissatisfied. So, while biologicals are increasingly being used, there is still a substantial lack of understanding around their efficacy, and a significant portion of retailers and farmers are not adopting biostimulants at all.
The Cause for Confusion
At the Salinas Biological Summit, a panel of farmers shared that while many of them were open to incorporating more biological products, they have tried a number of products without seeing results and, therefore, have some skepticism. Biological products have been sold for decades, and many ineffective products have hit the market over that time, providing fodder to the “snake oil” accusations around biologicals. Even for well-trialed products, success rates can vary drastically, and factors like temperature, light, fluctuations in soil chemistry and biology, and application timing can impact efficacy. A grower can apply the same product to the same field at the same time of year and get different results. While the mechanism of action for chemicals is very well established, the conditions for effective biological use tend to be more complex and less understood. This makes it difficult for farmers to sort through the options and ensure efficacy.
Also at the Salinas Biological Summit, the Mixing Bowl released its landscape of ag biological companies. The landscape contains 400 companies, a subset of the more than 1,200 companies identified in their research. There are so many products out there with little guidance on which ones to use, and growers can’t possibly trial everything themselves, leading to confusion and fatigue. One of the Mixing Bowl’s major findings is that there are not yet industry standard definitions, and companies are cavalier with descriptions of their activities. This contributes to the obfuscation around what products do and the expectations farmers should have.
Distribution is also a barrier to adoption. Products containing living organisms, in particular, must be transported, stored, and applied in a way that won’t kill them. This can require specific temperatures, humidity levels or other factors not currently built into agricultural supply chains. Lastly, comprehensive farm-based trials are expensive and difficult to conduct due to unpredictabilities in the field and the issues with generalizing results. But farmers are looking for clear data on efficacy, which lab trials can’t provide.
In the next article, we will explore the future of biologicals and what it will take for these products to gain substantial adoption and market share.
