5 Insights into the Biological Market for Agronomic Crops

A few weeks back, I attended an industry conference for biologicals in agriculture. Since attending that conference, I’ve had a delightful conversation about labels. More specifically, why labels matter.  The conference was called “The 5th Annual BioAgTech World Congress.” Gosh that name kills me. What’s a World Congress? It felt like a conference to me, what is the difference?  Can’t we just call it what it is? By not calling it a conference, it felt so pretentious.

Secondly, this event did not include animal agriculture.  It only included biological solutions for cropping systems. What do I mean by cropping systems?  I mean row crops, vegetables, non-tree producing fruit, and turf and ornamentals. I’ve seen so many corporations use BioAg - even just agriculture – to ONLY refer to cropping systems.  But isn’t animal agriculture still agriculture?  Are companies missing the mark by using agriculture to mean exclusively cropping systems?

I think as biological companies we need to do better because it’s confusing. We need to choose our words with INTENTION. Calling something a BioAgTech World Congress is confusing and quite frankly, dumb. And because my career has spanned both animal and plant agriculture, I’m acutely aware of the impact of NOT choosing words and definitions with intention. Be specific. Be clear. Otherwise, your target audience will not know you are talking to them.

Ok now that my rant is over, I did come away with some positive information. I’ve been in this biological industry for over 10 years now.  First with a large, global company in their applications research area and then with a small start-up in their business unit. So, I’ve been on both sides of the coin – developing products and trying to commercialize them. I’ve felt the pain points of each. Attending this conference only solidified what I already felt was going on in this industry. So together with my experience, I want to talk about 5 Key Insights to consider when bringing a biological solution to market.

Note: My use of BigAg in this article refers to large companies like Syngenta, Bayer, BASF, Certis Biologicals, and Novonesis (formerly known as Novozymes).

Number 1: BigAg is investing in companies, not technologies.

I’m being a bit cheeky here. BigAg is for sure putting dollars into their R&D for the biological market. What percentage are they allocating towards these technologies?  I can confidently say not as much as chemistry-based solutions. Why though?  My hunch is that as an industry, we are still unsure where biologicals fit into the overall market. In the U.S. at least, there hasn’t been a huge demand for such products. There is a disconnect between what people say they want and what they actually purchase. Frankly, farmers can’t afford to pay extra for these kinds of technologies (more on that later). So where do biologicals fit? BigAg is letting startups figure that out. Who has it figured out? Which products are gaining traction and in what areas? By investing in companies, and letting the startups take on that kind of risk, eventually we’ll figure out where biologicals fit.

Which brings me to risk. BigAg isn’t quite there in terms of taking on the risk of biologicals. It takes an incredible amount of capital to bring a product to market. With all the unknowns surrounding biologicals, the math just doesn’t add up within these large companies. BUT when multiple companies, venture capital, and other funding sources pool their resources, the risk becomes more manageable. Essentially, the industry is leveraging capital resources to innovate and commercialize high risk biological solutions. And to be honest, this makes sense. When a bio-control product can take upwards of 10 years to develop and commercialize, we need to pool resources at this point in time. No one has that kind of money.

Once there are successful products on the market, we will start seeing a lot more key partnerships and acquisitions. This should not be a shock to anyone. This is typical in the cycle of a growing industry. The biological market is FLOODED with startups and new technologies. Some will make it, and others will not. Take AgBiome for example. They were a company with great technologies, but they just ran out of steam. Certis Biologicals acquired their commercialized products, and Gingko Bioworks acquired their 115,000 sequenced and isolated strains. The number of closed-door meetings that occurred during the conference should be a clear indication that key partnerships will continue to be an important way to commercialize products.

Number 2: Biologicals will not be stand-alone products.

It was clear from all the BigAg speakers that they are not interested in stand-alone products, and I agree with them. For over 10 years we’ve been trying to sell farmers stand-alone biologicals, and they are just not interested. I think this in part because we don’t actually have that many stand-alone products. We don’t have much that can be a 1:1 swap for something they are already using. There is just not room in the budget for yet another product. Yes, we have some really great biologicals out there, but is it better than what is already on the market?  I don’t know, I think it depends.

Which brings me to my next point. Stop trying to produce a product that is supposedly capable of treating 10 different crops in every environmental condition across the globe. Find your niche and test synergies and compatibilities with the popular chemistries already being used. Give farmers another tool in their toolbox to solve pinch points in their operation. Give them use cases that make sense in their soil, in their crops, in their climate zone. That’s what farmers want.

Lastly, farmers will not pay a premium for a biological product. Telling them it’s a green technology or that it’s sustainable will not get them to shell out more money. The price point on your product HAS to be competitive against what’s on the market. Biologicals will NOT become their own category that warrants a higher price point. Farmers will categorize products based on need. Make your product competitive in price, function, ease of use, compatibility, or whatever else.  Merely saying it’s a biological is not enough.

Which brings us to number 3.

Number 3: Stop selling directly to the farmer.

Stop building a sales force that calls on farmers directly. Firstly, you don’t want to incur that kind of cost. Secondly, farmers are deeply loyal which means it will take way too long to gain their trust.  Add a year or two more for test strips on their farm, and you’re looking at 5-7 years before you’re getting a sale big enough to matter.  Wouldn’t it be nice if there was something already in place where farmers go to get their supplies in a trusted and loyal way?  O wait, there is – distribution. Especially in the U.S. there is a huge network of distribution for ag products.  And better yet, it’s tiered so you can choose the best way to enter the market.

I want to reiterate something important which is going to be a major shift for some companies. FIND YOUR NICHE. Stop trying to sell your technology across the United States in every situation. It’s too expensive. Figure out your best-case scenario and launch there. And because distribution is tiered, find the distribution network that fits your operation and sales goals. Identify your top 3 distribution outlets, talk with them early to figure out what THEY NEED to sell YOUR PRODUCT. Gain their trust and their collaboration. Get them on board, and they will sell your product. But you must get them on board. They are equally your customer as is the end-user.

EDUCATE, EDUCATE, EDUCATE.  We are all going to stop selling directly to the farmer, right? But this doesn’t mean we need to stop educating the farmer. A 2022 study conducted by McKinsey and Company showed that 25-34% of U.S. farmers have never heard of biological products. THIS IS YOUR UNTAPPED MARKET. We need to ramp up our outreach efforts to make sure that when they do hear of biologicals it’s positive.

Number 4: Understand the regulatory pathways early.

This might be another reason why BigAg is investing in companies, not technologies. Registering Ag products is expensive especially here in the United States. It’s also inconsistent and confusing. And if we’re talking about a bio-control product like a pesticide, it’s practically cost prohibitive.  The field trial cost alone will be millions if you try to launch across the United States. Don’t spread yourself too thin.

My suggestion for any product development team is to understand the regulatory ask before you start research. Develop your registration dossier as your project moves along its timeline.  The last thing you want to do is spend millions in R&D and not have what you need to register in your key states. You want ZERO LAG TIME from the time your product is ready to commercialize and final launch.

Now I’m no regulatory specialist, far from it.  So, I’m going to leave it here: don’t try and guess what is needed to register your product. Get input early and often.

And finally,

Number 5: Big data will be the key to future success.

For the past 10+ years, new compounds have been discovered by developing robust screening pipelines. Thousands and thousands of natural compounds have been screened for every sort of application. Think of a funnel, you start with a thousand candidates, and as you move through time, your number of candidates shrink until you get only a few that make it to products. This is a time-consuming and expensive process with a relatively low success rate.

A few companies at the conference unveiled their AI tools to cut this process down. But if I have to guess, so many more companies are keeping their AI a secret. Companies will and probably already have leveraged AI for predictive selection of natural compounds. We will start to see targeted approaches to product development, and this will save both time and money.

This shouldn’t be a surprise to anyone. This is just business today. But here is the thing I want to talk about because no one else is. The types of data a company chooses to collect and protect will become their competitive advantage. Read that again. At this point, it’s too difficult to collect all the data types within a single ag space. Think soil, precipitation, temperature, time, crop varieties, crop phenotypic data throughout growing season, shipping conditions, user data, geographic information and the list goes on and on. Combine all that with in-house research and development data. It’s just too much. So, companies will have to choose what they want to collect and how to protect it.  They will develop algorithms that mine and combine the data for innovation purposes.

Here's the real impact though. Companies will partner to combine their complementary datasets. Data will become the product.  I believe companies might even pay big money to train their algorithms using other companies’ datasets. What does this mean though? Companies will invest time, money, and effort, on top of what they are already doing from a physical product perspective. I believe it will pay off in the long run though. If you work in an AgTech company and aren’t putting considerable resources into collecting and protecting a unique aspect of this industry, then you need to prioritize it quickly. What will be your competitive advantage in 5 years?

If you’re reading this, thank you for reading the entire article. I hope this challenged norms and perhaps shifted your focus. We must stop developing products for farmers based on what consumers think they should be using and instead produce products that farmers actually want to use. Let’s call it farmer-first product development.