Biopesticides: Continuous Growth
Contents
Introduction
Taking out the toxins
Market forces
Facts and Figures
Market movers
Leaders & fast followers
Investors
VC / PE / Funds
Farming for the Future
Sustainable pesticides are better for the planet, now and later.
Population growth and the resulting food security have been a concern to our society for decades. However, climate change, the COVID-19 pandemic, and recent world events (e.g., war in Ukraine) have raised this concern to the level of “unprecedented crisis” around the world, according to comments from United Nations Secretary General António Guterres in June 2022.
The global population is expected to grow by roughly two billion people by 2050. Now more than ever, both innovation in farming and food production and supporting sustainable alternatives are vital to achieving global food security. In addition, consumers are increasingly aware of the chemicals used in food production and what they are putting into their bodies—and are interested in supporting chemical-free production alternatives.
Biopesticides (i.e., biological control products), which are used in agriculture for pest control and to improve plant physiology and productivity, are derived from natural materials such as plants, bacteria, and certain minerals. They target specific pests and are inherently less toxic than their synthetic pesticide counterparts. While biopesticides have been around for more than 50 years, the market has experienced a rapid growth over the last decade in terms of sales, research, and user acceptance.
Biopesticides are classified into three major groups:
Biochemicals: naturally occurring substances that control pests
Microbials: microorganisms that control pests
Plant-Incorporated Protectants (PIPs): pesticidal substances produced by plants containing added genetic material
Market Trends: Facts, Figures, Forces
Market Facts
North America and Western Europe are the leading markets worldwide for consuming biopesticides.
The US currently dominates the industry, representing approximately 40% of the market.
Spain and Italy are the largest markets in Europe, with Spain expected to dominate the European market through 2028.
Market share analysis indicates a highly fragmented market on the basis of product type, end use, and region.
Market Figures
According to the GAFSP 2021 Annual Report, the food system as a whole could be at fault for generating more than a third of global emissions. Between 2000 to 2020 the share of agriculture in global GDP has been stable at around 4%, which accounts for roughly 3.4 trillion US dollars in 2020 .
The biocontrol market has grown steadily over the last 15 years, and the biopesticide industry is growing at a rate two to three times that of the traditional pesticide industry.
A recent report by Durham Trimmer predicts that the biocontrol market, including biopesticides, will exceed $10 billion by 2025, and will continue growing at 15–18% compound annual growth rate (CAGR).
By 2025, the biocontrol market is expected to reach nearly 10% of the total market share of the Global Plant Protection Market.
Market Forces
The main forces driving growth in the biopesticides market include the following:
Research: There has been a marked improvement in the efficacy and development of new active ingredients and formulations in recent years, with biocompanies investing in and focusing more resources into biopesticides, which has accelerated the growth of the industry worldwide.
There is an increasing awareness and consumer wariness of toxicity in food products.
Unsustainable pesticide costs: Glyphosate is the active ingredient common weed killers, including Roundup. Researchers noticed that glyphosate prices increased from $10 per gallon in 2020 to $60 per gallon in 2021, and estimated prices to rise to $80 per gallon in 2022..
Regulatory changes toward more sustainable practices: The EU announcement in June 2022 that it would be setting an ambitious target for food production of a 50% overall decrease in the use of chemical pesticides by 2030.
Sowing the Seeds
Globally, regulations are consistently being implemented and updated to create more sustainable farming practices.
Investment Opportunities
The current growth of the biopesticide market is backed by increased investment from leading crop-protection companies, growing environmental safety awareness, and demand for more organic food—as well as rising government initiatives. The current state of the sector therefore provides a unique opportunity for investing.
However, a number of factors can hinder this growth in this market, such as a lack of awareness, low adoption rates by farmers reluctant to switch from traditional pesticides to biopesticides, inconsistent performances and low shelf life of certain products.
Market Segments
The biopesticide industry encompasses a variety of segments the most notable of which are based on type, use, form, application, category, and crop,
Use: bioinsecticides, biofungicides, bionematicides, bioherbicides, and others
Type: microbials, microorganisms, insects, and biochemicals
Form: dry and liquid
Crop type: fruits and vegetables, row crops and cereals, seed treatment, non-crops, and others.
Application types: foliar, soil, seed treatment, post-harvest, and others
Impact
Biopesticides support the stability and sustainability of the agroecosystem, as they do not negatively affect the environment.
Among the main benefits of biopesticides over traditional pesticides are they control the proliferation of pests through non-toxic mechanisms, which means they do not harm crops, remain on the crop surface, and can be easily metabolized by the human body because they do not contain chemicals.
Biopesticides can also be used as a component of Integrated Pest Management (IPM) programs, greatly reducing the use of traditional pesticides while helping crop yields remain high.
Market Movers: Current and Future Heavy Hitters
While dominated by such prominent players as Bayer Crop Science and Syngenta, the main leaders in the biopesticide sector include:
Bayer AG CropScience (Germany) is a life sciences company that entered the biocontrol space in 2012 with the acquisition of AgraQuest and Prophyta.
Syngenta AG (Switzerland), part of ChemChina, is an agribusiness company focusing on crop protection, starting in 2009 and further increasing in 2012 with the acquisition of Pasteuria Bioscience.
BASF SE (Germany) is a chemical company operating in over 80 countries, with an Agricultural Solutions segment that focuses on crop protection and biological solutions.
Koppert Biological Systems (Netherlands) is a global leader in the development of biocontrol and biorational products, with presence in more than 25 countries. The company emphasizes support, education, and training as key to the growth of biopesticides in the sector.
Marrone Bio Innovations (US) focuses on sustainable bio-based solutions for IPM and plant health. Recently, MBI completed a merger with Bioceres, a company with bionutrition expertise. View our report on two of their products here.
BioWorks Inc (US) provides environmental and cost-effective biocontrol solutions, focusing on Trichoderma-related products.
Certis (US) is developing biopesticides with a focus on the North and South American markets.
Biobest Group NV (Belgium) has made its way into the biocontrol space as a pioneer in the use/production of bumblebees as pollinators, focusing on greenhouse vegetables, ornamentals, and soft fruits.
Andermatt Biocontrol (Switzerland) aims to replace chemical pesticides with good biological alternatives, such as microbial products, natural substances, beneficial insects, and traps. The company has made recent investments to establish a global distribution network throughout the EU, North and South America, and Africa.
Other companies and technologies in the sector include:
Focuses on applying advanced plant science to develop and commercialize botanical crop production solutions
Flagship product, TimorexGold biofungicide, used in more than 20 countries and regions globally
Focuses on biorational solutions that improve agricultural productivity, public health, and natural spaces
Offers four different biopesticides, and its XenTari product is the world’s only biopesticide containing a strain of the microorganism Bacillus thuringiensis
Agtech leader fusing science, nature, and artificial intelligence
Actigate product increases the efficacy of both biopesticides and traditional chemical pesticides and has the potential to reduce global synthetic chemical loads in agriculture by 80%
Raised $45 million in its latest funding round in 2019
Focuses on developing natural, affordable pheromone products for pest control and crop protection
Announced in October 2019 that it had raised $85 million in Series C financing
Focuses on DNA-sequencing to study microbiomes and identify interactions that have desired outcomes (e.g., combatting common crop threats)
Currently researching on combating a fungus that commonly threatens strawberries
The Boundless Impact Assessment for Marrone Bio Innovations’ BIOst® Nematicide
Venture Capital/PE and Other Fund Investors
The biopesticide market presents many challenges for companies that might lack the resources and/or capital to research and develop market access in multiple crops and countries. Therefore, the biocontrol sector has seen significant merger and acquisition activity over many years, with $2 billion to $3 billion in acquisitions occurring since 2012 alone.
In addition, some of the funds investing in the biocontrol sector include:
S2G Venture Funds is a fund mission that backs companies improving the overall health and sustainability of the food system. The fund led the $10 million venture round for biopesticide company Terramera.
Bold Capital manages a family of funds by investing in early stage/growth technology companies. The group was a participant in the same funding round as S2G Venture Funds in the biopesticide company Terramera.
Renewal Funds invests primarily in environmental technology in order to accelerate the sustainable economy. Its portfolio of companies consists of industries that advance sustainable water, food, and climate activities.
Maumee Ventures, the VC arm of Andersons Inc, specializes in agricultural investments, primarily investing between $500,000 and $5 million in early stage Series A/B opportunities.
SVG Ventures founded the VC fund Thrive to connect with and invest in companies in order to advance the future of food and agriculture. The group has been recognized by Crunchbase as the most “active” fund in the Agricultural Technology space, with over 40 investments to date.
Final Thoughts
The global biopesticide market is growing significantly faster than that of traditional pesticides, due mainly to consumers and regulatory demands, as well as the pest resistance and unsustainability attributed to the traditional pesticide market.
Crop protection companies have come to realize the need to develop more sustainable products through research, investment, and/or acquisition of biopesticide companies. However, there are a number of limitations confronting the full adoption of biopesticides, including costs associated with R&D, commercialization, and registration; the inability to meet global market demand, different standards, and methods; the need to obtain buy-in from farmers and deliver the training; and susceptibility to certain environmental factors.
It is therefore still the opinion of many experts that chemical pesticides are and will remain an important part of agricultural practices, as when used correctly, they can still maximize control with minimal adverse effects. However, it is important to encourage the transition to sustainable agriculture practice and promote the use of biopesticides as part of an IPM framework to avoid pest resistance and fill the gap in the market wherever traditional pesticides are regulated and/or have been banned.