Field of Possibilities

Leaders in the field of pesticides are preparing for the era of biology

Field of Possibilities: Leaders in the field of pesticides are preparing for the era of biology

Originally published by: THEMARKER

Recently, farmers have increased use of bio-pesticides. Large chemical companies, having identified a new and growing field with sales of $ 2 billion per year, are investing hundreds of millions of dollars in acquiring companies that specialize in the development of such substances. Which one will eventually become top leader in this field?

Increasing demand for the use of biological pesticides in agriculture is influenced by the parallel evolution of several trends in recent years. Among others, this is due to increased demand for natural and organic food and growing awareness of health and environmental damage possibly resulting from the use of chemical pesticides.Even leaps in biological research and its commercialization greatly contribute to the development of this field.

However, the revenues of the global biological pest control market today only reach $1.5-2 billion a year – compared to the market’s chemical pest control products with $40 billion a year turnover. In fact, the main operators in the field are the major agrochemical companies that also market chemical pesticides.Therefore, the main influence of transition to biological pest control on the industry’s future depends on operating companies’ ability to adopt new products and technologies – an ability that may drastically change the balance of forces in the field.

Major pesticide manufacturers are not themselves generally involved in biological pesticides development but acquire smaller companies in the field or sign distribution agreements with generally much smaller biological pest control companies.Large companies sign distribution agreements with smaller companies, invest in or purchase them and these develop the products for them.

Biological pest control or ‘green’ products are divided into two main families: products based on plant-extract materials and extract from live organisms such as various kinds of bacteria and germs.

The biological pest control market began its career at the beginning of the 20th century, partly as the result of studies in microbiology and ecology that led to identification of microorganisms – minute organisms that can be seen only with a microscope. The studies led tothe development of products intended for agricultural pest control, but their adoption was not widespread, since the chemical pesticides developed at that time were more efficient and cheaper to produce.

However, over the years, health and environmental damage that accompanies widespread use of chemical pesticides in agriculture came to light.It became clear that such agents endanger farmers and consumers, animals, land and the environment.Following these disclosures renewed interest in the development of eco-friendlybiological pesticides was seen.

Agricultural pesticides are manufactured and marketed primarily by multinational corporations and large pest control companies.The global pesticide market today is led by the world’s six largest companies:BASF,Bayer,Dow Chemical, DuPont, Syngenta and Monsanto.All these companies in recent years are investing in the field of biological pest control.

Meanwhile, biological pesticides do not replace but integrate with chemical pesticides, according to farmers’ concrete needs.For example, according to many countries’ regulatory restrictions, it is forbidden to spray fruit and vegetable with chemical pesticides six weeks before harvesting,  to prevent  toxic material remaining  in the food when it reaches the consumer.  However, use of biological pesticides up to near harvest-time is allowed, and growers have gone through these stages.

Ziv Tirosh, CEO of Stockton Group

Ziv Tirosh, CEO of Stockton Group

Ziv Tirosh, CEO of the Stockton Group, a green pesticide manufacturer of crop protection, points to LuxResearch Company datawhereby the green pesticide market is expected to double its revenue to $ 4.5 billion by 2023.In 2007-2012, green pesticide market sales grew by 27% per year. “Stockton and similar companies are faced with a huge potential market,” said Ziv Tirosh.

The Stockton Group develops and sells worldwide a green fungicide called Timorex Gold, based on tea tree oil extract. Stockton’s revenues in 2013 are estimated at $ 50 million, with a large part of its sales coming from chemical pesticides. The company’s profits are used to finance development of the field of biological pesticides, contributing about $ 10 million to its income. Stockton has an active R&D program with the Weizmann Institute and other academic institutions.

Photo: Daniel Vatan

Small companies that manufacture biological pesticides integrated with chemical pesticides are still at the start-up stage and need to raise funds.  Some of them are estimated to be of high value.For example, AgraQuest, Inc., a small company producing green pesticides, with annual sales of about $ 40 million, was sold in 2012 to Bayer for half a billion dollars.

Field of Giants

Six large companies operate in the multinational market, each with slightly different specialization.  The first is the Bayer Group, Germany’s largest pharmaceutical manufacturer and one Europe’s largest chemical companies. The company is traded on European stock exchanges, and manufactures products for pharmaceutical, agriculture and polymers markets.The company operates in a variety of areas and their common denominator, according to it, iscontribution to a healthy lifestyle.In the field of drugs, it is known to the public as the manufacturer of aspirin and Betaferon (for the treatment of MS).

In the agricultural area, Bayer is developing a variety of vegetable and pesticides, and also operates in the field of genetic engineering.  In 2013, the company’s sales reached 40.2 billion, euros, an increase of 1% compared to 2012.Its net profit for this year totaled 3.2 billion euros – an increase of 773 million euros.  In the field of pesticides, its sales totaled 8.8 billion euros in 2013 – an increase of 5.2% compared to 2012.  TheEBITDA(earnings before interest, tax depreciation and amortization) in this area was 2.2 billion euros – an increase of 6.5%. Bayer’s acquisition ofAgraQuest, Inc. was intended to place the purchasing company in the position of global leader in the biological pesticidestechnology development.

Another giant corporation from Germany working in the field isBASF,manufacturing a wide range of industrial, agricultural and building chemicals.The company’s sales of agricultural fertilizers and pesticides in 2013 reached a level of 13% of total sales, which amounted to 74 billion euros – an increase of 3% in 2012.Its net profit amounted to 7.2 billion euros – an increase of 8% compared to 2012.

Monsanto, another giant in the field, is a multinational agricultural biotechnology corporation in agricultural biotechnology, based in the United States.Most of Monsanto’s revenues stem from the sale of seeds, particularly genetically engineered seeds.In 2013, Monsanto’s revenue reached $ 14.9 billion, an increase of 10% compared to 2012. Its net profit was $ 2.5 billion – an increase of 21% in 2012.

Dow Chemicals Company, one of the largest chemical manufacturers in the world, headquartered in the State of Michigan, USA, is one of the big players in the market.Its sales in 2013 were $57.1 billion, an increase of 1% compared to 2012. Its profit was $ 8.4 billion.

DuPont Chemicals is another company operating in this area, the world’s second largest after BASF Company. DuPont cut its 2014 profit forecast, given the expected decline in profit from agricultural chemicals to $4.0 – $4.1 per share, compared with a previous forecast of $4.2 to $4.5 per share.

Syngenta, considered the largest agrochemical company in the world and the largest manufacturer of pesticides is another giant active in this market. Syngenta revenues in 2013 totaled $ 14.7 billion, of which $ 4.5 billion from sales of seeds, and the rest from various generic products. The company’s net profit totaled $ 1.6 billion – a decrease of 11% compared to 2012.

Pests are developing resistance to chemicals

Brett Wang, a research analyst at the American investment bank, Piper Jaffray, wrote in 2013 a comprehensive report on the global pesticide market, where he said: “The green pesticide market is gaining momentum, as farmers all over the world struggle with plant and pest resistance to chemicals Overtime they develop resistance to chemicals due to overuse.In addition, strict regulatory requirements due to the environmental impact of synthetic pesticides have been applied.

We believe that these factors will establish a long-term positive trend for use of green pesticide products. Currently, the industry is experiencing a wave of mergers and strategic investments in small companies by the six largest agrochemical companies in the world. Giants of the industry show mutual enthusiasm for this category, and are willing to pay high prices for innovative technology companies currently in their early stages”.

Investment companies pinpoint some small companies that might be targeted for acquisition by large companies.One of them, Marrone Bio Innovations Inc., (Trading Code:MBII) is a developer and manufacturer of biological substances for agricultural pest control.The company was founded in 2006 and went public on NASDAQ in 2013.  Revenues in 2013 amounted to $ 14.5 million, more than double its revenue in 2012.

Piper also explains that the American chemical giantFMC,whose generic agrochemical division sales are around a billion dollars a year, is expanding its hold on the biological pest controlcategory.

“Today there are only a small number of green pesticides  that actually work well and have global impact, “said Ziv Tirosh. “These materials have a bright future. In an industry dominated by a few large multinational companies, it is necessary that the big players promote the proven value of green pesticides.

“Green pesticides cannot join the agricultural mainstream without major companies leading the dissemination. Development and commercialization of such substances require high technical capabilities and an even greater investment in product and market development and market education. A factor promoting this trend is the transition to fresh and naturally healthy food.All this together can lead to the development and rapid growth of the green pesticide industry”.

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Combining the powers of biological agents and synthetic chemistries

As a leader in biopesticides innovation, STK Bio-ag Technologies (formerly Stockton) is pioneering a new generation of ‘hybrid’ products that combine the powers of biological agents and synthetic chemistries, and which may present a new era in pest control. With recent partnership agreements with industry giants such as BASF, Syngenta and Seipasa, this seemed like a great time for Chemicals Knowledge to catch up with STK’s Chief Scientist, Professor Moshe Reuveni. STK seems to be in a great place right now! How have the values and mission of the company led you here? STK was founded and is headquartered in Israel, the ‘innovation nation’! Innovation and sustainable agriculture are in our DNA, and we are committed to the values of sustainable agriculture – from field to fork. This stems from our main mission to provide premium, highly effective products, with low chemical residues and novel and unique mechanisms of action (MOA). We also aim to provide additional yield benefits, and to ensure that our products are flexible and easy to apply, and chemically compatible with many other active ingredients. What are the main benefits of biopesticides? There are many advantages. Biopesticides come from nature – they may be plant extracts, like Timorex Gold, which effectively ruptures pathogen cells (Figure 1), or bacteriological, like Aviv, a powerful Bacillus subtilis requiring less than half the dosage of other biopesticides. In any case, biopesticides contain no synthetic chemicals. They are produced from renewable sources, and they leave minimal crop residue, making crops treated with biopesticides much more competitive in domestic and international markets. Regulators, consumers and retail supermarkets all want to reduce the chemical residue on their produce. The selectivity of biopesticides, which target only their natural enemies, also helps to maintain beneficial insect and mite populations, ensure worker safety and promote environmental safety. Today’s biopesticides are as effective – or even more effective – than synthetic chemical pesticides, in terms of crop protection and increasing yields. Furthermore, biopesticides are an important weapon in managing pesticide resistance. They can help reduce the selection pressure for the evolution of resistance to synthetic pesticides, and the risk of pests and pathogens developing resistance to biopesticides is low, especially as these agents often have multiple modes of action. Switzerland recently announced that it is considering a total ban of synthetic pesticides – do you think it is feasible to have a world free of synthetics? The world’s population is expected to grow from the current 7 billion people to 9 billion people by 2050. In order to feed all of these people and avoid mass starvation, mankind will need to double crop yields globally. This is a tall order, and to achieve this, growers will need effective tools for combating diseases – we think this will need to include biopesticides and synthetic chemical pesticides; or hybrid technologies that combine the two. The use of biopesticides is forecast to grow by 15% to 20% annually for the foreseeable future, while synthetic chemical use is predicted to grow at a slower annual rate of 3%. If those growth rates are maintained, eventually we will be in a situation where more biopesticides than synthetic pesticides are being used. We think this will be a good situation to be in, for the many reasons discussed above, but we still see a continued need for good synthetic pesticides. Can you tell us more about ‘hybrid’ technologies and how they expect to encourage uptake of biological agents? STK has introduced the world’s first ‘hybrid’ pesticide, Regev – the ‘pre-mix’ of a synthetic pesticide with a botanical-based biopesticide. Specifically, it combined a Tea Tree botanical extract and difenoconazole in an easy-to-use formulation. The combination of a natural product with broad-spectrum activity and a traditional site-specific synthetic provides growers with the different modes of action of a botanical-based active ingredient and an effective chemical pesticide. The hybrid combination results in a reduced synthetic chemical load on the environment, compared with other traditional mixtures based on two synthetic chemicals. Regev is an effective and unique tool for resistance management, and it is clearly suitable for Integrated Pest Management (IPM) programs. This product is also a bridge for growers who have never previously tried a biopesticide. These growers can use Regev in exactly the same way as their current chemical pesticide: no mixing, no rotating, easy-to-use… and with the benefits of lowering chemical residues, improved resistance management and yield growth. Regev will accelerate the uptake of biological products by making it easy. Historically, biopesticides have been used largely on high-value crops, such as fruits and vegetables, but hybrids like Regev are not only being used on fruits and vegetables, but have proven to be a cost-effective approach for row crops like soy beans, and field and broad acre crops like corn. Regev is already being used in 10 countries throughout Latin America, Israel, Serbia and the Philippines. Plans for 2019 call for the global rollout of REGEV. How are you working with global majors to encourage global distribution of these technologies? To accelerate the distribution of STK’s biological technologies for sustainable agriculture, we have entered into partnerships with various companies . In Brazil, Timorex Gold botanical-based biofungicide is co-distributed by both STK and BASF, which is proving to be very effective in this very large country. In the US, Aviv, our low-dose Bacillus subtilis biofungicide, is distributed by Syngenta. Not all of our distributors are the global majors, and STK is always open to partnerships with companies large, medium and small. What’s next for STK? Beyond the continuing geographic distribution of Timorex Gold, Regev and Aviv, STK has a powerful pipeline of new biological products to provide new tools to help growers reach the goal of doubling their yields by 2050. This pipeline includes new biopesticides based either on powerful natural plant molecules or plant extracts to be used as bio-fungicides or bio-insecticides. In addition, new hybrids combining natural active ingredients and reliable synthetic active chemicals, to be used on wide range of crops and pathogens, are under development. Interview with: Professor Moshe Reuveni, Chief Scientist at STK bio-ag technologies, Ha’Mefalsim St 17, POB 3517, Petach Tikva 4951447, Israel

Effective solution for avocado disease found

Shay Shaanan, STK Bio-Ag Technologies This is according to Shay Shaanan, the company’s Vice President of Research and Development. “In collaboration with the growers, we found a very effective solution for this disease, using Timorex Gold®.” Timorex Gold® is a broad-spectrum, botanical-based fungicide that can be used for many different crops or diseases. “Here, we are talking about Mexico, Colombia, Brazil, and Peru. We are still in the process of registering this solution in Chile. It looks like avocado is becoming the next big crop for us. Avocado is the new banana”, says Shay. “We are constantly developing new applications for the product because it has many modes of action.” Shay explains why Timorex Gold® is so versatile. “It is made from the extract of the Australian tea tree. This extract contains various molecules. Each molecule has a different function. Basically, Timorex Gold® is a product that can be used in many different ways. It counters many different diseases and has different effects on different plants.” Interesting finding in banana plants He goes on to say that they have learned from the banana growers in Brazil that Timorex Gold® affects their trees’ roots when sprayed directly onto the tree’s leaves. According to Shay, this combats Fusarium disease, which affects the roots of the banana tree. “This is very interesting.” “We know that Timorex Gold® molecules penetrate the plant, but not moving systemically down to the roots . Spraying the tree’s leaves with this product dramatically influences its roots and the entire plant. We are researching exactly how this happens, but we now know that Timorex Gold® has another good attribute.” The benefit of using Timorex Gold® is also being recognised further down the food chain. One of the international supermarket chains in Brazil has introduced a high taste and quality category, requiring that produce have no chemical residue and pass labor and environmental audits. Bananas treated with Timorex Gold® have qualified for this program and have received the taste and quality label. The use of Timorex Gold® has been reauthorised in Chile until 2022 and has been expanded to include other fruits & vegetables. It has been approved in China, Brazil, and just about every US state. Expanding quickly Shay goes on to say that STK is growing very fast, with its technologies expanding geographically. “There have been so many new developments with Timorex Gold®, Aviv®, REGEV ™, and partnerships in the last six months or so”. This company is one of a handful that focuses on developing botanically-based pesticide solutions. One of these partnership deals for Timorex Gold® is with BASF, the largest chemical producer in the world. “Our strategy is based on this kind of cooperation”, says Shay. “We see the benefits of this from two angles. Firstly, these large companies have access to the big markets. They can usually offer our product better than us because of the army of salespeople that they have at their disposal.” “The other angle is that we are developing new lines of biopesticides based on mixing biological and soft chemical solutions. In order to develop these new products, we need to cooperate with large multinational companies to get access to their data packages in various countries. This is the most costly part of trying to register new solutions on the market, especially in Europe and the US.” Shay adds that Europe is a much a tougher market to penetrate than the United States. “It takes much longer, and the costs are much higher”, he says. “European farmers will not use unregistered products. We are working hard to get Timorex Gold® onto the European market. We have submitted a registration, which should be completed in 2021. This is only in two years time, but in our industry two years is like tomorrow.” AVIV ‘Low Dose’ Bacillus subtilis biofungicide Another well-known STK Bio-Ag Technologies product in the US is AVIV®. AVIV® is an advanced microbial solution, a low-dose fungicide that contains Bacillus subtilis”, says Shay. “You only use a very small fraction compared to other well-known similar products. This is a big advantage.” Shay continues, “The strain of Bacillus in AVIV® as is also much more efficient, so you need much less in order to get the same efficacy.” “It is much easier for the farmer to use”, says Shay. “The very friendly and clear formulation makes the difference. This product is selling well, especially in the USA.” AVIV has recently been approved for use in California and 26 other American states. “Things are progressing ahead of schedule”, says Shay. Hybrid Fungicide: REGEV® REGEV™ is STK Bio-Ag Technologies’ first hybrid. “It is a completely new solution on the market”, Shay says. “We call it a bridge. We believe that this is a nice link for us to reach conventional farmers. These farmers are feeling pressured into using more environmentally-friendly solutions. They are hesitant to go all out in using purely biological products. These are usually not as efficient as the chemical pesticides.” “Once you tell them REGEV™is a mixture of a biological fungicide with a chemical they know,” he continues to say, “it makes it much easier for them to use it. In many cases, this solution performs better than the chemical solutions they are familiar with. At the end of the day, they reduce the amount of chemical they use dramatically. It is also very versatile when it comes to which crops it can be used on. In each country, different crops respond well to this product.” “REGEV™ solves a big problem”, adds Shay. “The use of bio-pesticides is growing at an average of annual rate of something like 15 - 20 %. In contrast, synthetic pesticide usage is only increasing by three per cent year-on-year. Yet, most growers are still not using any biologicals. Why is this?” He says REGEV™ addresses this issue. “It is a premix, so the farmer does not have to mix anything, and they do not have to do rotations between bio-pesticides and conventional pesticides. So, the grower can use REGEV in exactly the same way he used his chemical pesticide. Only now, with REGEV™, the farmer gets to participate in this biological revolution and gets to have a more sustainable profile. He also has a new product with which manage crop disease resistance.” Hybrid Technology at LATAM BioControl Conference Shay says the company has great faith in this product. “We can see how fast the farmers and industry are accepting this product. That is why there several new hybrid solutions in the pipeline. We have many interesting, attractive developments in the works.” Jose Antonio Estevez, STK Bio-Ag Technologies’Colombia Country Manager, will be doing a presentation about its ‘hybrid technology’ at the upcoming LATAM BioControl Conference. This is the largest international event dedicated to biocontrol in Latin America. It is to be held on 14 November in Medellin, Colombia. Publication date : 9/6/2018 Author: ©