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 pest control’ 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

STK Welcomes French Wine Growers to Israel | STK

December 31,  2018  (Petach Tikvah, Israel) – STK bio-ag technologies, the innovative Israel – based leader in bio-ag technology for sustainable crop protection and aquaculture, hosted a group of 13 top wine growers and crop protection experts from France who are learning about botanical-based and  hybrid technologies for sustainable grape growing for the creation of high quality French wines, champagnes and cognacs. Effective September 1, 2018 all Neonicontinoid pesticides have been banned from use in France, because they are believed to be killing the bee population. New French law also makes it illegal to use any chemical pesticide in any park or public place after 2020, punishable by a 30,000 Euro fine and 6 months in jail.  According to the Telegraph (Henry Samuel, August 31, 2018, Paris), France is the first country in Europe to ban all five pesticides researchers believe are killing off the insects. Consequently, wine growers in France are in search of new tools for sustainable crop protection. STK VP R&D and business development Shay Shanan commented, “STK is happy to have welcomed these top French wine growers and crop protection experts.  STK’s botanical-based biopesticides and hybrid solutions are currently providing sustainable solutions for growers in over 30 countries, and there is no doubt these technologies can help growers in France to comply with the new regulatory environment and continue to provide their customers with the highest quality wines,  with less  chemical residues. For new users of biological products, Timorex Gold and REGEV are highly recommended, especially for wine grapes, for the control of Botrytis and Powdery Mildew.  REGEV is  a new hybrid product with a very easy approach, applied in exactly the same way as the growers’ current chemical pesticides, with no mixing, resulting in much lower residue levels and much better resistance management.

EXCLUSIVE DISTRIBUTION AGREEMENT ANNOUNCED FOR TIMOREX® GOLD IN SPAIN

STK & Sipcam announce an exclusive Distribution Agreement for Timorex® Gold botanical-based biofungicide in Spain January 23, 2019 (Petach Tikvah, Israel) - STK bio – ag technologies, the innovative Israel-based leader in bio-ag technologies for sustainable agriculture, and Sipcam , a global leader in crop protection products,  are announcing an exclusive agreement for the distribution and market development  of Timorex® Gold bio fungicide throughout Spain. Under this exclusive agreement, Sipcam Iberia will market and sell the product throughout Spain under STK’s trade name, Timorex® Gold. Timorex® Gold is currently approved for use in Spain on cucumber and zucchini, with label extensions applied for grapes, tomatoes, eggplants, pumpkins and gherkins. Timorex® Gold is a highly- effective, eco-friendly, Maximum Residue Level exempted premium biofungicide, meeting the highest standards for sustainable agriculture. Timorex® Gold’s unique mode of action protects plants by rupturing fungus cells, increasing overall plant health and yields for a wide variety of fruits and vegetables. Timorex® Gold works to protect plants from Botrytis, Powdery Mildew, Black Sigatoka and many other fungal and bacterial diseases. While Timorex® Gold is currently used by growers in over 30 countries in various regions, Spain is the first country is Western Europe to approve its use. The plan is for Timorex® Gold to enter the rest of the Western Europe over the next few years. According to STK CEO Arye Tenenbaum, “The collaboration between STK bio – ag technologies & Sipcam Iberia is a testament to both companies’ commitment to sustainable agriculture and our mutual goal of providing innovative, effective and environmentally friendly solutions to growers. “  Sipcam CEO Pablo Montañés declared, “Sipcam has a rigorous process for identifying the most innovative and effective biological products and companies for distribution partnership.  We look forward to our collaboration with STK and rolling out Timorex® Gold with great success bringing a highly-effective new tool to hundreds of Spanish growers, completing the already interesting Sipcam portfolio in bioprotection.”