Controlling Your Enemies Naturally

The biologicals market has been growing at a great pace all over the world, and especially in Brazil. Pest and disease control using biological products grew by 7% p.a. on average between 2013 and 2018, reaching about USD 1.3bn. The Brazilian Association of Biological Control of Companies (ABCBio) pointed out a growth of above 20% per year from 2014, with a market size of around USD 127m in 2018.

A Growing Market With Traditional and New Players

Some of the main factors of the recent success of biologicals are:
1. the price increase of chemical crop protection;
2. the growing debate around more sustainable food production, and farmers’ concerns about the excessive use of chemicals; and
3. the growing availability of biological active ingredients.

The last five years have been marked by the proliferation of companies in the biological segment, motivated by the potential demand and farmers’ interest. Between 2015 and 2019, more than 40 new companies registered their first bio product. Due to the characteristics of biologicals – as live organisms – most of them operate as local companies with a very limited portfolio. In the same period, traditional companies in the chemical pesticide segment also added bio products to their portfolio.

Figure 1: Number of biological control products approved – annual and accumulated

Source: Ministry of Agriculture, 2020

By the end of 2019, there were 256 bio control products and around 70 active ingredients approved in Brazil, owned by almost 80 different companies. Despite the considerable number of active ingredients, 50% of the products are made with only five of them. With regard to portfolio diversification, about 50% of companies work with only one active ingredient and only two companies have more than 15 active ingredients registered.

Figure 2: Number of products approved per biological active ingredient

Source: Ministry of Agriculture, 2020

Not Always a Bed of Roses

Despite the robust development of the market, the industry still has a lot of space to grow but also some challenges to overcome. For example:
● The difficulties in monitoring large areas makes the adoption of bioinsecticides and biofungicides expensive and slow: the success of biological control is directly linked to the identification of pests and diseases in their initial stages of contamination.
● Farmers (in Brazil) have a tradition of chemical product application, which means that many of them are used to applying products according to the calendar – rather than applying after illness identification.
● The current biological portfolio does not combat all pests and diseases, so farmers still have to call upon chemicals to avoid some specific infestations.
● There is a concentration of companies in the south-eastern region of Brazil – these companies are well-positioned to attend sugarcane crop, but are somewhat far from the main soybean, corn and cotton crops.
● Agronomists and independent consultancies still need to be convinced of the benefits of biologicals – currently only a few of them recommend the use of these products.

What to Expect

Growing consumer concerns about the environment and more stringent regulations are likely to lead the food production transformation and incentivize farmers to change their practices to a more sustainable agriculture (read more in our earlier article “French Lessons: What others can learn from France’s alternative farming systems”). As mentioned above, there are some obstacles to the massive adoption of biocontrol, but new technologies are appearing to improve farming practices and should facilitate this process. An example is autonomous pest and disease detection, which may allow bio application at exactly the right time by identifying any infestation at its early stages.

To keep growing and consolidating its position on pest and disease control, the industry will have to improve its penetration on crops such as soybeans and coffee – where adoption was only 20% by 2018 – and reinforce its presence on sugarcane and fruits & vegetables crops – where adoption is 40% or above. All this will require regional and portfolio diversification, with companies getting closer to their clients.

The necessity of investments in R&D, as well as in marketing and regional diversification, may trigger a wave of consolidation in the market. In this regard, small and medium companies are likely to merge so that they can face the bigger companies, and big companies may look to acquire some small companies in order to improve their presence or portfolio – this happened on a large scale with Tier-1 agchem/seed players.