Giving farmers a bigger toolbox
A primer on biologicals with Pam Marrone
Welcome to Topsoil – a monthly newsletter with frameworks to help you make sense of agriculture, at just the right depth.
Before we launch into biologicals, I want to share a podcast appearance from last week. I joined Tim and Tyler Nuss on the Modern Acre podcast to chat about crop inputs like seed, crop protection, and fertilizer. You can listen here.
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I’ll be honest. Despite my curiosity, I’ve been intimidated to dip my baby toe in biologicals. Having never directly worked in this corner of agriculture, I knew I needed to chat with an expert.
Fortunately, Pam Marrone, whose name is synonymous with biologicals, was gracious to share insights with me from her storied 30+ year career. She is the founder of 3 biologicals companies – Marrone Bio, which went public in 2013; AgraQuest, which was acquired by Bayer Crop Science for nearly $500M; and EntoTech, a subsidiary of NovoNordisk. She is one of the only agtech founders with an IPO and a $100M+ acquisition to her name. Today, she continues to innovate as an advisor to several biologicals companies and is the Co-Founder of Invasive Species Corporation, which develops and markets bio-based solutions to control invasive species.
Today, we’ll cover seven key things I learned from Dr. Pam Marrone about biologicals.
Let’s dig in!
The biologicals market is broad and crowded
Starting with the basics, biologicals are crop inputs that are – or derived from – living organisms or other natural materials that farmers use to improve their crops. This is in contrast to chemical inputs, which as the name suggests, are often synthesized from petrochemicals and other raw materials using chemical processes.
Pam points to the categorization by DunhamTrimmer (below) as the easiest way to understand what’s under the biological umbrella:
This can be boiled down to three main categories: biofertilizers, biostimulants, and biopesticides.
As of 2023, there were over 1,200 agriculture biologicals companies solving a variety of problems from farmers – from pest control, to improving nutrient uptake, to tolerating abiotic stresses like heat or drought, and more. Especially when looking at the biostimulant and biofertilizer segments that are less regulated than biopesticides, Pam neatly summarizes: “it’s really crowded.”
Biologicals should be part of an integrated program
Pam stresses that biologicals are best used with other tools on the farm, whether that is chemical inputs, improved crop genetics, and management practices to improve soil health. In study after study that Pam has seen throughout her career, when biological products are integrated, farmers see “better results than chemical-only programs.” (Side note: any quotes are from Pam unless otherwise noted).
This is not unlike how chemical inputs are used today. “Farmers don’t use chemicals alone. How many herbicides are mixed together because there is weed resistance?”
The biologicals market is growing and global
Today, the biologicals market is dwarfed by chemical inputs, but is growing 3 times faster. Globally, there are $11 billion worth of biological inputs sold, compared to over $60 billion of chemical inputs.
While biologicals are sold around the world, Pam notes that Brazil and the European Union are particularly hot markets.
Farmers in Brazil have faced devastating outbreaks of fall armyworm and soybean cyst nematode. These pests destroyed billions of dollars of crops and are becoming more difficult to manage as populations develop resistance to chemical pesticides. Brazilian farmers were desperate for solutions.
Pam describes how the Brazilian government worked with farmers to address this problem. Brazilian federal and state governments made investments to educate farmers about biologicals. The Brazilian regulatory approval process was streamlined so it took only 13 months, instead of almost 3 years in the US. She notes the government’s stance was, “farmers need these products so we are going to get them through.”
Today in Brazil, more bio-based nematicides are sold than chemical nematicides.
In the European Union, biologicals are growing in popularity as the EU passed regulation to restrict chemical fertilizer use. Now, every big agricultural company is working on bringing to market biofertilizer and biostimulant products to fill the gap.
Biologicals are becoming mainstream
When Pam started working on biological products decades ago, she was told by distributors, “we’ll try it in organics, and if it works, then maybe we’ll put you in conventional.” Biologicals were seen primarily as a niche set of products for the oddball organic market.
Today, that perception has changed.
Biologicals are another tool to integrate within many different farming systems, whether organic, regenerative, or conventional. They are used in specialty crops, like fruits and vegetables, as well as commodity row crops, like corn and soybeans.
This drift to the mainstream is also evidenced by who is participating in the biologicals space.
After billions of dollars worth of acquisitions of biologicals companies and R&D by the traditional major agricultural input companies, Pam observes, “big ag chemical companies are now also big biological companies.”
Biologicals’ strengths also can make them challenging
One thing that struck me from my conversation with Pam is that the things that make biologicals beneficial are also some of the trickiest challenges for innovators to tackle.
Many biological products are highly specific. Instead of working on all insects, for example, they may only target a specific species. This sniper-instead-of-a-shotgun approach is wonderful for reducing unintended environmental consequences. But it also leads to two challenges.
One, the total addressable market (TAM) for a given biological product might be smaller than for another product with a broader application. In turn, a small TAM might constrain how much investors are willing to spend to develop a product.
Second, Pam explains, “parameters of how and when to use the product are really critical in biologicals.” Especially in cases where the product is highly targeted, there is a learning curve for farmers to know where and when to use the product. Pam says it’s a misconception that “they don’t work” or “they don’t work consistently.” The key is that biologicals are “consistent when you know how to use them.”
Pam mentioned that “most biologicals are very biodegradable.” In a world awash in fears of forever chemicals and farmers carefully planning around the residual effects of certain chemical inputs, the ability to biodegrade has many benefits. However, innovators must develop formulations that stabilize the active ingredient until it serves its purpose in the field.
Biologicals are ripe for innovation
While developing a biologicals product is “not for the faint of heart,” there are a few tailwinds.
Even in this difficult agriculture economy, there is continued M&A activity in biologicals. Pam notes that as recently as last month, the CEO of Corteva expressed continued interest in acquiring biologicals companies. When there are exit opportunities for companies, it makes it easier for investors to place bets in earlier stage companies.
The industry is aware of the perception that biologicals can be “snake oil” (or as Pam colorfully describes “bugs in a jug” or “bathtub brews”). For that reason, Pam and other leaders in biologicals have been advocating for, and developing, industry standards to set a minimum bar. As one example, the Biological Products Industry Alliance (BPIA) developed standards for biopesticides that member companies live by; now, the BPIA is working on doing the same for biostimulants.
Beyond voluntary standards, the regulatory environment allows for faster commercialization of biological products when compared to chemical inputs. While biopesticides are registered through the Biopesticides and Pollution Prevention Division of the EPA, biostimulants and biofertilizers are not regulated by the EPA.
Speed matters, because as Pam explains, “when you’re a small company, time is your enemy. When you’re funded by investors, they want to see things fast. But agriculture doesn’t work fast. So that is the balance that investors need to understand and you can still work quickly.”
One approach Pam has taken throughout her career is to launch and iterate – a very different approach than the existing paradigm. “The Big Chem model is to spend $300 million up front and then launch a product big. And I always said, ‘No – we’ll get into the market with our Gen 1 and we’ll improve it with our 2.0, etc.’ Everyone in the industry hated it! And I said, ‘Wait a minute. Growers want my product because they have an unmet need. Their chemicals can’t do everything.’ As long as the product has good data, it works, it’s safe, we’ve proven all that and there’s a farmer for it – let’s launch it!”
Manufacturers must prove the value to the farmer
Pam shared “Around the globe, 40 to 50% of farmers use biologicals and the rest don’t. And the ones that don’t are afraid to use them because they don’t have the knowledge on how to use them and have heard scuttlebutt that ‘they don’t work.’ But once they start using them, and the key is understanding how to use them, then they rank them extremely highly, like 7 to 8 out of 10. So it’s really the education gap.”
Pam emphasizes that biologicals manufacturers have the responsibility to reduce this education gap and “have good field data.” Manufacturers must provide, at a minimum, “enough data to show what product does, how it works, and the value it brings.”
Specifically, farmers want to know the conditions in which a product works and doesn’t work, when to use it, when to apply given the stage of the crop, how often to apply, how to mix with other products, how it works across different soil types and weather conditions, and at least a simple explanation of the science behind the product.
“You better not tell a farmer they need to sign an NDA to understand how your product works.”
Once those baseline facts are established from rigorous field trials, then Pam would encourage a farmer to trial the biological product compared to their standard program on their farm.
Pam said that a common mistake is when a farmer tries a biological as a last ditch effort: “My chemicals won’t work and I have this huge problem!” She says that that is definitely not the right time to try a biological for the first time.
Pam has some final words of wisdom for innovators developing biologicals products for farmers:
“Just because it’s an exciting technology doesn’t mean it’s going to make it in the market. If you’re using new technology to get the same result in the field as everybody else, it’s not differentiated. You’re not going to fare well. It really has to show that return on investment to the grower. With so many 5% yield increases, that doesn’t cut it anymore. You have to have 10% and an 80-90% win rate or above otherwise it’s just noise. With so many players, the bar is higher.”
Topsoil is handcrafted just for you by Ariel Patton. A heartfelt thank you to Pam Marrone for sharing your knowledge. Complete sources can be found here. All views expressed and any errors in this newsletter are my own.
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Great article. 100% correct an NDA and all that goes with an NDA is a deal killer and reason to immediately terminate all discussions. Thank you for your good work on these articles.
Sounds like biological agricultural inputs are a promising way to reduce the overall negative effects of petrochemical-derived ones. Even if it's not permaculture, it could be much less bad. Thanks for sharing!