The State of Play in Sustainable Agriculture
researcher with crops
Where do farmers and agribusiness companies stand on sustainable cultivation? Here’s what our research reveals.
Volume XXV, Issue 55 |

From insect pheromones used to control pests through mating disruption to microorganisms that help crops stave off the impacts of climate change and soil degradation, crop biologicals — biological products that can be used to stimulate and enhance both the nutrition and the fertility of crops as well as protect them from fungus and insect pests — have been around for years, some for decades.

But more recently, as demand for more naturally cultivated food products has continued to pick up speed, so has the pace of development for a whole new generation of crop biologicals — and, along with it, farmers’ interest in adopting them. In the meantime, as the EU considers banning a number of commonly used pesticides, both it and the U.S. have recently moved to streamline the approval of new biologicals to replace them. The net result of these developments is that growth in crop biologicals is now forecast to outpace that of conventional agrichemicals, with a compound annual growth rate of 14% through 2029. 

In other words, crop biologicals are just getting started. And given how significant the role is that they will play in sustainable agriculture going forward, they present a tremendous opportunity today. 

Why the time to consider crop biologicals is now

In order to better understand the current trends in sustainable agriculture, including both the drivers of and the barriers to the adoption of sustainable practices and technologies, L.E.K. Consulting surveyed more than 450 U.S. growers in the U.S. and Brazil and engaged in executive roundtable discussions with a range of crop input manufacturers, retailers and related industry experts. Crop biologicals was just one of the five key dimensions of sustainable cultivation that we focused on in our in-depth study, and it is one that still has substantial room for growth. 

The vast majority of crop biologicals are either biopesticides, biofertilizers or biostimulants. Biopesticides, which are used to protect crops, are pesticides derived from natural materials such as animals, plants, bacteria and certain minerals, whereas biofertilizers and biostimulants are used to enhance crop fertility. Biofertilizers are microorganisms that promote the growth of plants by directly increasing the supply or availability of primary nutrients to the host plant when applied to seeds, plant surfaces or soil. Biostimulants are substances or microorganisms that enhance nutrition efficiency or improve tolerance to abiotic stress and increase crops’ yield and quantity. 

As our survey and related roundtable discussions revealed, a variety of factors make now the time to consider crop biologicals:

A sustainable intensification in global food cultivation is needed — Biologicals complement and help reduce the required use of synthetic crop chemicals and some fertilizers, which in turn improves soil health and productivity. And while biologicals are not directly substitutable for each other in field applications, the production of biologicals has a lower overall carbon footprint.

Biotech has evolved to support the widespread use of crop biologicals — From gene editing to precision fermentation, advances in biotechnology have rendered crop biologicals accessible and available to even the smallest grower. 

For growers, biologicals make economic sense — Growers want to protect the health of their soil, increase their productivity and reduce their input costs, and effective biologicals enable them to do all three.  

Biologicals offer growth opportunities for both traditional and newly emerging crop input providers — Compared to fertilizers and crop chemicals, the biologicals market is still relatively small. Biopesticides now represent just 8% of the roughly $65 billion total crop protection market. And biostimulants and biofertilizers together comprise roughly 2%, or $2 billion and $3 billion respectively, of the more than $200 billion global fertilizer market; traditional chemical fertilizers make up the rest. But biologicals have already seen considerable investment, which continues to accelerate (strain development, scaling production capacity, etc.). 

The adoption outlook for biologicals 

Growers’ adoption rates of biologicals are about the same for crop protection and crop nutrition, with some 18%-20% of growers either using biologicals at scale or trialing them with the intention to use at scale, according to our survey findings. That said, those findings also suggest that many growers have trialed biologicals and opted not to roll them out at scale; some 30% of the growers we surveyed abandoned their use of biologicals after trying them. Meanwhile, another 29% have yet to trial biologicals at all, so an untapped market opportunity remains (see Figure 1). 

Of those growers that already use crop biologicals, yield enhancement and a reduction in overall input costs have been their primary motivators. And 46%-62% of current users indicate a high level of satisfaction with the products they’ve tried, in particular with nutrition-oriented biological products (see Figure 2). Current users also indicate that they expect to continue to further increase their use of crop biologicals over time. 

There are also good reasons to believe that the demand for effective biologicals remains unmet. Growers that have already adopted biologicals indicate that they are interested in using more, with anywhere from 14%-19% suggesting they will engage in “significantly higher” usage in two years’ time compared to what they are currently using and an additional 51%-67% of existing adopters saying they expect to engage in “slightly higher” usage over the next two years (see Figure 3). 

The number of tailwinds for the adoption of crop biologicals — from an urgent need to stave off the effects of climate change to the relatively small size of the market — combined with the high level of awareness but low level of adoption on the part of growers make this an ideal time to take advantage of the opportunity biologicals present.

The outstanding barriers to adoption

While growers are making clear their interest in using crop biologicals to protect their crops and manage their nutrition, they also cite a formidable set of challenges to doing so. Notable challenges to the use of crop biologicals include (see Figure 4): 

  • Their high cost and the variable — and in some cases insufficient — return on investment (ROI) they yield 

  • How inconsistent their impact can be across different soil types 

  • How hard it can be to assess their impact in isolation 

  • The challenges of using them, from storage to application to propagation 

Crop input manufacturers, retailers and experts cite similar challenges to adoption as growers do. Industry executives note that while some biologicals have worked well, others have underperformed when deployed in the field, resulting in inconsistent results and poor ROI. Such negative experiences, they say, can dissuade growers from embarking on further trials and/or adoption, particularly given the often confusing marketing messages that growers receive. 

Other challenges cited by industry leaders include insufficient ROI/impact data from field trials conducted by biologicals players. The gaps in on-farm infrastructure and the know-how needed to effectively handle, mix and apply biologicals are also notable. All of that being said, those same leaders believe that such challenges can be addressed over time and that they should not prevent the industry from seeing further growth over the longer term.

Indeed, the forward momentum is undeniable: Leading crop input companies are taking steps to tap into the growth opportunities from crop biologicals. And there is strong consensus within the industry that use of biologicals as a complement to — not a substitute for — conventional chemicals and fertilizers is expected to grow. In fact, industry leaders suggest that a step-change increase in adoption could happen if biologicals technologies are able to achieve a breakthrough in performance and/or a meaningful reduction in cost relative to their current state.

An increasingly favored investment space 

In the meantime, many of the leading manufacturers of crop protection chemicals and fertilizers have been actively investing in the space via M&A activity and venture capital funding. 

For example, seed and herbicide maker Syngenta has struck numerous deals over the past three years as part of its Good Growth Plan, which aims to reduce agriculture’s carbon footprint and help farmers deal with the extreme weather patterns caused by climate change. In 2020, it bought Valagro, a leading biostimulants producer based in Italy with 12 global subsidiaries, and in 2021 it entered a multiyear collaboration with Insilico Medicine to harness artificial intelligence for the development of advanced sustainable crop protection solutions. Then, in 2022, the Swiss agricultural giant acquired two bioinsecticides — NemaTident and UniSpore — from U.K.-based biopesticide technology developer BioNema. Also in 2022, Syngenta inked a 10-year collaboration with Scheffer, a Brazilian regenerative agriculture company with more than 200,000 hectares of farmland, to jointly develop biological crop protection products.

A more natural idea whose time has come 

From the smallest growers to the biggest manufacturers of chemicals and fertilizers, there is a desire — and a need — to take a more natural approach to growing and protecting crops. It’s why crop biologicals are starting to garner both attention and investment. To be sure, it’s still early days. But as our survey and executive roundtables make abundantly clear, despite increased awareness and a growing list of notable investments, tremendous additional runway for growth in this space remains — and with it, tremendous opportunity. 

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