Agrochemicals: reshaping crop protection with biologicals

Farmers typically apply conventional agrochemicals reactively, using pesticides only when weeds, fungi or insects threaten their crops. In contrast, biological solutions such as biostimulants and microbial biopesticides need a more proactive approach, with longer lead times and greater foresight. This shift necessitates the development of advanced diagnostic tools, new application techniques and different farming methods.

Forward-looking diagnostics, predictive analytics and innovative application models rely heavily on a variety of data including farm records, meteorological and biological information and aerial imagery. These insights can guide cultural control measures—practices that modify the environment to reduce or eliminate pests. They can also predict the optimal timing for interventions and determine the exact mix, timing and doses of stimulants, microbials or biofertilizers.

Currently, primarily new players and start-ups are addressing the growing demand for biologicals. The top five agrochemical companies account for only 11% of biological sales, compared to nearly a two-thirds share of the conventional crop protection market.⁷ A comparative analysis of 60,000 priority patent filings for biologicals between 2016 and 2021 revealed a decline in innovation, measured by the share of filings, for the top five agrochemical players in the European Union and the US.⁸

Established agrochemical players are making efforts to gain a foothold in this market through mergers and acquisitions. Notable examples include Corteva's acquisitions of Stoller and Symborg, Syngenta's purchases of Valagro and select bioinsecticides from Bionema, and FMC's acquisition of BioPhero. Additionally, larger players, including Bayer, are forming partnerships with companies such as Kimitec and Ginkgo Bioworks to accelerate innovation.

However, M&A activity alone may not be sufficient to secure a leading position. Agrochemical companies will need to change their business models more rapidly and reinvent their operations. If they fail to do so, they risk being outpaced and driven out of business by emerging entrants.

Traditional players must be willing to cannibalize their conventional agrochemical business with biologicals. This effort involves making biologicals a strategic priority, allocating investments and talent and creating organizational structures that help grow the biologicals business. It also requires dynamic experimentation and forming partnerships to accelerate innovation. Because the biologicals market is evolving rapidly, with many new entrants and novel solutions, established decision-making and management processes for mature non-biological businesses are often inadequate.

Predictably, biologicals will change the agrochemical landscape. Biologicals are not just a new mechanism; they represent a transition to a broader ecosystem approach. To make this change, companies will need to adopt advanced engineering and application technologies and add next-generation digital and AI-based capabilities.

To identify the optimal farming model, consider the best combination of biologicals and the following three factors:

• Novel delivery mechanisms — Explore various methods for delivering the active biological ingredients to their targets. For instance, incorporating microbial strains inside seeds can improve their effectiveness. Biodegradable microcapsules can ensure precise delivery.

• Modes of action mechanisms — Analyze different approaches for controlling pests and diseases and keeping plants healthy. These can include antagonism, where beneficial organisms outcompete pathogens; predation and parasitism, where natural enemies consume or parasitize pests; and methods that disrupt insect development. Another approach is to mobilize nutrients more effectively, ensuring plants receive the necessary elements for robust growth.

• Precision applications — Use advanced technologies such as GPS, sensors, drones and AI-enabled analytics to monitor field conditions in real-time. This approach allows farmers to apply products in precise amounts and at specific locations, improving both crop health and yield. By using these tools, farmers can reduce costs and maximize the effectiveness of their biological treatments.

Running a biologicals business on a platform developed for a conventional agrochemical business is unlikely to succeed. As such, companies will need to reinvent processes, platforms and data foundations. Successful business models will likely be built using processes, data and insights tailored to support novel delivery and action mechanisms. These models will also address the unique manufacturing, supply chain and storage needs of biologicals.

• Move from single-pest to ecosystem R&D solutions — Concentrate on optimizing the overall health of plants as well as the surrounding ecosystem.

• Examine the overall system, including engineering and application technologies — Look beyond an individual molecule or mechanism to focus on the overall farming model.

• Use digital technologies to accelerate R&D — Shift to automation of lab experiments, in silico chemistry and intelligent analytics. Replace conventional trial-and-error approaches with technology-enabled, highly focused, predictive and prescriptive experimentation.

Manufacturing and supply chain for biologicals differ significantly from conventional agrochemicals in terms of process and cycle time or shelf life. As a result, we expect the degree of complexity to increase substantially, especially when companies offer integrated biological and non-biological solutions to farmers.

In our experience, organizations will need more sophisticated planning and scheduling tools, with more robust simulation, scenario analysis and deeper insights.