Chemical Companies Take Note Of Biologicals

Vern Hawkins

Perusing recent headlines, a definite trend has emerged in the crop protection business. The giant ag chemical companies are very much interested in biological products. Consider:

In August, Bayer CropScience completed its purchase of Davis, CA-based AgraQuest Inc., a global supplier of innovative biological pest management solutions. The purchase price was approximately $500 million. This acquisition will enable Bayer CropScience to build a leading technology platform for biological crop protection solutions and pump up its fruit and vegetable portfolio, while also opening new opportunities in other crops and markets. Biologics control a broad spectrum of pests and diseases and offer farmers integrated pest management programs to minimize resistance and maximize crop yields.

AgraQuest is now part of Bayer CropScience’s crop protection business, and the former CEO of AgraQuest, Marcus Meadows-Smith, is now Head of Strategic Business Management Biologics. He explained that Bayer CropScience is integrating their former research and development team, and breaking down traditional silos looking for synergies between the areas of chemicals and biologicals. The company is planning on increasing spending on R&D, and between 2011 to 2016 Bayer CropScience plans to invest $5 billion euros. Half of that will be on seeds and biologics, half on novel chemical crop protection. Part of the change is not only internal, said Meadows-Smith, it’s how they view growers. “The old model for biologics was based in organic, so you had to use them by themselves,” he said. “Today it is an integrated solutions approach, completely different.”

Meadows-Smith said growers will be changing the way they view these new products. In the past, biological materials were on the soft side. But today’s products will offer very, very good control, in part because they are
not wholly dependent on biological ingredients. “This mixture of chemistry plus biological will give growers better yields and higher quality, which is particularly encouraging for those who want to enter lucrative export markets,” he said.

In late September, Pasteuria Bioscience, which is based in Florida, announced that it would be acquired by Syngenta. In 2011, Syngenta and Pasteuria Bioscience entered into a global exclusive technology partnership to produce nematode control products based on Pasteuria spp., a naturally-occurring soil bacteria long recognized as a promising biological control agent against nematodes. The first products resulting from this relationship will be available in 2014. Under terms of the agreement, Syngenta will acquire Pasteuria Bioscience for aggregate payments of $86 million, plus up to $27 million in deferred payments.

“Biologicals are getting more prominent, especially in Europe, and there’s an increasing emphasis on environmental stewardship,” Vern Hawkins, president of Syngenta Crop Protection, said in a speech at October’s annual meeting of the California Association of Pest Control Advisers. “Stewardship is not optional any more in fruits and vegetables.”

In an interview later, Hawkins said he definitely expects Syngenta to keep more biological companies on the radar screen as both grocery chains and consumers continue to focus on such issues as the environment and food safety. “We see the evolution of this technology changing agriculture, especially the production of fruits and vegetables, where consumer preferences continue to develop,” he said. “Look at Europe, where protocols are emerging for growers. Growers will need some level of control without chemicals, which means biologicals.”

In late November, (just prior to press time) BASF completed the acquisition of Becker Underwood from Norwest Equity Partners, a U.S.-based private equity investment company, for a purchase price of $1.02 billion. With the acquisition, BASF has expanded its product portfolio in the area of biological crop protection. “The acquisition fits very well with our long-term growth strategy,” said Andreas Kreimeyer, research executive director, in a press release. “It will provide our customers with an even broader range of innovative solutions for agriculture. And it also provides our new colleagues with access to BASF’s global R&D platform as well as new markets and customers.” 

For more on biologicals, click on the additional page.

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