|Bob Trogele |
COO and EVP, AMVAC
“With a CGAR of 10%, the biologicals market will continue to become more attractive to investors. Consolidation will likely continue as smaller start-ups get rolled up,” said Bob Trogele, COO and EVP, AMVAC in a recent interview with AgroPages.
He also shared his views on the opportunities and challenges for biologicals; AMVAC’s biological business and global presence, product lines and special features, as well as the dynamic changes and future development trend for biologicals etc.
Could you describe the current state of the biological market?
The biological market’s current double-digit-driven growth is being driven by several factors including increasing consumer demand for traceability, organic or natural produce, increasing government regulation of synthetics, shareholder sustainability requirements, and improving advancement in technology and utilization. To meet the demand, global agribusiness enterprises such as AMVAC are investing in research, development, manufacturing, and marketing of biorational and specialty nutrient solutions. (A good example from within our own company is the use of a patented biochemical technology platform from Envance Technologies that is used in Procter & Gamble’s Zevo product line for the household insect control category, and also in our own global technology pipeline for crop and non-crop solutions.) Further, venture capital also is available for start-ups that are targeting financial and sustainability ROI. Last, the market is consolidating with active M&A.
What and where are the biggest opportunities and challenges for biologicals?
The biggest opportunity for these biological solutions is in soil health, where we at AMVAC are targeting the segments of soil nitrogen fixation (for instance, through our recently announced collaboration with Azotic North America); soil micronutrient supplements (including our relationship with Verdesian Life Sciences); and microbial regenerative soil enhancement (such as our own iNvigorate Biological). In the U.S. we have launched our SIMPAS application system and our growing portfolio of biological SIMPAS-applied Solutions, opening up a new channel for our customers.
Further opportunity exists in organic production, seed treatment, foliar Integrated Pest Management, and Maximum Residue Limit management for food processing. For example, in Central America through our Greenplants company we provide a broad range of Green Solutions under the AmGreen umbrella brand and are Carbon Neutral certified.
For many biological companies, the challenges to manufacture consistent quality solutions remains a significant challenge to convincing farmers about consistent results, when compared to existing synthetic chemical products. Market access and commercial scalability also remain a challenge. Many start-ups lack the financial sustainability to reach economies of scale globally. For our part, AMVAC has addressed this by investing in dedicated training in the entire value chain (see map).
What are the factors affecting changes of the biological market?
Affecting changes in the market are a number of macro trends such as Millennial consumer demand for natural produce; government regulators wanting to lower the environmental impact of synthetics, especially in soil; activists lobbying for greener solutions; investors looking for an ESG contribution by input manufacturers and producers; and food companies looking to serve the needs of the fragmented shelf space. All of these in accumulation are directly driving the adoption of biological solutions. Investors are pouring in billions to improve the manufacturing and formulation technology to improve microbial delivery. Via SIMPAS, AMVAC also has launched into the soil health space the ULTIMUS technology platform, which has MVRA (measure, validate, record, audit) capabilities as a tool targeted to delivering powerful solutions like nitrogen fixation. Our partnership with Azotic and their N-fixing product, Envita, is a great example of a sustainable solution that also brings demonstrable value to the grower.
Please introduce AMVAC’s biological business and its strategic position in your company, global presence and core strengths in this area?
AMVAC and our parent company American Vanguard (AVD) are just now introducing Green Solutions™, an umbrella identity for our growing portfolio of products in this area. Green Solutions is a diversified growth platform for AMVAC composed of biorational and specialty nutritional products. This line of products is one of three key strategic growth areas for us, the other two being our core business of proven chemistries, and precision ag technologies including SIMPAS.
Green Solutions products are available everywhere that AMVAC and AVD have a product footprint. We sell direct to a wide swath of global agriculture including the U.S., Canada, Mexico, Central America, Brazil, Spain, Ukraine, China, India, and Australia. We also sell through distribution in important production areas of South America, Europe, the Middle East, and Africa. Market access obviously is a core strength of ours in the Green Solutions space, alongside key acquisitions including the purchase of Agrinos two years ago, and ongoing research conducted internally with a number of important industry partners. We sell our own manufactured Agrinos and Greenplants products globally and represent country-specific market access to several third-party providers targeting approximately USD 50 million in net sales in 2022. We continue to look for global strategic alliances as we conduct our own and also outsource research and development and manufacturing. We have more than 100 experts in the biologicals category throughout our network who support our customers as they learn more about the utilization of this technology. Further, as I mentioned earlier, we have launched SIMPAS and ULTIMUS in the U.S. targeting soil pest control at low rates and soil health for regenerative longevity.
Could you talk about your company’s biologicals and special features? What are the strategies of biological development and integration? How does your company combine biologicals with services?
Across the globe we now have more than 120 Green Solutions offerings in our portfolio. These include biofertilizers, biostimulants, biopesticides, specialty nutrition products such as essential minerals and trace elements, and ancillary products such as adjuvants and solar protection. Our strategy is to be mostly vertically integrated – from research through manufacturing and on to market access as I’ve talked about, where we market brands that are familiar to our customers or else are newer products sold alongside other well-known AMVAC brands.
In addition to technical expertise and support of the market channel for which AMVAC long has been known, we’re developing precision technologies for application of Green Solutions products which will help farmers capitalize on the movement to carbon sequestration and carbon credits. For instance, we recently announced two important additions to the portfolio of SIMPAS-applied Solutions™ (SaS), which through use of SmartCartridge containers can be applied prescriptively, in-furrow at planting, using the SIMPAS system. These two SaS additions are iNvigorate Biological, the first liquid formulation for SIMPAS; and Envita, which as I mentioned earlier, is a nitrogen-fixation product for SaS through our collaboration with Azotic North America.
Could you introduce the overview of biological R&D, production and application of AMVAC and relevant facilities & capabilities? What's the biggest challenges during above process?
It all starts with research, of course. Envance Technologies is our most important R&D centers overall. Agrinos brings us advanced research capabilities in India. We just recently announced we have extended our contract with Biotor Labs in Nicaragua to develop biological control solutions for a wide range of crops using each other’s microbial libraries. We expect that this will expand the product line of AMVAC Mexico, and we intend to collaborate on a commercial launch in the Australia market. We also have a number of research partnerships at the university level. Regarding production, we have two facilities specifically for Green Solutions manufacturing: one in Clackamas, Oregon; and one in Mexico. While we are busy building demand creation for the SIMPAS system and have succeeded to date with close to 30 units sold since our U.S. launch a year ago, conversely on the crop inputs side we – like nearly every supplier right now – are often challenged to be able to match supply with demand, even with ownership of our own production facilities.
What kind of biologicals do you think are the most promising?
Simply said, the biologicals that are the most promising are the ones that work for society and the producer. This is easier said than done, of course. For us, key target markets are soil health, nitrogen fixation, IPM MRL management, and seed treatment. In the foliar arena we are looking to combine our Envance Technologies research results to bio-engineer solutions in combination with biologics or low-impact synthetics. We call this a hybrid solution. We also have a nonselective bio-herbicide solution close to marketability that we are excited about.
What do you feel could be the next breakthrough innovation?
Manufacturing and formulation technology delivery will continue to improve in their capability to provide a high concentration of live organisms. IPM programs will combine pest control with regenerative microbial solutions targeting soil health and sustainability. Research and prescriptive technology continue to advance, and AMVAC thinks we will be on the cutting edge, for example, with our bio-herbicide from Envance.
Could you share some changes of market requirements, regulation & policy and application technologies of biological industry?
The regulatory environment is not well defined for the biorational category, sometimes to the point of being either too strident (if you want to have natural solutions, make it easier to register them), or too loosely defined (such as biostimulants). The result is that it is hard to know what is coming in the future as regulators continue to define the space and what the financial investment will be going forward. For soil health, that is, in carbon sequestration, government incentives to the producer are lacking. A carbon trading market needs to be organized in such a way that producers change their behavior, get the tools and solutions they need, and receive training on scientific know how and solution applications.
What’s the future development trend of biologicals (e.g., products, market, services, development opportunities)?
With a CGAR of 10%, the biologicals market will continue to become more attractive to investors. Consolidation will likely continue as smaller start-ups get rolled up. Precision ag technology will provide better information on how to use these technologies (such as with SIMPAS) and measure and record the results (such as with ULTIMUS). There is a huge gap in agronomic training, and service providers have the opportunity to fill that gap. Traceability should allow producers to have greater marketing upsides for their crops. Key question: Can we as an ag community produce more with less in an environmental technological fashion using biologicals? The answer is yes, but much work is ahead of us as an industry. We are just beginning to improve, explore, and learn.
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