‘Climate, Biologicals, Policy, Supply Chain, Agtech, AI’ - Key Words Frequently Mentioned in Year-End Interviews with 17 Industry Experts

Date:03-18-2024

Agriculture is an ever-evolving industry, continuously shaped by emerging innovations, economic shifts, climate impacts, and policy changes. The year, 2023, proved to be a year of uncertainty, but was also one that revealed the remarkable resilience and adaptability of agriculture. At the end of 2023, I interviewed 17 industry experts about the most impactful 2023 events and trends in crop protection, crop nutrition, biologicals, seeds, and beyond. Their insights highlight critical industry developments with resounding implications for 2024.

Weather Disruptions Expose Vulnerabilities

The most frequently cited 2023 trend was the series of extreme climate events - heatwaves, droughts, floods - affecting agricultural landscapes worldwide. These weather extremes highlighted existing food system vulnerabilities and underscored the urgent need for climate-smart, resilient agriculture. 

Krishna Kumar, Founder & CEO of Cropin, said, ″Unprecedented heatwaves, floods, and droughts affected regions such as the US, Europe, China, India, and beyond, emphasizing the urgency for technology-driven solutions, such as climate-smart agriculture to secure food supplies. Recognizing the vulnerabilities faced by farmers, world leaders, governments, and agribusinesses underscored the need to transform food systems and identified Agtech as a critical piece in this puzzle.″ 

Rafael Juncosa, CEO and President of Futureco Bioscience, said, ″Amidst these adversities, the industry showed remarkable resilience and adaptability driven by innovation. Companies that had long focused on advancing technologies and products aligned with precision agriculture seized opportunities despite the challenges. For example, at Futureco Bioscience, we have dedicated years to developing solutions to mitigate adverse weather conditions, exemplified by products such as Hydromaat, a microbial product that is effective in preventing hydric stress in plants.″

The Ascent of Biologicals

Another predominant trend involved the rising adoption of biological crop inputs, such as biopesticides, biostimulants and biofertilizers, as sustainable alternatives to traditional chemical products. Independent consultant Claude Flueckiger said that biologicals will overtake the chemical crop protection market in the long-term, with 2023 marking a growth milestone. 

″LATAM, Europe and APAC experienced contractions, but there was a promising growth trajectory in almost all biologicals segments and PGRs, indicating a readiness among growers to substitute synthetic chemicals with biologicals, despite the price premiums. This shift towards value-driven growth in the biologicals space signifies a departure from traditional volume-driven metrics,″ said Dr. Nomman Ahmed, Executive Director, Global Practice Advanced Analytics & Sigma at Kynetec.

Renato Seraphim, Business Strategist and CEO at Ciarama Máquinas John Deere, expects the Brazilian biological markets to bloom through rising farmer confidence and the presence new players. This shift aligns with rising public demand and policy pressures for eco-friendlier agriculture, as governments worldwide advance towards carbon neutrality.

From a financing perspective, Pam Marrone, Co-founder & Executive Chair of the Invasive Species Corporation, said, ″For biologicals, 2023 was a boom or bust year. A great success or massive failure.″ She cited Biotrop, Meristem, Pivot and others as fundraising success cases, but she also mentioned failures, such as AgBiome and Boost Biomes. 

″The venture capital investment climate was challenging, but biological deals in general were a bright spot for financing compared to the overall broader climate for startup financings. Valuations were in correction territory after sky high valuations in 2000-2022,″ she added.

In 2023, Rovensa was the industry leader in launching groundbreaking initiatives. ″At the Rovensa Group, we responded to these industry trends by launching a groundbreaking initiative. The launch of Rovensa Next in 2023 enabled us to empower growers to drive the green transition by offering a comprehensive range of high-performance biosolutions. This initiative, which brought together ten consolidated companies under one umbrella, created a broad range of innovative biosolutions combining local technical knowledge, innovation and on-the-ground teams that work alongside growers and distributors in the field to solve their sustainability challenges,″ said José Alfredo García, Chief Commercial Officer at Rovensa Next.

The consensus highlights the robust growth of biologicals through 2024 and beyond, disrupting mainstream chemical-reliant crop management. Their capacity to enhance sustainability and resilience cements these innovations as agriculture’s future.

Heightened Policy Support but Continued Regulatory Woes

While mounting policy encouragement energized sustainable agriculture in 2023, frustrating complex regulatory atmosphere persisted as a hindrance. 

″The year 2024 started with mass protests across Europe, with farmers being unsatisfied with low commodity prices, high supply of products from Ukraine, EU agricultural policy placing additional requirements on agri production, therefore, constraining EU farmers’ ability to compete on global markets. Agriculture-related topics could become focal points of the upcoming EU parliament elections. Whereas it is unlikely that the EU will change its overall direction in terms of meeting its climate goals, it is likely, in our opinion, that the implementation of the most difficult reforms would be delayed or postponed to ease tensions among farmers,″ said Wojciech Babski, CEO, BU Agro Director at CIECH Sarzyna S.A.

″The regulatory changes have had a significant impact on the pesticide and crop protection industry. Various regions and countries have implemented stricter regulations or outright bans on certain chemicals due to health and environmental concerns. This has spurred innovation in the sector, with companies investing in the development of new, safer active ingredients and formulations, as well as alternative pest management solutions like biologicals,″ said Alexandre Quesada, Executive Director at SmartTox Ltda.

″A prominent trend is more and more government control on pesticides. This is good because it is healthier and environmentally safer. We have a special system that monitors rates of applications and registered crops, in according with pesticide certificates. Therefore, if everything is legal, you will be reliable partner for farmers,″ said Anastasia Romanovskaya, Head of Marketing and Export at LYSTERRA LLC.

Marrone observed record United States EPA backlogs upending biological approvals, whereas failed EU reforms thwarted the streamlining of regulations there. 

However, there were also supportive policy developments, with governments acknowledging technology's indispensable role in transforming food systems. Kumar highlighted European and American sustainability regulations, climate financing pledges, and urban agriculture support schemes that are gaining momentum. Bikramjit Singh, Manager R&D Ops HH North America of Reckitt Benckiser, said the US Department of Agriculture (USDA) made available up to $7.5 million in grants through its Office of Urban Agriculture and Innovative Production (OUAIP), with the aim of supporting the development of urban agriculture and innovative production projects.

Therefore, 2023 witnessed rising high-level policy prioritization for Agtech’s climate mitigating and food security potential. However regulatory bottlenecks remain obstacles, demanding harmonized international biologicals guidelines and well-timed domestic approvals, to fulfil Agtech’s immense promise in 2024 and onwards.

Commodity Shocks and Input Inventory Gluts

Extreme commodity price volatility was another tumultuous 2023 trend. Many experts bemoaned excessive industry input stockpiles, weakened demand from farmers facing slim profit margins, credit access difficulties, and commodity market uncertainties. This inventory glut rippled through entire agricultural supply chains. 

″The agricultural chemicals market in 2023 experienced both growth and contraction across various segments, facing challenges such as persistent wage inflation and elevated inventory costs. Significant factors included the destocking of retail inventories for generics and key proprietary crop protection products, putting pressure on prices in crucial markets. Despite this, the area under cultivation for key row crops remained stable, and while commodity prices were on a lower trajectory, they were still relatively high, leading to a less severe contraction from an on-ground use perspective. This resulted in a market contraction within the range of 2% to 5%, according to the latest Kynetec estimates,″ Nomman said.

Seraphim explained that 2023 posed significant challenges for Brazilian agribusiness across all sectors, particularly for producers of grains such as soybeans and corn, which constitute some 70% of the agrochemical, biological, specialty, and agricultural equipment market. Decreased commodity prices, coupled with adverse weather conditions, led to a sharp decline in farmers' profitability.

Kevin Price, Head of Corporate Affairs at Certis Belchim, said that Certis Belchim is not heavily exposed in arable crops generally or in cereal herbicides, where applications and sales were significantly down. ″Fortunately, our risk is spread more widely, but ongoing high interest rates and substantial inventories at distributor level place working capital under pressure and remain important factors in shifting their focus away from new purchases,″ he said.

The situation became worse as climate disruptions, such as regional droughts, hit crop yields. Veranika Bursevich, from the R&D Department of PETERS&BURG Kft, noted that with farmers storing input inventories rather than purchasing new stock, sales contracted across crop protection and nutrition categories. 

Therefore, 2023 constituted a recalibration period, with commodity and input price corrections lowering agricultural profitability after pandemic-era windfalls. The industry appears to be trending towards stability, steadily adapting to slow demand. However, with high inventories persisting as 2023 transitions into 2024, a muted recovery trajectory lies ahead. Key players must make timely procurement decisions to capitalize on input price drops while preventing recurring surplus crises.

Shifting Role of Technology

Beyond biological products, experts highlighted technology’s expanding agricultural influence through innovations such as artificial intelligence (AI), automation, precision agriculture, vertical farming, and others. Multiple specialists stressed that AI is a critical piece in enabling food systems to address challenges, such as climate change and food insecurity.

Luis Xavier Quijano, President of Dragon Enterprises, emphasized the use of AI technologies, from pest and disease control, climate monitoring, satellite usage, planting quantities, crop values, to identifying trends in foods with higher nutritional properties and superfoods at lower prices.

Roy Chen, Formulation Consultant & Expert Witness at AgroFormula, discussed how embracing AI holds immense potential to revolutionize research and development processes for sustainable agrochemical and pesticide development. AI can enable formulation scientists to enhance efficiency, precision, and creativity in various areas, such as data analytics, predictive modeling, precision application and robotics, expert systems, and decision support. By leveraging AI over the next 5 to 10 years, the industry can streamline formulation R&D, reduce costs, improve efficacy, minimize environmental impact, and contribute to global sustainable agriculture. 

Kumar expects an AI revolution fueled by innovations like generative AI, which can overcome limitations in farm monitoring using satellites. Cropin utilizes generative AI to guarantee precise insights throughout cultivation, by masking cloud cover and reconstructing field images based on extensive historical and current data, demonstrating AI’s considerable role in advancing agriculture.

Nicolas Lindemann, Special Advisor TKCRY at AgrotechFocus, said decision support AI models will be necessary in 2024 to support ″Knowledge Agriculture,″ or the increased complexity of integrating biostimulation, bionutrition, and biocontrol. These models can ensure all parameters are considered, to optimize crop nutrition and protection programs. 

Therefore, 2023 showcased Agtech’s promise while heightening anticipation for accelerated development and adoption through 2024. Investor and corporate attention are focusing decisively towards novel interventions, such as automation, AI/ML, regenerative agriculture, and controlled environment farming, to construct robust food systems amid unrelenting changes.

Navigating Ongoing Uncertainty with Resilience  

Despite persistent upheaval, events in 2023 affirmed agriculture’s ingenuity in coping with disruptions, from biologicals mitigating climate threats to technology facilitating productivity and transparency. The industry displayed remarkable resilience, adapting to evolving landscapes, and 2024 promises the return of stability across certain metrics, whereas volatility will persist in terms of commodities, climate, and global tensions. 

As Rovensa’s José Alfredo García explained, recognizing shared challenges across agriculture sectors has become crucial to achieving unified sustainable progress. Meanwhile Kevin Price of Certis Belchim cautioned that distributor inventory corrections are ongoing, necessitating cautious procurement tactics. ″For a relatively small market, extremely competitive and with the purchase window for agrochemicals being so small, purchasing efficiency is key,″ said German Pessagno from GAIA AGRITRADE Ltd.

Therefore, 2024 requires balanced optimism and prudent decision-making to best harness agricultural technology’s promise amid continuous change. The industry must collaboratively integrate cutting-edge solutions to construct reliable systems. Our common future depends on sustainable food security. 

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This article was published in AgroPages' 'Annual Review 2023' magazine.

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