Bringing your Biopesticides to Market
Posted 7th May 2018 by Kate Barlow
The application of crop biotechnology in agriculture has permitted an enhanced level of income to farmers and environmental benefits, while also reducing cropland expansion. Insect-protected crops, such as corn, showed more than 10% increase in yield worldwide and insect-protected corn and cotton augmented farm income by >$56 billion between 1996 and 2001.
There are important factors to consider to ensure the value and the benefits of these products. These relate to their mode of delivery from suppliers to end users, including correct shipping, storage as well as user education.
A bright future for biological products
Biopesticides have great regulatory advantages that support R&D investment. The average cost of bringing a new conventional pesticide to market is ~$250m. While current data suggests that the production of biopesticides averages ~$30m, so the risk/reward ratio will continue to drive investment and new products. There have been examples already of product successes driving market acceptance and further demand.
Challenges of bringing a biological product to market
Evidence of product efficacy and end-user understanding of the correct use and expectation are still an issue and claims of yield gain can be troublesome. If your product is sold with yield gain claims and these are not seen in year one, a grower will stop using that product forever. In order to combat these problems, clear positioning in the market and a long-term view is necessary when branding your product. If, for example, your product is really about stress mitigation, then you are really selling insurance. Maintaining yields is just as important and becoming more so in certain regions and markets, so the longterm brand should be clear on this.
Some products that have failed, have suffered from the ‘snake oil’ reputation. There are cases of rushing a product to market that worked in one region but hadn’t been tested in different 3 environments. Reputations then spread that may or may not be warranted as a grower will judge efficacy in black and white terms, regardless of circumstances or even when their usage was not as originally intended/instructed. Other issues include logistics, storage issues, compatibility and mixing issues, and grower and retailer education.
California gets a lot of attention because it is the largest market for crop protection products in the USA. This is because of the high percentage of specialty crops grown there. However, this does not mean it generates the most revenue by crop. Therefore, markets need to be studied carefully when deciding on a product target. These specialty crops are good markets to go into but in terms of acreage, there are many other opportunities.
Considering your crop targets, location of key markets and what that means for transportation and storage is very important. The combined distribution industry in the USA alone has over 500 warehouses, supplying ~10,000 retail outlets. This means that once your product hits the market, it can be shipped to any of 500 locations for storage, before onward shipping to outlets and finally the farms, in a variety of seasonal conditions. When developing a live product, this creates many variables in handling, storage and temperature exposure that must be considered and makes inventory shelf-life critical.
Application season is often very short. Treatment for some insects and diseases or the wait for the correct application conditions can create demand spikes that need to be fulfilled instantly and therefore distributors need the stock already in storage to meet demand. This means most product is bought by distributors between November and February and brought into their warehouse system before March.
Shipping to a warehouse in November for a May-June first application means a shelf life of six months is only just enough to cover the first application. Given multiple applications of biological products is common and, more generally, considering any stock not sold is returned to the manufacturer, a shelf life of 2 years is required for a practical and profitable product. You are often competing with conventional products with a shelf life of 5 years or more.
Products with short shelf-life have mandatory product return policies at the end of the season and those costs need to be factored into your business plan.
Product will be shipped to the north in winter and even if the warehouse is heated, the trucks will not be. Similarly, southern states will not have air-conditioned trucks or warehouses and your product must survive summertime storage, let alone storage and handling on the farm site where conditions are unknown.
The realities of storage and the distribution network
Each warehouse is usually full during the times of year your product will be in storage. These warehouses are many acres in size, full of many products, shifts of staff and many other variables that make even the best systems of stock control less than optimal. Product rotation in a time and space pressured environment cannot be guaranteed, so your shelf life needs to factor in that there is no guarantee of a ‘first in, first out’ system being consistently applied at the warehouse.
In the next biopesticides article, we will be discussing the importance of selecting a formulation type and package size, preferred packaging options, crop specific economics, tank mixability, and tank mixes.
To find out more about the biopesticides market, join us at the Partnerships in Biocontrol, Biostimulants & Microbiome Congress: Europe. Download the agenda here.
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