The highly regarded business journal Bloomberg is well known for keeping its finger on the pulse of industry trends, which is why one of its recent reports on the future of agriculture is causing some fertilizer analysts to foresee the beginning of the end for chemical fertilizers.
As the December 2019 report states, “Agribusiness is increasingly turning to natural and sustainable alternatives to chemicals as consumers rebuff genetically modified foods and concerns grow over Big Ag’s role in climate change.”
While switching to organically grown food would avoid the problems caused by conventional fertilizers, organic farming produces low crop yields and is an inefficient use of farmland. With a joint report by the Organization for Economic Cooperation and Development and the United Nations’ Food and Agriculture Organization predicting that population increases will require an added 15% more food be produced over the next decade on the same amount of land, simply growing without chemical fertilizers is not a viable option.
“There’s a growing world population and how are we going to feed all of these people?” Asks Craig Forney, an expert on intellectual property of biorenewable products at Iowa State University. “We need to use land better and use the resources better. At the same time, we want to protect the environment.”
While conventional chemical fertilizers would be able to meet the increased demand for food, it would come at a price.
In 2012, global ammonia production totalled 170 million tons. The process of making this fertilizer raw material emitted 487 million metric tons of CO2, an amount equally 1.44% of global CO2 emissions. Alternative chemical fertilizers are reliant on non-renewable raw materials, such as rock phosphate.
“We’re starting to see some of the effects of that - all of this wonderful industrialization has contributed to climate change,” says Nicole Kling, a patent agent with Nixon Peabody who specializes in the biotechnology field. “We’re starting to see people swing back in the other direction.”
Avoiding agribusiness’s role in climate change while feeding a growing population will not be easy. According to Forney it means “intensified agricultural production to increase productivity of land but with minimal chemical support.”
Alongside the moral need to reduce the impact of climate change comes increased political and legislation on the agrichemical industry.
As a recent report in the English language daily Japan Times, notes, “Much of the handwringing over farm chemicals stems from the recent fate of glyphosate, the most ubiquitous weedkiller ever. Regulators around the world are tightening up rules around using the chemical, including Europe and Mexico. Meanwhile, thousands of lawsuits that could result in billions of dollars in penalties are pending against Bayer AG over whether its glyphosate-containing product, Roundup, caused cancer. Bayer insists it’s safe, and some government agencies such as the U.S. Environmental Protection Agency say it isn’t likely to cause cancer in humans.”
While fear over agrichemical risks do mostly fall on herbicides and pesticides, such as neonicotinoids, other agrichemical sectors have also hit the headlines and legal system due to health concerns. Zinc oxide as a feed additive was recently banned in Europe, while use of antibiotics as a growth enhancer has also come under fire.
The result is increased public and political demand for a healthier and safer agricultural industry, leading many businesses to opt for higher standards for their food products.
As Rob LeClerc, chief executive officer of AgFunder, an online venture-capital platform, observes, “Both entrepreneurs and investors are saying, ‘Hey, the writing is on the wall, we’re entering a post-chemical world’.” Adding that, “… seed companies who have billions in market cap are like ‘We need to do something,’ and everyone recognizes the opportunity.”
The reason for this industry wide change in direction is made clear in the Bloomberg report, which states that, “The global fertilizer and pesticide market is around $240 billion, and grows 2 percent to 3 percent a year, according to Ben Belldegrun, a managing partner at Pontifax AgTech, a company that invests in food and agriculture technology. While so-called biologicals including biofertilizers, biopesticides and biostimulants are just 2 percent of that market, those have been growing closer to 15 percent a year for the past five years.”
A large part of this growth will be in the biofertilizer sector, an innovation that boosts or adds microorganisms to the soil. These naturally occurring bacteria can turn atmospheric nitrogen into a soluble form which the plant can absorb. In return for accessible nitrogen, the plant feeds the bacteria energy.
Research into this field is growing, with investment typically located in the US, China, Japan, South Korea, and Germany, and is based on replacing standard nitrogen fertilizer.
The result is a string of product patents from all the major AG corporations, such as Bayer, Syngenta AG, and BASF.
For now, the agrichemical sector is secure. The industry will not stop using traditional fertilizer products over night. Instead, a slow shift away from conventional crop nutrition is more likely. This will happen on many fronts, with the increased use of biofertilizers, adoption of precision agriculture, and the development of crop types with larger yields or crops that are better at growing in specific soils or climates.
Achieving these changes is complicated, as it involves closer cooperation between research institutions, legislators, and entrepreneurs. As Forney notes, “The hope is someday in the future they will merge, and you will have organic and non-GMO products that are just as productive as Big Ag.”
For now though, the status quo remains, but with changing technologies and priorities, nothing is certain. The market will always adjust, and if current trends continue we may be witnessing the beginning of the end for chemical fertilizers.