Mind the Gap: The Need for Innovation in Crop Protection

Author: Jason Convey, Sean Paquet

Today, farmers still use chemicals that were developed and commercialized in the mid-1970’s, like glyphosate, to protect crops from insects, disease, and weeds. But crop protection innovation has slowed considerably over the last few decades in part because of increasing regulatory constraints and costs to bring a product to market. This innovation drought is one of many significant pressures threatening the toolset farmers have to combat pests. Pests are increasingly resistant to our most effective protection products, in part due to climate change with more than 1,000 pest species having developed resistance to date. Even though more products are applied today, more crops are lost to pest damage than when pesticide usage began (40% today vs 7% in 1940). Adding pressure are continued debates over the negative externalities of major chemical crop protection products, amplified under a global spotlight on sustainability, soil health, and biodiversity. While still arguable, evidence is mounting of pesticidal harm to pollinators and beneficial soil microbe populations, and human health concerns surrounding pesticide exposure.

Where do we stand today? By the numbers, up to 40% of global crop production is lost to pests, leading to an estimated $220B in economic damage. $70B of this is attributed to invasive insects, while the remaining $150B is caused by disease and weeds. This is a hidden tax on society and we contend a substantial opportunity exists for investment in sustainable, effective, and novel crop protection innovation.

We looked to three areas to better understand the opportunity – corporate deal activity, venture investment, and emerging solutions. Incumbents, including Bayer, BASF, Corteva, Syngenta, FMC, and UPL, are responding to the opportunity, looking beyond their R&D labs and placing bets on novel technology platforms. Lopsided venture capital allocations into crop protection sub-verticals highlight potentially underserved needs, novel weed control in particular. Among many emerging technologies in the space, peptides, small molecule and PROTAC excite us most as potential answers to industry hurdles.

In the past year, we have seen a range of M&A and partnership activity in the crop protection space, highlighting the knowledge and subsequent action that incumbents are taking to hedge against imposing challenges in crop protection. June 2022 saw the acquisition of BioPhero, specialized in stable pheromones for a range of pests in row crops, by FMC Corporation for an estimated $200M. Ginkgo and Bayer signed an agreement in July to build out biological R&D platform capabilities with Bayer being the first major partner for Gingko’s biological platform. Symborg, having developed a range of biological products with an emerging biocontrol pipeline, was acquired by Corteva (undisclosed amount) in September. In January 2023, Bayer and Oerth Bio launched a collaboration to direct Oerth’s PROTAC technology toward development of novel protection products.

Notes:

  • Source of funding data: PitchBook, Scouting and categorization: SVG Ventures|THRIVE
  • Platform: utilize a base technology that has a multitude of potential routes to market, often in the early stages of development.
  • Delivery Technology: improve the efficacy of existing products.

Capital raised for venture-backed novel crop protection has increased substantially over the last decade, with insect control companies receiving the most funding raising $424M from 2020-2022 and accounting for over 35% of capital raised since 2012. Disease and weed control companies received markedly lower funding, making up 16% and 4% respectively over the 2012-2022 period. Across these categories, there is a substantial difference between the $220B in annual economic damage and amount invested, highlighting the opportunity to close the gap.

Herbicides stood out as relatively underfunded. According to the EPA, a “herbicide is a chemical used to manipulate or control undesirable vegetation.” The process by which the chemical manipulates the vegetation is defined as a mode of action (MOA), the “biological process or enzyme that the herbicide interrupts, affecting normal plant growth.” Since 1984, only one novel herbicide MOA has been introduced. Compare that to the 515  unique species that have developed herbicide resistance to date and limited investment in innovation ($81M from VCs between 2012-2022), and we see a problem worth solving.

For the endurance of our fields, farmers, and fabric of our economy, agriculture needs products that work. While a product’s environmental profile is important, efficacy and economics are just as important. In assessing the potential of novel protection products, an ideal profile mirrors key attributes of traditional chemistries: a novel MOA, minimal re- entry time and residue, a good safety profile, product stability, and reasonable production costs – alongside environmental neutrality or better. Among many emerging technologies, peptides, PROTAC and small molecule solutions are worth noting for their potential fit with this profile. Vestaron, a leading agtech scaleup and THRIVE Top 50 company, has developed a range of peptide-based insect control products that tout efficacy and usability of conventional products, and sustainability of biologicals. Mentioned above, Oerth Bio is developing a range of protection products in partnership with Bayer, utilizing PROTAC technology from the pharmaceutical industry that works through protein expression modification. Among other positive attributes, PROTAC has the potential to be more targeted than traditional chemistries, and thus safer. 5metis, is focused on combining boron-based, small molecule discovery and synthetic biology, developing novel MOAs.

The challenges faced by the industry to better protect crops are formidable, with real impacts to food security, soil health and biodiversity, and human health on the line. Accelerating the pace of innovation will be critical going forward, as will collaboration. By harnessing global expertise and working together as an industry, we can produce the crop protection products that will feed future generations as traditional chemistries have fed the world since WWII.

About the Author
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Jason Convey
Corporate Innovation Associate, SVG Ventures|THRIVE
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Sean Paquet
Director of Corporate Innovation, SVG Ventures|THRIVE

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