Fertilizer International 511 Nov-Dec 2022
30 November 2022
CRU Fertilizer AgriTech Forum
CONFERENCE REPORT
CRU Fertilizer AgriTech Forum
An eclectic mix of delegates from established fertilizer companies and technology start-ups gathered in Dallas, Texas in September for CRU’s inaugural AgriTech Forum. We report on the highlights of this lively networking event.
Why fertilizer AgriTech?
Chris Lawson, CRU’s head of fertilizers, opened the event by asking: “In a higher interest rate/inflationary/recessionary environment – is AgriTech a safer bet?”
2022 has certainly been a year of dramatic market change. CRU’s fertilizer price index (FPI) reached an all-time record in March. These sky rocketing prices have opened the floodgates to higher cashflows and record earnings, particularly for North America fertilizer producers (Fertilizer International 510, p4). At the same time, fertilizer companies – to some extent – are holding back on their traditional capital investments, suggested Lawson.
Within the industry, high prices are also forcing innovation downstream. In effect, farmers are demanding more ‘bang for their buck’ from fertilizers as their input costs balloon. Fertilizers have also been making headlines as food security concerns have moved up the news agenda.
Despite recent price declines, fertilizers remain relatively unaffordable – a fact that has hampered demand in 2022. This has led farmers to look for alternatives, which, overall, is a positive for the fertilizer AgriTech market.
Given current developments, CRU believes there is room for an AgriTech conference dedicated to crop nutrition. “We aim to provide a focused, networking-heavy event to facilitate innovation in this critical industry,” comments Lawson.
He provided a hypothetical scenario to illustrate AgriTech’s disruptive potential:
What if, for example, the introduction of an innovative microbial product – claiming to deliver a nitrogen application rate saving of 45 kg/ha (40 lb/ac) on corn crops – eventually achieved a penetration rate of around 80 percent of the total US planted corn area. (This is similar to the current rate achieved by genetically engineered corn in the US.) In this scenario, annual North American nitrogen (N) consumption would eventually be cut by 1.4 million nutrient tonnes by 2045, equivalent to a CO2 saving of 3.4 million tonnes. This would herald a major market step change in nitrogen usage and efficiency.
Summing up, Chris argued that 2022 will “absolutely” be a pivotal year of change for the crop nutrient industry. Yes, prices being cyclical will drop. But don’t expect them to return to previous lows, he said, as raw materials costs and environmental compliance look set to keep prices higher. Inevitably, fertilizer producers will also shift their focus onto new growth markets.
Looking ahead, promising AgriTech will undoubtedly make its impact felt, yet commodity fertilizers will still be required in large quantities. This suggests that a symbiosis is required between AgriTech start-ups and the industry’s incumbent major producers.
AgriTech investment accelerates
“Today is the best time” to invest in North American AgriTech, suggested Matt Foley, programme director of Invest Nebraska. This was due to the financial support from two financial tailwinds:
- The increase in capital being deployed by private markets
- The focus of government programmes on soil health and nutrient management.
Invest Nebraska has been investing in tech companies since 2011. It currently makes 20-25 seed stage investments each year, typically awarding a cheque of around $250,000 to individual companies. Two of its notable ag tech investments include Sentinel Fertigation and Monolith.
Sentinel has gone through a successful $1 million seed round through Invest Nebraska. Its technology is now commercially available across the state and delivers an average nitrogen saving of 43 lb/ac to farmers. Monolith, the recent beneficiary of a $1 billion loan from the US Department of Energy, is building a commercial scale ‘turquoise’ ammonia production plant in Hallam, Nebraska. This is expected to produce around 319,000 t/a of ammonia, primarily for on-farm use.
AgriTech start-ups are becoming increasingly attractive to investors. Globally, around $4.1 billion has been raised for 527 fertilizer technology investment deals in the past five years. These include:
- 272 deals totalling $2.7 billion for innovations in biology and chemistry
- 137 deals totalling $233 million for innovations in software
- 80 deals totalling $96 million for innovations in hardware and sensing
- 38 deals totalling $987 million for innovative business models.
In the US, government support includes the USDA’s $1 billion pilot programme for climate-smart commodities and the small business innovation research (SBIR) programme. SBIR has awarded $54 million to fertilizer technology start ups in the past decade. Beneficiaries have included Midwestern Bioag and Nitricity.
Hurdles to AgriTech adoption
Convincing farmers to adopt AgriTech requires them to vault two hurdles, suggested Sam Taylor, executive director, Rabobank. Firstly, growers need to be convinced they need to change and, secondly, they also need to be taught how to use new products effectively.
In Taylor’s view, the successful adoption of new products requires farmers to be led “through the retail landscape” along the following pathway:
- Persuasion – though the use of education and evidence
- Influencing decision-making – to avoid rejection as a possibility
- Acceptance and purchasing – including viable financing options
- Successful use – as negative experiences my lead to discontinuation and the warning-off of others.
How many times a year the grower makes a purchasing decision will also hold the key to AgriTech adoption and growth, suggested Taylor.
Sustainability was identified as the great agricultural disruptor by a panel of industry executives at an event hosted by Rabobank in 2021 – who placed it ahead of e-commerce, new breeding technologies, precision agriculture and biologicals. Among industry executives, there was a view that ‘biologicals’ would become a major purchasing area for corn/soybean production, being likely to account for 10-20 percent of the farmer’s wallet by the end of the decade.
Within the industry, climate change, consumer demand, technology and social innovation are seen by executives as the main catalysts for agricultural change – including farming practice. While climate change and consumer demand will push changes to farming practice, technology and social innovation are pull factors that will act as enablers to deliver the necessary change.
“Pushed and pulled by a mix of factors, the book of farming will be rewritten again in the years and decades to come,” commented Taylor. Among executives, however, the jury remains evenly split over whether the Russia-Ukraine conflict will ultimately decelerate or accelerate the drive for agricultural sustainability.
Sharing the desire to win
The Mosaic Company is dedicated to the pursuit of a “healthy soil”, according to Kim Nicholson, the company’s VP for AgriTech & innovation. Balanced crop nutrition, through pioneering speciality products such as MicroEssentials, K-Mag and Aspire, forms the foundation of Mosaic’s overall business approach.
The company has also moved into advanced crop nutrition via strategic partnerships with innovative market entrants such as AgBiome, BioConsortia and Sound. To consolidate its position in the biostimulants market, Mosaic recently bought the biological-based crop input company Plant Response, its first major acquisition in five years.
The key to successful AgriTech partnership, suggested Nicholson, was a shared vision and an agreed definition of success. Both parties also need to understand their respective roles, contributions to the partnership, and different strengths/weaknesses. Neither should the partnership be overly competitive.
“The focus is on a shared desire to win – not who is the winner. It really needs to lift both boats,” said Nicholson.
Mosaic remains interested in new AgriTech partnerships and acquisitions. “We’re still out there looking for technology,” Nicholson confirmed. Areas of interest include:
- Sensors and software for measuring nutrient use efficiency
- Novel crop nutrition products and equipment.
Joint ventures – engines of innovation and R&D
Two of OCP’s high impact joint ventures (JVs) were highlighted by Zach Hedge of OCP North America. The company’s involvement in JVs dates back to its partnership with Jacobs (now Worley) in 2011. OCP subsequently established partnerships with Spain’s Fertinagro in 2019 and China’s Forbon in 2021.
OCP’s partnership with Fertinagro – OCP Fertinagro Advanced Solutions (OFAS) – is developing and manufacturing innovative speciality fertilizer products tailored to specific farming conditions and individual crop requirements. The Forbon JV, in contrast, is an R&D partnership developing next generation technologies for fertilizers and ‘smart’ agriculture.
Becoming nature-positive
Nutrien’s senior director Ryan Bond sits on the retail side of the business where he leads the company’s soil health team. He said his job is: “To deploy capital, deploy resources to get to nature-positive.”
Nutrien’s current sustainability offerings and capabilities include:
- C2 biological nutrient use efficiency technology
- Dynagro cover crops l ESN enhanced efficiency fertilizers EEFs)
- Echeleon variable rate application (VRA) technology
- Agrible precision farming app.
The company is continuing to invest in new technologies and is pursuing the transition to low-carbon fertilizers as part of its 2030 ‘Feeding the Future’ plan.
Ryan offered two takes on AgriTech: “You don’t need data – our 500,000 growers will tell you they’re drowning in data. You need insights, not data.” He also directly quoted Nutrien’s CEO: “Innovation is worthless without adoption!”
This plays to Nutrien’s strengths, as the company can act as an accelerator by working at scale through its digital retail platform, network of 3,500 agronomists and half a million grower accounts.
Embracing external innovation
Hedar Sutovsky, ICL’s VP for external innovation, set up ICL Panet, an external startup hub in 2021. The hub is used to form partnerships with start-ups who have already developed a product, but are poised at the intermediate pilot or market-ready stage.
ICL Planet is part of a wider set of ICL innovation initiatives that also include:
- BIG – the company’s internal innovation accelerator
- An operational excellence unit – pursuing ‘Industry 4.0’ production technology
- ICL Ag start-ups – Agmatix and Growers
- An open innovation platform.
This ‘ecosystem’ at ICL is fast-tracking company-wide innovations in areas such as food tech, eMobility, next generation fertilizers, digital agriculture and novel materials.
Being disruptive
Creative disruption is at the heart of Koch Agronomic Services (KAS), says Greg Schwab, the company’s VP for innovation & agronomy. KAS itself was set by Koch to disrupt its core fertilizer commodity business – with Greg being recruited as its fourth employee!
Greg highlighted Protivate, the latest innovation from KAS. This novel seed enhancer provides both primary nutrients and micronutrients and is applicable to corn, soybean or wheat. The Protivate range includes:
- NU4-DRI (2% N, 12% P2 O5 , 9% Zn, 2% Mn). This is applied at the planter box or in downstream/retail applications.
- NU5-DRI (10.5% Zn, 5% P2 O5 , 3% Mn, 2.5% Mo, 1% Fe). Also applied at the planter box or in downstream/retail applications.
- NU5-LUX (17% Zn, 5% P2 O5 , 3% Mn, 2.5% Mo, 1% Fe). This is used in retail seed-treated applications.
These enhancers also improve seed flowability and encourage better seed singulation – so eliminating the need for talc. Trials on corn with NU4-DRI have demonstrated a 4 bu/ac yield advantage over talc/graphite seed treatments. This could typically deliver a net return to farmers of almost $20/ac, calculates KAS.
Listening to tree heartbeats
Phytech originally offered drip irrigation technology before moving into plant nutrition and then pest disease and control. The company now manufactures sensors which are attached to the trunks of trees to measure their daily cycle of contraction and expansion, explained Oz Ben-David, the company’s VP.
This daily cycle measures trees stress levels and indicates when to irrigate – to maximise yields – while minimising costs and environmental impacts. Phytech’s technology combines multiple sensors for 4Rs nutrient management. These include:
- Soil probes
- Irrigation flow sensors
- Weather sensors
- Fruit growth sensors
- Trunk sensors.
Data from these sensor arrays ensure that fertigation is performed efficiently with no leaching, as water and crop nutrients are placed precisely within the active root zone in the required amounts.
Phytech says its technology powers more than 850 of the world’s top tier agricultural growers. The company has an almost 40 percent share of California’s large almond-growing market, for example.
START-UP SHOWCASE
The second day of the event was dedicated to pitches from the following AgriTech start-ups:
Diego Angelo, ucrop.it. This platform monetises and rewards sustainable farming behaviour and acts as a trusted and reliable intermediary between farmers and major AgriFood players such as Cargill, BASF, Profertil and Bayer. upcrop.it functions as a ‘track and trace’ system that collates, verifies and certifies on-farm information such as crop yields and nutrient use efficiency.
Certified growers can generate incomes of up to $1.50/ac. The system operates in Argentina, Uruguay, Paraguay and is being rolled out in Brazil. The platform is used by more than 500 large scale farmers and 200 corporate partners in the Americas and certifies around three million acres currently.
Joe Brooker, Stable. This UK-based, venture capital backed company was founded in 2016. It solves the problem of unmanaged price volatility and ill-liquidity for agricultural commodity where conventional futures contracts have failed. The company’s commodity contracts address a market gap and failure. For example, only 16 percent of ag products are covered by futures contracts currently, leaving 173 products whose risks cannot be hedged or managed. These include onions, barley, wine, broilers, boneless beef, potatoes and apples. Sable’s simplified hedging model works by pricing unpriced commodity risks and providing new sources of liquidity. The company employs 50 staff and operates out of New York, Chicago, London and Hamilton.
Keith Driver, Replenish Nutrients. This Alberta-based company manufactures innovative regenerative (NPK+S) fertilizer products for sustainable farming. These build soil organic matter, restore soil biodiversity, activate microbes and strengthen the natural defences of plants. They also meet regenerative agriculture goals by maintaining yields while restoring soil carbon. Products include a soil probiotic (HESO, 0-9-20-20), a potassium builder (Super KS 0-0-35-30) and a phosphate builder (Rebuilder, 0-17-0-12). The company currently operates a 20,000 tonne capacity production plant in Beiseker, Alberta. An additional 50,000 tonne capacity granulation plant is due to come online in Debolt, Alberta in 2023. Meanwhile, another 200,000 tonne capacity granulation plant, co-located at K+S’s Bethune mine site in Saskatchewan, is at the project engineering stage.
Peter Gross, Lucent Bio. Novel technology developed by Lucent Bio transforms food processing co-products (lentil and pea hulls) into a sustainable, high-performance fertilizer marketed as Soileos. The company’s technology binds micronutrients to bio-activated cellulose. The resulting ‘climate positive’ fertilizer improves soil carbon and acts as a source of zinc. Soileos has been tested in 149 trials on both broad acre and speciality crops. It was found to deliver a 20-25 percent yield improvement for tomato, lettuce and strawberries and a 5-12 percent yield improvement in soybeans, wheat and corn. Lucent is building a 7,000-tonne capacity production plant to manufacture Soileos at Rosetown, Saskatchewan, Canada. This $20 million project is due to be completed by the end of 2022.
Nicolas Pinkowski, Nitricity. This start-up’s ambition is to electrify and distribute global fertilizer production locally – with the dual aim of cutting GHG emissions and improving the equity of global food supply. Nitricity’s technology turns air and water into nitric acid using solar energy and a plasma reactor. The nitric acid can be converted into a range of liquid fertilizers by combining with other inputs such as limestone, phosphate rock and potassium hydroxide. Nitricity has already operated an on-farm solar fertilizer project at a fertigated 75-acre plot for bell peppers and tomatoes in Fresno, California. Having linked up with terranova ranch in 2021, the company began a new project with IFDC and khosla ventures in 2022.
Jane Fife, 3Bar Biologics. Biofertilizers do not ‘travel well’ due to the decrease in microbe viability over time and distance. Although well known, this problem persists as the industry’s current answers – the overloading of microbes, cold storage and expiration dates – are only partially effective. 3Bar has taken a very different approach. Its innovation places research-quality microbes in the hands of famers using just-in-time fermentation. 3Bar’s portable containerized fermentation system uses a push-button mechanism to release microbes from a sealed storage chamber into a rich nutrient broth. The microbes grow exponentially within a small container over the next 24-48 hours – and are then ready to apply for several months.
Hunter Swisher, Phospholutions. RhizoSorb is a granular fertilizer additive developed by Phospholutions. It increases the phosphorus (P) efficiency of fertilizers and, according to the company, allows farmers to achieve the same or better yields with half the fertilizer application. Essentially, the product acts as a reservoir for P, only releasing this nutrient when it is needed by the plant. RhizoSorb has been demonstrated on 2,500 acres of crop land and been shown to maintain yields while at the same time reducing P use by 50 percent. Phospholutions is preparing for a pilot launch with retail partners in 2023.
Jared Criscuolo, Upcycle & Company. Upcycle’s ‘active’ fertilizer triggers and supports the microbes necessary for resilient soils and plants – while providing supplementary nutrients, organic matter and carbon in a single treatment. In a trial on turf, the product increased plant growth and zinc transport pathways and reduced water stress and disease pressure, in comparison to polymer-coated urea (PCU). The company’s production process upcycles organic waste using renewable power. To date, it has received $1.5 million from angel investors and is seeking further funding to allow it to move aggressively into the agricultural market.
