NAI editor-in-chief Luke Hutson spoke with Zem on the rapid rise of BioTrop in Brazil, the strategy to enter the U.S. market, and the importance of being a pure biological player.
“We’re seeing the tip of the iceberg,” begins Zem when talking about the revolution taking place in Brazil’s biological market.
Quality issues have been addressed and a two-year shelf-life without refrigeration is usual for biological products, he enthuses.
There’s another side to the equation for Zem. In his words, the chemical industry is exhausted.
“Regulation means more products are being withdrawn than are being introduced. The costs are getting high, resistance means more applications, and growers are fed up with this. Biologicals are coming at the right time.”
Zem worked for FMC for 30 years, running field trials and eventually becoming country manager for Mexico and Brazil. Having trained as a biologist with a masters in agricultural entomology from the University of São Paulo and a PhD in Agronomy from ESALQ, Zem also attended the Advanced Executive Program at Kellogs School of Management, Illinois, U.S.
When he retired at age 65 from FMC, he joined Aqua Capital, a private equity company focused on agriculture. “I worked in the best years of chemical. But declining margins, more regulation, and consumers are demanding more.” Zem says he worked during the best years for chemicals but now he wants to focus on a pure biological company. And it was here that the idea to launch BioTrop was born in 2018.
Aqua Capital remains the major shareholder in BioTrop. Singapore’s sovereign investment fund GIC took a stake in BioTrop in July 2021, and now has a seat on the board.
Antonio Zem, CEO, BioTrop
Grape times ahead As well as a supplier, Zem is also a grower. He has a grape-growing business in the northeast of Brazil, exporting to Europe, U.S. and Canada. He’s also a soybean farmer. Both activities offer BioTrop’s consultants the chance to learn more about the products and pass that information onto clients.
For Zem, it’s important to practise what you preach, so he uses biological products in the vineyard. For example, seaweed-based products have been shown to be important in elongating the grape bunch.
Zem says they are not yet able to replace fully the use of conventional products on the grapes.
One product he mentions is calcium cyanamide. He says this is difficult to replace given the lack of a typical winter in Brazil (compared to the northern hemisphere), and this product is used to stimulate young shoots and facilitate multiple harvests during the year.
Zem makes the prediction that they could be pesticide free for grapes in three to five years. He emphasizes the number of modes of actions that can come from biologicals. He mentions Azospirillum, a bacterium typically used for its nitrogen fixating properties for legumes, but also used on melons in Brazil since it promotes growth. “But we still need to put science behind these products,” he adds.
New capacity In preparation for market growth beyond soybeans, BioTrop is busy bringing on-stream new capacity.
In terms of soybeans, 98 percent of soybean farmers in Brazil are already using Bradyrhizobium and more than 30 percent also using Azospirillum as co-inoculants on seeds. The use of in-furrow applications is also driving consumption.
BioTrop has a large production capacity, around 4.5 million litres per annum, for a large portfolio of microorganisms across rhizobium, bacillus and pseudomonas products.
“We’re at our limit,” says Zem. The second plant is scheduled for start-up 2021 and fully operational by 2022. The third plant is scheduled for start-up 2022, operating 2023. After these expansions, capacity will be approximately tripled.
This brings down the cost per unit. “In the largest bio market in the world, it’s about execution,” says Zem. BioTrop is also investing in R&D, with 12 PhD microbiologists.
For Zem, it’s important they remain a pure biological company. “This way sales reps don’t get distracted. It’s easy to sell glyphosate, it’s about price and terms … in eight years, by 2030, biologicals will be dominant,” Zem predicts. “Until that situation, it’s better not to be distracted.”
Biologicals for pasture BioTrop launched their latest product in July 2021 – PastoMax. This is a ‘grass’ inoculant, combining Azospirillum and Pesudomas for phosphate solubilizing properties.
Zem points out for every head of population there is a head of cattle i.e., 230 million. Most cattle are grass fed in Brazil. The country has low quality pasture, Zem explains. Biologicals can help pastures recover, particularly if they have previously been converted to crop production. The PastoMax product, which will be applied as a spray, was developed with Embrapa, Brazil’s national agricultural research institute.
Jonas Hipolito, marketing and strategy director for BioTrop told New AG International: "Pasto Max is gaining momentum and with the rainy season starting soon it is expected to cover over 100,000 hectares in its first year. BioTrop's expectation is to reach over one million hectares in three years, recovering pastures, increasing yields and sequestrating hundreds of tons of CO2.”
U.S. market BioTrop has already established a footprint in the U.S. in anticipation of entering the market, and an office in Missouri was set up this year. Zem says they have already brought in expertise to navigate EPA registrations, and are looking to conduct long-term trials. Inoculants should be easier than biopesticides, which Zem anticipates will be three to four years to register.
For Zem, it is essential to bring the right technology, at the right cost. Nitrogen fertilizer in the U.S. is relatively cheap compared to, say, Brazil, so a nitrogen-fixation product needs to come with a certain ROI for the grower, or other benefits. Another BioTrop product – combining three bacteria to help with water stress – could provide that additional benefit. He also mentions again the benefit of multiple modes of action.
The pricing strategy will be all important. For Zem, once a biological product is consistent and delivers, and compares with chemical, he says you might start talking about pricing 10 percent above or below the chemical price, depending on other benefits. He would caution against destroying value by under-pricing. But a low production cost is vital. He cites the example of Brazil, where inoculants are historically low-cost for the farmer, yet are still profitable for companies with the right production base. Finding the balance for the U.S. market will be key.
Zem celebrated his 70th birthday this year. Where does he find the energy for this new venture? “As long as God gives me batteries,” he says with a smile. ●
Jonas Hipolito, marketing and strategy director, BioTrop
Grazing cows Minas Gerais, Brazil
BioTrop launched their latest product in July 2021 – PastoMax. This is a ‘grass’ inoculant, combining Azospirillum and Pesudomas for phosphate solubilizing properties.
