War in Ukraine and commodity boom pushes fertilizer prices to record highs: profiting from microbes’ properties is a cost-effective solution as investors jump in, writes the Wall Street Journal
by Matteo Cavallito
Soaring fertilizer prices bring under spotlight an alternative solution: microbes. Today, Wall Street Journal writes, “Startups marketing alternative crop fertilizers said they are gaining traction among U.S. farmers and investors.”
At the same time, “Companies such as Pivot Bio, Kula Bio and Anuvia are pushing development of farm fertilizers by harnessing microbes or plant-based products to deliver nutrients that corn and other crops need. They aim to replace traditional fertilizers produced from natural gas or mined underground, prices of which have hit records this year due to supply-chain constraints and Russia’s war on Ukraine.”
$1 billion investments in 12 months
According to estimates by the research firm AgFunder, startups engaged in the sector have attracted about $1 billion in new investment in one year. The trend is not surprising as fertilizer prices skyrocketed threefold this year driven by the economic impact of Russian invasion.
Companies involved in the development of microbe-based solutions, the WSJ says, include California-based Pivot, founded in 2011 that has raised $615 million in funding, with $430 million collected last summer from some some large investors such as Singapore’s sovereign wealth fund Temasek, Bill Gates‘ Breakthrough Energy Ventures, and food commodity trader Bunge Ltd.
Our chart of the week shows CRU's #fertilizer price index down 10 points over the past three weeks from its record high of 390. It remains well above the 360 record set in 2008 #agriculture #commodities pic.twitter.com/LiRSqh48QS
— Fertilizer Week (@FertilizerWeek1) April 20, 2022
That crucial link between microbes and fertility
Currently, WSJ says, Pivot is developing new microbes that are allegedly capable of fertilizing agricultural soils. Scientists indeed have been emphasizing their crucial role as well as the increasingly obvious link between soil fertility and microbial biodiversity.
Microorganisms, in fact, act as a resource bank from which plants can selectively draw according to their needs. In this way, microbes contribute to the decomposition of organic matter and the release of essential mineral nutrients.
The economic issue, of course, is equally important. Karsten Temme, Pivot’s CEO, told the Wall Street Journal that applying microbes is often less expensive than applying fertilizers. Although the main problem, todaya, “is to convince people that now it’s possible” to profitably use alternatives to conventional fertilizers.”
Skyrocketing prices revive soil tests
It is too early, perhaps, to tell whether microbial applications will be able to emerge as a widespread solution for promoting agricultural yields. However – and that’s for sure, the current market scenario – shaped by a overall rise in commodity prices – will likely drive the search for alternative strategies to replace or limit the use of fertilizers. Which will also benefit the environment.
Recently, for example, some researchers focused on the opportunities associated with soil testing. This kind of analysis, in particular, can provide crucial information that can help avoid waste and poor choices in the treatment of farmland.
When fertilizer prices are high, “a soil test is the best investment,” Greg LaBarge, an expert at Ohio State University, explained. “The first thing to look at on your soil test reports is pH. Soil pH is the critical factor in nutrient availability.” When soil is acidic, for example, lime application “will make more soil stored phosphorus and potassium plant available.” Thus reducing the need to rely on high amounts of fertilizer.