• 20 mar 2023
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  • Assetmanagement

Food for thought: investing in biologicals

Modern generations of agricultural biologicals could be a promising and sustainable solution for growing enough food for the world’s population, thinks Marek Troszczynski van Genderen.
Marek Troszczynski Van Genderen 480X480 Pggm

Marek Troszczynski van Genderen

Senior Investment Manager
Source: Bloomberg

As former American president and army general Dwight D. Eisenhower once correctly observed, farming only seems easy when you are at a distance. From close by, it suddenly becomes complex and difficult.

The last 12 months in the world of agriculture can best be described as a perfect storm. Almost every farming input – which farmers need in order to achieve sufficient yields – is currently under pressure and with ever less time to fix those problems before next harvest kicks in. Compounding these issues are unfavorable weather across the world1, as well as the military conflict in Ukraine, which has until now been one of the largest grain exporters in the world2.

Let’s take fertilizer, for example. The price of ammonia (which is a nitrogen-based fertilizer), without which yields could decrease by as 50%3, has increased by a factor of 5 in the past 2 years.

20230316 Blog Biologicals.2

Pesticides, which protect plants from pests such as insects, weeds or other plant pathogens, have more than doubled in price in that same time frame.

20230316 Blog Biologicals.3

Another important farming input is diesel, necessary to power all the farm machinery from tractors to combine harvesters. Those prices have tripled in the past 2 years, providing farmers with even more challenges to deal with.

20230316 Blog Biologicals.4

And those are only three examples of issues farmers all over the world have to deal with. Other challenges that we are familiar with from daily media reporting such as insufficient labor availability (who will pick up the crops during harvest?4) and supply chain challenges (how to get spare parts for the farm machinery5) also apply to farming.
As a result, it is not surprising that food prices have been rising steadily since 2020 and now have reached some of the highest levels in years.

20230316 Blog Biologicals.5

To compound this issue, the level of our grain stocks (the amount of wheat and other important crops that we store to cover any future deficits) is historically low, dropping over 40% post-Corona.


The overall picture in agriculture is now bleak and calls for renewed efforts to increase yields, in order to secure sufficient food production globally. At PGGM we focus on achieving these targets through our investment in companies producing high yielding seeds and offering effective pest controls. Examples of such companies are United States-based Corteva and FMC Corporation, both of which are leading global providers of traditional and biological-based pest and weed management, as well as seeds.

We especially consider agricultural biologicals to be a very promising and sustainable solution for agriculture, even though they are still at very early stages of adoption. Biologicals present a diverse group of crop protection and stimulant products derived from living organisms and naturally occurring compounds.

The wild growing ancestors of our current crops benefited from a microbiome that was much richer and more diverse than what is found in soils on modern farms. In order to replicate this bio-richness today, scientists have been experimenting with the use of microbes in agriculture. Some microbes (very tiny living organisms) have been found to benefit their host plants, resulting in better yields with fewer fertilizers or pesticides. Others can make crops more tolerant to harsh environmental conditions.

Modern generations of agricultural biologicals, such as the ones offered by FMC and Corteva, offer hope for the future. Performance of early biological products was inconsistent, and varied depending on crop species and environmental conditions.

However, recent advancements in computational technologies and genetic engineering have brought development of biologicals to the next level, making them more efficient, customizable and reliable. As a result, scientists expect that agricultural biologicals could improve the yield, quality and tolerance of crops while reducing chemical inputs.

The task of producing sufficient agricultural yields to feed an ever growing human population is indeed daunting and there are no shortcuts and silver bullets here. At PGGM we recognize this challenge and use targeted investment in various technologies to solve this problem in the most sustainable way possible.


Source of the charts: Bloomberg

1. https://yaleclimateconnections.org/2022/09/food-supply-and-security-concerns-mount-as-impacts-stress-agriculture/ 

2. https://oec.world/en/profile/bilateral-product/wheat/reporter/ukr#:~:text=Exports%20In%202020%2C%20Ukraine%20exported,of%20Wheat%20in%20the%20world.

3. https://www.yara.com/siteassets/investors/057-reports-and-presentations/other/2018/fertilizer-industry-handbook-2018-with-notes.pdf/ 

4. https://www.bbc.com/news/science-environment-60999236

5. https://www.reuters.com/world/the-great-reboot/desperate-tires-components-shortage-roils-us-harvest-2021-10-12/


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