The biological market in the Brazilian Ag Industry has reached 834MUSD in the crop season 2023/24, with an average growth of 30% in the last 6 years. It has been an expectacular growth, but more has to come since adoption is only 36% across crops.
According to the Minister of Agriculture, there are currently more than 200 companies with more than 400 commercial products available in the biological market.
Most of these products are “generic” inoculants since they come from the same active ingredient (g.e. Bradyrhizobium sp., Azospirillun sp.). Due to the intense competition among these multiple comparable products, price is usually as low as 1 to 3USD/ha.
On the other hand, we also see several biological companies making significant R&D investments to bring novel and/or stacks of new active ingredients to the market. These products usually show superior performance against biological targets such as nematodes, leafhopper, stink bugs and soil diseases and therefore, its price ranges from 15 to 30 USD/ha.
There is no “one fits all” strategic approach to be competitive in the biological sector of Brazilian Ag industry. In fact, there are three distinct approaches one company could adopt to sustain a competitive advantage here: “cost leadership”, “differentiation” or “focus”.
By assuming a “cost leadership” approach, a company must drive all efforts to develop and sell its products with extremely competitive price and acceptable quality standards. If the decision is for “differentiation”, a company must invest enough resources in R&D (Discovery, Product Development, Regulatory, Formulation) to develop and launch innovative products frequently to prevent being copied and threaten by generic brands. If the decision is for “focus”, the company must choose certain segments to play: crops (g.e. row or specialty crops), indications (g.e. biostimulant, bionematicide, biofungicide or bioinsecticide) and geographies (g.e. Brazilian Cerrados). By putting more efforts in specific segments, the company will have more chance to differentiate itself from competition.
As we have seen in other sector of Ag Industry such as Crop Protection and Seeds & Traits, trying to adopt a multiple-strategy-approach such as “being low cost and differentiation at the same time” is very risky and this is one of major reasons for failure. The reason of that is because certain necessary activities to be a “low cost” company conflict with other related to “differentiation” approach. For example, it is almost impossible to develop and launch innovative products and in high frequency with a low budget for R&D.
In conclusion, there are many ways to be competitive in the biological market in the Brazilian Ag industry and adopting a consistent strategy approach and executing activities that reinforce such decision is a crucial step for that. It sounds obvious, but many companies don’t pay enough attention to that.
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