World Agriculture Report 2011

Hardman & Co. Leaders in Corporate Research 1 Tel: +44(0)20 7929 3399 www.hardmanandco.com

Leaders in Corporate Research

World Agriculture Report A Greener Revolution

3 October 2011

Introduction Such is the impact of mankind upon the planet that geologists at the Geological Society of London have proposed that the current geological era be christened 'The Anthropocene'. Attention is now turning urgently to finding ways of making our presence on earth more benign, particularly in relation to agriculture, the origins of which are being linked with the beginning of this new, man-made geological age. A recent upsurge of private and public research has been directed toward finding cleverer, more sustainable alternatives and aids to the technologies that have been used to grow food since the middle of the last century. Agriculture has historically been the most complex and the most important of mankind's interactions with nature, and both the focus and the facilitator of many of our species’ greatest social and scientific achievements. Central to this is the critical partnership that has developed between mankind and certain plants, the relationship on which civilization was first established and by which it is maintained. It was the grains, fruits, vegetables and fiber crops that were first domesticated 10,000 years ago that allowed enterprising hunter-gatherers to abandon their nomadic lifestyles and settle in more complex, organized communities, beginning human life as we know it. Ever since, the social development of mankind and the genetic story of the plants that feed us have been inextricably linked. In this era of the Anthropocene, the growth in human numbers and the gathering effects of our activities on long term climate stability and resources availability calls for innovation in food production and an emphasis on sustainability. While the major Agro-chemical companies such as Bayer CropScience, Monsanto and Syngenta are investing $billions in new crop protection and nutrition products, a small group of innovative technology companies is attracting the attention of the global AgChem leaders and of investors. This report outlines the developing science to address agriculture’s most urgent requirements, and profiles some of the companies actively seeking to commercialise the opportunities available. As food commodities face growing demand competition from a bigger, richer global population, an increasingly corporate producer sector is turning to these technologies in order to farm sustainably and to expand production & margins. Just as soil, water & fertilizers produce crops in partnership, so now these innovative technologies are being deployed to boost yields, to combat pests and to allow crops to thrive commercially in territories beyond their normal range. The companies that produce these critical technologies are the focus of this report.

Key Findings: Plant cultivation & science has been the platform for civilisation Food commodity shortages a catalyst for the Arab Spring Agricultural Inputs Worth $200bn pa Gene technologies & smart plant chemistry are driving the Greener Revolution Sustainable farming & improved profitability are driving a progressively corporate agri-producer sector to use these technologies

Profiled Companies: AgraQuest Arborgen Arcadia Bioscience Eden Research Evogene FuturaGene Mendel Biotechnology Novozymes Plant Health Care Plant Impact TyraTech

Analysts: Doug Hawkins

Yingheng Chen

Technology Research: Zoe Hawkins

Tel: +44 (0)207 929 3399

Email: [email protected]

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A Greener Revolution 3 October 2011


Table of Contents

Food Crisis ……………………………………………………………………………………………………………………………………………. 3 Global Warming ……………………………………………………………………………………………………………………………………. 3 Carbon Fertilisation Drought

Extreme Temperatures

Ozone & US Pollution

Raised Soil Salinity

Flooding

The Green Revolution …………………………………………………………………………………………………………………………… 5 Silent Partners

Technology Empires

The British Agricultural Revolution Late 18th & early 19th Centuries

Second Green Revolution ‐ 2nd Half 20th Century

The Greener Revolution ………………………………………………………………………………………………………………………… 7 Water Use Efficiency (WUE) Nitrogen Use Efficiency (NUE) Crop Protection Efficiency (CPE)

Plant Science In Support of Sustainability …………………………………………………………………………………………….. 9 Gene Technologies………………………………………………………………………………………………………………………………………… 9

Gene Science To Support Nitrogen Use Efficiency (NUE)

Gene Science For Greener Nematicides

Gene Science To Reduce Usage of Herbicides & Improved Carbon Management

Carbon Management

Gene Science To Support Water Use Efficiency (WUE)

Gene Science To Manage Temperature Extremes

Gene Science For Climate Change Related Pressures

Gene Science For Crop Enhancement

Non‐GM Plant Technologies …………………………………………………………………………………………………………………………. 12

Bio‐pesticides

Soil Technologies

Stress Response Activation Technologies

Yield Enhancement Technologies

Abiotic Stress Management

Importance of Calcium

Strategic Partnerships in Evaluation, Development & Distribution of New Plant Technologies ……………… 17 Implications For Investment …………………………………………………………………………………………………………………. 18 Postscript………………………………………………………………………………………………………………………………..…………….. 19 Company Profiles

Plant Impact …………………………………………………………………………………………………………………………………………………. 20

AgraQuest ………………………………………………………………………………………………………………………………………………....... 22

Plant Health Care ………………………………………………………………………………………………………………………………………… 25

Eden Research ………………………………………………………………………………………………………………………………………………. 27

TyraTech ……………………………………………………………………………………………………………………………………………………….. 30




Food Crisis The World Food Program (WFP) estimates that almost 1 billion people are chronically hungry or malnourished. Some 29 countries are already unable to feed their people, with more at risk. The global food crisis of 2007-8 was prompted partly by poor yields, and, though yields rose again in the following year, extreme weather patterns across Russia, Ukraine, Pakistan & Australia in 2010 brought a drop in the total global production of many soft commodities including wheat & cotton with correspondingly higher prices. Political scientists believe that one of the knock-on effects of the weather associated inflation in food prices in 2010 was the wave of unrest that has swept the MENA region. With the average number of hectares of arable land per person shrinking from just over 0.4 in 1960 to a little under 0.25 in 1999, and more since, the need to get more food out of less land is pressing. The UN Food and Agricultural Organization data on grain yields show healthy annual increases of 2.7% in the 1960s and 1970s, but more modest gains of only 1.6% per annum in the last 25 years. Global wheat production fell enough in 2010 for demand to exceed supply, causing a withdrawal of several million tonnes from worldwide reserves. The fragility of the stock: usage ratio is revealed by analysis of overall agricultural productivity. The 1960s saw average yield increases of 4% per annum, which have now dropped to around 1% and are trending downward. Unless something can be done to reverse this, wide spread hunger, disruptive migrations and increasing social unrest in vulnerable regions looks likely.

Global Warming The International Energy Agency (IEA) predicts that, as a direct result of human activity, the average global temperature will be 3.5°C higher by the end of this century than it was in the pre-industrial era. International co-operation to restrict the rise to 2°C is compromised by electoral pressures in both the affluent developed world and the aspirant developing economies. Scientists have been working to model the likely consequences of a 3°C+ rise, at which temperatures southern latitudes could see as much as a 30% fall in the production of maize, and a 40% fall in the production of rice. However climate scientists acknowledge that the lack of any reliable data or previous experience means that forecasts will be approximate at best. What seems certain is that food production will become a more difficult and uncertain process. Research by William Cline at the Center for Global Development suggests a warmer world climate may reduce global agricultural output by as much as 16% by the 2080s. It is anticipated that the developing countries would be the most severely impacted:

• India could experience a decline in agricultural productivity of 38%. • Africa could experience a decline in agricultural productivity of 28% • Cline has suggested that Senegal & Sudan could experience agricultural

productivity losses of 50%+ • CIMMYT predicts that within 50 years as much as 50% the Indo-Gangetic plain

(IGP), an area covering much of India, Bangladesh and Pakistan, may have become unsuitable for wheat farming. This is South Asia's bread basket, producing roughly 15% of the global wheat supply.

Wealthier countries stand to lose some of their agricultural land too, the currently rich south west plains of the United States may face losses of 35% to their productivity; Australia is already experiencing record-breaking droughts which are likely to worsen with global warming. Other regions of the world, Alaska for example, are expected to become more hospitable, but reaping a harvest from positive climatic change is likely to mean developing land not previously used for agriculture, a process which is likely to be capital intensive and environmentally disruptive.

1bn chronically hungry Political & social unrest Per capita arable land shrinking Declining growth in productivity Fear of social upheaval Average temperature predicted 3.5º higher Would produce significant reductions in crop yields Northern African could be severely impacted Foot print of wheat cultivation could change Wilderness regions like Alaska may go under the plough




Carbon Fertilisation A best case scenario that assumes that some of the damage done to agricultural productivity by Global Warming may be offset by the process of carbon fertilization (CF), in which crop yields rise in response to increased atmospheric CO2 levels. However, Cline predicts that even with CF the world would still see a decrease in total productivity of an estimated 3%, with India losing some 29% of productivity, and Africa dropping around 17%, partly because some important crops, including sugar cane and maize, receive no benefit from CF. It is predicted that US agri-production could experience anything from a 6% drop in productivity without CF to an 8% rise with it. However these comparatively encouraging figures disguise catastrophic effects in some areas, such as the south-west plains, which could be affected almost as badly as India. Cline’s research is anything but optimistic; he also warns that these crop impact models do not take into account the less predictable and more extreme episodic consequences of global warming, such as floods, droughts and raised pest activity.

Drought Drought is the greatest environmental threat to agriculture, bringing an average 50% loss to crops whenever it strikes. Even now American crops are vulnerable; it is estimated that annual drought-related crop losses worldwide are worth over $10 billion, with around 12% of the damage being done in the US alone. One of the key challenges of global warming will be reduced water supplies, particularly for those parts of the IGP where changing weather patterns will reduce melt-water and affect the monsoon. Much can be done by using irrigation water more efficiently - the FAO has estimated that crops actually make use of just 45% of the water drawn for irrigation - but this is of no help to those regions which rely on natural water sources. An increasing incidence of drought, and prolonged drought, will hit these regions hardest, including 95% of sub Saharan Africa's cropland. Plant science will need to produce crops that can cope better with water shortages.

Extreme Temperatures In the event of global warming, temperatures are expected to be higher; this poses a problem, since it has been shown that photosynthesis in many plants slows as the thermometer rises. According to research published in 2007, rice yields are particularly sensitive to temperature, and decline by around 10% for every +1°C in nocturnal heat. Extreme variations in temperature or soil moisture have been shown to increase calcium deficiency in plants leading to weaker cellular structures and greater susceptibility to both abiotic and biotic stresses.

Ozone & UV Pollution Mendel Biotechnology located in Hayward, California, is predicting a need for plants to be developed with improved tolerance to ozone. It has earmarked for research and development ozone tolerance traits. Another existing stress for crops – especially in the Southern Hemisphere - is excessive ultra violet light due to ozone depletion in the Earth’s upper atmosphere. Plant Impact is collaborating with research scientists at two agriculturally focused universities in New Zealand, University of Lincoln and University of Massey. The focus of this research is the efficacy of Plant Impact’s Alethea technology to reduce the impact of Ultra Violet light stress on grapes. Ozone depletion in the Southern Hemisphere means that living material has to deal with potentially harmful levels of UV, especially during the important spring and early summer growing season, and in grapes this has been found to reduce photosynthesis and thus leaf matter and growth. This has implications for yield and possibly also for fruit coloration.

Carbon fertilisation may redress some damage Some regions will be hard hit Unpredictable & extreme weather risk Drought reduces crop yields by 50% Water use efficiency needs to be raised Photosynthesis falls as temperatures rise Calcium deficiency Mendel was founded on the idea that controlling gene expression would create new opportunities to improve plant productivity & quality.




Raised Soil Salinity Raised soil salinity as a result of long-term irrigation is a major cause of soil toxicity. It is estimated that some 10-12 million hectares of arable land are lost annually throughout the world to soil degradation, of which salinisation is one of the major causes. The United States Department of Agriculture estimates that, worldwide, 10 million hectares of arable land is lost to irrigation salinity every year. While some soils are naturally saline, secondary salinity occurs when salts from deep within the earth are dissolved & deposited into soil and water. This can happen in one of two ways:

1. In dry regions, deeply-rooted perennial plants, such as shrubs, trees, and grasses, play an important role in regulating groundwater levels. As water is applied to the soil, the plants drink it up and breathe it out through a process called evapo-transpiration. This ensures that the water table levels stay relatively stable. But when the land is cleared for farming and the deep-rooted plants are replaced with shallow-rooted varieties, the water table rises and salt deposits increase amongst the topsoil.

2. Irrigation salinity is also caused by a rising water table that brings deep deposits of salt upwards through soil layers from increased irrigation. As water soaks into the soil, it adds to existing water, raising the water table. During periods of irrigation, the water table will lower again, but salt will remain in surface soil, increasing the salt concentration with each irrigation cycle.

Flooding Scientists at the International Rice Research Institute (IRRI) in the Philippines are developing flood-resistant strains of rice for areas, such as Bangladesh, where flooding is expected to worsen. Pakistan is thought to have lost as much as 30% of the 2010 harvest due to severe flooding in the Punjab in August of that year.

The Green Revolution Silent Partners The cultivation of plants & the development of science around their breeding and management has been one of mankind’s outstanding achievements. Since the earliest farming practices began ten thousand years ago, a breeding program, first based on observation and intuition, but now focused on genetic science, has led to the development of ever more productive varieties of crop species. For the plants, our silent partners in the development of our civilizations, the benefits have included the easier living afforded by cultivation and a free ride to otherwise unreachable territories. Once early communities had been established, travel and trade dispersed and mingled crops, initially within the Old and New Worlds and Asia, and then between Asia and Europe. This culminated, five hundred years ago, in the voyages to the New World that spread crop varieties across the globe, and saw the domestication and development of completely new crops, such as sugar, rubber, and blueberries for the benefit of a rising human population. The spread of the oil palm from West Africa to East Asia in the late 19th Century has resulted in a monoculture of some 9m hectares across Equatorial Malaysia and Indonesia. The crop is now gaining a foothold in Papua New Guinea and Equatorial Central & South America.

Technology Empires Parallel to Man’s relationship with plants has been his development of agronomy and of scientific solutions to the problems of managing nature. The nature of this management has frequently been brutal, such as the elimination of predators or undesirable plants with a chemical arsenal. Consider the scale of the global industry in Crop Protection:

• Herbicides - $19bn • Fungicides - $10bn • Insecticides - $9.5bn • Other - $1.5bn • Total - $40bn

10-12 million hectares lost annually Rising water table Long term irrigation Floods in The Punjab Man’s outstanding achievement Silent partners Palm oil becomes a $50bn pa global commodity after migrating from Africa Man’s brutal oppression of Nature Crop protection is a $40bn annual trade




We have also become highly skilled at breeding or developing new varieties of the plants we find useful. Today the global seeds market generates revenues of some $23bn, split between conventionally bred seeds at $15bn and genetically engineered seed at $8bn. The use of gene technology to produce more useful varieties has not been without its critics but, as this report reveals, one side effect has been a reduction in the use of pesticides and herbicides on genetically engineered varieties. A new branch of crop protection, formulated around bio-solutions, is also gaining market share as consumer & regulatory pressure increase on chemical solutions that may pose a risk to human & environmental health. Small today, the bio-pesticides market is estimated to generate only $1bn of revenues in a $40bn industry – but industry participants suggest that this will grow to capture around $10bn of revenues by the end of this decade.

The British Agricultural Revolution Late 18th & Early 19th Centuries The British Agricultural Revolution of the late 18th and early 19th centuries produced improved crop varieties and mechanization on such a scale as to change the nature of farming. The rural economy became emphatically commercial rather than subsistence, with substantial net exports, and the consumer to producer ratio rose dramatically. The First Green Revolution continued this trend. Beginning in the years following the end of the Second World War, synthetic chemical inputs, increasingly efficient farming practices and ever more sophisticated plant breeding techniques furthered the industrialisation of agriculture and the drift of populations to cities.

Second Green Revolution - 2nd Half 20th Century In the Second Green Revolution industrial agricultural techniques were spread to the developing world. Included in this technology export were advances in breeding and the development of chemical nutrients and crop protection systems. These innovations were welcomed by recipient nations – some of whom were still confronted by the threat of famine. Crucial to averting this crisis was the development, in the late 1950s to 1960s, of High Yield Varieties (HYVs) of rice and wheat by the International Rice Research Institute (IRRI) in the Philippines, and by the International Maize and Wheat Improvement Centre (CIMMYT) in Mexico. These HYVs were produced largely by breeding recognized genes for reduced stem-height into conventional cultivars, thus producing semi-dwarf varieties in which energy and therefore growth was redirected from plant to seed. These new semi-dwarf varieties of wheat & rice produced 50% grain to total biomass versus earlier varieties at 30%. In the new rice varieties, genes were also incorporated to allow the crop to be planted at any time of year, and to shorten its period from sprouting to maturity - in one case from 180 days to just 100 - so that three, rather than two, crops could be harvested annually. With appropriate fertilizer, crop protection and irrigation inputs, the new rice variety, IR8 or 'Miracle Rice', could produce almost 10 tons of grain per hectare, 10 times the yield of traditional varieties. The increases in global productivity revolutionized agriculture in some countries; IR8 helped Indonesia to increase its production of rice by 276% in the period 1966 to 1996, Pakistan by 180%, India 163% and Vietnam 209%. World wheat production also soared, increasing between 1966 and 1990 from 308 million tons to 541 million. India, in particular, was transformed from a country facing widespread famine in 1961, into a nation able to export several million tons of grain annually. Total world production of cereals doubled in the thirty years between the introduction of these technologies to developing countries in 1960, and when the first GM crops were released in the 1990s, allowing average daily calorific consumption to increase by 25%, with the bulk of the additional energy supplied by cereals. GM crops have been shown to have, on average, higher yields than their non-transgenic counterparts. According to PG Economics, GM canola shows yield improvements of around 3%, corn of 6.7%, cotton 15% and soybean a huge 20%. With almost 120 million hectares of transgenic crops planted in 2008, and more since, it seems likely that GM is here to stay. Many consumers, especially in Europe, remain resistant to this technology, but with a population of 8 billion expected by 2025, requiring a global cereal harvest of 3 billion tons, up from around 2.2 billion today, transgenic development techniques may become a critical tool for survival.

Seeds market comprises $15bn conventional seed and $8bn genetically modified seed Bio-pesticides could grow to $10bn during this decade Subsistence gives way to commercial Industrialisation A First World export Semi-dwarf HY varieties Shortened maturation Miracle Rice Famine in 1961 Global production of cereals doubled in 3 decades 120m ha of GM crops




Gene technologies may also have a role in addressing abiotic stress. Many environmental challenges to crop productivity are already being tackled by genetic engineering and scientifically enhanced breeding techniques. Wheat varieties have been engineered to grow in acid soils with high aluminium content such as the aluminium toxic cerrado soils of Brazil. Low temperature and salinity-tolerant rice varieties have also been developed. But as we discuss elsewhere in this report, agriculture requires the flexibility of chemical solutions to address abiotic stress at the discretion of the grower. Even with the use of “traited” seeds, agriculture is now concerned with “total factor productivity in the growing system” PL Pingali & S Rajaram, World Wheat Facts & Trends 1991. That this statement was made 20 years ago does not lessen its relevance. Today agriculture is facing an additional challenge – to produce food sustainably; farmers are now being asked to deliver harvests with due concern for the environment and bio-diversity.

The Greener Revolution The revolution in crop productivity enabled by the technologies of the last phase of the Green Revolution transformed food production, but there is mounting evidence that the gain in yields came at a heavy cost to the environment and biodiversity. The current phase is not just focused on enhancing yields in a more uncertain climate for a growing human population, but on doing so sustainably. The HYVs, typically grown in vast mono-cultures, have required systematic protection from pest and weed infestations and intensive supplies of nutrients and water. All these have come at a cost, whether to the environment in the form of nitrogen and water depletion, to farm productivity in the case of rising soil salinity levels due to long term use of irrigation, or to the farm profit & loss account. New agri-science is focusing on the challenge to make more efficient use of water, fertilizers [especially nitrogen based fertilizers] and crop protection systems, and to optimize the yield potential of plants. A new generation of companies is in the process of developing and commercialising novel technologies designed to combat pests & disease, to boost crop yields & quality, and to help crops respond to abiotic stresses, many of which are associated with climate change, whilst supporting sustainable agriculture. Though many of these technologies are still being validated in field trials and remain the subject of intense scientific scrutiny, they are also at the heart of collaborative associations and alliances with the global agro-chemical companies. Some technologies have been commercialised already: AgraQuest’s Serenade is now used on 70% of commercial tomato cultivations in Florida and has established market share of circa 10% of the total market for diseases it controls amongst high value fruit &vegetable crops and the technology is at the heart of a worldwide [ex NAFTA] distribution agreement with BASF.

Water Use Efficiency (WUE) 70% of all water used by mankind is drawn by agriculture, mostly for crop irrigation. Where too much water is drawn from a river, the waterway's natural eco-system suffers and land downstream is deprived of vital supplies. Since the 1950s the area of land dependent on China’s Yellow River for irrigation has more than tripled and in 1997 the river failed to reach the sea for well over half the year; 92% of the water drawn from the river was for irrigation. Inefficiency in irrigation techniques mean that as little as 30% of the water drawn from the river for irrigation ever reaches crops. Elsewhere, it is often underground water sources that are at risk. The environmental impact of this kind of depletion is less visible, but, in the long-term, it may be impossible to repair. Lester Brown, president of the Earth Policy Institute (EPI), an independent Washington think-tank, recently argued that the depletion of underground water sources was a more serious long-term issue than the depletion of oil reserves. Oil, he argues, can be replaced with other fuels; not so water. He may have been thinking of the US Midwest's Ogallala Aquifer, source of almost a third of all groundwater used for irrigation in the US. Since it was first tapped in 1911, levels are thought to have fallen by 90%. In some areas, it has been completely dewatered. Attempts have been made to reduce the pressure on the aquifer, such as growing less thirsty crops and recycling agricultural water, but demand continues to exceed recharge.

Gene technology for abiotic stress High tolerance varieties of grain Total factor productivity A focus on sustainability Yield optimisation A new generation of science Frontier developments Water availability is one of our greatest threats Depletion of vast resources Memories of the Aral Sea




Irrigation has caused environmentalists and agronomists further concern because of its deleterious effects on the land it feeds. According to the FAO, roughly a quarter of irrigated land in China and the US suffers from excessive soil salinity. As the irrigation water evaporates or is used, it leaves its burden of salt in the ground, greatly reducing the soil's viability for agricultural use. Water sources can also be heavily compromised by agricultural pollution. The U.S. Environmental Protection Agency has blamed farmers for 70% of the pollution currently affecting North America's waterways, with associated damage affecting some 173,000 miles of streams and rivers.

Nitrogen Use Efficiency (NUE) Amongst the worst agricultural pollutants are synthetic nitrogen fertilizers (NFs). These were amongst the first of the synthetic chemical inputs into the field, largely because of the expansion of nitrogen manufacturing facilities during World War Two for munitions. Nitrogen is one of the most important crop nutrients and is essential for boosting crop yields; as a result, it is estimated that 1 billion tons of nitrogen fertilizer is applied globally every year. It is estimated that almost half the world's population is supported by the products of synthetic NF usage. Yet inorganic nitrogen remains a deeply controversial input because of its wide-ranging effects on the environment. Problems begin at production, an energy-hungry process which is thought to account for around 5% of global consumption of natural gases, or a little under 2% of world energy usage. Once on the field NFs contribute significantly to greenhouse gas (GHG) production, increasing the amount of methane emitted from crop fields, and breaking down into nitrous oxide. As a direct result of NF usage, nitrous oxide is the third most dangerous GHG, and a major culprit in ozone depletion. Nor is their use without consequences for farming itself. NFs reduce the natural fertility and health of the soil they are used to enrich by killing the micro-organisms that would otherwise keep the soil aerated and healthy. Excessive fertilizer use also leads to so-called 'root-burn' and to increased soil acidity, ultimately reducing agricultural productivity. Furthermore, as much as two thirds of the NFs applied in farming may be lost either through atmospheric release or field run-off. This has serious consequences; the accumulation of NFs in lakes causes eutrophication (catastrophic oxygen depletion) and it is thought that algae overgrowth encouraged by nitrogen run-off into the Mississippi River is a major cause of a 'dead zone' in the Gulf of Mexico, which, at the beginning of the last decade, already covered 20,000km. The costs are financial as well as environmental; the European Nitrogen Assessment committee recently warned that nitrogen pollution costs Europe as much as £60bn - £280bn pa, an amount exceeding the income generated by NF usage. The new nitrogen delivery technology, PiNT, from UK company Plant Impact (Pi), which is designed to enhance nitrogen uptake and minimize pollution, therefore has the potential to be a game-changer. PiNT has been hailed as 'the first new thing in nitrogen to appear in the USA in the last 50 years' by Dr Raymond Bryant, Research Soil Scientist for the USDA. PiNT's key technology works by stabilizing nitrogen in amine form instead of as nitrates, which tend to leach out of the soil almost immediately, or urea, which swiftly breaks down into ammonia and nitrates. What this means for farmers is that the nitrogen remains in the soil and around the roots of the plants for longer, allowing far greater uptake and much less leaching. The benefits of the product appear, after 38 rounds of testing, to be potentially significant. Growers can expect to make savings of up to 25% in nitrogen fertilizer applications and to eliminate usage of urease inhibitors, a costly and environmentally harmful product intended to slow the breakdown of urea-based fertilizers. They should also see improved plant health and vigor, with more productive growth patterns, and better plant tolerance of environmentally stressful conditions, particularly soil salinity. The product looks versatile, with potential application for both high value and broad acre crops, and, importantly for its chances in the global market, Syngenta Brazil has shown an interest in the technology and is currently trialling it in Brazil on soya. Success could see PiNT gaining access, ultimately perhaps to tens of millions of hectares of crops worldwide. This is urgently needed; without a major change in agronomic culture, nitrous oxide levels are expected to rise a further 37% by the end of this decade. Importantly for the product's long term future, it is likely that PiNT would complement rather than clash with the other

Rising salinity in soil Agricultural pollution The growth in supply of nitrogen fertiliser was likened to a discovery of a 6th Continent A controversial pollutant Damaging soil fertility Dead Zone $460bn annual bill ‘the first new thing in nitrogen in 50 years’ Savings of 25% Syngenta trials with Soya in Brazil




front-runner in dealing with the world's nitrogen problem; namely, GM crops. Several biotechnology companies are developing transgenic or genomically engineered crops designed to use nitrogen more efficiently, which should translate into smaller applications of fertilizer for greater crop gains.

Crop Protection Efficiency (CPE) Pesticides & herbicides include some serious polluters, with significant & deleterious consequences for bio-diversity, particularly amongst non-target (and often beneficial) insect populations and bird species. Yet crop protection is at an all-time high, in part because the mono-cropping practices encouraged by the last phase of the Green Revolution also encourage pest & weed infestations. Research suggests that application techniques are profligate. It has been estimated that less than 1% of pesticides applied to crops actually reach and act on the target pests, [David Pimental & Lois Levitan Cornell University; American Institute of Biologial Sciences Journal 1986 Vol 36] with the remaining 99% serving only to pollute waterways and damage non-target species. It is increasingly believed that pesticides may have contributed to colony collapse disorder amongst honey bees

Plant Science In Support of Sustainability While seeds now carry many of the benefits of the scientific advancements of the past 20 years, they also command a higher price. Agronomic risk has been moved to the very start of the growing cycle. This has meant that science / technology / products to protect crops and reduce agronomic risk have become desirable supports. The objective is both to protect the grower’s investment in the crop and also to support optimisation of the crop’s yield potential.

Gene Technologies In spite of early public concern, and some high-profile scares about the possible effects of Bt engineered pollen on the Monarch butterfly, herbicide and pest resistant GM crops are proof that, with the right science, yields can rise even when inputs fall. The evidence now available after a half decade or so of widespread commercial GM crop cultivation suggests that use of Bt plant varieties (those engineered with genes from a bacteria that attacks a range of common pests) may have reduced total pesticide spraying by as much as 8.7%. The reduction in spraying on specific crops can be as much as a quarter; GM cotton, for instance, requires 24.7% less pesticide than non-GM varieties. The novelty of GM science is often exaggerated; techniques for artificially prompting mutations, and particularly mutagenesis, have been widely used for over half a century. Indeed, it is estimated that as many as 80% of the most common varieties of major crop plants have artificial mutagenesis, in which chemicals or radiation are used to force mutations, in their parentage. Nor are GMOs the first organisms to have been produced by transferring genetic material between sexually incompatible species. So-called 'wide-crosses' have been in use for some time, using a combination of techniques including embryo rescue, chromosome doubling to overcome sterility, and protoplast fusion, in which plant cells which lack cell walls (protoplasts) from two different and incompatible species are fused together and grown in vitro to produce hybrid plants. The application of the technology to food production, where arguably it may prove to be vital, has generated a vigorous consumer backlash, especially in Europe. However gene science has produced some unexpected but positive environmental effects, particularly in the form of reduced usage of herbicides and better control of GHC emissions.

Gene Science To Support Nitrogen Use Efficiency (NUE) Some of the NUE technologies are already quite advanced. Since 2008, Arcadia Biosciences of Davis, California, has been running trials in China with transgenic rice. The plant’s genetic profile has been modified with genes to improve mobilization of nitrogen. Early signs have been encouraging, suggesting that farmers could save up to $80 per hectare in reduced fertilizer costs. In fields treated with 80-160lb of nitrogen per acre the nitrogen use efficient varieties appear to produce around 4,000 kg/hectare more than conventional strains. Similar yields can be achieved from nitrogen use efficient canola with 65% less fertilizer.

Gene technologies complement chemical innovations Mono-cultures encourage high use of Crop Protection chemicals Huge inefficiency to cost of non target species Science rich seeds must be protected Gene technologies may account for 8.7% reduction in pesticide use Not such a novel science? European consumers resistant to Gene techniques Arcadia pursues agriculture-based opportunities for environmental & human health.




Mendel Biotechnology, which specializes in the manipulation of transcription factors (TFs), genes that control when and how other sets of genes are expressed, and Evogene, an Israeli company that focuses on gene search and selection, have both been granted patents on genes that could help to control the way crops absorb and use nitrogen.

Gene Science For Greener Nematicides Nematodes [ubiquitous parasitic worms] are amongst the most awkward of pests to control, with up to 28,000 different species. Nematodes cost farmers $ millions in crop damage affecting major crops including corn, soy, cotton and vegetables. But killing such a diverse and persistent pest can require powerful toxic agents. Up until 2008 one of the most commonly used weapons against nematodes was carbofuran, a broad spectrum insecticide, able to be sprayed directly onto soil and plants just after germination, to control nematodes and other pests. The greatest use of carbofuran has been on alfalfa, rice and grapes, earliest uses were on corn crops. Due to serious concerns about its toxicity its usage is being restricted. Monsanto’s acquisition of Divergence, a young company specializing in nematode solutions, in February 2011 was therefore a logical step in the group’s development of its expertise in nematicides. Divergence and Monsanto had established a collaborative relationship in August 2004 under which the companies worked to develop nematode-resistant soybeans. In 2008, Monsanto and Divergence made public their sequence of the soybean cyst nematode genome, and extended their relationship. Divergence is focused on parasitic nematodes, and on developing biotechnology traits for nematode control and the development of nematicides with novel modes of action that provide superior safety profiles. The company is believed to be working on seed treatment formulations to maximize the performance potential of the seeds by combating nematode activity.

Gene Science To Reduce Usage of Herbicides & Improved Carbon Management Whilst the total use of glyphosate herbicides, [Monsanto's 'Round-Up' series has led the field], has increased, overall usage of herbicides is significantly down. Transgenic canola requires 24.2% less herbicide than conventional strains, and transgenic soybeans save around 20.4% of herbicide compared with non-GM. A study of canola cultivation in Western Canada 1995-2007 by Smyth, Gusta & others [University of Saskatchewan] published by Elsevier February 2011, reveals a remarkable 40% reduction in per ha use of herbicides and low or zero tillage, with consequential carbon savings, using transgenic canola.

Carbon Management The environmental benefits of herbicide-resistant GM crops look to go beyond the reduction in total herbicide usage. The greater efficiency of the herbicides used with such crops is such that farmers have been able to adopt low-till farming practices or avoid tilling altogether. This results in far less disturbance of the soil, helping to reduce soil erosion and improve water quality. Better still, it increases carbon sequestration by crops. While ploughed land re-releases the carbon stored by plants in the soil back into the atmosphere, untilled soil stores it remarkably efficiently. Indeed, it has been estimated that taking into account the reduced fuel emissions and better carbon storage that have occurred as a positive side-effect of herbicide-resistant crops, as much as 39 billion pounds of atmospheric carbon dioxide may have been eliminated in 2009 alone.

Gene Science To Support Water Use Efficiency (WUE) A group of companies focused on plant science is working to modify the genetic character of some species to make them either more efficient in their absorption of water, or more tolerant to drought. Included in this group are Mendel Biotechnology, Arcadia Bioscience and Evogene. Arcadia Bioscience has Water Efficient crop technologies in the testing phase, and an agreement with Advanta for their development. Similarly, Evogene announced in 2006-7 collaboration with Pioneer Hi-Bred, a subsidiary within the Dupont group, for the development of drought tolerance genes in corn and soybean, and another collaboration

Evogene develops traits such as yield & drought tolerance, for key crops, using genomics. Toxic solutions Nematode resistance Seed treatments Big savings with transgenic canola Low till farming Transgenic canola has recorded significant savings Collaboration with Dupont




with Limagrain for the development of drought tolerance genes in corn. Mendel is also developing drought tolerance genes and has reported strong results for its NF-YB transcription factor in both laboratory tests and the field trials it has been conducting with Monsanto. The trials with Monsanto are reported to have produced good results in corn, appearing to show significant improvements in the crop's yield on dry acres. If these positive results continue, crops containing the NF-YB technology could be available at the turn of the decade, or even earlier. The two companies will, in collaboration with others, be donating rights to the technology to the Water Efficient Maize for Africa (WEMA) project, and delivery is expected in as little as five to six years.

Gene Science To Manage Temperature Extremes Mendel Biotechnology is working on traits to help plants cope with more extreme temperatures, both hot and cold. Mendel has also contributed the drought and freeze resistant transcription factor based gene technology, WeatherGard® to ArborGen LLC’s portfolio of Eucalypts. Eucalyptus trees carrying the gene have shown excellent results. If, as Cline & others have predicted, agriculture is able to extend into new territories as global warming allows cultivation in regions such as Alaska, it will be advantageous to have plants available that can withstand temperatures that may fall below their normal range, either seasonally or diurnally. CIMMYT has predicted that Alaska could become a future wheat-stronghold, but this will not happen overnight, and cold-tolerant technologies may be vital for helping the transition of agriculture into such regions.

Gene Science For Climate Change Related Pressures Other known stresses include:

• Raised soil salinity as a result of long-term irrigation; • UV light pollution • Ozone pollution • Soil toxicity.

Evogene, FuturaGene, Mendel and Arcadia are all working on producing gene technologies to address some or all of these challenges. Arcadia entered into a development agreement with Advanta for Salt Tolerant technology in sorghum in 2009, and has donated Salt Tolerant technology in rice to the charitable African Agricultural Technology Foundation (AATF), with which it continues to work on delivering the product for mass use, with a target in use date of 2016.

Gene Science For Crop Enhancement IRRI scientists are working towards re-engineering the photosynthetic system used by the C3 variety of rice to make it more effective. An alternative photosynthetic process, known as C4, which naturally occurs in crops such as maize, could potentially super-charge the productivity of rice. Mendel Biotechnology also has further yield enhancing products in its R&D pipeline, focusing particularly on improving photosynthetic output, which may also help some plants cope with global warming. Development strategies are also being pursued to boost growth rates and the bio-mass sector is at the front line of these developments. Mendel's patented HERCULES gene is reported to be showing good results in certain species. Mendel has identified sets of transcription factors which control growth responses and it is applying them to crop plants to create a more optimal growth pattern. Science is not just focused on growing more food, but also, importantly, better food; even where hunger has been reduced or eliminated, malnutrition remains a problem for large numbers of people. The reason is simple: many in poorer countries have grain dependent diets which, whilst sufficiently calorific, are low in some essential nutrients. Here, too, biotechnology can help in the form of bio-fortified foods, such as so-called 'Golden Rice'. Developed in Switzerland using technologies from over thirty companies, Golden Rice was engineered to allow the plant to produce beta-carotene in its seeds rather than only in its leaves & stem. This technology has been donated rather than sold, though the threshold for humanitarian as opposed to commercial use has been set at $10,000; growers making over this amount annually will be required to pay some royalties. Similar projects include the development of wheat & sweet potatoes bio-fortified with iron, zinc & vitamin A.

Drought tolerant genes Benefits for Africa Drought & freeze resistance Arborgen develops advanced seedlings for the global forestry industry. FuturaGene has defined renewable woody biomass as its strategic focus with plantation forestry Super charged rice Promoting growth rates Quality as well as quantity Golden Rice Fortified foods




Arcadia is working on a strain of celiac-safe wheat and bringing to market a GLA-rich safflower oil made from a variety transformed with genes from the Mortierella alpina fungus. It is likely that we can expect to see more of these kinds of consumer products emerging as GM becomes more accepted, and such innovations may lead scientists to important discoveries.

Non-GM Plant Technologies As promising as gene based technologies may be, many remain unproven and each traited product will likely address one stress challenge only, at least in the near to medium term. The genetic pathways controlling abiotic stress tolerance are complicated, and addressing multiple stress challenges with single traits is believed to be beyond the present competence of genetic science. Most genetically modified organisms (GMOs) are to date single gene actives. Stress relief typically requires a range of gene responses, and these gene sequences are in the plant to fight occasional external stresses. The value of the alternative approach, based on smart plant chemistry, is to provide technology to combat these stresses that the grower can employ in anticipation of stress (aridity, salinity, UV). Untreated, the plant will experience the stress and then respond with the production of its own protective chemistry. This response time costs yield, but could be reduced or eliminated by smart products to encourage the plant to grow in response to stress. Also GMOs are heavily regulated and even the simpler single gene examples are difficult to create and develop, with a cost of perhaps $100m for each product. These genes then have to be bred into all the elite seed varieties that are proposed for the market place. The technologies based on chemical manipulation of plant signalling systems, using either nutrients, pathogens or hormone analogues, are regulatory ‘lite’, especially in comparison to GMO technologies, and they can be applied as and when needed on any crops. Therefore solutions for dealing with abiotic stress through smart plant chemistry will be less expensive and more flexible because they are acting on in-built mechanisms in plants. These are the compelling reasons why companies with multi billion $ R&D budgets will still look to outsource functionality to the new technology companies discussed herein.

Bio-pesticides The bio-pesticides sector of the global crop protection market is valued at circa $1.0bn, a fraction of the $40bn main market, but consumer concerns about toxic spray residues on food and a drive for more sustainable methods in agriculture have increased interest and demand for bio-pesticides which leave no residues and have low to zero environmental impact. In Europe the segment is being partly driven by the EU Sustainable Use Directive which was adopted October 2009. Member states are required to set up their quantitative objectives, targets, measures & timetables to reduce risks and impacts of pesticide use on human health and the environment and to encourage the development & introduction of integrated pest management to reduce dependency on pesticides. The sector is expected to increase significantly in value over the current decade, some industry participants believe it could grow to $10bn of market demand, and in the process new suppliers of sustainable products will emerge. In April 2011, Chemical and Engineering News reported that the market for low-chemical or biological pesticides was growing faster than the market for synthesized chemical equivalents. Three approaches are being pursued in greener crop protection:

1. Microbial Formulations – formulations containing bacteria or fungi or their metabolites that attack and destroy insects

2. Plant Extracts - botanical or other natural extract blends, in which combinations of phyto-chemicals, such as terpenes, pyrethrum, or the toxins exuded by Bt bacteria, are formulated to create products lethal to pests;

3. Hormone Analogues that boost a crop's natural defenses. We comment on the first two of these approaches which have spawned a number of commercial products and developing businesses.

Wheat for gluten intolerance Gene technologies rifle shot approach Crop setback losses $100m per gene technology Plant signalling systems Smart plant chemistry $1.0bn annual market growing strongly EU requires member states to reduce dependency on pesticides Natural methodologies




Microbial Formulations

An important player in the first category is AgraQuest, a bio-pesticides ‘research to manufacture’ company based in Northern California. AgraQuest specializes in bio-chemistry to provide clever products that exploit naturally antagonistic relationships between organisms to protect plants and produce. The company is achieving steady growth in revenues of 30% plus pa and higher rates may well be possible as its products meet a growing need for low impact, zero residue, environmentally safe solutions for crop protection that consumer pressure is driving the big global retail brands to demand from their suppliers. AgraQuest’s Bio-Pesticide product portfolio includes:

• SERENADE – a foliar fungicide incorporating the patented bacteria, Bacillus subtilis (QST 713). This organism has 30 lipo-peptides, which contain a fatty acid chain that breaks down the fatty membranes of fungi, causing the contents of the cell to leak out. This action may be enough to kill the hostile organism, and if not, other fungicidal compounds can then penetrate the breached cell walls to destroy the organism. The lipopeptides then remain on the surface of the plant, offering continued protection for up to 10 days, which is further boosted by SERENADE's stimulation of the plant's own disease-resistance systems. In a further perk for growers that conventional fungicides lack, this strain of Bacillus subtilis also emits a phyto-stimulator which encourages plant growth.

• SONATA – a fungicide based on patented bacterial strain bacillus pumilus: QST 2808).It emits anti-fungal amino sugars that compete for the enzyme that uses glucose to build pathogen cell walls.

• REQUIEM – a target specific insecticide based on a plant extract. It targets sucking pests and interferes with their ability to feed or lay eggs, it also reduces virus transfer, while leaving beneficial insects unscathed.

AgraQuest's products leave no toxic residues and as a consequence the technology is safe for both farm workers and consumers; a lapse of just 4 hours (the shortest legal period) is necessary before workers re-enter sprayed fields, and no delay between application and harvesting is required. Formulations exist for both specialty crops, and also broad acre crops, giving the products a large potential market. Used alone, the bio-safety of AgraQuest's range is such that all its products are accepted for use on organic produce, whilst conventional farmers have the option of using them as in-tank companions for chemical solutions. This may increase the effectiveness of the synthetic chemical products enough to allow meaningful reductions in volume used.

Plant Extracts

Bio-pesticides formulated with plant extracts – specifically the chemical agents used by plants to defend against attack, form an active segment; 3 companies prominent in this sector are mentioned herein. Plant Impact’s BugOil is a natural insecticide which combats sap sucking insects in an environmentally friendly manner. It is entirely based on food grade materials already in the human food-chain. The benefits claimed for the product include:

• Controls harmful pest insects (whiteflies, aphids, mites and thrips).

• Has no detrimental effect on higher organisms other than the target pests.

• Has both preventative and curative action.

• Will reduce virus transmission in a wide range of crop systems.

• Leaves no harmful residues.

• Technology has both repellent and insecticidal activity.

Exploiting naturally antagonistic relationships Patents on bacteria No toxic residues Acceptable to organic farmers Defensive plant extracts BugOil based on food grade materials Better for consumers of crop products Environmentally benign




Plant Impact (Pi), has granted a 20 year world wide license to Arysta Lifescience (ALS) for the rights to manufacture, market, sell and distribute BugOil, a natural pesticide. The product is currently going through registration in the US, UK and EU. This patent protected technology is formulated around essential oils of Tagetes, Thyme & Wintergreen, suspended in rapeseed oil, targeting sap-feeding pests including whiteflies, aphids and mites. Essential oils comprise the volatile compounds contained in the odorous parts of plants and are normally collected by steam distillation. They are contained in flowers, roots, bark, stems, leaves, fruits and seeds. These oils contain 15,000 to 20,000 active chemicals, including some which have evolved for plant defence against invertebrate attackers, and which can be harvested and employed as insecticides or repellents. Organic growers would recognise BugOil’s herbal actives as deriving from common “companion” plants for growing amongst commercial crops to ward off pest attack. BugOil has strong claims to supporting sustainability in agriculture whilst delivering impressive results. Trials concluded in 2008 showed BugOil achieved 100% control of mites within 3 days compared with 14 days for standard treatments. US based TyraTech, also listed on the London Stock Exchange AIM, also produces bio-pesticides using botanical essential oils. The company has developed a screening platform which facilitates the development of products targeted specifically at invertebrates. The selected and cloned G protein coupled receptor targets are only found in invertebrates, thus making mammalian toxicity less likely. Examples of the botanical oils used in TyraTech products include rosemary oil, citrus oil and thyme oil. TyraTech's proprietary technology is based on a discovery platform for the identification of both individual, and combinations of compounds that can bind to sensitive G-protein coupled neurological & olfactory receptors of invertebrates. Compounds that bind to & activate these receptors have been shown to be powerful insecticides. They trigger a disruption of critical biological messenger chemicals necessary for insect function and survival. Tyratech’s products address consumer, commercial, professional pest control, agriculture, human & animal health, vector control and livestock markets. A British company, Eden Research, has focused its innovative bio-pesticide technology on the action of terpenes. Eden's products take advantage of the biocidal and antimicrobial properties of terpenes. Eden works with what are known as GRAS substances, that is, compounds 'Generally Regarded As being Safe' for human consumption or application to food crops. Terpenes are the primary constituents of the essential oils of many types of plants and flowers. Vitamin A is an example of a terpene. In addition to their roles as end-products in many organisms, terpenes are major bio-synthetic building blocks within nearly every living creature. In nature, terpene compounds function as defence mechanisms in many plant groups and are synthesized in response to elicitor chemicals produced following infection, stress or mechanical injury. Because terpenes occur in the food chain, with careful selection and formulation of terpene mixtures, the products formulated around them are highly likely to win regulatory approval. Safe for consumption and for the environment these technologies provide a less toxic alternative to traditional chemical products. Terpenes have well-documented bactericidal and fungicidal activity, and Eden’s research has also demonstrated arthropod and nematode control capability. Research trials, conducted in the greenhouse or field, suggest that terpenes can prevent or reduce the impact of a variety of plant diseases and pests currently being tackled by methods considered to be either of limited impact or unfriendly to the environment. Target-specific terpene mixtures have been identified and continue to be developed by Eden to fight specific diseases or pests. The company claims intellectual property and expertise in the application of terpenes for a number of environmentally friendly uses

Soil Technologies With many soils now damaged or depleted, and the price of seeds rising as breeding and GM raise their value and production cost, attention is turning to finding ways to make agricultural ground a safer and more hospitable environment. Seed protection is an important part of this new industry off-shoot as farmers seek to protect their 'traited' seed investments. One of the advantages of the SERENADE fungicide from AgraQuest, is that it

ALS develops, markets & distributes products for agroscience & nutrition Power of essential oils Species specific Specific target proteins Terpenes are useful natural biocidal agents Presence in the human food chain should argue for easier regulatory approvals Developing intellectual property Seed protection in the soil




can be applied as soil treatment when seeds or seedlings are planted. Serenade Soil builds a disease protection zone around the seed or transplant and, as the plants grow, the bacillus subtilis expand this zone, attaching themselves to the roots of the young plants. Novozymes, the Danish supplier of agricultural crop protection & yield enhancement products includes mycorrhizae spores as the key ingredient in its range of bio-yield enhancers. Novozymes also has a range of products designed to improve the quality & health of depleted soil. This range uses natural partner-fungi, such as Penicillium bilaii, which help plants to extract phosphate from the soil, and which also encourage more effective fixing of nitrogen within the soil. Like AgraQuest, Novozymes also has soil-borne crop protection products based on pesticidal fungi. The active ingredient of Novozymes’ Met52 pesticide, which is effective against many soil-dwelling insects, is the Metarhizium anisopliae fungus. The spores of this fungus infect insects at several stages in their development. When Met52 is added to the soil, its spores are mixed in. These spores then germinate on the surface of the insect and grow into it. New spores can then be formed, which lie dormant for years without germinating unless another insect arrives as a host. Like the bacteria in AgraQuest's Serenade, this fungus is harmless to humans, making it a safe and environmentally gentle alternative for growers of a range of fruit and flower crops.

Mycorrhizal Fungi

Micro-organisms can also help plants to access nutrients more efficiently, allowing them to get more out of the soil, and can also help to rehabilitate soil damaged by over-fertilization or compression by heavy agricultural equipment. Colonization of plant roots by mycorrhizal fungi provides the host with a supply of phosphorus that its roots alone could not have accessed, and helps plants to develop more extensive root systems, enabling improved uptake of water and nutrients, particularly copper, zinc and iron, and as a consequence improved responses to both biotic and abiotic stresses. US based company Plant Healthcare has developed products designed to help farmers exploit this natural agricultural aid. The fungi are naturally stimulated by hormones emitted by stressed plants, the most effective of which is formononetin, from clover plants, and it is on this compound that US based Plant Healthcare has based its Myconate product range. Tests have shown that corn grown in soil treated with Myconate can have more than double the mycorrhizal root-colonization of corn grown in untreated soil.

Stress Response Activation Technologies A set of naturally occurring proteins, known as Harpins, are secreted by plant pathogens, and plants have evolved to respond to the presence of Harpins by activating their defence mechanisms and accelerating growth. Discovered by scientists at Cornell University, the technology is now being commercialized by Plant Healthcare. Its product portfolio includes Harp-N-Tek or ProAct. When these products are sprayed on a crop, the plants treated respond as though they were under attack, accelerating growth, increasing the rate of photosynthesis and even show more efficient nutrient uptake. PHC promotes the Harpins range on the basis of benefits including greater vigor, growth, yield and quality of produce, as well as better water management. As a co-blend, ProAct applied with glyphosate herbicides to corn, leaves weed control unaffected, but the company reports that at a rate of one ounce per acre, ProAct has demonstrated yield gains of up to 9.6 bushels per acre when compared with glyphosate-only control crops.

Yield Enhancement Technologies Yield enhancement has had two significant drivers to date: the development of a global fertilizer industry with annual revenues of more than $140bn and a global seeds business generating some $23bn pa in revenues. But now a host of new technologies are being developed on the back of a better understanding of how plants control their growth, how they respond to stress, and how they utilize the nutrients in their environment.

Using fungal spores to destroy crop pests Improved root function for crop optimisation Using stress signals to stimulate plant growth Yield gains in use with CP systems Crop nutrition is a $140bn segment




Abiotic Stress Management Plant Impact working in collaboration with a team of world renowned plant biologists at Lancaster University, is investigating the action and range of a patented blend of natural plant chemicals called Alethea. Alethea's active ingredients include Jasmonic acid, salicylic acid and arginine. Jasmonic acid plays an important role in plant immune defenses, whilst arginine is an amino acid involved in cell division, immune function and control of hormone levels. Pi and Lancaster are still investigating exactly how Alethea controls the production of damaging reactive oxygen species (ROS), produced by plants in response to stress. ROS are a normal by-product of photosynthesis, and as long as the plant is healthy and growing in good conditions, it is able to control levels of ROS with antioxidants (for instance vitamins C and E). During times of stress, however, ROS production rises and the nutrients needed to balance it out are often stretched thinner by redirection to other functions, resulting in widespread damage to the plant's biological systems. Alethea, however, appears to stop ROS production in its tracks, with some remarkable results. In tests conducted at Lancaster, plants treated first with Alethea and then Paraquat, a herbicide which works by accelerating the production of ROS, remain seemingly unaffected, whilst untreated controls wither alongside them. Excitingly, the product shows real promise for improving salt tolerance; maize grown in water of a salinity equivalent to that of low quality irrigation water and treated with Alethea shows healthier and more abundant foliage than controls grown in the same conditions. Alethea's strengths are obvious. Its mostly natural ingredients give it strong sustainability credentials, which are likely to receive increasing recognition from consumers, growers and governments as the need to reduce agriculture's toll on the environment grows more acute. As a spray-on product, it can be judiciously applied by farmers in anticipation of periods of stress, such as drought or high temperatures, as well as routinely, meaning that the plant's resistance can be boosted in advance. It is also versatile, and should, in theory, work equally well on any crop without the need for large changes in its composition. This gives it a clear advantage over genetic manipulation technologies. For GM to have such wide coverage a strain of each crop would need to be individually developed and certified as suitable for mass market use and human consumption. This process is expensive and time consuming. If Alethea can be proven to have the same extraordinary results in the field as in laboratories it may permit crops to be grown in currently unacceptable soils, and enable ongoing usage of land into the latter half of the century that might otherwise have been rendered useless for agriculture by global warming. Nor will its applicability be reduced by the development of elite seeds traited for tolerance to abiotic stresses.

Importance of Calcium Despite the routine use of calcium applications on arable farms, it is not uncommon to see evidence of calcium deficiency in fruit and vegetable crops, manifesting as brown staining on potato flesh, curled brown leaf tips & edges on varieties of the lettuce family and rot around the base of tomatoes & peppers. These defects may lead to the produce being rejected by retailers or consumers, and they will reduce storage period & quality, and shelf life. Calcium deficiency may also result in lower crop yields, and this is most likely when a crop has also been exposed to conditions of abiotic stress. Calcium is a crucial mineral for plants and for farmers – it underpins the health of plants & therefore the quality & quantity of their production. Calcium supports the development of plants; it is a vital component of cell walls, influencing cell division & formation. Calcium deficiency can therefore result in physiological deformity, plant weakness and sub-optimal crop yields. Scientists also believe that the mineral is a component in plant signalling systems, helping to control physiological behaviour. It is common for commercial farmers to apply significant quantities of calcium to their crops during the growing season to maintain the health of the crop and to ensure the optimisation of its yield and quality. Calcium disorders are often as a result of poor distribution. Calcium moves passively in plants, driven by the transpiration stream; since it is not phloem mobile, the mineral cannot move with the sugars from leaves to fruits etc. Therefore, tissues with little water loss (low transpiration rates), through which less water, and therefore less calcium, is drawn, are more prone to calcium disorders. Conventional calcium products only supply calcium, but

University development partnerships Controlling plant response mechanisms Sustainable tools for improving agricultural productivity A possible advantage over gene technologies We all recognise calcium deficiency when we see it A crucial mineral for plants Is calcium used efficiently? A technique to mobilising calcium within the plant




they do nothing to help aid its distribution. UK plant technology company Plant Impact has developed a technological solution for this problem which it describes as “a...novel approach to triggering the localised movement of calcium”. Calcium fertiliser is an important economic segment within crop inputs; global fertiliser sales were in the region of $142bn in 2010, of which calcium related products are thought to have accounted for as much as $10bn. Calcium fertilisers are applied either as soil dressings or as foliar sprays, but they do not necessarily reach the parts of the plant that may need it most, and this is especially true for mature crops. It may be that large quantities of calcium are being used to address small deficiencies, resulting in economic wastage and a failure to reach the areas of greatest need. Due to the way in which it aids calcium management, Pi claims results achieved with InCa exceed or match the results achieved with conventional foliar applications, but with calcium application rates typically running at 95% - 50% below conventional rates. Pi asserts that InCa moves calcium to where it is needed 20x - 50x more effectively than conventional root or foliar treatments.

Storage & Shelf Life

The better fruits and vegetables survive in transport and storage, particularly those prone to damage or rapid deterioration, the less likely it is that sellers or consumers will reject them. Arcadia has been working for some time on technologies to improve shelf life in soft produce, such as tomatoes, strawberries and melons. It is not clear when the product will be ready for commercial use, but it has attracted investment from both the US Department of Defense, and also Spanish company Semillas Fito Research. Created using Arcadia's proprietary TILLING® technology, which identifies genes that can be deactivated or 'silenced' within the target plant's genome, these products will not need to be classified as GM, making them suitable for a wider range of markets. Plant Impact’s InCa product range represents another important technology for improving storage capability and shelf life in plant products. The product is being trialled on soya by Syngenta in Brazil, and has the potential for application to a wide range of crops. Pi's ambitions for InCa are centred around the potato market, to which Pi hopes to gain access to 25% of target region potato hectares. Trials conducted in the Netherlands two years ago showed that InCa produced up to 34% more potatoes per cultivated area, and that the quality of the produce was improved by 20.9% using the traditional Dutch traders’ criteria. The same system also confirmed that these potatoes then survived better in storage. Research suggests that healthier, better quality produce often has a longer shelf life. These benefits should not be underestimated. As more people move to cities and more food must therefore be transported, a longer span from picking to plate will be necessary to prevent the wastage that, increasingly, we will not be able to afford.

Strategic Partnerships in Evaluation, Development & Distribution of New Plant Technologies The new plant technologies discussed in this report have potential application to millions, perhaps 100s of millions, of hectares of crops. For these technologies to gain access to this market opportunity, it has become a feature of the market development strategy of new technology developers to recruit as distribution partners the companies that have established sales networks deep into the crop heartlands of the major agricultural producing regions, including North & South America, Northern Europe, and MENA region. The cost of developing and managing a proprietary sales force to develop these huge areas of opportunity would be prohibitive for young companies still in product development. They would also take many years to develop the commercial & professional relationships of trust that the traditional agro-chemical distributors have established over decades with local distributors and directly with growers. Plant Impact’s Chairman, David Jones, formerly of Syngenta, put it succinctly, “the best arrangements for getting small company crop enhancing products into big agriculture is through the development and marketing muscle of one of the major industry incumbents”. Californian based AgraQuest refers to itself as a “Go To Partner”, a reference to its specific R&D competence in bio-fungicides; partnership relationships struck with the company by the Tier 1 AgChem companies may be likened to outsourcing of R&D function.

$10bn annual market Big savings on calcium usage Shelf life & product quality Brazil trials with Syngenta on Soya 34% yield improvement with potatoes Broad acre crops are the ultimate target market Trojan Horse strategies




There are compelling reasons for the AgChem majors to view the new technologies detailed herein with serious interest; they have the potential to offer significant benefits in terms of crop optimization and improved efficiency in application of crop nutrients. These are attractive product features for growers and they confer margin benefits all along the supply chain. Incorporated into existing product technologies, they also enable product line extension with the ability to gain additional patent protection if they can be incorporated into other AgChem sprays without reducing the efficacy of either product set. Differentiation from competing products, margin expansion and product life extension – strong reasons for these products to be given serious attention. It is these drivers that underlie both the marketing strategy of the new technology providers, and the desire for large brands and distributors in the AgChem sector to work with them in field trials and evaluations. It is no secret that the top AgChem companies are all looking for new proprietary active ingredients for crop protection systems and yield enhancement technologies and to access these assets they will either establish collaborative partnerships, joint ventures or they will simply acquire the technology owner. Examples of industry collaborations and partnerships include:

• AgraQuest has agreed world wide [ex-NAFTA] distribution rights for its Serenade technology for foliar & soil application to BASF,

o AgraQuest has entered into a R&D collaboration with Monsanto for the development of seed treatments based on AgraQuest’s proprietary library of microbial technologies

o AgraQuest has licensed Bayer Environmental Science pesticidal actives for the Home & Garden sector

o AgraQuest has licensed Alpharma to market an active ingredient to improve animal nutrition products

• Plant Health Care has similar agreements in place with Monsanto and regional distribution companies in the US.

o Syngenta and PHC agree to joint development of Harpins

• Plant Impact has a 20 year worldwide license agreement with Arysta LifeSciences [ALS] granting ALS worldwide exclusive rights to manufacture, market, sell and distribute Bugoil in all fields except for Home & Garden and Animal Health.

o In September 2010 Pi entered into an exclusive evaluation, development and distribution agreement with Agrimatco covering its crop nutrient products - InCa, PiNT K, PiNT Ca, Balance, Saxon, Scope, CaB and Speedo additive products. The agreement covers countries in the Middle East, North Africa, Eastern Europe and Central Asia, and will initially focus on high value horticulture crops with potential extension into some arable crops.

o In August 2010 Pi announced that it had commenced field trials with Syngenta Brazil using InCa & PiNT based products on soybeans, cotton and forestry. Initially focusing on 4,000 ha of soya beans, this is expected to be a significant field trial involving large numbers of Brazilian farmers, and resource from both Syngenta Brazil and Pi.

Implications For Investment The development of innovative, cleaner technologies to support greater food production in sympathy with the principles of sustainability will also provide investors with opportunities for capital gain. The anticipated growth of the biopesticide sub-sector is a case in point; today only a $1bn slice of the wider $40bn crop protection sector, some industry players see this segment growing to $10bn by the end of this decade. Each year the world uses roughly 3 million tons of pesticides (including herbicides, insecticides and fungicides) and insecticide use alone increased 10-fold in the US between 1945 and 1989. Similarly crop nutrition technologies can be expected to gain a share of the annual $140bn trade in chemical fertilisers.

Compelling benefits Collaboration & partnership All big name brands Evaluation & development agreements Brazil’s vast acres offer ideal testing ground AgChem is a $200bn market segment of global economy




The producer sector has for many years been squeezed between the price setting power of the global retailers and an equally strong international inputs sector. New crop nutrition technologies not only provide an opportunity to reduce the environmental burden of chemical fertilisers, they also suggest an opportunity for the producer sector to improve marginal returns. As food commodities face growing demand competition from a bigger, richer global population, an increasingly corporate producer sector is likely to recover at least some of the power it has ceded in the last century to set prices. And just as soil, water & fertilizers produce crops in partnership, so now these new sustainable technologies to boost yields, to combat pests and to allow crops to thrive commercially in territories beyond their normal range, offer opportunities for producers and investors alike.

Postscript The challenges facing mankind in the 21st Century and how it responds to them may prove critical to our very survival. After centuries of relegation to the margins of economic & political significance, the food producer sector may emerge in the coming decades to be as important to the health of human civilization as it was to its inception, and at its heart will be that silent partnership with plants. Plant science looks likely to become an essential discipline in The Anthropocene Era.

An opportunity for producers to improve returns? Opportunities for farmers & investors Mankind faces a critical challenge Plant Science essential for our times




Share price: 21.5p

Q4-2010 Q1-2011 Q2-2011 Q3-2011Source: Fidessa

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34 PIM PLANT IMPACT ORD 1P

12m High: 32.5p

12m Low: 19p

Market Cap: £10.8m

Shares in Issue: 50.2m

Key Financial Data:

Financial Year End: 31 Mach 2011

Revenues: £1.78m (£1.41)

EBIT: -£1.86m (-£1.66m)

Net Cash: £1.17m (£2.12m)

NAV/Share: 3.9p

Gearing: N.A.

EPIC Code: PIM.L

Sector: Agricultural Chemicals

Market: London AIM

Website: www.plantimpact.com

Description:

Plant Impact develops sustainable technologies for crop nutrition to enhance plant performance and crop yield.

Major Shareholders:

Rising Stars Growth Fund 10.90%

Henderson Global Investors 9.52%

Arysta LifeScience 9.08%

Allianz Cornhill Insurance 3.39%

Plant Impact ‘Novel Technologies For Sustainable Crop Enhancement’ Pi is developing and commercialising novel technologies to boost crop yields & quality, and to help crops respond to abiotic stresses – some of which are associated with Climate Change, all supporting sustainable agriculture. At a time when governments and international agencies around the World are grappling with the challenge of ensuring food security for a population rising to 9bn, these are highly relevant technologies. The company’s portfolio of technologies and products are still being validated in field trials and are still the subject of intense scientific scrutiny; but they are also at the heart of collaborative associations with global agro-chemical giants such as Syngenta, and alliances with important agri-sector organisations including Arysta LifeScience [ALS], and important regional distributors such as Cebeco [Northern Europe] and Agrimatco [MENA region].. As a small company with limited resources seeking to grow in the crop nutrition and protection sectors, Pi has adopted a pragmatic development strategy. This is based on “owning” certain crops with specific crop enhancement product solutions. Pi is driving the current phase of its development very specifically with its calcium delivery technology, InCa and with its Nitrogen Use Efficiency technology, PiNT. The focus is initially on potatoes, lettuce, tomatoes & melons – high value fruit & vegetables, over laid with a country / regional strategy with emphasis of effort on USA, Germany, Holland, France, UK, Egypt and Brazil. Meanwhile broad acre crop trials with Syngenta Brazil will, it is hoped, underpin the second development phase with a focus on soya and cotton in particular. Seeking distribution agreements with global AgChem partners represents an important strand in Pi’s growth strategy.

Plant Impact is not likely to become profitable until the year ending March 2013, when it will be 10 years old. Industry sector partners will have a keener appreciation of Pi’s strengths than financial investors & they represent a natural pool of potential development funding, as exemplified by the recent issue of some 4.56m new shares to Arysta LifeScience. Commitment from this sector will be viewed positively by financial investors who will take confidence in such expressions of support.

A small but professional management team includes John Brubaker the recently appointed CEO who took over from Peter Blezard in August 2011. Formerly the Global Head of Business Development at Arysta LifeScience Corporation (ALS), Brubaker has a track record in corporate development and sales & marketing in both multinational businesses and growth phase operations – like Pi. He has been responsible for executing on distribution for ALS products & businesses in markets as diverse as Russia, Mexico, India and Africa in a 6 year stint since 2005. Chairman David Jones is the former Head of Business Development for Syngenta & ex-Chairman of Arysta LifeScience. He brings deep industry knowledge – after a lifetime career in international agro-chemicals sales, and big corporation management experience to bear at Pi.




Revenue growth of 27% to end March 2011 produced £1.78m of turnover; and there was no repeat of the 2010 £0.5m milestone payment for the bio-pesticide BugOil. Regulatory approval for the product in the UK, EU and US has taken longer than expected. All the growth came from the crop nutrition product portfolio. For the period to end March 2012 the crop nutrients products are likely to show growth in revenues again in region of 70%. At this stage Pi will still not have ‘hit its stride’; sales growth could be explosive if the product portfolio is able to break into the big broad acre crops such as soya & cotton. There is much still to prove, but this enterprise is not without potential; Pi has not morphed from ‘high tech duckling’ to ‘capital markets swan’ just yet, but the ‘DNA’ is in place. A portfolio of products is now producing revenues, important field trials could unlock access to 38 million hectares of crops in Brazil alone, and additionally there is a rich pipeline of innovative technology to fuel future growth as well. The early phase nature of Pi today makes valuation difficult; its technologies are still in the process of being developed for full commercial exploitation Sector M&A activity perhaps provides the best indication to valuation. The Feb 2011 purchase by Novozymes of EMD/Merck Crop Bioscience came in at circa 4.7x revenues [$283m purchase price versus $60m of forecast revenues]. Multiples of revenues provide a convenient metric for valuation when businesses are acquiring sales loading and product technology in particular. The multiple of sales is likely to rise according to the potential for the acquirer to ramp up volume once it has ownership of the brand, products or technologies. In November 2009 for example, Bayer CropScience acquired US agri-biotech company Athenix Corporation, then only 8 years old. We can find no public record of Athenix revenues, but various US agencies estimated these in the range $0.5m to $50m. Bayer CropScience purchased the business for its herbicide tolerant traits and insect control traits for between $365m-400m, suggesting a multiple of sales of perhaps 16x or more [assuming sales of circa $25m].

The recent purchase (24th May) of 4.56m new shares in Pi by Arysta LifeScience, to give it some 9.1% of the enlarged equity was priced at £0.45 per share – a premium on the day of more than 76%. At £0.45 per share Pi was capitalized at £22.6m, suggesting a price: revenue ratio of 12.7x 2011 revenues, or 8.2x 2012 estimated revenues. A 6x-7x multiple of prospective achievable revenues is perhaps the best guide to Pi’s value during this phase of its development.




AgraQuest ‘Go To’ Partner for Bio-pesticides & Crop Enhancement’ AgraQuest is a plant technology company that focuses on discovering, manufacturing & marketing highly effective, environmentally sustainable, pest management technologies for agricultural, institutional & home markets. Possessing one of the largest R&D teams for bio-pesticides anywhere in the World, outside research institutes, AgraQuest employs over 50 scientists & research professionals. AgraQuest is a knowledge rich company with a strong pipeline of new products to underpin revenue growth. Founded in 1995 on the understanding that microbes & their metabolites could form the basis of a revolutionary new technical solution for crop protection, AgraQuest’s first products began to appear between 2000-2005. With the introduction of a highly experienced senior management team, drawn from the AgChem sector, the company is now beginning to record consistent annual revenue growth of circa 30%. Some $130m has been invested in the business to date, enabling AgraQuest to position itself as the ‘Go To Partner’ for globally scaled AgChem companies looking for bio-pesticides to bolster their proprietary product lines, to extend patent lives and to protect brand share and margin. Partnerships have been announced with BASF, Bayer Crop Science, Alpharma, Sylvan and Monsanto. Revenues in the 12 months to end December 2010 were in excess of $30m [$20m] and in the current year we anticipate similar growth to circa $45m. An ambitious management team is targeting revenues approaching $200m by 2014.

Status: Private company

Domicile: U.S.A.


Website: www.agraquest.com

Description:

Discovery to market bio-pesticides & crop enhancement technologies company with worldwide presence via important AgChem sector partnerships

Major Shareholders:

Generation Investment Management LLP

Otter Capital

Loudwater Trust Limited

TPG Growth

Emerald Ventures

Halcyon Capital

Foragen

SwissRE




Company Profile Based in Northern California, AgraQuest also has manufacturing facilities in Mexico. It maintains its own sales & distribution capability in the USA & Mexico, but has a partner strategy for selling elsewhere in the world. The company’s technology & market strength derives from its R&D platform, but it is additionally building an impressive distribution capability and partner portfolio. Today AgraQuest products are sold in 25 countries worldwide, supported by major partnerships with BASF, Bayer CropScience and Alpharma. AgraQuest is structured around two core divisions: Agrochemicals – focused on providing leading edge bio-pesticides for the conventional crop protection & organic grower segments, and the Bio-Innovations division which works with industry partners to monetize AgraQuest technologies in adjacent markets such as animal nutrition, biocides, food safety and seed treatments. Within its Agrochemicals activity the company has registered 12 brands on the basis of 3 proprietary actives. Leading the pack however are the branded products Serenade, Sonata [both fungicide / bactericides] and Requiem [insecticide]. BASF has signed an agreement with AgraQuest to register & sell Serenade across the ex-NAFTA global markets for fungicides and bactericides in speciality crops, valued at an annual $1.2bn in sales. Serenade is also being developed and its sales expanded into the $1.3bn pa row crop sector. Serenade contains a unique, patented strain of Bacillus subtilis (strain QST 713) which provides over 30 different lipo-peptides that work synergistically to destroy disease pathogens and provide superior antimicrobial activity. It protects vegetables, fruit, nut and vine crops against diseases such as Fire Blight, Botrytis, Sour Rot, Rust, Sclerotinia, Powdery Mildew, Bacterial Spot and White Mold. Sonata is a fungicide which controls downy & powdery mildews and rusts, and is a proven fit in resistance management programs. With a 14-day activity, Sonata is marketed as an effective and economical biological partner in disease control programs. It is based on a naturally occurring patented strain of Bacillus pumilus (QST 2808). Sonata is exempt from residue tolerances, so food crops treated with this product can be exported to key markets worldwide. It can be applied in both conventional and organic disease control programs. Sonata's performance has been confirmed by more than 300 efficacy field trials in high value specialty fruit and vegetable crops. Requiem is an insecticide that targets all lifecycle stages of sucking pests, from eggs to adults, with a unique mode of action. With three different modes of action, the development of resistance to Requiem by target pests is unlikely–making it an excellent tool for resistance management. First, it breaks down the insect’s exoskeleton. This degradation of the body and joints causes a loss of fluid and inhibits the pest’s ability to move. Second, it clogs the trachea, interrupting the insect’s respiratory system, preventing respiration and causing suffocation. Lastly, Requiem disrupts the insect’s ability to navigate, blinding it from finding sources of food. Without the ability to locate food, the pest starves. Other established branded products within the portfolio include Ballad Plus and Rhapsody. Ballad Plus is a fungicide for control of rust, powdery mildew, cercospora, and brown spot that is based on a unique, patented strain of Bacillus pumilus (strain QST 2808) Studies conducted in the U.S. and around the world have shown that the product offers significant control of Asian Soybean Rust, and when used in conjunction with low rates of a strobilurin, can control disease while enhancing yield. OMRI listed and NOP approved, Ballad Plus is the only fungicide listed for organic use that controls ASR. Ballad Plus is aimed at broad acre crops such as soya, corn, and wheat. A broad spectrum product for the control or suppression of many important plant diseases, Ballad Plus is an excellent fit in disease control programs of both conventional and organic production. It provides the additional benefits of resistance management, short 4 hour restricted entry intervals, compatibility with other products, no residue restrictions for export, and safety to beneficial insects.




Rhapsody is an effective fungicide and bactericide that protects turf, landscape areas, ornamental and greenhouse plants from a broad spectrum of foliar diseases. It contains a novel active ingredient formulated from a unique, patented strain of Bacillus subtilis which produces more than thirty biochemicals that work in concert to destroy disease pathogens. This multi-site mode of action makes Rhapsody an ideal resistance management tool and tank-mix partner product. It controls a broad spectrum of bacterial and fungal diseases - including Brown Patch, Anthracnose and Dollar Spot - and helps turf in top condition. The BioInnovations Division was established in 2009 but already it has signed a valuable agreement with Monsanto for development of seed protection technology and with two other out-licensing partners. The division co-operates with the Agrochemical Division to explore new crop protection opportunities & markets. It has technology in various stages of development for applications around plant health and yield stimulation, soil fumigation for control of key pathogens and nematodes, fungal control, sucking pest control, and lepidopteran control. Seed treatment is closely related to AgraQuest’s core business of agrochemical disease control. It is developing applications for AgraQuest’s technologies to help stimulate root colonization, and act as antimicrobial, antihelminthic and antifungal agents. The seed treatments market segment has been growing rapidly over the past 5 years to some $2.5bn pa. AgraQuest’s technologies are targeting disease, nematodes and insect activity. The company is also focusing on yield enhancement, especially around root development technology. The use of AgraQuest’s technologies as nutritional supplements, topical treatments and pest suppression provide extension into the food chain. AgraQuest is developing proprietary intellectual property to act as probiotics, mold suppressants for feed, antimicrobials, fumigants and pest control/repellants. The company is leading the challenge to the traditional use of hormones and antibiotics with its probiotic technologies. Addressable Market The global crop protection market is valued at $40bn pa, within this the bio-pesticides segment is valued at some $1bn, but it is expected to grow in the course of this decade to as much as $10bn as consumers & regulators demand reduced chemical residues on food and greater protection and care for the environment and biodiversity. The need to combat resistance in pests to conventional crop protection treatments is another driver of the segment. The opportunity is to integrate biopesticides with conventional crop chemistry to provide higher yielding crops and cleaner market produce. Bio-pesticides can be used in place of synthetic sprays without reducing efficacy or yield or combined with conventional crop protection systems to improve efficacy and yield. Development & registration of a bio-pesticide requires only a fraction of the cost [$10m-$15m] of developing a new synthetic chemical pesticide [$240m]. Bio-pesticide development cycles take half the time of their synthetic counterparts at 2-3 years. These important savings provide seed technology companies and conventional agrochemical companies with valuable novel components to combine with established products and brands, to extend brand life, to provide product differentiation, and to widen marginal returns. AgraQuest exploits its R&D strengths and proven technologies in the fields in which it is pre-eminent to develop its attractions as a ‘go to partner’. Effectively an R&D / product outsourcing facility, the company aims to become a major supplier of bio-pesticides and sustainable yield enhancing technologies to global AgChem partners.




Share price: 53.5p


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100 PHC PLANT HEALTH ORD 1P

12m High: 106p

12m Low: 41.5p

Market Cap: £28.4m


Key Financial Data:

Financial Year End: 31 December 2010

Revenues: $7.09m ($16.7m)

EBIT: -$7.9m (-$1.8m)

Net Cash: $12.98m

NAV/Share: 46.9 cents

Gearing: Nil

EPIC Code: PHC


Market: London AIM

Website: www.planthealthcare.co.uk

Description: PHC develops & supplies natural alternatives to synthetic chemical products for plants & soil. The focus of its technologies is improved root structure & function. Products serve the: horticulture & agriculture sectors.

Major Shareholders:

Henderson Global Investors 16.84%

Pictet Asset Management 9.63%

Boulder River Capital Corp 8.47%

Credit Suisse Asset Mgmt 5.14%

Aviva PLC 4.88%

Generation IM Climate Sol Fund 4.44%

Bronco Weiss 4.14%

Ora (Guernsey) Limited 4.10%

Universities Superannuation Scheme 3.96%

AXA Framlington Inv Mgmt 3.40%

Plant Health Care Growth Promotion Technologies A manufacturer of natural products to produce stronger root function in plants and to promote growth in plants, either as leaf or soil dressings. Products are claimed to be environmentally beneficial and on more cost effective than conventional synthetic chemical products. Established in 1995 in Pittsburgh in the United States, PHC currently has operations in the US, Mexico, UK and the Netherlands, with technical support in Austria. On 6 July 2004, PHC listed on the AIM market of the London Stock Exchange raising £7m to fund product and company acquisitions and to expand sales & marketing. In February 2010, the Company’s ordinary shares were listed on the Official List of the Channel Islands Stock Exchange ("CISX") (ticker symbol/mnemonic: PHC). Product Technologies – Harpins Protein PHC describes Harpins Protein Technology as a unique, patented and novel class of protein technology for improving crop health and production. The company claims that Harpins products offers growers an effective and environmentally sound tool to regulate overall plant health and to improve yield and output value. The Harpin Protein binds to receptors present in all agronomically important crops. These receptors react to the presence of Harpins by sending signals to the rest of the plant, in the form of fast release of cellular calcium and an increase in plant metabolic activity, photosynthesis and nutrient uptake. Harpins belong to a class of proteins released by pathogens when attacking plants, which although harmless to plants, induces a hyper sensitive response in the area of attack. When used as a plant treatment, Harpins induce a response identical to the response of plants in the presence of attacking pathogens. The hyper-sensitive response of plants to the presence of Harpins is stimulated by a set of genes which induce the plant to produce a cascade of effects designed to bolster the plant’s natural defences. The response Harpins induce is characterised by stronger growth and greater resistance to pathogens. The use of the Harpin protein has been demonstrated in trials to produce greater nematode resistance in soya beans, to improve shelf life and to enhance yields – especially in crops treated with glyphosate based herbicides. Crops treated with Harpins based products show negligible residues of the protein, it has minimal toxicity and it degrades quickly within the environment without impact.




Products based on the technology include:

• ProAct – a yield enhancing foliar spray format focused on field crops such as cotton, corn, soya beans and rice. ProAct is based on the core Harp-N-Tek technology. The Harp-N-Tek technology is also incorporated in a foliar spray fro the high value vegetable crop segment.

• N-Hibit – is a seed treatment that reduces nematode activity and which boosts plant vigour. The product is available both as seed treatment and soil treatement.

• Pre-Tect – is a pre-harvest treatment for longer shelf life in salad crops and soft fruits – specifically it prevents cracking in fruits like cherries and strawberries.

• Harp-N-Tek is also blended with fertilisers to improve nutrient uptake in citrus, other tree fruit, vegetables and turf. The technology is designed to activate a plant’s growth & stress defence mechanisms. The plant’s response is to absorb the nutrients included in the treatment and circulate them around its structure. Hence Harp-N-Tek is used in fertiliser formulations.

Product Technologies – Myconate Myconate is based on mycorrhizal fungi – a species that lives in the soil amongst plant roots. This has a beneficial impact on plants – serving similarly to a secondary root system as the fungus extends its structures beyond the range of the plant’s own roots and transporting mineral nutrients and moisture back to the host. In this symbiotic relationship the plant transfers sugars to the fungus via its roots. Plants colonised by mycorrhizal fungi are better able to withstand abiotic stresses. PHC claims that Myconate increases mycorrhizal colonisation of roots by over 50%, aiding to their early-stage plant growth and increasing important early phosphorous loading of agricultural crops. Myconate has also shown to help plants through periods of drought stress The basic efficacy of Myconate in improving yields has been established in a number of trials around the world. Highlights of the program include:

• Average corn yield increases of 9% over the control plots in 60 corn trials

• •Average soybean yield increases of 13% over the control plots in 21 soybean trials

• •Reliable yield increases in 8 other major crops, including cotton, edible legumes, sugar cane and potato crops

Myconate can be applied as both a seed coating and tank mixed with fertiliser. It is available in powder, liquid or pre-mixed with a seed-coat polymer. Seed germination and stand density are indifferent to Myconate application.




Eden Research Encapsulated terpene biopesticidal products Eden Research plc is a UK PLUS listed public company. It has developed intellectual property and expertise in encapsulation, terpenes and environmentally friendly technologies providing natural solutions to agricultural, medical and industrial problems. Eden initially worked with ‘GRAS’ substances, compounds 'Generally Regarded As being Safe' for human consumption or for application to food crops. These technologies are being developed & commercialized through a series of production, marketing and distribution partnerships. Eden Research’s primary focus is on the innovative use of terpenes to create an array of low-risk agricultural chemicals. Eden's products take advantage of the biocidal efficacy of naturally occurring chemicals produced by plant defence mechanisms and, in particular, the antimicrobial properties of terpenes. Terpenes are naturally occurring, low-toxicity botanical substances produced by most plants as part of their defence mechanisms. Company Profile The 2010 year saw Eden Research make significant progress with its encapsulation technology. TEVA Animal Health, a subsidiary of the generic pharmaceutical TEVA Pharmaceutical took out a licence on the encapsulation technologies and products. This was a milestone achievement and it provides significant validation for the technology which Eden claims has applications and benefits not only in the agrochemical sector, but also in unrelated sectors, such as animal health. Products Terpenes – are that the heart of Eden’s technologies. Research trials, conducted in the greenhouse or field, suggest that terpenes can prevent or reduce the impact of a variety of plant diseases and pests currently being tackled by methods considered to be either of limited impact or unfriendly to the environment. Target-specific terpene mixtures have been identified and continue to be developed by Eden to fight specific diseases or pests. The company claims intellectual property and expertise in the application of terpenes for a number of environmentally friendly uses 3AEY, is Eden's lead product; a terpene based fungicide, has now been out-licensed to a number of parties for a variety of applications throughout the World. Cheminova has the distribution rights for the product for the high value crop sector in a large number of territories around the world. Progress is reported to have been made with the European registration of the three active substances at the heart of 3AEY. In Greece and the Balkans, Redestos is preparing national provisional authorisations for 3AEY. In March 2010, Ecostyle BV, a Dutch company licensed rights to 3AEY for use in the amateur gardening sector, and it is believed to be seeking national provisional authorisations.

Share price: 16.5p


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24 EDE.PL Eden Research plc GBX

12m High: 23.5p

12m Low: 10.5p

Market Cap: £13.7m


Key Financial Data:


Revenues: £0.17m (£0.19m)

EBIT: -£2.6m (-£1.6m)

Net Debt: £2.9m

NAV/Share: 2.6p

Gearing: 1.13x

EPIC Code: EDE

Sector: Agricultural Chemical

Market: London PLUS Market

Website: www.edenresearch.com

Description: An intellectual property company with a unique, patented encapsulation delivery system as its core technology. This system has been used to create pesticidal products and solutions primarily for the agrochemical sector, but with applications in other professional markets.

Major Shareholders:

Battlebridge Group Limited

Oxford Commercial Services Limited

Oxford Capital Limited

Oxford Business Services Limited

Oxford Corporate Services Limited




Nematodes In 2010, Certis Europe entered into an exclusive option agreement for Eden's nematode product. Since then, both Certis and Eden have undertaken field trials on a variety of nematode species in order to evaluate the potential for the products and to determine the markets for which Certis would like to enter into a full licensing agreement. Also in 2010, Eden entered into a full licence agreement with Stockton Agrimor for rights to the nematode product in South America. The company is now seeking to out-licence the nematode technology in the NAFTA area. Spider Mites & Whitefly encouraging data from trials of Eden’s technologies for combat these pests has enabled the company to initiate out licensing discussions with interested parties for further development & registration. Encapsulation Terpenes are biocidal as a result of their lipophilic (fat-loving) characteristics, which are observed to affect the integrity of cell walls and cell membranes. However, their relatively low molecular weight (for an organic oil) creates two major drawbacks:

• volatility, which manifests itself in their strong aromas and fragrances • hydrophobia, resulting in poor miscibility and solubility in water.

Eden’s patented encapsulation technology overcomes these drawbacks by permitting the terpenes and other biologically active ingredients to be applied using conventional agricultural spraying equipment. The terpene-carrying particles can be prepared as a liquid suspension or powder formulation, which can in turn be applied to the site of infection. The terpenes continue to diffuse out of the carrier by the addition of more moisture from rainfall, dew or mist, maintaining an antimicrobial effect over a period of several days under moist conditions that would otherwise be conducive to fungal or bacterial growth. A similar effect is achieved in the soil when the encapsulated product is applied as a soil drench or via irrigation systems. After soaking into the soil, the free terpenes loosely adhering to the carrier particles kill nematodes and disease-causing microbes. As the soil dries out, activity slows or stops. However, when the soil becomes wet again due to rainfall or irrigation, activity restarts. As a result, the efficacy of the terpenes is maintained over an extended period and controls the re-emergence of disease or pests. This breakthrough also opened up opportunities in non-agricultural fields, such as medicine and dentistry, where the antimicrobial properties of terpenes can be effectively applied at controlled doses for wound healing and oral health applications. Working closely with major universities and commercial research organisations in the USA, Europe and parts of the Southern hemisphere, Eden is now concentrating on developing commercial products for agricultural use in the treatment of plant diseases in a wide variety of crops, as well as pest control issues. In addition to earlier research focusing on products to fight vineyard vascular infections (i.e. Pierce’s disease and eutypa), foliar products have been developed to control mildews and moulds, with scope for much wider use. Eden notes that it is making rapid progress towards developing an effective nematode-control product. More recent agricultural research has revealed the ability of the encapsulated products to control spider mites in glasshouses and to combat foliar and soil borne bacterial diseases. Eden looks to have reached an advanced stage in the development of a series of competitive antimicrobial and invertebrate-control agents suitable for use in vineyards and greenhouses and on a variety of high-value agricultural/horticultural field crops. Additionally the company notes that significant potential exists for finding further applications for terpene formulations in both the agricultural and healthcare sectors. The option and licence agreement with TEVA Animal Health has broadened the revenue generative potential of the encapsulation technologies. At the end of 2010, SBM Development SA, based in Lyon, signed two agreements with Eden which granted SBM the rights to use Eden's terpene encapsulation system. SBM are co-encapsulating two of their important crop protection molecules with blends of synergistic terpenes to create




new products that will exhibit a wider spectrum of activity and be less prone to resistance development. Product registration In April 2010, the UK regulatory body, the Chemicals Regulation Directorate (CRD), submitted the Draft Assessment Report ("DAR") for 3AEY to the European Food Safety Authority (EFSA). EFSA is currently reviewing the DAR. After this process has completed, Eden is hopeful that EFSA will then recommend inclusion of the three active substances used in 3AEY to the EU Commission who will then vote for its inclusion onto the list of approved active substances.




Share price: 32p


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40 TYR TYRATECH (REGS) COM SHS USD0.001 (REGS)

12m High: 40p

12m Low: 19.4p

Market Cap: £16.6m


Key Financial Data:


Revenues: $2.06m (£2.59m)

EBIT: -£6.09m (-£11.1m)

Net Debt: $

NAV/Share: N.A.

Gearing: N.A.

EPIC Code: TYR

Sector: Agricultural Chemical

Market: London AIM

Website: www.tyratech.com

Description: Formed in 2004 to develop & commercialise products to control invertebrate pests & pathogens. Products are positioned for human health, animal health & pesticide sectors with a global market opportunity of $32 bn. Technology targets specific chemo-receptors in invertebrates using natural botanical compounds – safe for other animals.

Major Shareholders:

Sustainable Asset Mgmt 13.02%

Vanderbilt University 9.93%

Standard Life Investments 9.58%

Fiske Noms 8.69%

Alan John Reade 8.14%

Ora Limited 7.44%

Legal & General Group 3.83%

TyraTech ‘Novel Safe Technologies For Control of Invertebrate Pests’ TyraTech, Inc. was established in 2004 to utilize its novel technology to fill global demand for effective, safe, and natural pesticide technologies for human and animal health. Its products incorporate a blend of potent natural active ingredients. These address consumer, commercial, professional pest control, agriculture, human & animal health, vector control and livestock markets. TyraTech, Inc. made its Initial Public Offering in June 2007 on the AIM section of the London Stock Exchange. TyraTech’s screening platform facilitates the development of products that are selective for invertebrates. The selected and cloned G protein coupled receptor targets are only found in invertebrates, thus making mammalian toxicity less likely. The platform is a high-throughput assay that can rapidly screen thousands of candidates to identify prototype active formulations. These mixtures are also pursued through the patent process, designed to give the Company intellectual property protection. The principal source of the natural materials that are used in TyraTech products are plant essential oils. These oils are naturally occurring chemicals which have evolved for plant defense against invertebrate attackers, and which can act as insecticides or repellents. Essential oils comprise the volatile compounds contained in the odorous parts of plants and are normally prepared by steam distillation. Examples of these oils include rosemary oil, citrus oil and thyme oil. They are contained in flowers, roots, bark, stems, leaves, fruits and seeds. These oils contain 15,000 to 20,000 active chemicals. Arbitrary screening of these individual compounds to find synergistic combinations for pesticide activity is impractical without a molecularly targeted high-throughput screening assay. TyraTech discovers and develops proprietary active ingredients for product formulations to address a wide variety of market segments, either in conjunction with development partners or by TyraTech itself. The company has products or partnerships established for professional and horticultural insect control, and for an insect/mosquito repellent. TyraTech also has a partnership with Kraft to use its natural oils in the development of functional foods to improve the health of the 2bn people subject to intestinal parasitic infections. The company claims its technologies can contribute to superior efficacy, improved margins, stronger patent protection and a significant reduction in resistance development by the targeted insects or parasites.




Company Profile TyraTech has product research & development facilities and laboratories in Melbourne, Florida and it supports a research laboratory at Vanderbilt University in Nashville, Tennessee. Safety and efficacy testing is carried out in-house and through independent testing companies. Development and testing of new products is conducted both in house with partners including: University of Florida [fruit & vegetable integrated pest management]; Ohio State University [Dust mites]; Snell Scientifics [Phytotoxicity and agricultural insect testing]

The management team is led by Alan Reade, the Executive Chairman. He was appointed in May, 2007. From 2000 to 2005, he served as executive chairman of Merial Limited, a leading animal health company and joint venture between Merck & Co. Inc. and Sanofi- Aventis. Earlier in his career he was head of global integration at Aventis, where he was in charge of merger integration, and Chief Executive Officer of Rhone-Poulenc Agro Inc. and member of the Global Management Board. He previously has been a director of Sygen International and IFAH, a global animal health association.

In October 2010 the company signed a seven-year agreement with Terminix International which included both an upfront payment and product milestones. Terminix is described as the largest professional pest control company in the world. The agreement allows Terminix to market, use and distribute certain TyraTech natural pest control products in the U.S., Canada and Mexico. The Agreement is encompasses the continued successful marketing of lead TyraTech products and support for the development of additional products for commercialisation in such key channels as the professional, commercial, institutional, and residential markets.

Following the initial exclusivity agreement signed with Terminix in November 2008, TyraTech has launched Terminix SafeShield for the residential market and Terminix Natural Pest Control and Terminix Natural Drain Fly Killer. These products are being sold and distributed into institutional, commercial, and government markets. Under this new Agreement, Terminix and TyraTech will work together to develop and market new and effective pest control products incorporating TyraTech's Nature's Technology™. The new products will be launched under the Terminix brand. The products will be based on insect control that is effective and safe for people and pets when used as directed. The products are intended to permit Terminix to provide differentiated services & products to the residential, commercial, and government sectors.




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World Agriculture Report 2011

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