Agriculture Fertilizers: The Over Application and Under Appreciated Opportunity
By: Stella Liu
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Gigaton Potential
Reducing fertilizer overuse on 370–750 million hectares of farmland by 2050 could avoid nitrous oxide emissions equal to 3–12 gigatons of carbon dioxide from 2020-2050.
For reference: In 2019, the world emitted 51 gigatons of CO2-equivalent greenhouse gases. Project Drawdown estimates we need to cumulatively eliminate 1,000 GT from 2020-2050 to keep global warming below 2 degrees Celsius.
You Might Be Interested If...
You care about the future of our food systems
You want to reduce the negative impacts of agriculture on our environment
You want to reduce the number of chemicals that go into our food
What You Should Know
Around half of all nitrogen applied to crops is lost, according to a global index study from Nature. Where does this go? An estimated 75 million tons of nitrogen runs off into the environment every year. When this happens, the fertilizer runoff leaches into our water system and destroys marine life. The most alarming example is the Gulf of Mexico where the Mississippi River drains massive amounts of nutrients into the ocean, triggering algae blooms that choke off oxygen in the water and make it impossible for marine life to survive. The “dead zone” is around the size of Delaware.
Unfortunately, this issue is not linked to a handful of countries. Most countries have excess nitrogen use, which is measured by the difference between nutrient inputs and the amount harvested in crop material.
Source of the map is here
This massive challenge represents a huge market opportunity. According to Global Market Insights, the fertilizer market size is projected to surpass $210B by 2027. The growing population and demand for food worldwide drive the fertilizer market at a CAGR of 2.4%. While the overall fertilizer market growth is slow, smaller segments such as precision agriculture (using digital technology to optimize inputs) and biofertilizers (fertilizer substitutes that use less nitrogen) are growing at double-digit CAGRs. The fertilizer shortage, price spikes, and supply chain issues are making farmers reevaluate how they manage their fertilizer inputs. 2 out of the 3 main minerals in fertilizers (nitrogen, potash, and phosphate) are mainly produced in Russia and Belarus, which is impacting the global supply of fertilizers.
Key Players
There are two main categories: biofertilizers and autonomous agronomy tools. Biofertilizers are living microbes that enhance plant nutrition by either mobilizing or increasing nutrient availability in soils. These biofertilizers promise to reduce or substitute the nitrogen fertilizer required without compromising yields. This category has sprouted a unicorn startup Pivot Bio that is valued at $1.7B.
Autonomous agronomy tools are deploying robotics and drones to help farmers apply just the right amount of fertilizer needed. Platform-based robotics like Future Acres promise to optimize fertilizer application, crop picking, and transport of crops. Rantizo is deploying swarms of drones to precisely apply fertilizer in hard-to-reach spots in large row crop farms.
More nascent solutions include using insects to create fertilizer such as Beta Hatch, waste-to-value startups like Anuvia that transform manure, food waste, and agriculture processing waste into fertilizer, and electricity-to-fertilizer startups like Nitricity.
*Robotics segment includes robots that can apply herbicide more precisely
Opportunities for Innovation
🌿 Challenges
Inconsistent performance with biofertilizers: microbial communities differ based on soil composition and microclimates, resulting in varied performance across regions. New tools to measure microbial activity coupled with precise application of biofertilizers can unlock this space. Listen more here.
Farmer ROI for robotics: Many of these autonomous solutions are expensive and farmers must see the ROI to adopt these technologies. As these startups scale up, economies of scale can help reduce hardware costs. Many are first establishing a foothold in specialty crops (ex. strawberries, oranges, etc) where the farmer's willingness to pay is higher.
Tradeoffs between precision and TAM (total addressable market): Robotics and drones need to be trained for a specific crop type to develop the precision required. However, startups need to have a roadmap for scaling their solutions across many crop types so their TAM isn’t reduced to one crop type.
Farmer trust: Farmers tend to overapply fertilizers because underapplying can result in lost yields. Startups need to work on building farmer trust that their solutions can reduce chemical inputs without sacrificing yields.
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Author Bio:
Stella Liu is an MBA candidate at Stanford with experience in ag-tech at Indigo Agriculture and vertical farming in Singapore. She is a tech product manager turned investor and is fascinated by whitespace opportunities in traditional industries such as agriculture, manufacturing, and insurance that can help decarbonize our world and adapt to changing weather patterns. For fun, she enjoys going on hikes, making art (pottery wheel throwing anyone?), and traveling to new places (Egypt and Jordan are next on the list).