Agricultural Biologicals Market - Global Outlook & Forecast 2023-2028

MARKET OVERVIEW

The global agricultural biologicals market was valued at USD 9.50 billion in 2022 and is expected to reach USD 16.16 billion by 2028, growing at a CAGR of 9.27%. One of the key drivers for market growth is the increasing demand for organically cultivated food products. Furthermore, the need for eco-friendly alternatives is on the rise as several multimillion-dollar companies work on developing high-performance agricultural products like fertilizers and pesticides. Decades of extensive use of synthetic products for high crop yields have significantly impacted underground water reserves and soil fertility worldwide. As a result, the adoption of sustainable farming practices and organic products has increased substantially.

Agricultural biologicals are derived from natural materials and play a vital role in crop protection and production. They help safeguard plants against pests and are becoming increasingly important in modern farming practices. Many agricultural communities worldwide have adopted these products to establish sustainable farming methods. Further, the United States is one of the largest global agricultural biological market consumers. The demand in the country is fueled by the growing need for environmentally friendly and safer crop protection technologies. The U.S. regulatory agencies have been actively involved in product approvals and changing regulations to enhance market penetration. Additionally, the increasing number of mergers, acquisitions, research partnerships, and new product development initiatives are expected to drive agricultural biological market growth in the country.

Industry participants focus on strategies such as investing in research and development and targeting emerging economies for future growth opportunities. While the agricultural biologicals market is still in its early stages of development, merger, and acquisition activities are moderate. Companies aim to improve their product portfolios or expand into new geographic regions through acquisitions. The growing number of product approvals and investments in bio-ingredients indicate an impending intense market competition.

Biopesticides are also gaining popularity due to their lower environmental risks than chemical pesticides. The US Environmental Protection Agency (USEPA) generally requires less stringent data for registering biopesticides than chemical pesticides. This results in quicker registration of biopesticides, typically within a year, compared to over three years for chemical pesticides. In the European Union, biopesticides are regulated similarly to chemical pesticides, with the Organization for Economic Co-operation and Development (OECD) assisting in assessing the risks to humans and the environment.

Developing countries like India have simplified biopesticide registration requirements to encourage their use and boost the regional agricultural biologicals market. The National Farmer Policy in India strongly advocates for the widespread adoption of biopesticides throughout the country, presenting significant opportunities for global biopesticide development. In the United States, the registration process for bio-fertilizers is managed at the state level, with these products being categorized as soil amendments due to their organic composition. Similarly, the Canadian Food Inspection Agency (CFIA) has well-established procedures for registering bio-fertilizers in Canada. These practices provide a secure operating environment for bio-fertilizer companies and attract new investors to the industry, thereby fostering the growth of the agricultural biological market.

MARKET TRENDS & OPPORTUNITIES

Emerging Organic Farming
The demand for organic farming is being propelled by its environmental advantages. Organic farming practices help reduce soil and groundwater contamination by eliminating chemical fertilizers and pesticides. Moreover, organic farming requires fewer non-renewable resources compared to conventional methods. It also promotes the preservation of biodiversity in the soil. According to a report by Columbia Climate School in February 2020, organic farming fosters 30% more biodiversity, consumes 45% less energy, and emits 40% less carbon than conventional farming.

Additionally, organic products contribute to the well-being of organic farmers, their families, and consumers by reducing exposure to harmful chemicals. The increasing awareness of the environmental benefits of organic farming and the health advantages of organic products has resulted in a growing demand for organic food. As a result, the organic agriculture market is experiencing significant expansion.

Expanding Sustainable Agriculture
The agricultural sector holds immense importance in the global economy as it employs a significant portion of the global workforce of numerous countries. However, conventional farming practices, characterized by intensive use of synthetic fertilizers and pesticides, monoculture, and large-scale industrial farming, have had adverse effects on the environment, public health, and food security on a global scale. Sustainable agriculture has emerged as a viable solution to counter these problems. It offers a path towards a more resilient, equitable, and environmentally sustainable food system that benefits all stakeholders. Sustainable agriculture has become increasingly crucial in the present times. Climate change has led to variable weather patterns, increased soil degradation, and declining groundwater levels, posing significant challenges for farmers in meeting the growing food demands of a growing population.

The effectiveness of sustainable agriculture hinges on the quality and accessibility of natural resources, including soil and water. It is crucial to encourage the preservation and sustainable utilization of these invaluable resources through tailored approaches suitable for specific regions to support the expansion of agricultural production. Sustainable agricultural systems are financially feasible and address society's safe and nutritious food requirements. Additionally, these systems contribute to the preservation or improvement of environmental resources, ensuring the long-term quality of the environment for future generations.

SEGMENTATION INSIGHTS

INSIGHTS BY PRODUCT
The biopesticides product dominated the global agricultural biologicals market in 2022, holding a significant share of over 50% owing to the increasing utilization of biopesticides in soil, foliage, and turfs, particularly in North American and European countries and has contributed to its substantial market share. Key biopesticide products include insect sex pheromones and scented plants, which attract and trap pests. Microbial pesticides, on the other hand, contain active ingredients that effectively control various pest types. Among these, microbial pesticides containing Bacillus thuringiensis strains are widely adopted due to their ability to produce a protein mix that eliminates pests.

Bio-fertilizers are expected to gain significance primarily in North American countries, followed by countries in the Asia Pacific region and Europe. There are two major types of bio-fertilizers products: phosphate solubilizing and nitrogen-fixing bio-fertilizers. Bacteria such as Azotobacter, Rhizobium, and Azospirillum are extensively employed for nitrogen fixation in seed and soil treatment applications. Nitrogen-fixing rhizobium forms an endosymbiotic association with the roots of legumes, making it a valuable bio-fertilizers in the cultivation of leguminous crops. The aerobic nature of Azotobacter and ability to thrive in alkaline soil have broadened its application scope in the cultivation of crops like maize, wheat, cotton, mustard, and potato.

INSIGHTS BY APPLICATION
The global agricultural biologicals market by the application can be segmented as foliar spray, seed treatment, soil treatment, and post-harvest. In 2022, the foliar spray method dominated the market, primarily due to the significant demand for biologicals in enhancing seed properties to improve crop yield. The excessive use of synthetic fertilizers and other chemical crop care products like pesticides and insecticides in recent years has led to significant degradation of soil quality in major agricultural economies. However, governments have started implementing regulations in the agricultural sector to address the environmental hazards caused by the excessive use of chemical products in farming. This regulatory approach is expected to grow bio-fertilizer in various seed and soil applications worldwide. Chinese and Indian governments have introduced initiatives to promote eco-friendly products for seed treatment at the domestic level.

Among the various microbes, strains of Metschnikowia pulcherrima are widely employed as biocontrol agents for post-harvest applications in the agricultural biologicals market. The use of agricultural biologicals in the post-harvest phase is gaining momentum due to numerous crop losses and spoilage witnessed in the past decade. Such factors are projected to increase the demand for these products in the coming years.

INSIGHTS BY CROP TYPE
The cereals & grains crop type segment held the largest global agricultural biologicals market in 2022. The larger share can be attributed to the increasing global demand for crops such as wheat, rice, corn, barley, and millet. Advancements in microbiology have played a crucial role in determining the appropriate composition of agricultural biologicals for wheat cultivation, leading to a high demand for biologics and driving the growth of this segment. Cultivating cereals & grains requires a significant quantity of various agricultural biologicals, particularly bio-fertilizers, for promoting healthy growth. Studies conducted worldwide have shown that the injection of Azotobacter bacteria in cereal & grain crops reduces the nitrogen requirement of the plants and facilitates their development. Additionally, for optimal wheat growth, using phosphate solubilizing bacteria and Azotobacter inoculation has proven to be highly effective bio-fertilizers in terms of crop yield.

Moreover, in several developing agricultural economies such as Japan, Thailand, India, Indonesia, and various Latin American countries, there is a high demand for technologies related to bio-based product development. This demand is primarily driven by the need to boost the growth of pulses and oilseeds in these regions to meet the rapidly growing demand for these crops.

GEOGRAPHICAL ANALYSIS

North America emerged as the global agricultural biologicals market leader, capturing a significant share of approximately 39% in 2022. The regional growth can be attributed to the strong presence of global agricultural product manufacturers, with most producers concentrated in the United States. Additionally, the region's agricultural practices have constantly evolved, incorporating advanced farming techniques, technological advancements, continuous research and development, and government regulations promoting sustainable farming methods. States such as North Dakota, California, Montana, Wisconsin, and New York have emerged as key players in organic cultivation within the United States. The agricultural biologicals market has witnessed significant growth in the country as agricultural communities recognize the detrimental effects of aggressive chemical-based fertilizers and other inputs on underground water reserves and soil quality over the years.

Europe is one of the prominent regions in the global agricultural biologicals market. Approximately 7% of the region's agricultural land is dedicated to organic farming, with the area of organic farmlands twice that of conventional farmlands. Over the past decade, Europe has witnessed a 70% increase in organic farmlands, with more than 250,000 farms engaged in organic cultivation. Further, Germany, France, Italy, and the United Kingdom are Europe's largest retail markets for organic produce.

The Asia Pacific region is projected to exhibit the fastest growth rate in the global agricultural biologicals market during the forecast period. This growth is attributed to its status as a hub for numerous agricultural economies, such as India, Thailand, Japan, Malaysia, South Korea, and the Philippines, which follow more sustainable agricultural practices. The region's growth is further fueled by increasing consumer preference for organic food, supported by regulatory initiatives and agricultural reforms implemented by various governments.

COMPETITIVE LANDSCAPE

Prominent manufacturers in the global agricultural biologicals market consistently prioritize new product innovations, forging partnerships, engaging in mergers and acquisitions, and fostering collaborations to target a wide customer base while optimizing distribution costs effectively. Companies like Bayer CropScience and BASF SE are integrating their operations throughout the value chain to maintain their market standing. Meanwhile, new agricultural biological market entrants emphasize establishing long-term contracts with local and regional farming communities to expand their industry presence.

Leading global agricultural biologicals market players include Novozymes A/S, BASF, Bayer CropScience LLC, Lallemand, Inc., CBF China Bio-fertilizers AG, and Others. The industry exhibits a fragmented nature due to the presence of both local and international players, leading to intense competition among key industry participants. Market concentration tends to be higher in American countries. Vendors compete based on their offerings and pricing strategies. To drive growth, vendors are adopting new business models and focusing on expanding their portfolio of offerings.