The Agriculture Improvement Act of 2018, better known as the 2018 Farm Bill, holds numerous potential advantages for Marrone Bio Innovations (NASDAQ: MBII) (MBI). The bill’s provisions that could impact biological pest management companies and plant health companies such as MBI are as follows:
DEFINING BIOSTIMULANTS. Biostimulants are playing an increasingly important role with farmers to make their crops more productive thereby increasing farm profitability. This new Farm Bill will support the development of new sustainable technologies for U.S. agriculture and its farmers that currently lack a clear or harmonized path to market. MBI has one biostimulant product on the market, Haven, and expects to develop others over time.
The Farm Bill requires the Secretary of Agriculture, in consultation with the USEPA, state regulatory agencies and industry stakeholders, to submit a report to the President and Congress “that identifies any potential regulatory, non-regulatory, and legislative recommendations, including the appropriateness of any definitions for plant biostimulant, to ensure the efficient and appropriate review, approval, uniform national labeling, and availability of plant biostimulant products to agricultural producers.” The report is due within one year of the date of enactment of the legislation.
This Farm Bill provision also recommends that “the Secretary shall consider ‘plant biostimulant’ to be a substance or micro-organism that, when applied to seeds, plants, or the rhizosphere, stimulates natural processes to enhance or benefit nutrient uptake, nutrient efficiency, tolerance to abiotic stress, or crop quality and yield.” This language is the first legal definition of biostimulants in the United States, and it officially recognizes biostimulants as a new category of crop inputs that are separate and distinct from fertilizers or pesticides. The proposed definition also closely adheres to a biostimulant definition under consideration in the European Union, which supports a major industry goal of maintaining international harmonization within the biostimulant sector.
The Farm Bill language is the result of several years of discussions and consultations between industry and government agencies, and it advances the industry goals of: (1) establishing a uniform, national definition for biostimulants, (2) eliminating the patchwork of state regulations that have complicated commercialization of biostimulants and establishing a nationally harmonized path to market for the products, (3) allowing companies to make biostimulant mode of action claims that are backed with supporting data on product labels and (4) creating a single, standardized product label format that is recognized across all 50 states and territories of the United States.
The report, consultative process and the proposed biostimulant definition were strongly supported by the biostimulant industry, with significant leadership provided by both the Biological Products Industry Alliance (BPIA) and The Biostimulant Coalition (BSC). MBI is an active member of both industry associations, as well as the American Seed Trade Association, and we also played a leadership role in shepherding these provisions through the legislative process. MBI will be actively involved in the USDA-led consultative process tasked with completing the report to the President and Congress.
RECATEGORIZING HEMP. In 2017, more than 25,000 acres of hemp were grown in 19 states, a 163% increase over 2016, according to the Organic and Non-GMO Report. One cannabis industry analysis company, The Brightfield Group, estimates that the CBD market alone will exceed $20 billion by 2022, well above the current $820 million market valuation (Ag Marketing Resource Center). New Farm Bill provisions effectively deregulating hemp production in the United States could further bolster these estimates. MBI products, Regalia CG, Grandevo CG and Venerate CG, have a well-established and growing customer base within the cannabis growing industry, and the hemp provisions in the Farm Bill will augment market growth opportunities for MBI.
For MBI, the legal hemp cultivation provision of the Farm Bill opens up a significant, new crop market to sell our biopesticides and biostimulants. The Farm Bill allows legal hemp cultivation across the country, but the cultivated crop must have a level of psychoactive THC no higher than 0.3 percent on a dry weight basis. The law, which allocates billions of dollars in subsidies to American farmers, now allows hemp growers to apply for USDA programs available to other growers, such as federal crop insurance and disaster assistance. By removing hemp and hemp products from the U.S. Drug Enforcement Agency listing as a Schedule 1 drug, the Farm Bill now permits CBD product makers and sellers to sell product across state lines and to receive financial services from national banks and credit card processing companies, allowing for greater investment and growth within an industry. Without the burden of continued DEA listing, the hemp industry anticipates significant growth in the near future. MBI will work with the EPA to add specific hemp use recommendations on its product labels so as to allow sales on this high value crop, which is experiencing exponential growth in planted acres.
RESEARCH FUNDING. The Farm Bill contains continued funding of $185 million for the Foundation for Food and Agricultural Research (FFAR). FFAR, created in the 2014 Farm Bill, builds unique partnerships to support innovative science addressing today’s food and agriculture challenges. Since then, FFAR has partnered with industry, nonprofit and academic institutions to fund research that benefits agricultural producers and consumers. Every dollar of FFAR’s funding has been matched by non-federal funds. FFAR has funded a number of cutting-edge pest management and sustainable agriculture projects. MBI is working with large growers with difficult invasive pest problems to tap into FFAR funding. MBI’s CEO, Pam Marrone, serves on the Board of FFAR.
About Marrone Bio Innovations
Marrone Bio Innovations Inc. (NASDAQ: MBII) strives to lead the movement to more a sustainable world through the discovery, development and sale of innovative biological products for crop protection, plant health and waterway systems treatment that support a better tomorrow for farmers, turf managers and consumers around the globe. MBI has screened over 18,000 microorganisms and 350 plant extracts, leveraging its in-depth knowledge of plant and soil microbiomes enhanced by advanced molecular technologies to rapidly develop seven effective and environmentally responsible pest management products to help customers operate more sustainably while uniquely improving plant health and increasing crop yields. Supported by a robust portfolio of over 400 issued and pending patents around its superior natural product chemistry, MBI’s currently available commercial products are Regalia®, Stargus®, Grandevo®, Venerate®, Majestene®, Haven®, Amplitude™, Zelto® and Zequanox®.
Learn more about Marrone Bio Innovations at: marronebio.com
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Marrone Bio Innovations Forward Looking Statements
This alert may contain forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this alert regarding strategy, future operations and plans, including assumptions underlying such statements, are forward-looking statements, and should not be relied upon as representing MBI’s views as of any subsequent date. Examples of such statements include the potential of the Farm Bill provisions to benefit MBI and to drive MBI’s sales. Such forward-looking statements are based on information available to the Company as of the date of this release and involve a number of risks and uncertainties, some beyond the Company’s control, that could cause actual results to differ materially from those anticipated by these forward-looking statements, including weather, regulatory and other factors affecting demand for the MBI’s products, any difficulty in marketing MBI’s products in its target markets, competition in the market for pest management products, lack of understanding of bio-based pest management products by customers and growers. Additional information that could lead to material changes in MBI’s performance is contained in its filings with the SEC. MBI is under no obligation to, and expressly disclaims any responsibility to, update or alter forward-looking statements contained in this alert, whether as a result of current information, future events or otherwise.
Marrone Bio Innovations Contacts:
Pam Marrone, PhD, CEO/Founder
Keith Pitts, Sr. VP of Regulatory and Government Affairs and Chief Sustainability Officer
MBI Investor Relations:
MZ Group – MZ North America