Arisaig Partners

Bioceres: Addressing Food Security in a Changing Climate

The Russian invasion of Ukraine has caused severe disruption to global food and energy supply chains in 2022, compounding the challenges of COVID. This has sharpened the focus of governments across the world on the importance of reducing vulnerability to fluctuating food prices and minimising dependence on the generosity of export partners.

Before this most recent period, climate change and the need for greater food security had already rendered it crucial for governments in developing countries to improve agricultural productivity. Outside of China, most emerging markets are still growing their population, at the same time as getting richer on a per capita basis (and usually, therefore, acquiring larger appetites). The UN Food and Agriculture Organisation estimates that the world as a whole needs to produce 70% more food by 2050; in developing countries this number is 100%.[1] This has to take place as climate change makes growing seasons drier and less predictable, decreasing yields for staple crops across the globe.

Improving Productivity: Technology and Scale

Improving agricultural productivity can be brought about in numerous ways. Indeed, two of the most successful ‘emerging markets’ at having converged wealth and living standards with developed countries, South Korea and Taiwan, did so off the back of a rapid increase in agricultural productivity in the mid-20th century, enabling the diversion of labour and capital towards industrialisation. Larger scale farms, better machinery, better fertilisers and higher yielding rice variants were some of the key success factors here, often instigated by heavy state influence.[2]

We see some similar examples of this in earlier stage emerging markets today, albeit driven by the private sector. For example Kenya’s Twiga Foods, as well as the Digifarm division of telco giant Safaricom, enable cheaper access to farming inputs, as well as a more convenient route to market, for the estimated 4.5 million smallholder farmers in the country. Higher margins and more stable incomes should enable these farmers to both reinvest in their enterprise and be more resilient to economic shocks. In Brazil, the consolidation of the highly fragmented agricultural inputs supply and grain processing industries, by the likes of Tres Tentos and AgroGalaxy, should enable substantial savings at the smallholder level, again enabling them to reinvest in greater scale and efficiency.

From a more theoretical perspective, digital tools such as targeted weather forecasting and AI-assisted modelling could enable farmers to optimise planting and harvesting seasons, and prevent overuse of fertiliser, thus saving on input costs, reducing the environmental impact of excess use of chemicals, and maximising yields by limiting the variability caused by weather. Such tools are perhaps more likely to be pioneered in the developed world where large food producers have greater scope for experimentation.

Bioceres: Agritech in Action

Arguably the most important technological development in agriculture in the coming years, however, will be biological. Humans have for centuries manipulated edible plants in the direction of resilience, flavour and calories – evident, for example, in the ballooning of watermelons from wild, pulpy, 20cm varieties into near-seedless 60cm fruits[3].

Genetic modification is a step change beyond this well-established practice of selective breeding, and has been highly controversial, given its inability to shake off  ‘Frankenfood’ associations and concerns around biodiversity (i.e. the risk of genetically enhanced monoculture outcompeting wild plants). Campaigners also worry that a reliance on GMO seeds locks farmers into a dependent relationship with agri-tech majors. But, as per the WHO, all currently available GM foods have passed rigorous safety and biodiversity assessments. And further developments in GM technology could help create improved resistance against disease, better nutritional profiles, exclusion of allergens, and drought resistance[4]. Should farmers choose to grow such variants, therefore, there is the potential to create significant added value for all stakeholders.

The change in posture by the Chinese government towards GMOs, evident in policy announcements this year, suggests a growing awareness of the strategic value of agri-tech, particularly in import-dependent, water-stressed countries with relatively poor agricultural productivity by international standards. There is also evidence that consumer resistance to GMOs is beginning to fade, as awareness grows of the potential benefits of the technology and much greater threats to biodiversity (principally climate change and overuse of chemicals) continue unchecked.

The Argentinian company Bioceres, based in the agricultural belt in the North of the country, has developed GMO variants of soybeans and wheat which significantly improve yields in drought conditions. These are the world’s two most valuable staple crops, meaning that drought tolerance is both an invaluable revenue opportunity and hugely significant in terms of food security. The company has recently received full approval of its GMO soybeans from the Chinese government, opening up the world’s largest importer as a market for Argentinian farmers looking to adopt this ‘insurance policy’ against drought and enjoy more predictable yields.

Indeed while Bioceres continues with early-stage commercialisation of its drought tolerance technology, called ‘HB4’, the 2022 growing season has provided a timely reminder of its importance. Argentina has experienced severe drought conditions this year, with an estimated decline of 40% in total wheat yields – particularly poor timing for the global wheat markets given the reduced availability of supply from Ukraine. This season has provided a useful test case for HB4, which should help encourage greater adoption among farmers looking for greater ‘insurance’ against drought conditions in future. Through this growing period, an estimated 14% of HB4 wheat crop has been lost, an encouraging result in such extreme conditions.

Source: Bioceres

The HB4 technology functions through the insertion of a sunflower gene, which encourages the wheat and soy plants to continue growing even in the absence of rainfall. This sounds simple enough, but is in fact the result of several years of research, trial and error. Indeed, Bioceres’s research affiliate INDEAR has been developing HB4 for almost two decades, and it is estimated that any comparable drought-tolerant capability would take competitors at least six years to create. This provides the company with a revenue opportunity analogous to that of a successful pharmaceutical company with an unexpired patent.

Such innovation presents enormous opportunities for ‘win-win’ outcomes for investors and for global food security. Bioceres HB4 is, thus far, the best example of pioneering biotechnology in solving food security challenges we have encountered in emerging markets. We also welcome the fact that, beyond HB4, it boasts an impressive portfolio of biological alternatives to chemical inputs. These products provide steady cash flow to fund the ramp-up of HB4, and help soften the environmental impact of agriculture today, both through lower carbon emissions (e.g. Bioceres biopesticide products were found to reduce emissions by up to 87% compared to conventional pesticides[5]) and reduced local pollution (e.g. from fertiliser runoff[6]).

Away from the agricultural powerhouse of South America, there are a few other areas we have on our radar. China and India, for example, are likely sources of innovation in rice and corn seeds and planting techniques. Among these is a potential ‘holy grail’ for both food security and improved diversity – the development of a perennial variety of rice, currently underway in Yunnan.

And technological breakthroughs are not necessarily the only answer. In future, there may also be greater role in global food markets in future for naturally hardier alternatives to the staples most widely commercialised today. Fonio, for example, common in West Africa, is a fast-growing, nutritious grain, rapidly gaining in popularity in both its traditional origins and now in Europe. It tolerates dry, sandy soil. Such conditions are, unfortunately, likely to become more and more common globally as we burn our way beyond climate change tipping points.


[2] Moore 1984, Agriculture in Taiwan and South Korea: the minimalist State? Available at



[5] More information available at: (Marrone Bio is a subsidiary of Bioceres)



This material is being furnished for general informational and/or promotional purposes to professional investors only. The views expressed are those of Arisaig Partners and should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect opinion and should not be taken as statements of fact, nor should any reliance be placed on them when making investment decisions. This material does not constitute independent research and is not subject to the protections afforded to independent research.

The statements and views expressed herein are subject to change and may not express current views. Arisaig Partners makes no representation or warranty, express or implied, regarding the accuracy of the assumptions, future financial performance or events. Emerging markets are generally more sensitive to economic and political conditions than developed markets and may be more volatile and less liquid than other investments.

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