Conventional breeding can’t keep pace with a changing climate

Climate volatility is accelerating faster than crops can adapt, and the traditional tools we've relied on - conventional breeding programs that take a decade to deliver new varieties - simply can't keep pace.

The numbers tell the story of how this slow-motion crisis is unfolding. Droughts are lasting longer in Australia. Annual average broadacre farm profits are 23% lower than previous decades. And a recent global review predicted increasing pest damage at 2°C warming that could lead to yield losses of 46%, 31% and 19% for wheat, maize and rice, respectively. 

On top of these climate impacts, input costs are rising, regulations are tightening, and labor is nearly impossible to secure. Farmers are being forced to rethink the agronomics and economics of what they grow and where. 

As the gap between the crops we need and what traditional methods can achieve rapidly widens, we’ve been asking what opportunities will arise.

Building resilience in crop production systems

At Tenacious Ventures, we’re seeing opportunities for improving the resilience of crop production systems fall into four different categories: practices, genetics, financial mechanisms, and gene expression.

Practice changes helping farmers adapt faster than their crops

Growers can change practices like sowing time and depth with or without the support of new technologies to support decision making and address factors such as spatial variability in soil profiles. Other practices may be enhanced by technology adoption such as monitoring crop health and detecting and responding to pests and diseases using on-farm sensors and digital tools. 

Another variation on practice change is the use of new inputs to enhance plant resistance to abiotic and biotic stress. These products can take the form of synthetic chemicals, biomolecules, or microbes that are applied to the seed, the soil, or the plant. This category is huge and rapidly evolving. We’ve recently seen everything from a peptide-based foliar spray designed to trigger the plant’s immune response and increase disease resistance, to a liquid soil amendment that uses microbes to enhance water holding capacity in the rootzone and improve growth in dry conditions. 

In many of these cases, the choice of inputs and the timing and mechanism of application are crucial to overall success and this may vary with crop type, season, and geography. 

For investors, this means building a clear understanding of how easily and rapidly these new technologies can be adopted (and with how much capital), how widely applicable the solutions are, and the overall impact on market size.

Financial mechanisms to mitigate climate risk

Novel financial mechanisms such as new insurance products can support overall farm economic resilience despite the impact of pests, diseases, or weather on crop performance. This requires minimal practice change from growers, although it may require a mindset shift. 

Examples we’ve seen recently include offering a weather derivatives pool that empowers individuals and companies to hedge their climatic risks (e.g. the impact of extreme heat on crops); and solutions for hedging yield and transition risk.

When considering investment opportunities in this space, we’re interested in how solutions like this not only create but also capture value. Growers may benefit from new crop insurance products, but it’s likely that startups will actually be partnering with large insurers as customers. So how can they develop a competitive advantage that means they can ask for a premium or higher percentage of margin from these partners?

Changing how genes behave without touching DNA

Growers may also soon have access to plant seeds whose gene expression has been altered for improved resilience prior to arriving on farm. One example of this is using UV light to switch on plant signalling pathways that lead to increased root growth and better early establishment of the crop and yield resilience. Other companies are using electricity to change gene regulation and enhance seed germination and crop uniformity.

To develop a hypothesis on these types of investments, we’ve been thinking about the specifics of the market(s) and how seed treatments fit into current workflows and add value (and possibly redistribute margin) for seed companies and growers.

Rewriting the genetic code itself

Finally, we can alter the underlying genetics of the plant by making changes at the level of genes and their regulatory sequences (i.e., DNA). While this work has traditionally been done by established seed companies, it is becoming an increasingly active space for startups, including companies spinning out significant IP from research institutions. Examples include companies that have raised significant capital to commercialize platform genome editing technology, as well as earlier stage companies that are focused on specific gene regulatory mechanisms or traits like thermotolerance.

Taken to the extreme, changing the genetics of crop production systems could also mean the introduction or wider adoption of new or previously niche crop species, but this is likely to require specialist agronomic knowledge and/or equipment. In contrast, some companies are using AI and sophisticated modelling approaches to predict the performance of genotypes in the field and identify the varieties that are best suited to a particular location.

Why genetics deserves special attention

Each of these approaches offers value, and the most resilient farming systems will likely combine multiple strategies. However, while financial mechanisms, practice changes, new inputs, and seed treatments can help farmers adapt to conditions in the present, ongoing plant genetic improvement is the base on which current and future crop production systems will be built. 

A big reason for this is that genetics makes sense from an adoption perspective: growers are used to buying seed each season and customer relationships and distribution chains are already established. We believe genetics is also interesting from an investment perspective. The markets are large and recent advances in technology have the potential to deliver truly novel solutions.

What’s the difference between genetic modification and genome editing?

While genetically modified organisms (GMOs) and genome edited crops are both produced through biotechnological approaches, the genetic material of GMOs has been altered by inserting a piece of foreign DNA. Genome editing, instead, involves making changes without the integration of foreign DNA. In many cases, a genome-edited crop is indistinguishable from a crop that could have developed through natural mutations and is not regulated in the same way as GMOs in many jurisdictions.

Despite some consumer concerns about GMOs, an analysis of peer-reviewed studies from the last ten years found extensive empirical evidence that GM crops are safe for human health and the environment. The technology is generally considered mature and has substantial potential for addressing food security and environmental challenges through creating resilient and nutritious crops.

Genome editing represents a new and significant advancement in crop breeding technologies and has the potential for even greater impact and commercial returns. Promisingly, crops developed using genome editing rather than genetic modification also tend to have greater levels of public acceptance, especially for health or environmental applications.

The $100M barrier

As a general rule, creating and deregulating a GMO crop requires over $100M and 7-10 years of work - a timeline and financial requirement that has kept this field firmly in the hands of a few well-capitalized seed giants like Bayer, Corteva, and Syngenta. While herbicide tolerance and insect resistance traits have seen widespread adoption, especially in corn and soy, the variety of traits and crops available to growers remains limited.

But that's changing. Advances in machine learning and artificial intelligence, increasing availability of high quality genotypic and phenotypic datasets, new genome editing technologies, and evolving regulations are opening up crop genetics to a new wave of innovation. Startups can now credibly compete in the novel crop development process without the financial and physical resources that have historically defined the industry.

Which brings us to the focus of the remainder of this three-part series: the new technologies and business models in next generation crop breeding. Interestingly, this is an area that requires little to no practice change from growers while offering potential for significant gains in resilience, yield, and consumer experience. It's also where we're seeing the most dramatic shift in what's possible and who can participate.

In the next article, we explore how dozens of companies are pioneering novel approaches to break through the $100M barrier and why the playing field for crop genetics is more open now than it's been in decades.

Read the full series:

• Introduction: Breaking Barriers in Crop Innovation
• Article 2: The New Playbook for Crop Genetics
• Article 3: Conditions for Success in Crop Innovation

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