The Fertilizer and the BioTech Connection

What’s the link between fertilizer and BioTech?

Basically, the same nutrients that grow plants are

also needed to grow cells.

The Fertilizer Issue: Because there are a lot

more farms on the planet than fermentation

vessels, demand for fertilizer can greatly impact

the price and availability of biotech raw materials.

Approximately 90% of the phosphorous and

potassium, and 50-60% of nitrogen

(urea, ammonia, and nitrates), produced in the U.S. goes into the fertilizer market.

The Corn Connection: Further, corn crops consume about half of the global fertilizer supplies, and about half of the global corn is grown in the US Midwest. The primary markets for corn is animal feed and ethanol production (for blending with gasoline). This means as demand for meat products increase and/or gasoline prices increase, demand for corn increases and supplies to biotech decreases. What you need to remember: High price/demand for corn is bad for BioTech.

The Geekonomics: BioTech has less than 1% of the market for these nutrients... very little leverage over suppliers. Therefore small fluctuation in the gigantic fertilizer market can have serious availability issues for the BioTech supply chain.  To anticipate supply issues, monitor leading indicators such as stock prices and production rates for fertilizer companies; cost of corn and gas; natural disasters in the US Midwest; and animal feed demand.