A third of the world’s agricultural soil is degraded by drought, high salinity and the increasing effects of climate change. Without bold innovation, we will soon run out of healthy arable soil sufficient to feed the planet.
Puna Bio repairs and restores soil health using their proprietary extremophiles – organisms 3.5 billion years old, sourced from La Puna, Argentina, the highest and driest desert on Earth. These organisms grow where others can’t – and they sustain plant life, despite getting 1/5th the rainfall of Death Valley. When an athlete trains at altitude, she is even stronger at sea level. So it is with Puna’s extremophiles. They work wonders on degraded, acidic, UV-irradiated and salinated soil. In fertile soil, they boost yields 4x more than competitors, with far more consistent results.
Puna Bio is already at industrial scale, having treated +600 tonnes of seeds this season, and conducted over 20,000 acres of field trials. While they can easily secure high margins using a basic business model of directly supplying seed treatment to farmers, other innovative market value extraction models are available to them because of how their extremophile formulations are able to increase land value. The market value of farmland is driven by yield. For example, increasing soy yield by 10 bushels an acre can double the value of the farmland. Now, that’s a company that is matching their unique and defensible tech magic with an innovative disruptive business model.
I interrupted Franco Martinez Levis, CEO of Puna Bio, as he was packing freshly formulated, ready-for-sale bottles of his company’s Extremia™ seed treatment to be shipped out to his very first US customer. He graciously tolerated my interruption to answer a few questions:
Soil and seed treatments promising amazing yield improvements aren’t new. What’s really cool and unique about Puna Bio’s seed treatment products?
Yeah, you’re right. The Big Ag companies like Bayer, Corteva, and Syngenta use the same types of strains for specific crops. For example, for soybeans they tend to use Bradyrhizobium strains and Azospirillum for wheat. We do not use these typical strains at all. We use our unique extremophile strains that we isolated from the highest and driest desert on earth, which we can now produce at increasing scale. With climate change and erosion, most soils and ecosystems worldwide are subject to serious stresses such as high salinity, drought, and UV irradiation. The currently available seed treatments simply die and do not work as advertised under such conditions. Whereas, our strains consistently increase yields up to 25% even under these high stress conditions and they work better than comparable options in regular conditions.
Ag markets are dominated by a few big companies and margins are tight. Can innovative companies like yours achieve decent margins and extract a fair proportion of your added value?
Since we currently only sell liquid soil treatment direct to farmers in LATAM, we can be fairly independent of Big Ag’s lock on distribution, for the time being. Even our current unoptimized startup margins are north of 80% and this will improve as we scale. We just had our first customer re-order for a second season and they easily accepted our revised premium pricing. Once farmers go through a single season of experiencing the magic of our extremophiles in increased yields, we won’t have to worry about margins. We will need to worry about scaling production dramatically to satisfy a practically insatiable demand in every country.
What milestones did you accomplish during the IndieBio program?
Last season, before IndieBio, we did as few field trials on less than a thousand acres across Argentina. While at IndieBio, we scaled to over 20,000 acres of product coverage in the last few months. It was an amazing rush to get this done and we are on our way to the next step in scale. In terms of science, we continue to decipher most interesting functions that our extremophiles perform on seeds and soils. We are still scratching the surface, but our scientists, who are world experts on these organisms, just uncovered a specific mechanism by which our organisms can reduce the need for nitrogen-fixing fertilizers by about 30%. Last but not least, we enjoyed our first revenue-generating partnership with a US customer last week. That was a great feeling!
What’s next for you?
We are expanding our product line beyond soybeans to both wheat and corn. In parallel, we are also piloting with customers in other LatAm countries like Brazil and expanding our presence in the US. We will confirm and validate both yield improvements as well as the ability to decrease the use of nitrogen fertilizers, which will in turn reduce carbon emissions (1/3rd of total agricultural emissions come from nitrogen fertilizers) and shore up the large economic impact of our products on farmland yield and costs. With support from visionary investors, we want to seriously start exploring disruptive business models such as land value arbitraging to further capture the value of our innovations.
Hear how they outcompeted their peers for the most progress in one week in our Killer of the Week podcast: #1216 – A customer doubles down.