Plant Impact offers growth opportunity

While global crop prices have fallen in the last year, the long-term upward trajectory for agricultural commodities is in little doubt. Both demand and prices are steadily rising, due to a combination of growing populations, increasing meat consumption and climate change. This global trend is pushing farmers to hunt for greater yields from their harvests. Plant Impact meets this need with its crop-enhancement products, which - unlike fertilisers or pesticides - modify and support a plant's responses to environmental stress.

The company launched its first products in 2007 but it wasn't until 2013 that its first soybean enhancement product, Veritas, began generating a viable revenue stream. The success of Veritas, which mobilises the calcium in the crop and improves bushel yields by 4-6 per cent, was underlined by a long-term agreement signed last month to supply German agribusiness company Bayer CropScience with a series of products. Bayer, which markets Veritas in Brazil through its market-leading fungicide Fox, has paid $3m to Plant Impact upfront and promised a further $6m for additional products focused on all stages in the lifecycle of the plant. Terms on commercial product sales are to be agreed at a later date.

The deal gives the small Aim-traded group access to the sales network of a company with €8.4bn (£6.1bn) in annual turnover. Bayer's leading fungicide product currently has a 25 per cent share of the Brazilian soy market and is growing. Added to that, the deal gives Bayer exclusive first rights to market Veritas in the US and Argentina, which along with Brazil make up the largest three soybean-producing nations.

"If all goes to plan, farmers won't have heard of us," explains chief executive John Brubaker. That may sound counter-intuitive - and given Plant Impact markets its tree fruit version of Veritas directly to European farmers, not universally true - but Brubaker's point is that by partnering with large agricultural companies with established supply chains, Plant should seamlessly tap into revenues. A gross margin of 71 per cent suggests profits will follow too, although the company is reinvesting everything in research and development for now, with similar products for wheat the next major focus. Product development is set to receive a major boost from a £6.2m fundraising at 41.5p coupled with the Bayer payments.