The market
The global pest control market reached $45 billion in 2010, up from $32.5 billion in 2001. Worldwide, the sector has grown at a rate exceeding inflation. If we broaden the scope of chemical use to include herbicides, fungicides, and disinfectants for agriculture, global sales will reach $270 billion. Two-thirds of pesticide consumption is concentrated in OECD member countries, while China is the largest consumer, accounting for over 20% of global demand for this product range. The US market, with $11 billion in sales, represents a quarter of global sales. The US industry employs over 110,000 people and comprises 21,500 companies. The world's largest pesticide producer is Bayer, with sales exceeding $8 billion according to the latest publicly available data, closely followed by Syngenta (Switzerland), each accounting for approximately 20% of global sales. BASF, Dow, Monsanto, and DuPont are major players in the pesticide market, where the top ten manufacturers account for over 85% of global sales. State-owned ChemChina acquired Israel's Makhteshim Agan Group, the world's largest manufacturer of generic pesticides, for $2.4 billion. Interestingly, Monsanto is also the world's largest seed producer, closely followed by DuPont (#2) and Syngenta (#3). Globally, approximately 9,000 insect species and 8,000 weed species affect the productivity of monoculture crops. Insect pests cause approximately 14% of annual crop losses, and weeds account for 13%. The world's leading seed and pest control companies are increasingly collaborating, generating revenue either from seeds engineered to resist pests or from the sale of chemicals to control the side effects of industrial agriculture. Monsanto and BASF are pursuing a $1.5 billion cooperation program, an agreement comparable to the close relationship between Monsanto and Dow. Monsanto and Syngenta have agreed to halt their legal battles and cross-license their intellectual property, while Syngenta and DuPont have opted to combine their pesticide portfolios. It is difficult not to imagine that a production cartel exists that has escaped regulatory scrutiny.
Innovation
The indiscriminate use of chemicals on crops has caused irreparable damage to ecosystems and wildlife in general, negatively impacting the lives of amphibians and birds, leading to the extinction or endangerment of several species. Pesticide use is also the root cause of many health problems, first exposed by Rachel Carson in her seminal book "Silent Spring," published in 1964, which led to the ban on DDT, the leading pesticide at the time. One of the first innovations was the introduction of pesticide-specific treatments, instead of a blanket approach. In the case of cotton, this innovation reduced the number of pesticide sprays from 20 to 40 times per year to just 4 to 5 times, thereby reducing labor costs and chemical dispersion. One of the most creative solutions for pest control is the use of protective netting, like that developed by Avi Klayman in Israel. This netting provides the right amount of sun and air to the tomatoes, while any pests that might pass through the barrier are immediately immobilized by a lightweight filter. Today, most fruit imported from Central and South America is netting or bagging with pesticide-impregnated material, rather than being sprayed. This offers fruit growers a rare opportunity to combine pesticide use in a highly controlled manner while successfully obtaining organic certification. The drawback is the cost. José Oscar Gutiérrez Montes was born in Cali, Colombia, and studied medicine at the Universidad del Valle in Cali. He later earned a master's degree in pharmacology from the same university, where he became a professor. He worked at Edinburgh General Hospital in 1985 while pursuing a postgraduate course in internal medicine at the University of Edinburgh (UK). Dr. Gutiérrez then worked for a year at Cornell University (New York, USA), where he received a postgraduate fellowship to study membrane function. When he read in 2007 about research published in the University of Nottingham's Biochemical and Biophysical Research Communications showing that vanilloids, a family of capsaicin molecules extracted from chili peppers, could bind to mitochondrial proteins in cancer cells and induce apoptosis, the cell's self-destruction, he decided to build upon these findings and compare his own experiments with his own. Dr. Gutiérrez remembers all too well the traditional use of chili peppers (Capsicum spp.) as a pain reliever due to their stimulation of blood circulation. He applied extracts as a skin treatment, reducing and, in some cases, eliminating skin scars, particularly after burns. Documenting the positive effects based on anecdotal evidence and scientific studies accumulated over the years, Dr. Gutiérrez decided to focus on potential applications, provided he could secure a sufficient supply. He knew that chili pepper cultivation is easy, requires little land, can be intercropped, and doesn't even require high-quality soil, all while creating jobs. Each hectare of planted chili peppers requires five workers, and with over 10,000 hectares of readily available land, he considered the potential to create more than 50,000 jobs. Once he realized that supply wasn't the issue, he faced a lack of financial resources to undertake the clinical trials necessary to access the high-value pharmaceutical market.
The first cash flow
Dr. Gutiérrez then founded Capsacorp SA in Cali and launched an integrated program to produce cosmetic products for the local market, based on local sourcing. He also encouraged farmers to increase their production so he could ensure the quality and cost of locally processed capsaicin. Capsaicin extract is a well-known raw material for products such as Tabasco sauce, pain relief patches, and a topical anesthetic for arthritis. Capsaicin is even used as an active ingredient in riot control and self-defense, more commonly known as pepper spray—though the actual product is capsaicin, not pepper. The success of this operation, from farm to intermediate product and cosmetics manufacturer, earned Capsacorp SA the 2009 award for "Colombian's Most Promising Exporter." Its success in the field of cosmetics has enabled the company to continue its growth and to finance a laboratory which has moved from cosmetics to a wide range of opportunities by drawing on Dr. Guterriéz's experience as a pharmacist, author (and co-author) of more than 100 published scientific articles.
The opportunity
At the second Blue Economy workshop in Cali in May 2012, several producers gathered to present their potential in each sector. The establishment of nine sugarcane ethanol production centers has recently created new economic activity within the sugarcane cluster, and while this has had a positive impact on the region, the sector consumes ten liters of water for every liter of ethanol produced. This contaminated water, with a high biological oxygen demand (BOD), is expensive to treat, which would compromise the competitiveness of production if international standards were imposed. While this wastewater is chemically safe and nutrient-rich, sugarcane farms need water for irrigation. Transporting the water by truck is a viable but costly option. Building local wastewater treatment facilities also requires too much capital. While the sugarcane industry in the Valle del Cauca department is the most productive in the world, with two harvests per year and the need to replant this perennial sugar crop only once every eleven years, the pursuit of higher productivity levels requires better integrated resource management, particularly of water. Hot peppers have traditionally been used to control pests. While most birds (with the exception of pigeons) are unaffected by capsaicin, insects appear to suffer from the presence of this biochemical. Trials have now indicated that mixing capsaicin into wastewater from ethanol production and applying it to sugarcane fields offers multiple benefits: the soil is enriched with organic matter, irrigated with treated water, and a concentration of 0.03% provides pest control, from rats to insects. Transforming a wastewater problem into a multi-benefit product that can be used locally is a prime example of the Blue Economy. Given the vast volumes of water available and the proximity of ethanol plants, the creation of a local network of chili pepper growers and the local extraction of capsaicin can now be envisioned, with bulk use for medium-sized production and high-end use for premium quality. Considering that the cost of fertilizers and pesticides adds to the labor costs of the most expensive inputs, this would make the sugarcane sector more competitive by utilizing locally available water and plants while creating a significant number of jobs. The opportunity to integrate industries, all based on easy and abundant agriculture harnessing the power of the tropics, could benefit from this bulk purchase of chili peppers, which makes the fertilizer and pest control market a driver of development while eliminating the need for imports. Suppliers in the sugarcane sector could purchase most of the product to produce insecticides and nutrient-enriched fungi to combat insects and fungi. As the quality of the extraction improves, the production can be selectively processed into capsaicin derivatives, offering lower investment risk and higher income potential for farmers. Dr. Gutiérrez has already expanded his research beyond a line of cosmetic products for which he received the Peruvian surgeons' award for "Best (Innovative) Research in Plastic Surgery." Although he has never considered beauty his priority, he has been able to demonstrate his success in the market, paving the way for a cash flow that will allow him to deploy his knowledge and expertise in his preferred medical fields, such as pain relief, dental care, obesity management, gastrointestinal care, post-operative treatments, and hemorrhoid management. Mr. Gutiérrez believes that the time has come to ensure that this knowledge does not remain the domain of one of them, but that it should be part of a development platform for entrepreneurs who could make his native region in Colombia a prosperous region, building on what it has: abundance.
