It is only the first stage but it is highly significant that Brazil has now accepted the studies of the efficacy of the Plant Health Care (LON:PHC) PREtec product PHC68949 for use in soybean cultivation.
Earlier than expected the Brazilian Ministry of Agriculture, Livestock and Food Supply (MAPA) the approval is ahead of evaluation by the Brazilian Health Regulatory Agency (ANVISA) and The Brazilian Institute of Environment and Renewable Natural Resources (IBAMA).
The group’s PHC68949 product is for use as a seed treatment for the control of root-lesion nematode (Pratylenchus brachyurus) in soybean.
Field studies have already shown that PHC68949 may provide control of harmful nematodes comparable to the traditional chemical nematicides and superior to current biological products.
For Plant Health Care Brazil represents a very substantial market.
PHC68949 is a novel technology that amplifies a plant’s natural defence against damaging nematodes, increasing plant health and yield in a variety of crops.
Nematodes are microscopic parasitic worms living in the soil where they feed on plant roots, killing plants and reducing crop yields.
Globally, nematodes have been estimated to cause up to 12.3% of annual crop loss, worth approximately $157bn per year.
For 2022/23, the soybean harvested area in Brazil is forecast to be 42.9m hectares.
It has been reported that the use of nematicides in Brazil has increased 10-fold since 2015, with soybeans accounting for 52% of the use, followed by sugarcane at 23%, with the remainder on corn, cotton, coffee, potatoes and 14 other crops.
This approval is an important stage in the whole process of gaining regulatory licenses, which could take another year or two to be granted.
CEO Jeff Tweedy stated that:
“Today’s announcement marks a significant milestone in fulfilling our strategic objectives to launch transformative commercial PREtec products across substantial growth markets such as Brazil.
As the issue of food security continues to grow, and the farming world looks for technological solutions to achieve a sustainable future with better crops delivering higher yields and reducing environmental effects, our PREtec products will help meet global sustainability targets.”
Analyst Opinion – Cenkos says Buy
John-Marc Bunce at Cenkos Securities rates the group’s shares as a Buy with a Target Price of 37p a share.
He states that this first stage approval came faster than expected.
Bunce considers that full approval could be a much shorter process than has been stated and that it could well come before the end of this year.
That would enable a product launch in 2024.
He also states that the Brazilian market opportunity alone is significant, backing up his predictions of close to break-even this year and with first profits showing up next year.
This morning the group’s shares are up 4% at 10.50p and looking capable of a renewed climb to an early 12p and above.