By Ed Ballard

An energy crisis spells opportunity. Chris Abbott is hoping this one doesn't pan out like the last one.

Abbott is chief executive of Pivot Bio, a company that sells plant-nourishing microbes, and war in Iran has created an opening.

On the U.S. Gulf Coast, the price of urea, the most widely used fertilizer, has risen 35% since the U.S. and Israel attacked Iran. It is made from natural gas, and roughly 30% of global exports come from the Middle East, largely through the off-limits Strait of Hormuz. The price shock, ahead of spring planting, threatens farmers already dealing with low crop prices.

But Abbott's microscopic farmhands, grown in fermenters, don't get more expensive when fossil fuels do. Now, demand for them is ramping up. But the last time this story played out, after Russia invaded Ukraine, it ended badly.

"We were selling out," Abbott said. "That was probably the worst thing that ever happened to us."

In 2022, Pivot Bio's microbes were used on 3 million acres of corn, more than triple the 2021 total. But they flunked the test.

Pivot Bio uses a technique called gene editing to develop microbes that grab nitrogen, which plants need to grow, from the air. Farmers (corn growers are the main market) apply products containing them to seeds before planting. Regular fertilizers such as urea, by contrast, douse plants in nitrogen.

Less nitrogen-sloshing would benefit the environment: Regular fertilizers like urea generate greenhouse-gas emissions and the soil runoff harms oceans. The appeal for farmers lies in reduced spending on fertilizer.

But in 2022, only a little over half of customers reported a yield benefit. Abbott said the company failed to ensure its product was properly used. In some cases, farmers applied lots of fertilizer as well, so plants ended up with excess nitrogen and the money spent on microbes was wasted. Or they combined the microbes with incompatible products.

"Every day, someone was like, 'well, you screwed it up,'" Abbott said.

Abbott invested in Pivot Bio when he was co-head of Continental Grain's venture-capital arm. He joined as CEO in 2023.

Since then, Pivot Bio has been cooking up more efficient microbes and building a distribution network better equipped to advise farmers. This month it moved its headquarters from Berkeley, Calif., to Minneapolis.

The company promises less now. Instead of talking about replacing regular fertilizer, it says its microbes supply between 15% and 30% of plants' nitrogen.

Pivot Bio's sales dropped off after the earlier setback, but it says it is on track to comfortably surpass 2022's acreage numbers this year, selling to farmers across the U.S. After the conflict began, Abbott and his colleagues reduced the price of their microbes by 10%, after already reducing it by 30% in two years.

Cutting prices in a crisis doesn't square with the usual picture of hard-nosed commodities traders, but Abbott says his microbes are still in the money thanks to Pivot Bio's low production and shipping costs. The flex was aimed at gaining market share.

"We were on our heels last time," he said. "This time, we're on our front foot."

Pivot Bio says trials show that over 90% of growers now see a benefit, and can point to peer-reviewed studies offering some support. But the true test will come at harvest time.

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The Data Point

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"There are a lot of disagreements about where the safety floor really is, " OPIS analysts Charles Dayton and James Stevenson write.

Despite uncertainty over the exact figure, experts agree that overdrawing oil from the salt caverns it is stored in would damage the caverns. Geology is one of the factors limiting what the U.S. and other countries can do to reduce oil prices.

Phrasebook

Nuclear Entscheidungsreue

"Entscheidungsreue" is German for "decision regret." JPMorgan energy expert Michael Cembalest estimates that Germany's decision to decommission its nuclear power plants in the wake of the Fukushima disaster may have raised electricity prices by 25%.

Quoted

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Today's email was written by Ed Ballard in London. Contact him at ed.ballard@wsj.com. Contact the team at climate@wsj.com.

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