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MARK AUSTIN THOMAS: Every year farmers around the world spend some $30 billion on chemical pesticides. The chemicals kill insects, weeds and pathogens that can destroy crops and eat into a grower's bottom line. But nowadays, the fastest-growing segment of the pesticide market is something called biopesticides. From the Marketplace Sustainability Desk, Sarah Gardner reports:

SARAH GARDNER: At the AgraQuest laboratory in Davis, Calif., scientist Barry Kersting opens a deep freezer. It's packed with small plastic vials of microbes harvested from nature.

BARRY KERSTING: "This is a minus 80 degree Celsius freezer. (sound of freezer opening) We keep all of our strains that we have in our library. They'll stay viable for years in our freezer here."

The idea is to find strains of bacteria and fungi that naturally fight crop-killing insects and disease. So far, this 11-year-old company has discovered two proven winners. One of the microbes was discovered in a California fruit orchard. AgraQuest uses it in its best-seller, a biopesticide called "Serenade." CEO Mike Mille…

MIKE MILLE: "Our Serenade product is what's considered broad spectrum, so there's 15 or 20 different diseases, depending on what crop you're talking about, whether it's grapes or tomatoes or such that it attacks and is fairly effective against."

AgraQuest is among a small but growing number of companies looking to make profits fighting pests the natural way. Company president Dennis Joyce says demand is growing.

DENNIS JOYCE: "The Whole Foods of the world, the Wal-Marts of the world, they're explicitly stating goals that talk about organic, that talk about natural, that talk about residue levels and the like, which favor the products that we market."

Still, CEO Mike Mille says farmers accustomed to using chemicals often have preconceived notions about biopesticides.

MIKE MILLE: "Oh, if it's biological, it must be soft. So we have to overcome that. And after 10 years, we're doing that."

AgraQuest markets biopesticides in the U.S. and is now expanding into Europe and Latin America. But the company has yet to make a profit and had to cancel plans for an initial public offering after the 9/11 attacks crushed investor confidence. But venture capitalists and others have poured more than $62 million into the company since its inception. One of those is Walter Locher, who believes sooner or later the big chemical companies will be marketing biopesticides as well.

WALTER LOCHER: "Not just because it's organic or it's fashionable. But it just makes sense. It's the same price. It's the same efficacy. And therefore, why not use a product that's safer."

Locher hopes AgraQuest will begin turning a profit in the next 12 months. He's counting on a new product harvested from a cinnamon tree in Honduras. AgraQuest hopes to develop it as an alternative to methyl bromide, the popular pesticide that's being phased out because it's an ozone-depleter.

In Davis, California, I'm Sarah Gardner for Marketplace.