The BMO Global Farm to Market Conference is BMO Capital Markets' annual two-day investor event covering the global food, agriculture, and chemicals value chain. This year’s event ran on May 13-14th in New York, with management teams from inputs, protein, food retail, and chemicals with institutional investors for fireside chats, and panel discussions. Companies like CF Industries, Nutrien, BASF, Corteva and FMC attended. Below are highlights from FMC, Nutrien, and Corteva.
Index:
Corteva
Leveraging the Pioneer Channel Beyond Seed
Getting Paid for ‘Quality’ Traits in Seed
On Pricing Traits When Total Applications are Eliminated
Trait Licensing Revenue and Opportunity
Generic Pressure
Nutrien
View on Retail “Tuck-in” Acquisition Multiples and Synergies
On whether the USA Ag Retail Infrastructure is Overbuilt
Capital Allocation Discipline
Generic Impact on Retail and Proprietary Product Growth and Success
What comes next for Proprietary Products at Nutrien?
FMC
On Biologicals and the Launch of Sofero Fall in Brazil (pheromones)
Expected Date to know the Future of FMC
Corteva - Quotes from CEO Chuck Magro
The most notable comment from Chuck Magro was surrounding what might be sold through the Pioneer Channel once the companies separate:
"The way the Pioneer agency model works, it's a direct-to-farmer model. We have local independent business owners that are Pioneer reps, and we allow them access to our seed technology and they work directly with farmers to sell seed. A lot of these are really good business people and they sell many other things. About 20% to 25% of them will sell crop protection. They usually don't do the order fulfillment. They usually work with a local retailer in some capacity. The model I'm describing is an American model, a U.S.-based model. And of course, our crop protection would be part of that.
But we've never mandated, even inside of Corteva, that they can only do this or that with CP. We just don't feel that is for us to do. We want the Pioneer agents to focus on seed first. But if they want to do something else, obviously they can sell our crop protection, we would allow that and help them, but they can sell every other crop protection as well.
So once we separate, I don't think there's a lot of change here on either side of the house necessarily, initially. But I think that you've got to imagine that what we have in the United States is a relationship with the top growers in the U.S., with about 65 million acres that grow corn and soybeans every year. And these relationships run deep. They're strong.
So the question is, should we, as a seed company, invite others to have access to that channel? And is that good for farmers? Is that good for the Pioneer reps? Is that good for Vylor? Those are interesting questions that are in the early days today. We'll probably have a little bit more to talk about that in September."
In the most non-committal, yet most leading way possible, Magro essentially said they are looking at opening up their Pioneer channel to crop protection companies (or others inputs, or maybe even non-inputs). Worth noting, Magro was a part of the fertilizer company Agrium (which is one-half of what became Nutrien) leadership team as it rolled up ag retailers (through Crop Production Services) to act as a downstream distribution, and information acquisition mechanism for their upstream fertilizer assets.
Owning distribution is a powerful position to be in — we see it in equipment where John Deere has incredible capabilities for deploying and servicing new technology and products relative to a a more disparate dealer landscape for CNH, for example.
It also enables a company to layer products on top. I talked about this in regards to Pivot Bio in 2022, and it was an obvious option for Corteva when they acquired Stoller in 2022, which then launched their own Pioneer-specific brand of biologicals, Nexta, to sell through Pioneer dealers.
As alluded to by Magro, on the Crop Protection side, it made sense to allow dealers to sell Corteva crop protection, however, it didn’t make sense to emphasize it when they owned crop protection because of the potential friction between retailers and dealers. This is due to the fact that the net crop protection sale was going to be the same to legacy Corteva’s bottom line, so the friction likely wasn’t worth the headache. But once they separate, it becomes a different story. Vylor can realize upside from potentially moving more products through the channel.
One of the concerns that has been highlighted surrounding the separation of crop protection and seed in North America is not having a fully integrated acre — from seed through crop protection as one company. I think there is some legitimacy to the gripe as I am certain there is a lift between crop protection sales on Pioneer/Brevant seed acres.
However, what is notable is where that the “integrated acre” happens.
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