Upstream Ag Insights - April 15th 2024

Essential news and analysis for agribusiness leaders

April 15, 2024 • Read Time: 19 minutes

Welcome to the 211th edition of Upstream Ag Insights, where every week we dive into the latest events, innovations, and business dynamics impacting the agribusiness landscape.

My name is Shane Thomas.

Whether you're a new subscriber or this newsletter found its way to you through a forward, you're in an unparalleled place for frameworks and insightful analysis designed to help you navigate what’s driving outcomes throughout agriculture, what happens next and enabling your business and career to thrive.

Index:

  1. AGCO Launches New Tech Brand PTx: Was it a Successful Launch?

  2. Biologicals are ‘economically unfeasible’ According to Report: The Shortcomings and Opportunities + The need for specificity in talking biologicals

  3. AgroSpheres co-founders share lessons in ag biotech and the value of a long-term perspective

  4. Futureco Bioscience CEO on Why the Biostimulants Market Will Grow: Utilizing Omics in Biostimulants

  5. Ginkgo Bioworks Acquires AgBiome's Platform Assets

  6. The ultimate Trojan Horse? US drone makers up in arms about Chinese industry advancement

  7. CEO Andy Jassy’s 2023 Letter to Shareholders

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1. AGCO Launches New Tech Brand PTx: Was it a Successful Launch? - DTN

AGCO Corporation on Monday announced the launch of its new precision ag brand, PTx.

PTx includes AGCO's Precision Planting business. It also includes the $2 billion joint venture finalized last week by Trimble and AGCO. PTx Trimble, the company announced on Monday, combines Trimble's ag portfolio with AGCO's JCA Technologies. JCA, Winnipeg, Manitoba, Canada, was purchased by AGCO in 2022. JCA specializes in the design of electronic systems and software development to automate and control agricultural equipment.

I highlighted this announcement last week, and wrote about the strategic rationale in Highlights and Analysis of AGCO Acquisition of Trimble Ag Assets and Joint Venture, highlighting three core components that drove the deal:

  1. Trimble products as the primary choice in all AGCO equipment.

  2. Channels to market.

  3. Margin expansion in retrofit precision systems

AGCO has also emphasized their focus on retrofitting, which the Trimble portfolio further augments. I have a bias towards integration, as I wrote in Integrated Tech Stacks and Precision Technology, but retrofit solutions are needed and I commend AGCO for leaning into a specific area— even if other companies, like CNH Industrial and John Deere, will still have retrofit options and capabilities.

The thing about this effort is that it if AGCO really wants to capitalize on how they are “different” than Deere or CNH Industrial, they need to effectively communicate that into the market and ensure it resonates with their target customer.

The PTx Trimble launched failed to execute surrounding that.

For the full breakdown of how messaging should be targeted at the product implications for farmers, targeting a specific type of farmer, and what can be learned from Apple, become an Upstream Ag Professional member today:

As an aside, the logo was an apparently Corteva inspired design:

The Need for Precision in Talking “Biologicals”

It’s important to note the report cited is (kind of) emphasizing biopesticides, not biologicals across all segments (eg: biostimulants).

My only tangible takeaways from the cited “Precision spraying and biologicals – driving collaboration” report put together by Cambridge Consultants and Agri-techE is this:

Being precise in how we talk about biologicals is crucial to have a constructive conversation about biologicals.

Case in point, an effective report needs to identify the subsegment they are talking about within biologicals (eg: biostimulants, biopesticides etc), define the segment, and be specific in the questions they ask the interviewees. Otherwise, you conflate bioherbicides, with biostimulants with non-biological methods (eg: highlighting UV-C light in the report). Identifying the cropping segment is often important too (eg: row crops vs. high value permanent crops).

The only attempt at defining the focus in the report actually illustrates where the report goes wrong (emphasis mine):

We invited our contributors to consider use of a wide range of different biological products but with a core focus on biological crop protection products.

Getting a wide range of “biologicals” views makes it difficult to delineate a bioherbicide comment from a biostimulant comment from a non-biological comment.

Anything short of precisely identifying and defining which biological segment is being emphasized is detrimental — case in point calling “biologicals economically unfeasible” will be interpreted by many to be broadly applied across all sub segments. An unfortunate outcome of a poorly executed “report” given it got picked up by AgFunder News, a widely read and respected publication.

I have been guilty of lackadaisical use of the term “biological” too, and have been thankful that individuals have called it out. I hope we can all be more diligent on this front moving forward.

For the full overview and a deeper dive into some of the components of the report, including where collaboration should be a priority and where it doesn’t need to be along with what is actually needed to move bioherbicides ahead, check out the link above.

Related: The battle for the future of crop protection - Tenacious Ventures

Agrospheres is a compelling start-up that has promising technology. Their technology can improve the performance, COGS and viability of bio-based products, such as proteins or RNA technology.

Co-founder’s Payam Pourtaheri and Ameer Shakeel articulate the problem and their solution incredibly well in the below quote from the article:

The bet we made was, you have this whole microbe, maybe 1% to 3% of what it makes the actual product or what does the heavy lifting. Our bet was we need a system to isolate that trait, manufacture it effectively, and deliver it in a very stable manner. And that’s exactly what our technology lends itself to.

It’s a fermentation technology where you can put the trait in a microorganism and the microorganism produces this trait, which may be a protein, an RNA or a metabolite — anything that can be biologically produced. It produces it in a very stable format — it’s encapsulated. Basically, it has a shell around it, and that’s what we recover at the end of the fermentation.

The advantages of that is, on the manufacturing side, it allows you that continuous fermentation process. Downstream, it really simplifies things. Sometimes downstream can be as much as 16 steps of recovery, especially for something as sensitive as RNA. For us it’s always two steps, maybe three at max, and has a high throughput.

So while [others] were trying to figure out how to keep these CFUs [colony forming units] alive for two years and get them to colonize, we were focused on that single or double trait of how do we keep this protein stable from the tank to the plant. That’s how our technology is different and our epistemology and way of thinking.

Agrospheres boasts encapsulation technology that can effectively support the usage of small, bio-based molecules like peptides, and nucleic acids (RNA) along with volatile compounds such as pheromones in agriculture, meaning many of the next generation bio-based molecules:

For the full breakdown of what companies are likely to make up future partnerships for Agrospheres, why that’s important, an overview of the hurdles Agrospheres technology overcomes and images illustrating the the product value chain Agrospheres comprises and more, become an Upstream Ag Professional member:

The integration of the “omics”, transcriptomics, proteomics, and metabolomics offers a comprehensive understanding of how biostimulants interact with plant physiological pathways to enhance resilience against environmental stresses. Recent advancements underscore the potential of omics technologies to dissect the intricate interactions between biostimulants and plant responses at the molecular level.

In this interview, Futureco Bioscience CEO Rafael Juncos highlights “omics,” an area that can help to unlock a better understanding of biostimulants along with the what, why and how behind their efficacy— the often lagging insights from biostimulant companies surrounding their products and a key to enabling better utilization and adoption of them.

Transcriptomics is a branch of molecular biology that focuses on studying the complete set of RNA transcripts produced by the genome under specific circumstances or in a specific cell using methods such as sequencing. This includes all types of RNA molecules, including messenger RNA (mRNA), non-coding RNA, ribosomal RNA, and others.

Transcriptomic analysis serves as a crucial tool in molecular biology, enabling us to understand plant responses to environmental conditions or treatment with agricultural products, such as biostimulants. When working with biologicals, pinpointing specific plant reactions can be challenging, particularly as effects like larger root systems or increased abiotic stress resilience can result from multiple physiological factors. While it might be tempting to attribute improvements to increased photosynthetic efficiency or nutrient absorption, the actual drivers can be diverse. Transcriptomic analysis provides an initial layer of insight, offering potential explanations for these observed enhancements by illustrating changes in gene expression. This allows companies to begin deciphering the complex interactions at play, leading to more informed decisions in product application, development and positioning. Transcriptomics can be the starting point for overcoming The Sauce Paradox.

As pointed out in this Foresight Agronomics article, transcriptomic analysis can answer questions such as:

  • What kind of response is my product inducing in the plant?

  • How long does the response last? Are there off-target effects?

  • Is the response localized or systemic? (i.e., does foliar or in-furrow application make a difference?)

  • What is the proper rate and staging to use the product? Does it work well with other products?

Among other questions.

Complementary proteomic studies have identified key proteins whose levels are modified by biostimulant use, shedding light on the functional processes that bolster crop resilience.

Additionally, metabolomics offers a comprehensive overview of the changes in metabolite profiles induced by biostimulants, enhancing our understanding of how plants adjust metabolically to overcome abiotic stress. This method not only helps identify the metabolic pathways impacted by biostimulants but also assists in pinpointing reliable biomarkers for stress tolerance.

By leveraging multiple omics technologies, organizations can uncover the complex molecular interactions that underlie the beneficial effects of biostimulants on plants, paving the way for the development of more effective and targeted biostimulant products.

Cell platform company Ginkgo Bioworks announced Thursday the acquisition of platform assets from AgBiome, a North Carolina-based firm focused on developing crop protection solutions.

Ginkgo will buy AgBiome's biological assets, including more than 115K fully sequenced and isolated strains and over 500M unique gene sequences as part of the buyout, the company said.

AgBiome was founded in 2012 and, according to Crunchbase, raised more than $250 million since, with its most recent raise closing at $112 million in September 2021.

AgBiome is well known in the industry and announced partnerships and collaborations with major input companies Sumitomo, Syngenta, Mosaic, and BASF. Their investors include strategic companies like Syngenta Ventures, Leaps by Bayer, and Novozymes (Novensis).

AgBiome also had two primary commercial biological pesticides: Howler and Theia.

These are now divested to Certis Biologicals.

The only remaining asset that AgBiome had was its proprietary discovery platform known as GENESIS, which was supposed to give them an advantage in identifying, screening, and developing novel biological products. This asset has now been divested to Ginkgo, which seemingly indicates all assets have been divested from AgBiome.

In October 2023 it was reported that AgBiome was “potentially” laying off all its 120+ workers, according to a layoff notice filed with the state of North Carolina. As of this week, the AgBiome Linkedin still states 68 active members of the team, but the company is now seemingly defunct.

Ginkgo in Ag

Ginkgo Bioworks has a platform to enable its customers to program cells like we program computers. Their cell programming platform, or “foundry” enables the growth of biotechnology across various markets, including agriculture. GENESIS will likely become another tool in the toolbox within Ginkgo.

Ginkgo has positioned itself as The Amazon Web Services of Biology. Just like AWS enables software-driven start-ups the ability to be up and running quickly without the need for investment in servers or computing infrastructure, Ginkgo enables biological-based start-ups (or incumbents) the ability to access biologicals, or ramp up R&D capabilities, without the need for capital investment in their own infrastructure.

Discovery has many components, specifically when talking about bio-based molecules, and Ginkgo supports the majority of that, including in silico screening to in vitro assays/characterization and in planta efficacy assays, all the way to fermentation process development and strain optimization— this also goes beyond living organisms and gets into areas like peptides and proteins (like discussed with Agrospheres aearlier).

Ginkgo has relationships with agribusiness like Bayer Crop Science, Syngenta and Corteva and they also have partnerships with smaller entities such as Exacta, which uses Ginkgo’s fermentation and formulation optimization services to reduce their COGS.

Ginkgo charges its customers for using its foundry/cell programming system and/or takes royalties on its customers’ revenues.

There is significant potential for a company like Ginkgo. However, there remains more questions about their long-term viability and ability to grow revenue in their cell engineering unit, which will need to grow in the future, and is why we see a more significant push agriculture: Ginkgo’s total revenue was $251 million in 2023, down from $478 million in 2022, driven by its Biosecurity business unit, which provides COVID-19 testing and genomic surveillance services— this segment decreased drastically in 2023 (due to decreasing COVID needs) meaning their other revenue, cell engineering, needs to grow and it remained flat at $144 million (even after acquiring competitor Zymergen). For context, when the company went public through a SPAC in 2021, it guided this segment alone doing $628 million of revenue in 2024. The company burned almost $900 million in 2023.

To date, there haven’t been many public commercial successes from Ginkgo within agriculture. For example, it’s unclear how Ginkgo/Joyn Bio (Bayer JV) has contributed to Bayer’s biological business. Ginkgo had an announcement with AgBiome to optimize AgBiome’s COGS, something AgBiome drastically needed, but it’s not clear that anything positive has came from that, outside the now acquisition of the AgBiome asset.

This is a really interesting article.

One being because there is risk to relying on Chinese drones, as Guardian Ag has suggests.

The two largest drone makers globally are Chinese: DJI and XAG. In 2022, DJI stated that more than 200,000 drones from it’s organization were active. According to numerous articles, China cut off access to replacement parts for Ukraine, which has allegedly challenged Ukrainian military. That’s one risk for American food production if relying on Chinese manufactured drones.

The other is more detrimental that Guardian is emphasizing— risk of drones being reprogrammed with over the air software updates to be “used against Americans,” and making them the “ultimate trojan horse.” They highlight the food system relying on an “adversary.”

Many of these drones also acquire data, and deliver chemicals, which can be viewed as another concern because they are considered hazardous materials.

The emphasis isn’t surprising: it’s strategic lobbying by Guardian— a drone company that has it’s manufacturing facility based in Massachusetts.

There is first an emphasis to highlighting this for farmers and presumably, agribusinesses (eg: Co-operatives). But also the government— if there is an asterisk or concern put out by the government, that establishes a further doubt in the true target customers— farmers and agribusinesses.

Non Ag Article

I always find something interesting in the Amazon CEO letter to shareholders. Here are a few things that caught my eye this year:

Recently, I was asked a provocative question—how does Amazon remain resilient? While simple in its wording, it’s profound because it gets to the heart of our success to date as well as for the future. The answer lies in our discipline around deeply held principles: 1/ hiring builders who are motivated to continually improve and expand what’s possible; 2/ solving real customer challenges, rather than what we think may be interesting technology; 3/ building in primitives so that we can innovate and experiment at the highest rate; 4/ not wasting time trying to fight gravity (spoiler alert: you always lose)—when we discover technology that enables better customer experiences, we embrace it; 5/ accepting and learning from failed experiments—actually becoming more energized to try again, with new knowledge to employ.

With a cloud computing business at nearly a $100B revenue run rate, more than 85% of the global IT spend is still on-premises.

Generative AI may be the largest technology transformation since the cloud, and perhaps since the Internet. Unlike the mass modernization of on-premises infrastructure to the cloud, where there’s work required to migrate, this GenAI revolution will be built from the start on top of the cloud. The amount of societal and business benefit from the solutions that will be possible will astound us all.

Other Interesting Ag Articles