Upstream Ag Insights - April 1st 2024

Essential news and analysis for agribusiness leaders

April 01, 2024 • Read Time: 17 minutes

Welcome to the 209th edition of Upstream Ag Insights, where each week we dive into the latest events, innovations, and business dynamics throughout 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 happening in agribusiness and what happens next, enabling your business and career to thrive.

Index for the week:

  1. Nutrien 2023 Annual Report Highlights and Analysis

  2. GenerativeAI Strategy in Agriculture: Can We Learn Anything from Farm Management Software?

  3. Telus Explains Proagrica Acquisition, The Future of Digital Ag Platforms

  4. The State of Soil Testing

  5. Rantizo® Introduces AcreConnect™ Software

  6. Syngenta Crosses 100 million Digital Hectares

  7. Brainpower vs. Horsepower: An Alternative Future for Ag Equipment

  8. Winfield BioVerified Program

  9. The B2B questions

  10. Upstream Ag LLM Search and Audio Edition

  11. Other Ag Articles

This week’s edition of Upstream Ag Insights is brought to you in partnership with Headstorm and AGPILOT

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Highlights:

  • Nutrien generated net earnings of $1.3 billion and adjusted EBITDA of $6.1 billion in 2023 on $29 billion in total revenue.

    • Revenue was down 23% from the record levels achieved in 2022 and EBITDA was down 50%.

  • Nutrien proprietary products contributed $1 billion in gross margin in 2023, which equated to 23% of total gross margins for the year.

  • Gross margin for proprietary plant nutritional and biostimulant product lines has grown at a compound annual growth rate of 15 percent over the last five years.

(Revenue and margin as percent of each segment)

The Nutrien business overview includes:

  1. Overview

  2. Nutrien Ag Solutions (Retail) Business

  3. Retail Strategy - Highlight of the Nutrien Retail Strategy

  4. Revenue and Margin Mix by Segment - KPI Chart

  5. Proprietary Products Business - Continued Growth and Focus

  6. Non Financial Metrics - Sustainability and Context

  7. Nutrien Financial - Strategic Leverage Point

  8. Potash Business Highlights

  9. Nitrogen Business Highlights

  10. Other (See and Spray implications on the Business) and Annual Report Stats

  11. Final Thoughts

In the full Upstream Ag Professional highlights and analysis we dive into Nutrien’s retail strategy, Brazillian challenges, proprietary product numbers, Nutrien’s sustainability program, including extrapolated emissions reduction numbers and contextualized comparisons between Nutrien’s program and Indigo’s, an overview of Nutrien Financial, the impact of See and Spray on Nutrien’s business using 2023 numbers and much. Become a member to access the full deep dive:

In Artificial Intelligence and the Supply Chain in a World of Converging Agribusiness Software I highlighted my view of the importance of where LLMs and generativeAI tools are positioned in the target audiences workflow. I believe this will be crucial.

What is noticeable to me surrounding the LLMs and generative AI being launched today is that they are heavily agronomic focused.

Bayer announced two weeks ago “an expert GenAI system to benefit farmers and up-level agronomists in their daily work. The company has been using proprietary agronomic data to train a large language model (LLM) with years of internal data, insights from thousands of trials within its vast testing network.”

Syngenta’s CIO and CDO Feroz Sheikh teased a Syngenta generative AI tool last week, that again was agronomic focused.

Koppert announced in December an LLM for agronomic questions.

Bailey Stockdale of Leaf Agriculture has been doing a cool comparison of models, focused on agronomic questions.

All agronomic related examples. Can we apply learnings from FMS to what wilkl win in generative AI in agriculture?

To access the full Upstream Ag Professional breakdown, including whether we can learn anything from farm management software, what companies are best positioned to thrive with LLM integration, a new approach to watch and future features that will differentiate generative AI systems, become an Upstream Ag Professional member today:

TELUS recently spoke to The Daily Scoop about their acquisition of Proagrica.

I dove into this acquisition a few weeks ago ( TELUS Formally Announces Proagrica Acquisition: Strategic Acquisition or Act of Desperation?) so I won’t re-hash those comments, but I want to highlight one specific quote, which I think reinforces the struggles TELUS has had internally progressing the ag segment of its business forward:

When asked about milestones so far for the Telus Agriculture division, Terris mentions three. 

“Launching publicly after we had done acquisitions quietly was an important one for us. Then we went through a major rebrand when we added consumer goods. And over the past year we’ve started to retire legacy brands that were acquired and moved to a common naming structure,” he says. 

In the article TELUS states that the Agriculture division was founded in 2018.

TELUS officially launched the agriculture division in November of 2020.

So in almost six years since inception, and almost four years since officially launching, the biggest milestone has been moving to a common naming structure.

I don’t think it can be understated— building a new division within a large entity and acquiring a dozen assets plus effectively integrating them is very difficult. Moving fast and executing perfectly were unlikely to happen.

But I’d be remiss if I didn’t emphasize this further— in 40+ months since the TELUS Agriculture launch, the most notable milestone to point to is a common naming structure and a rebranding (which was adding “Consumer Goods” onto “TELUS Agriculture”).

In the next year it was stated that two goals are full integration of the product platforms with a  cohesive set of customer solutions and greater awareness in the industry that Telus Agriculture is investing in this industry for the long-term.

I think if you asked TELUS executives in November 2020 if a common naming structure was going to be their most notable accomplishment by March of 2024, they would have stated it as being a major failure and I suspect they would have already expected the two goals for the coming year to have been accomplished by now.

I have a different perspective on the acquisition. Not because it isn’t strategic (there is logic that says it could be), but because of what TELUS hasn’t stated they will do. To see the full dive into the TELUS acquisition of Proagrica, become an Upstream Ag Professional member today:

4. State of Soil Testing - Agribusiness Matters

Venky Ramachandran has been thoughtfully covering the agribusiness industry, especially Indian agriculture, for years. He does “Town Hall” style conversations and a recent topic was the state of soil testing.

In the conversation, Venky asked soil testing start-up founders a question surrounding whether there were “checks and balances” for when ag retailers use their tests to ensure they do not exploit the use of the tests to sell more products.

It’s a fair question, but I want to highlight the opportunity in reframing that angle.

Often, agtech gets positioned as a means to use less inputs by those that have that bias, or as a means to use more by individuals with that bias.

I think the right frame for legitimacy of a test in agriculture, including soil testing, is it accurate enough to enable a better decision?

Become an Upstream Ag Professional member to gain insight into what is being accomplished through testing, what needs to be managed, why it’s important, along with what companies are operating to improve these insights tied to tangible outcomes, highlights from AGCO’s sustainability report, what “precision agriculture” really is and much more:

Rantizo, the largest drone spraying network in the country, announces the launch of AcreConnect™ software. The software can help spray drone operators create work orders, product usage reports and generate As Applied and As Covered Maps to help streamline business operations.

The newly launched software has been tested through a beta program over the last several months. Real spray drone operators took advantage of the features and provided feedback on the benefits the software provided.

The launch of AcreConnect reinforces progress from what Rantizo stated last year when they raised $6 million. The aim of AcreConnect is to make it easier for drone operators to manage jobs, gather information for billing and collect data for compliance for operators. The software creates As Applied Maps to verify areas sprayed and manage compliance.

Last year, I did a deep dive on Rantizo and their ambition to Scale Automation Orchestration.

Rantizo was a seller of hardware. They are now working to further become an enabler of drone applicator businesses with their software.

The secret sauce really comes in with their software— Rantizo is building the software to enable drone operators, dispatch drone operators, to manage as-applied data and connect work orders in an effective way that allows verification of applications (among other things). 

Rantizo is building the necessary infrastructure to further orchestrate and optimize the delivery of drone services to farms across the United States. AcreConnect will be foundational to this effort:

For a full Upstream Ag Professional breakdown of Rantizo and their business model, ambitions in the industry, and why they are important to watch, check out the link: Rantizo Raises More than $6 million to Scale Automation Orchestration

6. Syngenta Crosses 100 million Digital Hectares and Withdraws IPO Efforts - Linkedin

We’re incredibly proud that our digital solutions are empowering farmers in more than 40 countries across over 100 million hectares of farmland.

Syngenta is noticeably quieter than other industry groups surrounding the acres they touch with digital systems, specifically the system they call Cropwise.

This week Syngenta shared that they were on 100 million hectares, or about 250 million acres. Impressive numbers.

Over the last 2 years were have had companies more pointedly touch on what an “acre” is indicative of, with John Deere being a prime example with their definitions of “engaged acres.”

Syngenta doesn’t do that here and given this isn’t a massive press release, just a simple Linkedin post, I think that’s fine.

But I am curious on how digitized acres influence the Syngenta business.

Bayer has taken swings at illustrating how FieldView Plus users add value to the Bayer business, sharing stats that FieldView Plus users have higher seed purchase loyalty, give a higher percentage of their wallet and use higher seeding rates compared to non-users. It isn’t clear if it’s correlation of causation, but I commend them for putting the effort in nonetheless.

For Syngenta, I was hoping its intended 2024 IPO presented an opportunity to illustrate the value that one digitized acre brings to their business, or what a digitally engaged customer means for their business.

However, just this week Syngenta Group decided to withdraw its application for IPO on the Shanghai Stock Exchange.

Syngenta said it will look to restart the listing process either in China or on a different exchange, when conditions are right, as well as explore alternative sources of funding.

I think this is a really thoughtful blog from Mineral CEO Elliott Grant.

He highlights some notable trends surrounding farm equipment size, and continuous management:

Continuous Management would represent a paradigm shift in agriculture - not only because greater precision would reduce chemical usage and improve yields - but because it would radically change a farmer’s risk calculation. It trades horsepower for brainpower … of the AI type.

Within the post, Elliott gets at “sustaining innovation of the current way of working - not a disruptive one. So what would a disruptive paradigm look like for agriculture?”

It is related to a comment in a recent article in AgFunder News that has good commentary from investors surrounding challenges of incremental innovation in ag— ‘Incremental’ innovation, a warning on the push for profitability and investors ‘scared shitless’ about portfolios:

“There are too many companies chasing what I call incremental improvement. Show me an industry where three players have figured out a really different way of doing something; that’s interesting. An industry that’s got 50 players where one’s a little bit better than another? Not very useful.”

That’s a pretty fair assessment.

It also gets at what David Friedberg and Vinod Khosla talked about during their conversation at the World Agritech Innovation Summit in San Francisco surrounding the concept of being an N of 1, as Peter Thiel would say:

There are so many me-too kinds of startups. In fact, what I would argue is what the market has done is separated the really good startups from the not so good… Markets go up and down and you have to roll with the punches.

By definition, a category that’s already popular isn’t one where future innovation is happening. If you’re doing something different and really innovative, you will make money

I think within this context, “innovative” can be the technology itself, such as with *InnerPlant, or it can be a novel vision surrounding how to manage a crop, with Solinftec (covered here: Solinftec and the Solix Autonomous Platform: Reimagining Farming from First Principles), or with See and Spray technology which could point to the acquisition of Blue River, but now the revenue model of how Deere is monetizing the technology and approach to weed management.

8. Winfield BioVerified Program - Winfield United

I like this initiative from Winfield United. They are well positioned to execute on it, given their reach/influence, agronomic expertise and trialling capabilities.

The WinField United BioVerified designation helps simplify the biological category by highlighting biological products we have thoroughly vetted. This designation was created to give you a clearer reference point when selecting biologicals.

Biological products chosen for the BioVerified designation are required to fill a need in the marketplace, offer a differentiated value, and comply with the following four key criteria:

  1. Uniqueness when compared to other available products

  2. Agronomic attributes including known mode of action, performance, and placement

  3. Operational alignment and ease of use with standard farming practices

  4. Economics showing that the product provides a clear return on investment (ROI)

I think they hit on key components across important categories in deciphering the value, or lack thereof, of various products which ultimately can be a really useful resources and starting point for farmers or agronomists.

There are a lot of consistencies, broadly speaking, with approaches I have worked on with various retailers in the past surrounding assessment frameworks.

Become an Upstream Ag Professional member to see the full framework for retails and farmers to better assess relevant products and companies in the biostimulant realm along with access to The Sauce Paradox that lays out how to help understand and position biostimulant based products:

Non Ag Article

The B2B questions - Seth Godin

I think the below is highly relevant to anyone operating in the world of B2B.

Questions people ask themselves when looking at a web page aimed at businesses (B2B). They are rhetorical, but should give you a place to begin:

  • Is it my job to deal with this?

  • Who sent me here?

  • Will this advance my project?

  • Will it help me get ahead if I take action?

  • If I ignore this, will I fall behind?

  • What are the promises being made?

    • Are they achievable–promises that break the laws of physics or contradict my experience are hard to believe.

  • Why should I trust this person?

  • What are the clues that lead me to want to believe this?

  • What are the clues that lead me to doubt it?

    • These could include: Design, testimonials, page responsiveness, typos, clarity of language, urgency of presentation, credentials, domain knowledge…

  • How easy is it to take the next step? What will happen if I don’t?

  • And the biggest one, the one that is so easily ignored: What will I tell my boss?

Other Ag Articles