Upstream Ag Insights - December 22nd 2024

Essential news and analysis for agribusiness leaders.

December 22, 2024 • Read Time: 20 minutes

Welcome to the forefront of agricultural innovation with the 245th edition of Upstream Ag Insights, where over 19,300 agribusiness leaders start their week discovering critical industry news and absorbing about the latest must-know information shaping the future of agriculture.

I want to begin the 51st and final edition of 2024 with a thank you.

Your curiosity and engagement are what make Upstream possible, and I’m fortunate to wake up every day with the opportunity to explore the world of agribusiness.

Every read, reply, and insight you have shared has fueled this newsletter and helped create unique conversations within the agriculture industry.

I’m grateful to have such a thoughtful and engaged community, and it’s a privilege to to be able to follow my curiosity towards the ag industry and write this newsletter each week.

As we head into the holiday season, I hope you get to relax and enjoy some down time with family and friends.

I’m excited for what lies ahead for the industry in 2025 and looking forward to learning alongside you throughout the year.

One place I am looking to learn is at Croptastic on Stage, where I am keen to hear Kip Tom’s keynote, catch up on InnerPlant’s work over 2024, and see their technology in person at the “science fair” portion of the conference Jan. 24 in Atlanta. Hope to see you there!

The first edition of 2025 will be Monday, January 13th.

Index:

  1. AGCO 2024 Analyst Day Highlights and Analysis

  2. Pivot Bio Launches New Retail Distribution Partnerships

  3. Buy vs. Build in Agronomic Software

  4. The Rise of Digital Platforms: A Reflection on Past Challenges and a Vision for the Future

  5. Bayer and Trendlines Dissolve AgTech Fund

    1. Sound Agriculture Raises $25 Million

  6. Upstream Ag Stats and Most Popular Articles of the Year

  7. I Have a Few Questions

  8. Other Interesting Ag Articles

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

Your Unfair Advantage in Ag Retail

AGpilot is an app that utilizes Gen AI to seamlessly integrate grower-advisor interactions with vast troves of both external and internal data. Leveraging sources such as Microsoft's ADMA solution for external data, and proprietary data repositories developed by ag retailers, AGpilot transforms raw information into actionable insights in real-time. By automating research tasks and consolidating relevant data, AGpilot empowers advisors to perform their duties more efficiently and effectively.

AGpilot enables your organization to:

  • Increase Revenue: Acquire more customers, expand customer share, and avoid displacement.

  • Improve Productivity: Quickly view customer info, data, and tailored insights across systems.

  • Reduce Attrition: Provide best-in-class tools to improve agronomist value, income, and relationships.

Transform your advisors into loyal, productive, and trusted advisors at scale with AGpilot, your unfair advantage.

1. AGCO 2024 Analyst Day Highlights and Analysis - Upstream Ag Professional

For the full breakdown with images from the event along with other charts and images, check out the link above.

Highlights and Key Takeaways

  • The 2024 year has been challenging in the equipment industry, with AGCO coming off its Q3 2024 financial results of $2.6 billion in revenue, a 24.8% decrease compared to $3.5 billion in Q3 2023, decreased production and margins, plus forecasts for continued challenges throughout 2025 with large ag equipment units forecast to decline 25%, margins to be 7% (12% in 2023) and production hours to be upwards of 20%.

  • AGCOs retrofit strategy is a significant point of emphasis. When AGCO initially announced the Trimble acquisition, they forecasted >$2 Billion in revenue by 2028. Now, given the downturn, they have pushed that back become ~$2 Billion by 2029, a year later.

  • AGCO emphasized that they do more than just spray weeds with their precision spraying solutions, mentioning that they cover crop scouting (eg: plant stand counts) and enable other agronomic decisions. I love this emphasis and think they should lean into it more— precision spray system equipped with camera’s are more than precision weed control, they are an agronomic swiss army knife. Precision sprayers aren’t only about saving money on weed control; they are about better agronomic decisions and the ability to manage the problems in a field that they couldn’t before.

  • AGCO stated that they have 55,000 active software users, 84 million engaged acres annually, and 158,000 connected machine. For context, Deere has recently stated their engaged acres is now 455 million and said that year over year they are up 30% on “highly engaged” acres, putting them at around 120 million (more than 2 actions per year in JD Ops Centre), and has more than 650,000 connected machine.

I watched the full 2.5 hour presentation and meticulously read their presentation slides so you don’t have to.

For the full breakdown, including detailed charts, presentation images, analysis, overviews of their precision product take rates and more, become an Upstream Ag Professional member with a limited time discount today:

Pivot Bio, one of the world's leading innovative agtech companies, is proud to announce a strategic distribution partnership with Hefty Seed Company, one of the largest independent ag retailers in the U.S. Beginning in 2025, PROVEN® 40, a microbial nitrogen source powered by Pivot Bio's patented gene-edited technology, will be available at all Hefty Seed Co. locations, offering corn farmers a new mode of nitrogen delivery that complements Hefty's trusted lineup of crop input offerings.

With an expansive network of 49 retail locations spanning 10 states, Hefty Seed Co. has built a trusted legacy as one of the nation's leading crop protection and seed suppliers. Starting in the new calendar year, Pivot Bio's PROVEN® 40 for corn and RETURN ® for sorghum, wheat and other small grains will be available to any interested farmers across the entire Hefty Seed Co. network.

Pivot Bio’s move to sell through retail marks a pivotal (no pun intended) evolution transitioning from primarily a direct-to-farmer approach.

For a breakdown of whether this initiative makes sense for Pivot Bio and what their next distribution expansion might be, become an Upstream Ag Professional member with a limited time discount today:

Related: The Dealer in Ag: A Natural Role, Evolving with Technology - AgTech Collective, Alejo Valverde

Drive Profitability at Your Ag Retail Business with Myriad AgVisors

Myriad AgVisors is a comprehensive software platform designed to help ag retailers improve administrative efficiency and drive company performance.

Track rebate, clearly identify net costs, develop a fully customizable price sheet for your sales team, and much more with Myriad Sync.

Myriad Sync can provide clarity and accuracy that will allow you to develop a road map to profitability and ensure the sustainability of your business. At Myriad AgVisors, we are committed to developing tools that make the most difficult parts of ag retail simple and accurate, allowing management to reallocate their time to other, equally important parts of the business. Rebate tracking, supplier rebate reconciliation, identifying net costs, managing margin structure and more - Myriad Sync was designed for ag retailers by ag retailers, and we would love to demonstrate how it can work for you.

If you would like to learn more, please visit:

For input retailers, the "build vs. buy" software debate is one that has been ongoing for two or more decades.

Choosing to build your own custom software, or hiring a third-party to do so, offers the promise of “unique-to-me” solutions, but demands significant resources, time, and expertise.

Buying off-the-shelf software, on the other hand, provides speed and scalability but often comes with trade-offs in flexibility and company fit.

This decision impacts not only operational efficiency but also how businesses engage with customers, manage data, and compete in a rapidly evolving market place.

Last week, Nathan Faleide shared a comment on the build vs. buy discussion surrounding ag retailers and precision and agronomic software, suggesting more retailers are looking at building out their own precision software.

There are tradeoffs in either direction, so the correct answer is “it depends.”

What it depends on is useful to consider.

The Case for Building Software Internally

Pros

  1. Customization — In-house development allows for tailor-made solutions that perfectly fit the organization’s unique needs, workflows, and processes.

  2. Competitive Advantage — Proprietary software can provide a strategic edge by enabling capabilities competitors may not have.

  3. Control — Companies retain full control over the software’s features, updates, and data security.

  4. Integration — Custom software can be designed to integrate with existing systems and technologies.

  5. Adaptability — It’s easier to make iterative changes as business requirements evolve.

Cons

  1. High Upfront Costs — Developing software from scratch requires significant investment in time, talent, and resources.

  2. Time-Intensive — Custom software can take months or even years to develop, delaying the time to value.

  3. Resource Dependence — Building software requires skilled developers, designers, and project managers, which may not be available in-house or difficult to attract to a specific region. The implementation of new software training is often overlooked, too.

  4. Maintenance Burden — Often the most overlooked aspect, ongoing updates, debugging, and scaling efforts become the organization’s responsibility.

  5. Risk of Obsolescence — Without regular innovation, custom software can become outdated quickly. The question becomes, who’s in charge of the vision? Internal teams are only talking to internal personnel.

The Case for Buying Software

Pros

  1. Speed — Off-the-shelf software can be deployed quickly, enabling faster time to value.

  2. Lower Initial Costs — Agronomic and precision software providers typically offer SaaS-based pricing, reducing upfront investment.

  3. Vendor Support — Purchased software often includes customer support, maintenance, regular updates and implementation support.

  4. Proven Reliability and More Exposure — Established vendors’ solutions are often tested, scalable, and widely used meaning more hands, eyes and experiences from around the industry to continually progress the software.

  5. Regulatory Compliance — Many software vendors ensure compliance with industry standards and regulations (eg: SOC 2)

  6. Future Focused - The best software companies have a vision that builds on their base for further expansion and connection.

Cons

  1. Limited Customization — Off-the-shelf solutions may not meet all business requirements, leading to inefficiencies.

  2. Dependency on Vendor — Organizations rely on the vendor for updates, pricing changes, and continued support.

  3. Integration Challenges — Purchased software may not integrate seamlessly with existing systems.

  4. Data Security Risks — Storing sensitive data on third-party platforms can pose security concerns.

  5. Long-Term Costs — Subscription fees and potential add-ons can become costly over time.

A lot of the decision making comes down to how an entity weighs the pro’s and con’s based on their unique priorities.

But I think it’s important to call something out that in my opinion gets incorrectly thought about:

Features and Customization Are NOT a Competitive Advantage

One thing that I find to be overlooked when I’ve been apart of build vs. buy conversations, or after the decision making process is over-indexing on some special feature that a software has or doesn’t have.

Consider one comment on Nathan’s post:

If you want to create a unique customer experience/value proposition you can't use what everyone else is using.

I have a different view.

For a full breakdown on why this fails to encapsulate what drives value through software, what is important and why it’s missed, along with other crucial considerations, Upstream Ag Professional member with a limited time discount today:

Another insightful article from Patrick Honcoop.

The two things that I will be watching closely surrounding software utilization by farmers or their advisors is around incentives and the other is around hands-off data entry.

Incentives

Patrick highlights the incentive dynamic, alluding to scope 3 emissions, traceability and financing/insurance which can all contribute to an incentive directly benefitting the farmer.

Without a direct, tangible benefit to the farmer, there is no urgency to use or to pay. With no urgency to use or pay, software as a stand alone business is challenged.

Jake Joraanstad, CEO of Bushel captured this in a comment to Rhishi Pethe of Software is Feeding the World:

I think doing farm management software completely independent of any other business models has been really clearly challenged. I mean, it's not even debatable. We have the largest paying subscription base, not only probably the largest user base, but even paying subscriptions, we have the largest. And still it would not be a very good standalone business inside of Bushel. And because it's inside of Bushel, it works.

Jake is better positioned than most to have insight into farm management software business models.

My friends at Tenacious Ventures have previously highlighted the business model dynamics emphasizing the user vs. the beneficiary and to date, a lot of agronomy and agribusiness software use (Agrian and Proagrica by TELUS Agriculture), Fieldalytics by Ever.Ag, Ag World by Almanac) has been driven by entities like ag retailers benefitting from recording agronomic information and enhancing their crop planning discussions for forecasting and inventory management of input products.

But even with incentives, there is one challenge that hangs over users: Data Entry

For a full breakdown on the challenge, tools to overcome, an example of what it might look like and more image context, Upstream Ag Professional member with a limited time discount today:

Note: For illustrative purposes only. Some companies do multiple things and the complexity makes it difficult to capture in one snapshot. Additionally, there are MANY other companies. The image is not intended to be all encompassing.

Trendlines Group Ltd. has announced the dissolution of the Bayer Trendlines Agtech Fund, originally set to terminate in April 2025, now scheduled for December 2024. This decision, made in agreement with Bayer Crop Science, aims to minimize operating expenses as no further investments are planned. The dissolution is not expected to impact Trendlines financially, as the fund has not generated profits, and the portfolio companies will continue their operations uninterrupted.

It’s unlikely that Bayer and Trendlines will be the only discontinued AgTech fund.

Consider the data from the aggregate VC industry on the growth in the number of venture capital firms, the lack of distributions (return going to Limited Partner and investors) has challenged further VC raises and slowed the total number of investors doing deals:

World wide, we are at a time when IPOs have cooled, M&A has slowed due to increased government scrutiny and interest rates have dropped.

This lead to ex-CEO of Techstars Maelle Gavet, to predict in a CNBC interview that:

"It could be as high as up to 50% of VCs in the next few years that are just not going to be able to raise their next fund.”

All of this data is for mainstream VC— now consider agtech, where exits have been slim, the size of those that occurred were small ($<1 Billion + upside quickly eradicated in public markets for those that exited via SPAC and didn’t sell) and there are only so many potential acquirers of agtech, limiting demand and future upside.

The reality is that many VCs in agtech will be challenged and right now are clinging to the equivalent of a VC ponzi scheme executing bridge rounds and extensions to keep their portfolio values artificially elevated as they try to raise their next fund.

That leads into the next story on a raise extension.

5a. Sound Agriculture Secures $25M - Sound Agriculture

Sound Agriculture, a high growth agtech company, has spun out its leading plant epigenetics platform and completed a $25 million extension of its Series D raise. The new financing, co-led by BMO Impact Investment Fund and S2G Ventures, will propel Sound toward profitability and support the launch of bio-inspired nutrient efficiency solutions that empower growers to achieve healthier soils, thriving crops, and climate-friendly farming practices.

The raise is an extension of its $75 million Series D from December 2022. $75 million over 24 months suggests a burn of over $3 million per month, not factoring in any product revenue, and assuming they aren’t planning to make any acquisitions. Sound has stated they are currently on 2 million acres in the US.

Sound suggested to AgFunder News that they will use the new funding to expand into new products and geographies.

It’s not clear what they mean by geographies, but that presumably means additional countries.

That is an interesting avenue to try and “propel towards profitability.”

For the full breakdown on challenges and why those may not propel the business tom profitability, Upstream Ag Professional member with a limited time discount today:

The full article is available to every one.

I commonly get asked about the newsletter metrics and with the newsletter turning 5 years old in January I thought it would be a good time to share some background on some of the questions I get asked, like:

  • Where is your audience located?

  • How many people read Upstream?

  • What are the most popular articles?

Much of this is in the advertising information packages I send out (free subscribers see advertisements), so I thought I would share some of those stats.

This year, the newsletter has expanded its reach more rapidly than any year before, and has been read by thousands of agribusiness leaders from around the globe.

Growth in Numbers

  • 19,312 total subscribers with a net addition of more than 5,300 subscribers this year, or 37% growth and over 100 new subscribers per week.

  • Upstream Ag Insights is now read across 122 countries, a >20% jump from ~100 last year.

    • Over 50% of subscribers are from the United States.

    • Canada has the second largest readership at 12%.

    • Australia, Brazil and India round out the top 5.

Content and Engagement

  • This year, 51 editions were published, alongside 77 individual articles, totalling ~376,000 words shared—If you read every word published in Upstream this year it would be the equivalent to reading six full-length books, not including any of the linked content!

    • There have been over 245 editions published since January 2020, totalling more than 1.4 million words shared.

  • Over 1,550 linked articles and resources were shared in the newsletter throughout the year. That’s an average of 30 links per edition.

  • 2024 was the first year to hit over 1 million page/email views (combined).

  • Search functionality became a valuable tool for over 300 Upstream Ag Professional subscribers.

For the ten most popular Upstream Ag Professional articles of 2024, check out the full Year in Review.

Non Ag Article

7. I Have A Few Questions - Collaborative Fund

In this article, Morgan Housel shares a reminder to approach the world with humility and curiosity. He challenges to confront blind spots and question the narratives we cling to, often without realizing why. Through a series of sharp, thought-provoking questions, he explores how biases, external influences, and limited perspectives shape our beliefs and decisions.

Other Interesting Ag Articles