Upstream Ag Insights - December 4th 2023

Essential news and analysis for agribusiness leaders

December 04, 2023 • Read Time: 19 minutes

Welcome to the 195th Edition of Upstream Ag Insight!

Index for the week:

  1. One (Three) Upping Indigo Ag: New Initiatives from Farmers Business Network

  2. Breaking Down the InnerPlant + GROWMARK Sentinel Project

  3. Converging Agribusiness Software Trends and Implications: Ever.Ag and AgVend Launch New Products

  4. AgroSpheres Completes Expansion of $25 million Series B

  5. Four Areas to Revamp Your Ag Retail Business: Investing in Strategic Assets

  6. Yara Introduces New Line of Biostimulants: Importance of Effective Positioning in Biostimulants

  7. The 60 Best Charlie Munger Quotes

This week’s edition of Upstream Ag Insights is brought to you by ClimateAi

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This week, I read an interview with FBN’s Head of Data Science & Analytics, Kit Barron, and Vice President of Global Procurement and Supply, Tom Lyons.

The interview took place during an FBN “Roadshow” which “attracted the participation of many Chinese agrochemical enterprises” that I get into below.

First, some interesting numbers on FBN’s business:

  • FBN now has over 75,000 members.

  • The FBN membership base has grown 42% from its 20,000 members in Q1 2021 to more than 75,000 in Q3 2023.

  • Cropland owned by farmers who are FBN members, reached 139 million acres, accounting for 29% of cultivated land of the US.

  • FBN says they have analyzed 100 billion field data points from across North America, covering 31.5 million acres of land, 6,800 seed varieties, and 150,000 purchase invoices for agricultural inputs.

The aspect that stands out about these numbers is that none of them emphasize the current engagement or activity of the member base.

Becoming an FBN member is low friction: there is no cost, and all it takes is an internet connection and an email address.

What indicates a healthy business are customers, or users, taking business actions; what percentage of those members purchased a product from FBN in the last 365 days, what percentage of those individuals grew their business with you in the past 365 days, and on the lowest of ends, a membership activity metric, such as an L28 (members that took an action within the app or on the website in the last 28 days).

If those KPIs, or variations of them, were positive, they would be stated because that illustrates a highly engaged member base. This, to me is a red flag regarding the health of the FBN business.

One (Three) Upping Indigo

In 2020, David Perry (in)famously stated that Indigo was “five start-ups in one” because they had so many different pillars within their business. Being that this was across crop inputs, grain, carbon, transportation and more, the total addressable market that Indigo could sell to investors was massive.

But, this broad based approach was a red flag. And even after focusing their efforts on three business units— it was still too many.

FBN went a similar route, now even emphasizing that they are an “8-in-one” app:

Business strategy and tactics stem from the concept of strategy in war.

A basic understanding of battlefield strategy is that you cannot attack an enemy from every direction. It scatters resources and people, leaving you in a weak or vulnerable position. The aim is to focus resources, play to your strengths, and get small wins, then move from there.

Indigo was doing the equivalent of aimlessly letting soldiers run rampant on the battlefield, and FBN is doing the same— this wreaks havoc on a battlefield, just like in a market, wasting resources, not gaining any ground, and making it a challenge for the business to gain momentum and wins that it needs to be successful.

In Zero to One by Peter Thiel, he emphasizes that it is easier for start-ups to overcome competition by dominating a small market rather than a large one.

Any big market is a bad choice, and a big market already served by competing companies is even worse…In practice, a large market will either lack a good starting point or it will be open to competition. And even if you do succeed in gaining a small foothold, you’ll have to be satisfied with keeping the lights on: cut-throat competition means your profits will be zero.

In other words, dominate a niche.

FBN has not dominated any niche.

For the full analysis of FBN’s strategy challenges along with a breakdown of FBN’s future initiatives in North America, become an Upstream Ag Professional member today:

InnerPlant, the seed technology company enabling the earliest possible detection of stress in crops to make farming more efficient and sustainable, and GROWMARK, an agricultural cooperative serving almost 400,000 customers across North America, today announce the launch of a sentinel project featuring InnerSoy, a soybean engineered to signal optically when under attack by fungi.

Three weeks ago, I broke down the news of *InnerPlant, John Deere Expand Ecosystem to Include Syngenta, Focusing on the Evolution towards Plant by Plant Disease Management, highlighting the expanding ecosystem collaboration.

Then, last week, I analyzed InnerPlant’s ecosystem strategy using concepts from Ron Adner’s book The Wide Lens in Ecosystem Innovation Through the Lens of InnerPlant.

For the full Upstream Ag Professional coverage, including an overview of sentinel plot tools, adoption chain risk, and the upside opportunities for both GROWMARK and InnerPlant, become an Upstream Ag Professional member today:

Ever.Ag, a leader in software for everything agriculture, is proud to announce their latest innovation: FieldAlytics Enable. This addition to the FieldAlytics platform is not just a sales enablement tool; it's a comprehensive solution that transforms the way sales agronomists work. By integrating rich spatial and transactional data, FieldAlytics Enable goes beyond traditional CRM capabilities, offering a unique and essential resource for the agricultural market.

FieldAlytics is a robust agronomic tool from Ever.Ag.

Ever.Ag also has an ERP offering in Merchant Ag.

As I highlighted above, moving agronomic or geospatial data closer to where the transaction occurs is the directional arrow within agribusiness software.

It drives better planning and higher resolution cost of production for farms, decreases manual entry, and ensures important information can be surfaced when needed, such as at the point of recommendation, crop planning, application dispatch, or otherwise.

Ever.Ag is uniquely positioned in the vertical software space, given its access to connect those important components via the Enable system. Notably, Enable and Fieldalytics as a whole are ERP agnostic.

A tool like Enable is important because ERPs are notoriously unfriendly to users— they are effective at storing important data and business processes, but often not a a great tool for salespeople to leverage the data in a quick and easy way, such as extracting a list of customers that purchased seed from them last year, to grab a list of priority custom application jobs from, or if you believe in sustainability programs the connection together creates a more seamless MRV process.

This is a great thing for sales agronomists, retailers, and, ultimately, farmers— Ever.Ag also launched its Engage farmer-centric offering earlier this year, which I broke down in April.

The other news came from AgVend, with their CRM+ launch:

AgVend, the leading provider of digital enablement solutions for agribusiness, announces CRM+, the first of its kind to combine the horsepower found in horizontal software solutions like Salesforce and Microsoft Dynamics 365 with the unique aspects inherent in the ag industry. Designed to handle the complex field-level account structures and the varying ownership splits typical in farm management, CRM+ is crafted from the ground up for the mobile-oriented nature of ag retail teams. The tool provides one place for ag retail teams to optimize their opportunities from the field to the office, strengthening face-to-face interactions, safeguarding knowledge amid turnover, and unlocking new revenue opportunities.

I think CRMs have been underutilized by ag retailers. In part, this has been because of the arduous user experience they deliver within agriculture: Most CRMs are built to be industry agnostic, and therefore, they do not consider the nuance of agriculture, such as unique invoicing splits or the reality that sales happen in a field and require a mobile-first capability.

AgVend’s CRM+ seeks to improve workflows, increase staff efficiency, and change how ag retail professional engages with farmers and suppliers.

I think the supplier part is important to note, too.

The Ever.Ag emphasis was on value towards sales agronomists. AgVend emphasizes customer relationship management as well, but the capabilities emphasized signal value for various retailer roles, including marketers, logistics, product managers and sales leaders, for example. This could be better demand generation functionality (marketing), product forecasting (product managers), better supply chain visibility (logistics) or better KPI tracking (sales leaders).

In my opinion, software needs to drive success at the customer-facing staff level first (eg: agronomists, salespeople, location managers). But from there, winners in the agribusiness software space will also be able to generate value across most roles (if not all) within a retailer. That generates more urgency to spend on software when there is value across multiple areas and people within the business.

Bushel CEO Jake Joranstaad was on The Scoop Podcast this week, where he stated, “we are starting to track towards CRM” functionality, which, along with statements from Bushel earlier this year to enter the ag retail side of the business reinforces that the competition in this space is not letting up. Not to mention the industry chatter surrounding TELUS acquiring Proagrica, the competitive landscape continues to heat up.

For the full analysis of the battleground in agribusiness software, who wins and the future moves in the agribusiness software space, check out the link in the heading title: Converging Agribusiness Software Trends and Implications.

AgroSpheres, a biotechnology company pioneering breakthroughs in sustainable crop protection, today announced the closing of its Series B funding round with a strategic investment from FMC Corporation, a global leader in agriculture sciences. This investment brings the total funding in AgroSpheres’ Series B round to $25 million, demonstrating the strong confidence in the company’s innovative solutions. FMC Ventures joins Lewis and Clark AgriFood, Ospraie Ag Science, BIDRA Ventures, and Cavallo Ventures to close out the round.

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. That part of their business is a formulation service business that establishes partnerships with crop input manufacturers (they currently have development agreements with Bayer, for example):

For full insights into the strategic investors in AgroSpheres, where their technology fits, when they will be bringing their own products to market and the challenges of RNAi and Peptides, become an Upstream Ag Professional member today:

Forces bringing change to the ag retail business demand respect. He sees many retailers ripe for either not taking some of the industry changes seriously as they emerge or — for those who have been in the industry for decades — not realizing change is afoot. 

As always, Brad Oehlmann, CEO of Farrell Growth Group shares great insight surrounding ag retail that is worth the read.

There is one aspect of what Brad shares that I want to highlight:

Infrastructure Assets to Support Declining Volumes

“You’re going to be selling less product to the same people in five years than today. This is because of product use rate efficiency, regulations and a decline in farmed acres,” he says. 

As an example, the most profitable ag retailers Oelmann consults with dominate their dry fertilizer markets. On the flip side, dry fertilizer is more asset-heavy to store and sell than seed or crop protection.

I think this is an important call-out.

I would tweak the framing slightly, though: Infrastructure Assets to Support Better Volumes.

There could be new regulations, changes to farmed acres (consolidation), and improved product efficiency, leading to lower volumes. The implication of this, though, is to invest more strategically in the infrastructure a retailer has:

What assets can be invested in to attain better crop outcomes?

A few examples:

  • Fertilizer coating capabilities on blending assets.

  • Biological infrastructure.

  • Precision seed treaters.

The industry trend is towards more early, in-soil, and on-seed input utilization. The above assets would enable a retailer to take advantage of those trends with better volumes.

Maybe volumes decline as Brad suggested, but my gut feeling over the next decade is that dollars spent will be flat on the low end and most likely up because of the aforementioned trends, increased complexity in crop production, and new crop input technology coming to market. In order to support better crop outcomes (eg: yield, quality, soil health) there will be a need to support new product utilization, and that is best done with assets fit for the up-and-coming challenges and product opportunities.

For the value-added retailer, value (margin) accrues to those who have differentiated assets. Farm consolidation is occurring; regulations might be on the horizon, but the overwhelming trend is toward needing new products and capabilities to deliver these to farmers.

If a retail strategy is to be value-added, like most talk about, then looking hard at new products that are coming to market in support of future trends and what assets are necessary to deliver those to farmers in the coming years effectively will be the most important.

Of note, not all strategies need to be value-added, as I talk about in Navigating Strategic Development, Strategy Tax and the Opportunity in Uncertainty in Agribusiness.

This week Yara announced the launch of YaraAmplix, a new brand of biostimulants.

Yara’s existing biostimulant product portfolio will now become part of the new YaraAmplix brand family, launching several new products in 2024. The YaraAmplix brand is a complement to Yara’s fertilizer portfolio and will allow the company to provide a complete crop nutrition solution. The portfolio contains mostly plant-based ingredients, such as seaweed and plant extracts.

The Sauce Paradox

In The Sauce Paradox, I shared logic and a framework for positioning biostimulant products in the market.

With biostimulant product positioning, there tends to be what I call the sauce paradox.

For most companies, biostimulants are tempting to take the Franks Red Hot Sauce approach: “I put that shit on everything”

It’s tempting to say biostimulants do everything, on every crop and in every situation because when you augment plant physiology so broadly, there is a desire to emphasize everything it does to allow for optionality.

That’s part of what has troubled biostimulant perception in the market. When you try to be everything to everyone, you accomplish being nothing to everyone.

Instead, in biostimulants, it’s better to take the BBQ sauce approach. BBQ sauce is intended for a very specific use: cooking and marinating meat. The sauce is intended for those very specific use cases and even has formulation considerations for the specific use (eg: being used in high-heat scenarios and on specific types of meats).

Biostimulants should be thought of as BBQ sauce and not Frank’s Red Hot Sauce.

To navigate, I use the funnel of specificity for crop input marketing and positioning:

To see the full Funnel of Specificity Framework, examples of positioning well and positioning poorly in the biostimulant space, become an Upstream Ag Professional Member today:

Non-Ag Article

I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long road ahead of you.

Charlie Munger, the legendary investor who had been Warren Buffett’s partner at Berkshire Hathaway for more than 60 years, passed away this week, just five weeks shy of his 100 birthday.

Listening to and reading Charlie Munger has been incredibly influential on how I think and how I approach problems.

He was one of the most quotable individuals, so this week, I wanted to share a link to 60 of his best quotes.

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