Upstream Ag Insights - January 29th 2024

Essential news and analysis for agribusiness leaders

January 29, 2024 • Read Time: 16 minutes

Welcome to the 201st Edition of Upstream Ag Insights!

Index for the week:

  1. John Deere 2023 Annual Report Highlights and Analysis

    1. John Deere Announces Its 2024 Startup Collaborators

  2. FBN Raises New Funding and Sells Insurance Business: What other businesses will they exit?

  3. GROWERS Platform to Integrate Bushel Wallet for Enhanced Online Ag Retail Purchasing Experience: What does it mean for Bushel, GROWERS, Retailers and Farmers?

  4. AgTech News…So What? January 2024 with Shane Thomas 

  5. Agoro Carbon Alliance Surpasses 2M Acres In Sustainable Ag Practices Across The U.S

  6. Agribusiness marketing teams could attract better ad responses with predictive intelligence insight

  7. Fairfax Reaches Deal to Take Farmers Edge Private

  8. FCC launches program to incentivize adoption of 4R Nutrient Stewardship

  9. Bluewhite rakes in $39M for robots-as-a-service that can be retrofitted to drive any tractor

  10. Asking the wrong questions

This week’s edition is brought to you by AGI (Ag Growth International)

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AGI’s equipment solutions and technologies contribute to reducing post-harvest losses and increasing food security. Our newly installed on-farm storage bins protect approximately 6.5 MT of incremental grain from potential spoilage each year, enough to feed an additional 30 million people per year.  AGI bins are built to last over 30 years, providing long-lasting solutions to food security outcomes. It is through our commitment to quality, reliable and durable solutions that we ensure crops stay protected and in optimal condition for years to come.

Learn more here:

Highlights

  • John Deere grew revenue by almost $8 billion in 2023 to $61.3 billion, with the most significant portion of their business continuing to be the large-scale production and precision ag pillar, accounting for 43% of their 2023 revenue.

    • North America remains Deere’s largest revenue geography, making up 61% of revenue.

  • Deere’s operating margin in the Production agriculture segment grew to 26.1%, pulling up the overall operating margin to above 25%.

  • In 2023, Deere spent over $2.17 billion on R&D; unsurprisingly, the biggest chunk of this is focused on Sense and Act technology, according to investor calls.

  • Leaps Ambition Progress:

    • Connected Machines currently sit at 642,000, up from 300,000 in May 2022, with a 2026 target of 1.5 million

    • They have progressed on their engaged acres to 388 million, with 24% highly engaged and 41% sustainably engaged.

  • Deere’s outlook for 2024 isn’t positive (consistent with other equipment manufacturers). The forecast is for double-digit decline clear across many business segments and geographies, with Deere’s North American large-scale ag forecast to have the largest at somewhere between 10 and 15% according to investor materials.

For the full breakdown and overview, including highlights of how Deere’s effort to move to recurring revenue could impact operating margins, autonomy progress updates, and more, become an Upstream Ag Professional Member:

Each year, John Deere works with a group of start-up’s as a part of a program that gives the organizations access to resources from John Deere and in return, Deere gets the opportunity to learn from these innovative organizations.

The first three, Constellr, Geminos and SB Quantum are really compelling from an agriculture perspective:

  • Constellr – a company measuring land surface temperature and water from its own satellites at unprecedented accuracy levels to enable insights for a more sustainable future. 

  • Geminos – an artificial intelligence company empowering businesses to understand and leverage causality for enhanced decision-making.  

  • SB Quantum – a quantum sensing company focused on navigation based on a novel quantum magnetometer. 

  • Fermata Energy – a leader in vehicle-to-everything (V2X) bidirectional charging platform technology. 

  • goFlux – a Brazil based logistics company focused on digital solutions to connect the ecosystem for freight transactions.  

  • Cloudscape Labs – a production management software company focused on providing job site visibility across the construction team to help meet production, cost, and safety targets.

2. FBN Raises 9 figures and Sells Insurance Business: What other businesses will FBN Exit?

Patriot Growth Insurance Services LLC said Thursday it has bought FBN Insurance LLC from Farmers Business Network, expanding is agriculture insurance business. Terms were not disclosed.

For the full highlights and analysis of the FBN raise from the end of 2023, what it means in the context of exiting the Insurance business and what other businesses they might exit next, become an Upstream Ag Professional member today:

GROWERS, a platform connecting farmers and ag retailers for digital input procurement, and BushelⓇ, an independently-owned software technology company focused on developing digital tools for the agricultural supply chain, announce a partnership to integrate digital payments into the ag retail purchasing process.

This news includes four separate groups: Bushel, GROWERS, retailers and farmers. I’ll highlight the importance and challenges for each group.

Bushel is primarily known as a software business. However, they launched Bushel Wallet in 2022, a “digital wallet” designed specifically for farmers and agribusiness. It is supposed to provide agribusinesses with a seamless ability to exchange payments through the safety and security of the Wallet’s digital ecosystem. Since meeting co-founder and CEO of Jake Joraanstad, in 2020, he has always emphasized the future payment infrastructure of Bushel to me and for good reason— I’ve talked about vertical agribusiness software needing other revenue streams.

For Bushel’s Wallet to be successful, they need to increase its utilization and take advantage of network effects. Increasing the integrations into other software’s, credit organizations, retailers etc is key to driving the success, after all, they need to it to be moving not simply millions, but billions of dollars for it to deliver meaningful network effects and revenue for Bushel’s business. I suspect this is the first of many more announcements around Bushel’s Wallet integrating with other players.

For the full overview of what it means for Bushel, for GROWERS, future acquisitions, and farmers and retailers, become an Upstream Ag Professional member today:

For 2024, my friends at Tenacious Ventures (Sarah Nolet and Matthew Pryor) and I wanted to try a regular podcast out. We have regularly scheduled conversations where we talk about big ideas and events in agriculture. We have often said, “We should have recorded this conversation," and in 2024 we are trying it out.

This week is the first attempt at the podcast, and in it, we cover the following topics:

  • What John Deere’s announced partnership with Starlink means for farmers, ag retailers, and the future of connected agtech

  • What Jigsaw Farm’s evolving status as a vanguard of climate-smart agriculture tells us about future trouble in carbon and methane emission-reducing plans

  • How ag software roll-ups might be evolving as agtech matures.

For more on the Starlink and John Deere Partnership, see the January 21st 2024 edition of Upstream Ag Professional.

Agoro Carbon Alliance, announced today that the company has hit a significant milestone: 2 million acres enrolled in sustainable agriculture practices across the U.S. These acres are conservatively estimated to sequester more than 7.5 million tons of carbon over the contract periods.

Agoro Carbon Alliance, a wholly owned subsidiary of Yara, last shared an update in June 2023 surrounding their carbon program utilization stating that they delivered $15 million total in carbon credit payouts to farmers over the first two years of running the program. This is after stating that their first year delivered $9 million to farmers, indicating a decline from $9 million to $6 million in payments to farmers. There was no acre announcement at that time.

For comparison, Indigo has 2,000 farmers that have enrolled more than 6 million acres, while Winfield’s TruTerra last shared that they had approximately 1.5 million acres in May 2023.

If we assume similar-sized farmers enrolled in Agoro’s program as Indigo’s, then Agoro likely has less than 700 farmers enrolled in the program.

Program enrolment continues to be relatively slow for all players.

I haven’t been able to connect with Kynetec yet to learn more about their software offering, however, the software highlighted in this article is quite interesting for crop input providers— software that:

uses historical sales data with other relevant sources of dynamic ag data to forecast future sales trends, the predictive intelligence platform allows for refined sales forecasting. It also permits for targeted account management, helping to identify new areas of opportunity and plan focused campaigns to sell the right product to the right farmer at the right time using local market size estimates.

In and of itself, it is interesting, and I have the view that “knowledge is power,” but what is really interesting is where future intersections of this software can arise.

In Catalytic Themes to Watch in AgTech and Agribusiness for 2024 I highlighted the role of precision; highlighting marketing and the functionality AgVend is delivering into the marketplace (check out the article for the deeper overview).

When we think about the power of each of these organizations' functionalities, we can see where there is an integration approach that makes both services more effective.

For Kynetec, they can gain real-time transactional data and customer engagement data to further augment their service, while AgVend can gain access to more macro information to help fuel predictive intelligence into campaign performance or likelihood of purchasing or enable the retail base to do a better job forecasting.

I think that’s just the beginning; some of the predictive capabilities that Kynetec talks about in the article give opportunities for other integrations throughout the ag value chain.

Farmers Edge has entered into an agreement with its largest shareholder to take the company private, pending approval from other shareholders.

The deal would see a subsidiary of Fairfax Financial Holdings, which owns approximately 61 per cent of the common shares in the digital agriculture company, purchase the remaining shares for a price of C$0.35 a piece.

While a negative storyline overall for those involved in the world of agricultural technology, it seems like a good thing for the future of Farmers Edge’s business.

Farm Credit Canada (FCC) is excited to announce a new Sustainability Incentive Program that will support crop producers who follow Fertilizer Canada’s 4R Nutrient Stewardship program using AgExpert. The program encourages producers to adopt 4R best management practices to help protect the environment without compromising their competitiveness.

FCC is the largest credit organization in Canada and arguably one of the best-positioned entities in Canada to incentivize new best agronomic practices.

However, this initiative leaves a lot to be desired. The incentive is up to $2,000 annually.

However, the devil is in the details.

To be eligible for the Sustainability Incentive Program, there are four things necessary:

  • A farmer must be an FCC customer

  • Have a 4R Nutrient Stewardship plan in place

  • During the crop year, record production activities, such as fertilizer applications in AgExpert Field

  • Have 4R best management practices verified by a 4R designated agronomist within the AgExpert Field by the end of the growing season

Unsurprisingly, FCC would keep it to their customer base only, and their “up to” amount is likely dependent on the size of the customers they are.

It seems unlikely that the majority of payment will be kept by the farmer either.

The farmer needs to use AgExpert Field, which has three tiers, with the free version not including crop planning or product usage reports, which means the farmer would need to use AgExpert Field “Premium” that costs $399 annually.

The farmer also needs to get the practices verified by a 4R certified agronomist— many retailers have individuals with this certification, however, some farmers will have to get an independent consultant that is certified, which may come at a cost to them as well.

A program like this comes across more like a box-checking initiative and customer acquisition strategy for their AgExpert Field system than it does drive any significant impact. I highlight it because this we are likely to see more programs like this throughout North America.

Bluewhite has picked up $39 million in funding to advance its own contribution to the field: autonomous robots that can be retrofitted to any tractor to operate it autonomously, which in turn are sold not as one-off products but as part of a bigger service play — robots-as-a-service.

The Bluewhite solution can be set up in one day — it comes as as a kit that is sent to the farmers local service center to be retrofitted onto existing tractors. And afterward customers take the service typically on a five-year contract. Tractors fitted with Bluewhite’s robots can still be operated by people where they might still be needed.

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