Upstream Ag Insights - July 1st 2024

Essential news and analysis for agribusiness leaders

July 01, 2024 • Read Time: 18 minutes

Welcome to the forefront of agricultural innovation with the 222nd edition of Upstream Ag Insights, where over 16,820 agribusiness leaders start their week discovering the latest industry news and learning about groundbreaking innovations and business strategies shaping the future of agriculture.

With curation and analysis from Shane Thomas, each edition delivers unparalleled insights and expert analysis meticulously crafted for the practical agriculture professional, empowering you to be among the best informed in the industry and make superior tactical and strategic decisions.

Whether you're a new subscriber or this email was forwarded to you, Upstream’s field-tested frameworks and in-depth examinations equip you with the knowledge and foresight to seize opportunities and catalyze growth in your business and career.

Index

  1. The Evolution of Input Manufacturer Program Perception

  2. Biological Corner

    1. Crop BioControl Landscape 2024, 300 Companies Targeting Crop Pests with Biologicals

    2. Dunham-Trimmer Biological Presentation from Salinas Biological Summit

    3. Evaluating Biologicals Businesses with Joel Lipsitch

    4. PI Industries Plans to Acquire Plant Health Care Plc for 32.8 million pounds

  3. League of Extraordinary Copilots: Vision for Open and Sociable AI

  4. Bushel Buddy Seat Conference showcases new features for its integrated workflow solutions

  5. Benson Hill Confirms Preliminary, Non-Binding Indication of Interest from Argonautic

  6. The House of Arnault

  7. Other Interesting Ag Articles (9 this week)

Happy Canada Day to Canadian reader! And early July 4th to all American readers!

This week's edition of Upstream Ag Insights is brought to you in partnership with Nave Analytics and The Combine

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Grower programs have been a staple in Canada for crop protection manufacturers for decades, but have been a newer introduction in the United States.

Stratus Ag Research recently did a survey of US based growers and retailers surrounding the perception of grower programs.

For the full Upstream article, including exclusive charts and images from Stratus Ag Research, and thoughts on driving the future of crop protection programming and what start-ups are working on, become an Upstream Ag Professional member today:

2. Biological Corner

As the biologicals sector has continued to heat up, we wanted to not only update the landscape, but also drill down more deeply.  So, we split the 2023 landscape into its logical BioControl and BioProductivity halves. The 2024 BioControl Landscape discussed here  includes 300 companies delivering biological crop protection products that target insect, mite, disease, weed and nematode pests. Of note is that about a third of the 300 companies represented did not appear on last year’s landscape.

The Mixing Bowl consistently delivers the best landscape maps across the ag industry, and this year, in conjunction with Western Growers, they shared one focused on BioControl:

A few highlights:

  • In 2024, there was an increase in the proportion of companies operating in more than one segment, reaching 60% of the total.

  • About 75% of the companies on the landscape target insects and mites, the most for any segment. Microbial and botanical actives were the leading technologies targeting these pests.

  • More than half of the companies on the landscape have products targeting plant diseases while microbials are the dominant technology being employed against them.

  • Although the segment looks small on the landscape, about 20% of companies offered bionematicides. Many of those companies are located in the Multiple Segments area.

  • About 40% of companies on the landscape offer products in multiple segments.

  • RNAi-based is a pre-market segment, although the first sprayable RNAi-based product has been registered recently by the EPA. Check out the Upstream write up on the registrant and their product, Greenlight Bio here.

I wanted to briefly zero in on one area: bioherbicides (middle-left portion of the landscape). It has just ~10 companies directly listed within it making it essentially the smallest subsegment from a company number perspective, within biocontrol.

Herbicides, in the synthetic sense, are the largest crop protection segment. Bioherbicides are the opposite.

What drives that?

Become an Upstream Ag Professional member to read about the challenges with bioherbicides:

This passed week was the Salinas Biological Summit and market research firm Dunham Trimmer presented their insights surrounding the bio market.

They shared their presentation on Linkedin— just 13 slides, but I think hitting on and contextualizing important topics with in the biological realm, such as investment trends, historical perspective and how incumbents are influencing the industry, including that mainstream industry investment and focus has increased credibility in biologicals. I think that’s accurate on incumbents boosting credibility and have talked about it in Biostimulant Battlegrounds, to not only investors, but farmers.

Dunham Trimmer also calls out the challenges and mixed results, which I also agree with, and have talked about surrounding a companies dominant logic, core competency and incentives:

What stood out in the above slide was Dunham Trimmer calling out the fact that none of the big crop protection companies have developed strong biological R&D capabilities.

What are the crop protection companies spending on bio-based R&D? What new legislation may give certain organizations an upper hand in microbials? Become an Upstream Ag Professional member to learn more:

Continuing the biological theme, Joel Lipsitch of Blair Road Consulting talked with Sarah Nolet of Tenacious Ventures about evaluating biologicals. The entire podcast is worth a listen, getting into routes to market, business models, pricing and more, but I wanted to highlight one topic they hit on: companies over promising and under delivering, specifically with biostimulants.

There is an often talked about knowledge gap at the farmer and advisor level surrounding biostimulants, but I’d also suggest there is frequently a gap in the organizations themselves that is entirely controllable. Joel and Sarah address the need of companies to improve from over promising and under delivering— to me, over promising and under delivering is a function of not putting in the work.

If a company hasn’t put in the time to deeply understand their product and its performance, that’s a red flag. There isn’t an excuse today.

For a dive into the three areas that bio-based companies should be aware of, and a breakdown of ‘omics’ and how it plays into understanding biostimulants to drive better commercial success, become an Upstream Ag Professional member today:

Udaipur-based agrochemicals company PI Industries Ltd said that its board of directors has authorised the acquisition of Plant Health Care Plc (PHC) for approximately 32.8 million pounds. This move intends to improve PI’s ability to provide integrated solutions for sustainable agriculture.

PI Industries is an India-based agchem business, which means I generally wouldn’t cover this news (North America focus). However, Plant Health Care Plc is a publicly traded bio-based company on the UK stock exchange which means a data point for what multiples bio-based companies are commanding in the market. PHC has primarily peptide based products and does have patents, including formulation and stability based ones.

According to their 2023 annual report, PHC had consolidated revenue of $11.2 million with a 60% gross margin in 2023, and $11.7 million of revenue with equivalent margins in 2022.

PHC is not operationally profitable which challenges an EBITDA multiple. However, a multiple of sales revenue is possible.

£32.8 million pounds converts into $41.3 million (1 British pound = 1.26 USD exchange rate) which means averaging the last two years of revenue for PHC had the deal done at 3.6x revenue.

For context, Corteva purchased Stoller in 2022 for 3x revenue. Valagro was acquired by Syngenta in 2020 when Valagro had revenue of $175 million for about $600 million, or 3.4x revenue.

Notably, PHC has losses over their existence totalling more than what the purchase price is for— with the last 6 years totalling $36 million alone. This is for a company that has over $10 million in annual revenue and 60% gross margins— that puts them easily into the top 5% of all bio companies globally, illustrating the challenge of successfully operating in the biorationale space.

Related: Corteva R&D Innovation Update Highlights and Analysis - Upstream Ag Professional

Last year, Dataiku spoke about an LLM Mesh – nice but I have something else on my mind! Such an idea of an LLM Mesh creates somewhat of a backbone that sits on top of underlying LLMs and acts as a gateway. But remember - we have Artificially Intelligent copilots built into each enterprise product, where is the fun in having to coordinate across them? How cool would it be if these AI Copilots could talk to each other natively?

This is a good post from Syngenta CIO Feroz Sheikh on “sociable AI,” planting more seeds of consideration surrounding LLMs within agribusiness.

One of the challenges for LLMs, just like software, is the need for connectivity and integrations. Just like no one wants 47 softwares to log into, nobody will want 47 LLM co-pilots that do not talk to each other. However, connecting co-pilots together is as complex or more than software— getting software to effectively work together with the LLM and then add another layer of complexity where each co-pilot connects to another and then reacts, and executes within the software, adding more layers and points to manage.

I have talked primarily about vertical agricultural software such as Ever.Ag, AgVend, or Bushel and their relevance relevance because of streamlining the workflow of agribusiness professionals. They have become a hub based on owning a control point— being a must use tool each and every day.

For the full breakdown, become an Upstream Ag Professional Member today:

Related LLM Deep Dives and Analysis:

Recently, Bushel had their Buddy Seat Conference in Fargo, North Dakota. At the event Bushel highlighted several aspects of their product and business, including an AI assistant:

Scoular announced that it is working with Bushel on a proof of concept to bring a generative AI assistant into ScoularView to help answer account questions from farmers such as how many bushels are in storage, average protein levels during last number of loads, or number of bushels remaining on to be delivered.

I have already talked about Bushel in Upstream write-ups as if they have an AI offering on the assumption they would eventually offer one— while Bushel did not state that it is going to be an offering for their entire customer base, it illustrates they are laying the foundation to integrate LLM assistants into their product.

Three weeks ago I highlighted the teaser and pricing decision of AgVend’s co-pilot offering, Goose.

Bushel usage highlights:

Bushel now powers more than 3,500 grain and ag retail facilities, representing more than 50% of U.S. and Canadian grain origination. Combined with its integrations with agricultural ERPs, this network is a unified digital infrastructure that enhances efficiency and communication across the agricultural supply chain.

 Benson Hill, Inc. , a seed innovation company, today confirmed that it has received a preliminary, non-binding indication of interest from Argonautic Ventures Master SPC (“Argonautic”), on behalf of itself and other co-investors (collectively, the “Investor Group”), to acquire all of the outstanding shares of common stock of the Company not owned by the Investor Group or their affiliates for $0.2236 per share in cash. The indication of interest states that the Investor Group and their affiliates currently own approximately 16% of the outstanding shares of common stock of the Company and that the composition of the Investor Group may change.

Benson Hill went public in 2021 at over $10/share after raising over $280 million in VC funding and an additional ~$310 million in public market raises.

Today, they are trading at around 17 cents per share and a market capitalization of $36 million— a cratering of almost 99%.

The offer, valuing Benson Hill at around $47 million, is seemingly an attempt to give Benson Hill the ability to transition their business model:

2024 represents a year of transition for Benson Hill while we evolve our business from an asset-heavy, closed-loop model to an asset-light, licensing and partnership model, where our seed innovation portfolio is well-positioned to expand into large and attractive segments in soy: animal feed and biofuels.

Non Ag Article

Arnault exploits this imbalance in a few ways, namely through real estate. His private equity arm, L Catterton, owns properties worth billions of dollars, including premier retail locations and office buildings in most major cities, and it’s taken advantage of cheap borrowing costs to accelerate the pace of acquisitions. Last year, LVMH spent €2.45 billion on real estate acquisitions, a record for Arnault’s group. He makes money from his own stores, from leasing space to rivals—and from the appreciation of premium real estate.

When LVMH buys a building, it takes the best storefronts for its own brands and often asks rivals to move out when their leases expire. Companies such as Kering and Prada have tried to keep up, buying their own properties. Kering’s recent €1.3 billion building purchase in Milan, coupled with the struggles at its main label, Gucci, even hurt its credit rating. “It’s just a clever way to distract competitors and make them sweat more,” says Solca, the Bernstein analyst. “It’s very difficult for anyone to keep pace.”

Arnault has gradually become even more ambitious with real estate. In Miami, L Catterton teamed up with a developer to transform an area of empty warehouses and litter-strewn lots into a new luxury shopping neighborhood called the Design District. Arnault waded into the details, including decisions about architecture, landscaping and which tenants could move in. With its latest project, called Royalmount, L Catterton is rehabbing a light industrial district in Montreal. A luxury retail and dining destination with various LVMH brands will anchor the $5.1 billion development, which will be connected to a metro station by a $37 million pedestrian walkway.

For rivals, all this creates an intolerable imbalance of power. They are either at the whim of property owners desperate to score a Dior or Vuitton store—or LVMH itself is their landlord. Either way, they’re likely to get bumped from the best locations. One rival luxury brand CEO, who asked not to be identified because he works with LVMH in multiple ways, was apoplectic. “Luxury is a disaster. There is no competition. It’s not a game for everyone, it’s just them,” this person says. “Everywhere you go, they try to kick you out.”

Other Interesting Ag Articles

The Imperative of Data Quality - The Context Network