Upstream Ag Insights - March 25th 2024

Essential news and analysis for agribusiness leaders

March 25, 2024 • Read Time: 17 minutes

Welcome to the 208th 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 the complex agribusiness landscape, enabling your business and career to thrive.

Index for the week:

  1. Takeaway from the World Agri-Tech Innovation Summit in San Francisco: Survival

  2. Stratus Ag Research Report: 2023 Tracking Biostimulant Use and Satisfaction Survey Highlights and Analysis

  3. Biostimulant Battlegrounds: The Legitimacy of a Program and Market Implications

  4. Corteva Launches Corteva Catalyst

  5. Certis Biologicals Acquires Howler and Theia Fungicides From AgBiome

  6. AgTech News …So What? March 2024 with Shane Thomas

  7. Bayer’s New Way Of Doing Business: The Future is Now For Crop Science

  8. Smartwyre® unveils Grower Compass: Unlocking the power of grower data for ag retailers

  9. Ambition’s Mass

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

Introducing AGPILOT, the Gen AI Agronomic Assistant – built by Headstorm.  

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. 

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

1. Takeaways from the World Agri-Tech Innovation Summit in San Francisco

Last week, the World Agri-Tech Innovation Summit took place in San Francisco.

As always, the event was exceptionally well executed, delivering an unparalleled opportunity to connect with the entrepreneurs, investors and agribusiness professionals building and enabling the future of agriculture.

It was great to connect and meet many of you— thank you for your continued support of Upstream and for taking the time to say hello.

There are many smaller takeaways, like the fact that generative AI was a hot topic, and that there was a lot robotics excitement, but I think the one macro takeaways for me from the event was this:

Survival

The ag economy is not ultra hot.

Drier bias persists in the corn belt and much of Canada.

Prices for commodities like corn and soybean are forecast to be lower than the past few years:

The Purdue Ag Economy Barometer is flattening out at lower levels:

Ag equipment companies are forecasting a challenging 2024/25:

Crop protection and seed companies have their own challenges— longer than expected de-stocking challenges in North America along with LatAm, plus challenges for many in their own unique ways— Bayer with continued lawsuits and operational changes, Syngenta unable to IPO (and wanting to have finances buttoned up for when they do) and FMC with pressure on revenue and the stock price as just a few examples.

Most start-up companies that raised in late 2020, 2021 and early 2022 have elevated valuations. Many would call them unrealistic valuations. These same companies are looking to raise again and founders, nor the investors on their cap table want to forego these elevated valuations.

To top it off, venture funds, generally speaking, are not flush with cash to deploy:

Lastly, taking learnings from the AgFunder 2023 AgriFoodTech Report, it seems unlikely that changes to funding will occur in any immediate future (within next 12 months).

Combine these factors together and we get three things for start-ups:

  1. Raising capital remains a challenge (more specifically beyond seed stage), especially if wanting to maintain previous valuation numbers.

  2. Growth in sales will be challenging on average due to lower farmer sentiment.

  3. Exits to agricultural incumbents will be few and far between when agribusiness acquisition has been the most prominent exit route for agtech companies and the likliest exit route for many moving forward.

A consistent comment I heard was companies not wanting to take a down round— and it is totally understandable that they don’t. But that’s the friction point.

On the flight to San Francisco I listened to Founders Podcast episode #342 The Lessons of History. The Lessons of History is an all-time favorite book of mine. On the podcast, a quote was highlighted that I think is apt to frame the current situation, similar to what I talked about in The AgTech Paradox: What Biology and Historians Can Teach Us About the Agriculture Industry in 2022:

Nature and history do not agree with our conceptions of good and bad; they define good as that which survives, and bad as that which goes under.

Great companies can’t be built if they run out of money.

The #1 cause of death in start ups? Running out of cash.

Seeking an up round above prioritizing survival is a death wish. In the words of Ryan Holiday, ego really can be the enemy. 

In the next 18 months, capital is unlikely to become more abundant. Acquisition activity from the leading agribusiness is unlikely to accelerate. Farmer’s are unlikely to have excess cash to invest in new or unproven technology.

All of this will put continued pressure on valuations and revenue growth.

The major takeaway from conversation this week was survival— likely continued cuts and some down rounds. The best companies are likely to be fine, but for those on the cusp will continue to see headwinds.

I’m aware it is very easy to say all of this from the chair I sit in vs. those currently navigating the situation with skin in the game. The observation isn’t intended to come across as negative, either. I think the sentiment of the event was positive, but a major takeaway for me was that challenges remain for agtech start-ups and surviving is going to be the biggest importance for companies in the coming 12 months.

This week I went through a publicly available survey from Stratus Ag Research called “Tracking Grower Perceptions of Biostimulant Products in North America” (available for free in the preceding link) where they surveyed thousands of farmers from Canada and the USA to breakdown farmer views, sentiment and experience with/towards biostimulant products that are available in the market place.

Topics covered:

  1. Introduction

  2. Biostimulant Usage Increased in 2023

  3. Category Usage

  4. Farmer Satisfaction Ratings and What it Means

  5. Satisfaction by Brand: Implications for the Lowest Rated Company and Product

  6. How does Satisfaction Compare to Mainstream Crop Protection Products?

  7. Top Brands and Companies by Usage

  8. Final Thoughts

  9. Further Biostimulant and Company Reading

For all of the key takeaways, breakdowns on which companies are having the greatest challenges and why that might be, which segments are seeing the greatest uptake, and more, become an Upstream Ag Professional member:

Biologicals and micronutrients have been looked at as the red-headed step child of crop inputs for decades— referenced as snake oil, garbage, useless and a host of other terms degrading their value.

Meanwhile, there have been studies illustrating the value of many biostimulants and micronutrients in plants for decades and if you look at the inputs applied to any world record corn, soybean, wheat or oilseed rape (canola) crop, they all apply multiple applications of the aforementioned inputs.

Still, there has been a lack of legitimacy associated with all of these products— part of it is complexity, part of it is a lack of understanding, some related to the type of companies that sold biostimulants in the past and part because they are often used not as part of a systematic approach to production.

Over the last number of years that perception has begun to shift— not only have companies like Bayer, Syngenta, FMC, UPL, Mosaic, Nutrien, Yara and Corteva begun to publicly emphasize their importance to the future of crop production and profitable farming, but they have begun to acquire companies, invest R&D resources and partner with organizations that specialize in these areas. A few examples:

  • Corteva acquired Stoller and Symborg in 2022

  • Mosaic acquired Plant Response in 2022

  • Syngenta acquired Valagro in 2020

  • UPL acquired Arysta in 2019

  • Bayer established a joint venture with Ginkgo Bioworks (Joyn Bio) in 2018

Become an Upstream Ag Professional member to access the full article overviewing the competitive dynamics between the likes of Yara and Mosaic between Corteva and Syngenta, along with how programs influence legitimacy in the biostimulant space, along with examples and what we might see next:

Corteva, Inc. announced the launch of Corteva Catalyst, a new investment and partnership platform focused on accessing and bringing to market agricultural innovations that advance the company’s R&D priorities and drive value creation. Corteva Catalyst will partner with entrepreneurs and innovators to accelerate the development of early-stage, disruptive technologies that enable farmers to sustainably produce more food and feed.

The wording is very targeted in the release not to state anything about corporate venture capital. However, Corteva does call it an “investment and partnership platform.”

Corteva, along with UPL are the only major crop protection and seed organizations that currently do not have a corporate VC initiative:

What the catalyst programs comes across similar to John Deere’s start-up collaborator program with the additional potential for investment from Corteva, a longer term collaboration structure and more access to their internal R&D capabilities.

Often a shortcoming that arises with true corporate venture capital is the silo’d nature— internal CVC’s scour to find and invest in compelling start-ups, however, there is little ability to get the start-up access to the operating portion of the company due to things like misaligned KPIs and poor communication between the operating arm and the CVC, leading to a lack of access to the acres, farmers and internal know-how that was promised to the start-up.

Corteva’s announced approach aims to eliminate the soli’s and also gives companies enhanced access to Corteva R&D prowess.

Corteva stated that they will initially focus on identifying opportunities across four strategic verticals aligned with the company’s R&D priorities:

  • genome editing

  • biologicals and natural products

  • technology platforms

  • decision science

Become an Upstream Ag Professional member to learn about agribusiness R&D strategies, to see how R&D efficiency is declining, and what can be learned from the Pharmaceutical industry:

AgBiome was founded in 2012 and, according to Crunchbase, has raised more than $250 million over that period, with its most recent raise closing at $112 million in September 2021.

AgBiome is well known in the industry and has announced partnerships and collaborations with major input companies Sumitomo, Syngenta, Mosaic, and BASF. Their investors include strategic companies like Syngenta Ventures, Leaps by Bayer, and Novozymes (Novensis).

AgBiome also had two primary commercial biological pesticides: Howler and Theia.

These are now divested to Certis.

Now, the only seeming asset that AgBiome would have is their proprietary discovery platform known as GENESIS, which was supposed to give them an advantage in identifying, screening, and developing novel biological products.

In October 2023 it was reported that AgBiome is “potentially” laying off all its 120+ workers, according to a layoff notice filed with the state of North Carolina. As of this week, the AgBiome Linkedin still states 68 active members of the team.

Given the only commercial products they had have been divested, it is unclear what will happen to the remaining discovery IP and the future of the business.

This week I joined Sarah Nolet and Matthew Pryor of Tenacious Ventures to talk about several different news items, including:

  • The vacating of Dicamba registrations in the US, and what increasingly uncertain ROI timelines could mean for the future of crop protection

  • Sustainable aviation fuel, soybeans, and what it means for energy and agriculture to become increasingly intertwined

  • Policy as a barrier and an opportunity in the agtech development arena

While its design and rollout has been months in the making, the “frontrunner” group in Illinois has been operating with its DSO framework for the past six weeks. 

The new “squads” as they are called will vary by geography, but most teams will range from 8-14 people. 

In general, Robertson describes them as centered on enabling/supporting the relationship with the customer and giving them the best support possible across finance, marketing and product supply to give them what they need and eliminate unnecessary bureaucracy. 

Related: Dynamic Shared Ownership and the Bayer Transition - Upstream Ag Professional

Smartwyre® announced today the launch of Grower Compass — an innovative way for retailers to gain deeper insights into their grower customers, use previous purchase data to plan for the future, and quickly understand profitability and margins down to the branch or grower level.

Program management is a real pain point for retail organizations and Smartwyre launching capabilities for retails gets at the crux of many of the issues they have, including where to upsell specific products and services to a specific grower, stacking segments together (eg: fungicide with a herbicide), and optimizing margins with product substitutions.

Some of the functionality will be valuable for procurement and marketing managers, too.

But one quote stood out from the press release:

All of this is delivered via a real time web interface that visually guides user to these insights in a few clicks giving access to whoever in the organization needs them when they need them.

Smartwyre likely has ERP integrations that deliver more real time data flows, but I can’t help but think of the utilization challenges at the sales agronomist level.

A web interface means it’s disconnected from the ERP or agronomic software workflow— where important input occurs, including crops plans or work orders.

That challenge goes back to the concept of control points.

Businesses want a single point of action across their company. They don’t want ten different softwares— they want one.

The way to become the “one” in vertical SaaS is to own a control point.

If a company doesn’t own the control point, adoption can be a struggle, and the value creation over time can be difficult, making them more prone to being displaced by a vertical software that does own the control point and simply makes program management a “feature” of their broader software offering.

I broke down the concept along with various players and opportunities in a January edition of Upstream Ag Professional.

Overall, I think the offering looks great and solves a problem. However, I expect Smartwyre to look for further integrations with other entities (eg: ERPs) along with other vertical SaaS companies to create features similar to what Smartwyre is launching.

Non Ag Article

Ambition’s Mass - Not Boring

Ambition is like mass. The more you have, the stronger your gravitational pull. 

Other Ag Articles