Upstream Ag Insights - May 27th 2024

Essential news and analysis for agribusiness leaders.

May 27, 2024 • Read Time: 17 minutes

Welcome to the forefront of agricultural innovation with the 217th edition of Upstream Ag Insights, where over 16,300 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 professional, empowering you to be among the best informed in the industry.

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. UPL Capital Markets Day Highlights

    1. Q1 2024 Agribusiness Earnings Themes, Highlights and Analysis

  2. Truterra’s Three Year Total: $21 Million to Farmers: How Truterra, Agoro and Indigo Compare

  3. Consolidation in Corporate Agriculture — Who Benefits?

  4. First Greeneye Technology Dealership Opens in Nebraska

  5. Armed with $100m in funding, Dave Friedberg unveils ‘boosted breeding’ tech at Ohalo in ‘holy shit’ moment for crop breeders

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

  7. Cooperative Ventures leads Traction Ag’s $10 million Series A to advance farm accounting technology

  8. Plant Genetics as a Tool for Manipulating Crop Microbiomes: Opportunities and Challenges

  9. Look back in (even more) Anger – a ‘Ruckblick’ four years on

This week’s Edition of Upstream Ag Insights is brought to you in partnership by Biome Makers

BeCrop®: The ultimate decision-making tool for the agriculture

BeCrop®, a Biome Makers technology, analyzes soil data intelligence to predict risks, improve yields and regenerate soil health.

Powered by the world’s largest database of 24M microorganisms, BeCrop® uses the soil microbiome DNA and machine learning to analyze not only which microbes are present but also their interactions among them, with the crop and ecosystem.

Get actionable insights to optimize farm operations, support product development and provide agronomic recommendations rooted in science. Analyze and compare data on a field by field level, connecting soil needs to inputs and illuminating the path toward sustainable farm management.

Request a Demo Report To Learn More

Highlights and commentary on UPL’s Capital Markets Day presentation, overviewing their 2023/24 Fiscal Year.

Two highlights include:

  • UPL Group revenue of $5.2 Billion USD, down 20% from previous year with EBITDA down 51%. UPL expects destocking challenges to alleviate in the second half of 2024.

  • Revenue declines were largest in North America at 60% and LatAm at 24%.

For more on the UPL 2023/24 fiscal year, including an overview of what is putting pressure on their margins, the challenges in North America and strategy to move out, global cost reduction strategies and their R&D pipeline, become an Upstream Ag Professional member:

Last week, I dove into over 40 analyst call transcripts and reviewed 30 quarterly earnings reports from leading agriculture companies.I worked to distil crucial themes, emerging trends, and key insights across crop protection, seeds, fertilizers, retail, equipment manufacturers (irrigation, tractors), and agtech providers.The write-up includes:

  • three charts (like the one below)

  • five trends from Q1 2024

  • six important quotes, images and takeaways from the transcripts

  • highlights and key takeaways from more than 20 agribusinesses.

To be the best informed on the latest trends in agribusiness, become an Upstream Ag Professional member today:

For the period Nufarm reported underlying EBITDA of $217 million and statutory NPAT of $49 million. We declared an interim dividend of 4cps. Whilst revenue and margin in our Crop Protection business were impacted by challenging industry wide conditions, we delivered a solid result and achieved a number of important strategic milestones in the half

Truterra has announced over three years, since it introduced its carbon program, the company has paid more than $21 million to farmers for the sequestration and reduction of over 1.1 million metric tons of carbon

This is the third time Truterra has released information about their carbon program. If we look at the previous releases, it helps us learn more about the 2023 year itself, too.

To see a breakdown of Truterra’s, Indigo’s, Arva Intelligence, and Agoro Carbon Alliance numbers for 2023 that would normally require hours of reading multiple websites and press releases along with crunching numbers, become an Upstream Ag Professional member today:

For the full calculation of Indigo Ag’s 2023 numbers, check out the March 3rd 2024 edition of Upstream Ag.

3. Consolidation in Corporate Agriculture — Who Benefits? - The Business of Agriculture Podcast

This is an interesting question to ask surrounding consolidation of crop protection and seed companies (specific to the question in this podcast, consolidation in agriculture goes far beyond just them, though), and one I won’t be able to deliver an objectively agreed upon answer to. But it’s worth exploring how to think about this question with some critical thinking.

I’ll be the first to admit, I have built up biases in this area as an industry professional and I think about this quote from Upton Sinclair in regards to those biases:

It is difficult to get a man to understand something when his salary depends upon his not understanding it.

In the podcast there isn’t really a discussion nor tangible data brought forth to uncover if anyone truly benefits from consolidation outside the companies solidifying their position in the market— there is only an assumption that consolidation has outright been good for farmers, over-indexing on investment in innovation leading to yield increases as the objective truth of the benefits.

I think this is an over simplification and too narrow of a view of what a “beneficial” outcome of consolidation is.

The question is very nuanced and complex, with a need a for regression analysis to assess farmer profitability while holding things like weather, and commodity markets constant over time, along with factoring in the long R&D cycles, the fact R&D spend is an input, not an output and that innovation would happen independent of consolidation, as just a few things.

But we can think through some qualitative market implications.

The first thing is defining what “benefit” means and then determining where these benefits, or challenges, start.

For the full analysis, including whether farmers benefit, whether retails and distributors benefit, and frameworks and mental models for thinking through the impact of consolidation in the crop protection and seed industry, become an Upstream Ag Professional member today:

Related: The Implications of FTC Suing Corteva and Syngenta - Upstream Ag Professional

Evangelizing the Problem

Another topic on the podcast gets into the realm of biostimulant products, an area I am passionate about.

In it they talk about various biostimulant considerations like proving the legitimacy of products along with challenges that biostimulants can alleviate such as “summer decline.”

Legitimacy is a good way to talk about it that is aligned with the need to effectively set expectations in biostimulants, something that has not been done well (on average) by biostimulant companies.

Summer decline, a concept talked about in the podcast, is an interesting issue to associate with biostimulants.

One of the things I talk about in biostimulants is the need to evangelize a specific problem.

Often, with biostimulants we bring it back to more yield and broad “plant health” claims. More yield is not a problem. It’s an outcome of managing an agronomic problem. Problems create urgency and urgency drives action.

For the full breakdown on what problems biostimulant companies should evangelize, including charts and data to reinforce, and a framework with images and examples that I have applied within multiple biostimulant organizations that has rapidly doubled and tripled sales while improving resource allocation, become an Upstream Ag Professional member today:

Greeneye Technology, has announced the opening of its first dedicated dealership. The company is partnering with Nebraska-based Boeck Seed Services to provide sales, installation and service to farmers in Nebraska and adjoining states, in the first of a planned nationwide network of dealerships to support the company’s ambitious expansion plans in the U.S.

This is good news for Greeneye.

In the April 21st 2024 Edition of Upstream Ag Professional I made the following statement:

One of the biggest hurdles I see for Greeneye is distribution.

I mentioned this because of the challenges that I thought were likely to rise with having ag retailers and FBN as the primary go-to-market for Greeneye based on a statement CEO Nadav Bocher made in a 2023 interview with The Daily Scoop:

Greeneye says its market is to farmers and ag retailers. The first systems will be sold via the FBN partnership will be for 2024 application season. And Nadav Bocher, Co-founder and CEO of Greeneye Technology, says he plans on FBN being the primary go-to-market channel for machines in just a few years.

For the full breakdown on how this new distribution initiative will impact Greeneye and how it is still connected into FBN, become an Upstream Ag Professional member today:

I briefly highlighted this news last week based on what Ohalo CEO Dave Friedberg shared on The All-In Podcast.

Last week I was able to connect with Dave, where he shared some additional insights that I breakdown for Upstream Ag Professional members, including an overview of vegetative propagation and what that means for potential crop focus for Ohalo, insights into the potato market and information about the investor base.

Last week I joined Sarah Nolet on the the AgTech So What Podcast to discuss topics like:

  • How governments are (and aren’t) stepping into the agtech ecosystem

  • What risk is posed by technology that’s made in a foreign (and potentially adversarial) country– like drones from China in the US

  • Whether or not there is an AgTech Funding Drought in 2024, and what risks and opportunities might result

  • 996 work culture

One of the tools we use to think about how the future might look - and therefore where to invest - is called horizon scanning. We turn data, trends, and anecdotes we see, hear, and read about into provocative-yet-possible future scenarios, and then ask ourselves: “what might we need to do to not only prepare for this future, but also to identify previously hidden opportunities?”

Here we propose genetic manipulation of the host plant as another avenue through which microbiomes could be manipulated. We discuss how domestication and modern breeding have shaped crop microbiomes, as well as the potential for improving plant-microbiome interactions through conventional breeding or genetic engineering.

The industry talks a lot about microbes for improving farm yield. Many are skeptical that a relatively small number of colony forming units (CFUs) being applied in a hostile environment like the soil can provide a consistent ROI across broad regions.

The alternative to increase microbial activity around plant roots today is applying a non-living biostimulant to the plant directly, generating a physiological response that increases secretion of various exudates, such as organic or amino acids, which attract soil based beneficial microbes. Sound Agriculture’s product has this type of action, for example.

Another alternative presented in the linked paper is genetically altering the plant to attract specific types of in-soil microbes.

For example:

There might be a bacteria that increases corn’s use of nitrogen in soil. The idea would be to genetically alter the corn plant so that it would disproportionately attract those organisms to the plant, theoretically increasing nitrogen use efficiency.

Particularly if the corn plant could produce a molecule that specifically optimizes that organism— giving it a step up over other competing organisms in the soil.

This approach is not viable today as stated directly in the conclusion of the paper:

Such methods are likely a long way in the future…A great deal of research is needed to provide the scientific foundation that would enable actionable genetic improvement strategies with predictable outcomes for microbiome function.

There are many challenges in understanding the microbiome itself, along with the plant physiology. However, the concept itself is interesting and the paper, presents some useful background for thinking through limitations of microbes in agriculture and opportunities, such as through the use of consortia.

Cooperative Ventures has announced an investment in Traction Ag, Inc., a leader in farm accounting technology and developer of the first cloud-based accounting software delivering solutions to farmers across the United States. A joint venture between two leading farmer-owned cooperatives, CHS and GROWMARK, Cooperative Ventures focuses on developing mutually beneficial commercial relationships between startups and cooperative partners. Traction Ag’s $10 million Series A round was led by Cooperative Ventures and joined by Plymouth Growth and existing investors.

Cooperative Ventures is a JV between CHS and GROWMARK, which means their VC portfolio companies theoretically have access to a network of agronomists and sales people, but also farmers:

Through this relationship, Traction can create valuable connections within the vast network of CHS and GROWMARK farmer-owners and customers. 

Traction has acquired assets from TELUS Agriculture (Conservis) and Corteva (some Granular capabilities) to augment their accounting software.

Lack of truly disruptive innovation: in my original article I had gone down to the original work of Clayton Christensen to determine that most of the innovation that is being showcased in AgTech is not truly disruptive as it seeks to serve the ‘high’ end rather than creating new markets. This is probably the contention that brought the most amount of pushback 4 years ago but I think this view is so widespread today that it is once again axiomatic. At the time, I was worried that without a 10X vs 10% value proposition to customers / growers, most startups would struggle to scale. The only segments that seem to be delivering on that vision seem to be Precision / Smart spraying technologies, Fintech and Robotics. The pivot of many data analytics / vision based scouting startups into Precision Spraying or Carbon credit MRV can thus be taken to be validation of this view.

If you haven’t read Shubhang’s 2020 article Look Back in Anger Or Disruption that Incumbents can love – AgTech in the 2010s, I would encourage you to do so. It is incredibly insightful, even 4 years later.

Say it out softly – there is no disruption in AgTech. Ambitions have mellowed. Valuations will follow.

He has written a good follow-up that is a good read as well. In it, I think he was too harsh on himself in what he got “wrong”, and he was primarily very accurate.

Non Ag Article

In early 2024, substantial inroads were made toward this goal with the release of Evo, a model developed by the Arc Institute, Stanford, and TogetherAI. Evo is the first publicly available model that can make inferences over an entire genome. The model was trained on a data set of 2.7 million prokaryotic and phage genomes and is capable of generating DNA sequences at single-nucleotide precision.

In a blog post announcing the release of Evo, researchers at Stanford’s Hazy Research Lab wrote, “As we were training Evo … it felt like we were observing a “GPT” moment in biology. A simple unsupervised task was getting competitive zero-shot performance by modeling across the central dogma of biology, and generalizing across DNA, RNA and protein modalities.”

Evo is just the first in what will likely be a series of models able to make inferences and predictions over a much larger biological context window. These models represent a promising new chapter in biology and medicine, where new genetic editing tools, along with answers to some of our most difficult questions, will be answered not through painstaking observation, but through generative AI. 

Other Ag Articles

Necessary Evolution of Concepts and Technologies - Britaldo Hernandez Solinftec CEO