Upstream Ag Insights - November 13th 2023

Essential news for agribusiness professionals

November 13, 2023 • Read Time: 15 minutes

Welcome to the 192nd Edition of Upstream Ag Insights!

Two comments for next week’s edition:

  1. Next week, I will be sharing the highlights, analysis, and summary of Q3 2023 Agribusiness Results, including topics such as Bayer’s comments on breaking up their business units, Syngenta’s IPO being further delayed until the end of 2024, and topics such as the lengthened destocking in the crop inputs space.

  2. I mentioned that I would share the summary of Innovation Adoption in Ag this week; however, due to some bigger events occurring in the space this week, I have opted to share that in the coming weeks instead.

Index for the week:

  1. InnerPlant, John Deere Expand Ecosystem to Include Syngenta, Focusing on the Evolution towards Plant by Plant Disease Management

  2. The Co-op Conundrum Continued: Skeptical Farmer and Co-Op Find Mutual Benefit in Relationship

  3. New Data: How Many Farmers Are Buying Inputs Online and Does it Really Matter?

  4. How Farmers Are Teaching Old Tractors to Think for Themselves

  5. Adapt-N Focuses on Growing Integration Network to Increase Nitrogen Management Accessibility

  6. Tech is Going to Get Much Bigger

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

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Your Competitors Already Are.

InnerPlant, the seed technology company enabling the earliest possible detection of stress in crops to make farming universally more efficient and sustainable, Syngenta, a global leader in agricultural innovation and crop protection, and John Deere, a global leader in the delivery of agricultural, construction, and forestry equipment, today announce a joint effort to develop an integrated solution to fight fungus in soybeans. The first-of-its-kind solution will link together plants that give off early and specific signals when under attack by fungus with optimized crop protection treatments that are delivered with See & Spray technology.

Overview

Last September, John Deere announced they were leading the *InnerPlant Series A Investment, a company that is developing genetically engineered soybeans that elicit unique biosignals when they’re experiencing specific stressors, such as fungal pressure or insect feeding.

InnerPlant’s trait technology platform allows remote sensors, such as satellites, to interpret what a plant is experiencing and when, delivering the ability to more proactively and precisely take action, enabling better outcomes for farmers (view the InnerPlant patent application here).

In March of 2023, InnerPlant and Satellogic announced a collaboration to launch a satellite with sensors capable of interpreting InnerPlant signals.

With the investment from Deere in 2022, it became clear that the goal for Deere was to bring the sensor capability beyond satellites and directly into the field, equipping their sprayers with the ability to accept signals from the InnerPlant trait, augmenting their mission for See and Spray capabilities and plant by plant management.

This week, the collaboration between InnerPlant and Deere expanded to include one of the largest crop protection companies in the world— Syngenta Group.

What Does the Announcement Mean?

At Deere’s Leaps Unlocked Event in 2022, the executive team stated that they were looking at launching See and Spray capabilities for plant disease within the next few years.

In order to offer a plant disease offering successfully (more on this below), they needed to partner with a company that delivered them unique pathogen-based insights at the plant level, leading to the investment in and collaboration with InnerPlant.

Now, in order to better understand how a fungicide performs better and broadly applied usage can be curbed in conjunction with the See and Spray and InnerPlant capabilities, InnerPlant and Deere needed a crop protection partner to work on trials and develop not just the understanding, but the ecosystem.

Syngenta is that crop protection partner that will work with them to establish a system that links together the signal (InnerPlant), the interpretation and the optimized fungicidal application (Deere) to mitigate. The consortium of companies will be starting with two soybean diseases: septoria (septoria glycines) and frog eye leaf spot (Cercospora sojina).

The initial work with the collaboration will work to better leverage InnerPlant signal technology, with John Deere See and Spray Technology, and look at how leveraging that plant data and equipment capabilities to create unique fungicide application approaches in soybean.

In the October 29th 2023 Edition of Upstream Ag Professional, I highlighted the reality that most crop protection companies, including Syngenta, had not externally expressed their approach to navigating precision spray systems and how they will position themselves to remain leaders when the ground is shifting under their feet.

Syngenta is proactively inserting itself into the fold with industry leaders to not only navigate the looming shifts in the crop protection world, but lay the foundation for what the future of crop protection application looks like.

*Disclosure: I am an investor in InnerPlant.

To gain exclusive access to the full Upstream Ag Professional breakdown the announcement, become a member today and get analysis of the following:

  1. Why is this announcement important?

    1. For John Deere

    2. For Syngenta

    3. For InnerPlant

  2. Can this collaboration work and add value to the industry? Will it work from a first-principles agronomic perspective?

  3. Will there be future additions to the ecosystem? Who could those companies be?

  4. Final Thoughts

This is a really interesting article from a cooperative perspective.

It highlights the importance of identifying unique individuals that bring diverse perspectives to a board of directors, particularly in rural co-operatives.

The article highlights CFS Co-op in Minnesota and Lance Petersen, a progressive farmer in Minnesota:

A self-described contrarian, Petersen doesn’t shy away from elephant in the room topics or being in the hot seat. He’s been an early adopter of online procurement for his crop inputs. For the past four years, he’s bought 100% of his seed without a face-to-face meeting. Even before that, he was buying crop protection products and fertilizer via online marketplaces and retailer portals.

A few weeks ago, I wrote about The Patronage Conundrum of Co-operatives, but that isn’t the only challenge of co-ops.

The below line stands out as it aligns closely with a conversation I had with AgVend CEO Alexander Reichert on cooperative boards earlier this year:

Earlier this year Petersen joined the board of directors for CFS in southeastern Minnesota. What makes this even more unique — Petersen lives two hours outside its traditional geography. 

The boards at co-operatives are typically full of seasoned farmers from within the cooperative trade area.

Having member customers on the board is valuable for both farmers and cooperatives.

However, if we look at any large company board of directors today, it is full of diverse experiences and perspectives.

Become an Upstream Ag Professional member today for a full overview on the need for coops to look outside their traditional trade area:

I think the industry has evolved beyond the focus of this survey.

“Online purchases” are a small subsection of what it means to interact on a digital basis with a crop input provider.

There will be a subsection of farmers that want a no-frills, lowest-price online purchasing experience. But I think it’s interesting to expand on a more holistic approach to purchasing products.

A purchase isn’t a singular action or moment in time— it has an entire journey to it, both before, after and in-between with ample opportunity to leverage digital tools to be able to make the farmer’s life easier and more convenient— after all that’s the main idea behind “online purchasing.” It’s about the customer experience.

For a deep dive into customer experience implications for agribusinesses, friction reduction frameworks, schlep blindness, examples of the areas for customer experience innovation and how we should think about online, become an Upstream Ag Professional member today:

This is an interesting article on the retrofit market, with some notable insights:

While rising crop prices in recent years put more money in farmers’ wallets for new equipment models, just 7% of farmers globally replace their equipment in a given year. That leaves 93% of farmers using older models as potential customers for upgrades, according to Agco. The company estimates that current industrywide spending in its retrofit markets is $150 billion a year. 

AGCO has frequently beat the drum about the opportunity in the retrofit market, specifically with their recent acquisition/JV of Trimble Ag assets:

I have frequently talked about the benefits of fully integrated systems, including in Winning in the Ag Machinery Space: Integrated Tech Stacks and Precision Technology.

I still believe there is a significant upside in being fully integrated because of performance maximization ability, but I have to admit I did a poor job acknowledging the variation in upgrade cycles of equipment vs. phones (frequently citing Apple and the iPhone as a comparative example which is not the exact same upgrade cycle at all).

There is also the reality that perfection could be the enemy of “good enough” in terms of performance. Than Hartsock of John Deere shares a good insight regarding this in the WSJ article:

Hartsock said the cameras aren’t as precise at recognizing weeds without the spray booms specifically designed for the system. But he said the retrofit costs about half as much as a new sprayer with factory-installed See & Spray technology.

The question becomes, how much worse are they at recognizing the weeds, and what are the economics of that impact? In addition, it becomes how this permeates to other See and Spray functionalities, such as with disease and fungicide, as discussed in the first article in this edition.

For AGCO it makes sense to prioritize the retrofit market— but groups like CNH Industrial or Deere will not forgo that market by any means:

Deere said it started emphasizing retrofit options earlier this year after concluding that some farmers are hesitant about plunging deeply into automation, artificial intelligence and farm software programs.

As hesitation subsides and upgrade cycles move along, it still seems to me the integrated player is going to accrue disproportionate amounts of not only market share, but of the margin pool in the equipment market.

As a leading nitrogen management software, Yara’s Adapt-N has served agronomists for more than 10 years to support critical efforts in maximizing nitrogen investment and efficiency. To further ensure growers across the U.S. have access to the tool and improve overall user experience, Adapt-N will focus efforts on building its integration network and will no longer offer direct interface access starting January 1, 2024. This focus on expanding through a farm management information system (FMIS) network will provide long-term benefits and better suit the operational processes and demands of growers today and in the future.

This is overdue for Yara with their Adapt-N platform.

I have called this out several times within Upstream over the last two years:

Adapt-N, as a stand alone nitrogen modelling tool, was never going to be used at scale as a stand alone system. It’s not a platform, it’s a feature. It needs to be incorporated and embedded into software platforms that are “suites” of tools.

For more on Yara integration initiatives, I covered them in July:

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Whatever the case, you need to think way bigger to win in a world where intelligence and labor are being commoditized.

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