Upstream Ag Insights - November 4th 2024

Essential news and analysis for agribusiness leaders.

November 04, 2024 • Read Time: 21 minutes

Welcome to the forefront of agricultural innovation and strategy with the 239th edition of Upstream Ag Insights, where over 18,600 agribusiness leaders start their week discovering crucial industry news and learning about the latest innovations and business strategies shaping the future of agriculture.

With curation and analysis from Shane Thomas, each edition delivers insights and analysis crafted for the practical agriculture 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. Q3 2024 Agribusiness Earnings Results as of November 1st

    1. New Report Available! The Rise of Biologicals and Specialty Fertilizers: A Dive into Agribusiness Initiatives

  2. Adjuvants Market Gets a Boost from ESA and Technology Can Help More

  3. What’s driving ag robotics innovation? ‘Labor, labor, labor,’ say FIRA USA 2024 attendees

  4. The Expanding 2024 Crop Robotics Landscape, Navigating To Commercialization

  5. Growth Through Acquisition with Kyle McMahon, Founder & CEO of TractorZoom

  6. The Everyone Trap

    1. An Audience of One: The Power of Persona

  7. Greeneye Technology Announces Field Trial Program with Croplands to Introduce Next-Generation Precision Spraying Technology in Australia

  8. Non-Ag Article: Hub-and-Spoke Biotechs

  9. Other Interesting Ag Articles (8 this week)

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

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  • Lindsay

  • Yara

  • BASF

  • FMC

  • Syngenta

  • ADAMA

A couple highlights from earnings calls:

FMC CEO Pierre Brondeau on North American revenue numbers:

North America performance was stronger than expected. More than half of the regional sales growth was due to increased order by diamide partners. I would add a note of clarification here. While the sales to these partners are recognized in North America, the final product is not always sold by the partner in that region. This creates the potential for North America sales to appear higher at the expense of other regions.

BASF on Glufosinate:

On July 10, 2024, BASF announced that it would cease production of the active ingredient glufosinate ammonium (GA) at the Knapsack and Frankfurt am Main sites in Germany by the end of 2024. GA formulation in Frankfurt will end in 2025. Subsequently, both production facilities will be shut down. The active ingredient GA remains a key component of BASF’s global herbicide portfolio and will be sourced from third-party suppliers in the future. This measure involves approximately 300 positions. The closure led to special charges in the low triple-digit million-euro range in the third quarter of 2024, which had a negative impact on the Agricultural Solutions segment’s earnings.

This is on the back of commentary from Q2 2024:

While cost reductions have been achieved in glufosinate-ammonium production, the GA business has been increasingly affected by generic competition, alternative technologies as well as high energy and raw material prices.

Glufosinate ammonium is about 20% of total BASF herbicide sales, which means it is around 7% of their total ag revenue.

For more aggregated highlights from all of the above agribusinesses, including insightful earnings call quotes from Lindsay CEO Randy Wood on their IoT and recurring revenue segments, FMC CEO on R&D expenditure, process evolution and more, become an Upstream Ag Professional member:

Once all companies have reported their earnings there will be an aggregated report completed by agribusiness segment exclusively for Upstream Ag Professional members:

  1. Crop Protection and Seed Companies

  2. Fertilizer Manufacturers

  3. Equipment Manufacturers

Each report will include macro trends and themes, along with useful comparison charts and images.

New Report!

This week I launched two new resources for agribusiness professionals:

  1. The Rise of Biologicals and Specialty Fertilizers: A Dive into Agribusiness Initiatives — A deep dive report into 10 of the most influential agribusinesses partnerships, M&A, investments, along with their current revenue and revenue ambitions in the biological and specialty nutrition segments, where their revenues are coming from today, new initiatives and much more!

  2. Biostimulant Playbook: The Definitive Guide to Positioning Biostimulants — Field-tested frameworks and hard-earned insights for effectively out positioning and out executing the competition in the biostimulant and specialty fertilizer segment, including a market case study applying the frameworks to a real world example from Stoller.

You can purchase The Rise of Biologicals and Specialty Fertilizer Report for $269, plus receive:

  • 1-Year Upstream Ag Professional membership ($299 value) — Receive essential news and analysis direct to your inbox every Sunday, plus access to the entire archive, audio editions for flexible consumption, LLM search functionality and all previous and future deep dive reports.

  • Get the Biostimulant Playbook for NO CHARGE ($27 value)

  • An additional bonus Upstream Ag Insights Foundations article called The Winners Mindset: Influencing the Market vs. Letting the Market Influence You, a crucial concept for being successful in the biostimulants and specialty fertilizers segment.

Stay tuned for another report in the coming months surrounding Precision Spraying Technology from company overviews, to market opportunities to challenges and beyond.

Adjuvants and surfactants are essential in crop protection, enhancing the efficacy of crop protection and plant nutrition products by improving coverage, penetration, and retention on plant surfaces. Surfactants help sprays spread evenly, while adjuvants aid better absorption, ensuring reliable protection even in poor conditions. All crop protection products come with some adjuvant or surfactant, however, there is an ability to further improve product performance, which is why these products have grown considerably over the last decade.

Consider this comment from Nutrien Ag Solutions President, Jeff Tarsi on the Nutrien Q2 24 earnings call:

Our adjuvants sales year-to-date are up 7% and adjuvants make up 5% of our crop protection space, and contribute 13% of our margins.

In H1 2024, Nutrien recorded $911 million in crop protection gross margin, which means they generated over $118 million in gross margin from adjuvants alone.

That’s about $78,500 in gross margin on a per location basis.

In the Agribusiness Global article there are two questions brought up:

How do you entice the holdouts to start using adjuvants?

What role is ag tech playing to support increased adoption of adjuvants?

The answers are multi-pronged, but there was one technology company not mentioned that is worth bringing up:

AgZen.

AgZen is an agtech company focused on enhancing the efficiency and effectiveness of pesticide applications.

AgZen mounts camera’s directly onto the spray boom to monitor and enable optimized droplet coverage in real time, delivering insight to farmers about how to adjust their sprayer settings based on the number of spray droplets hitting and sticking to the target plant (eg: weed, or crop).

One of the ways in which you can “entice” usage is through making the problem tangible.

I talk about this in the context of biostimulants in the recently launched Biostimulant Playbook.

Companies need to find ways to illustrate the problem and convey product effectiveness and then evangelize it— bringing the implications of product use to life. Often, there is water-sensitive paper used, but it doesn’t quantify the amount of droplets that hit and stick to the target plants out of all of the droplets dispersed, meaning it isn’t very convincing.

AgZen’s first product, RealCoverage, does visualize and quantify droplet accuracy.

RealCoverage leverages machine vision to assess how spray droplets are behaving in getting to the target (eg: crop) and allow for adjustment given parameters like sprayer settings, products in mix, water volumes, crop type and conditions.

AgZen calls this a Feedback Optimized approach. RealCoverage presents an opportunity to inform effectively around adjuvants.

For the full breakdown, including an overview of the next product coming from AgZen and use cases of how AgZen can benefit ag retailers and crop input manufacturers, become an Upstream Ag Professional member today:

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Somewhat related to labor (or, again, a lack of it), numerous FIRA attendees believe ag robotics and automation will create more jobs, rather than take them away as some fear.

There is always a fear of job loss with technology advancement. This goes back to the Luddites and beyond.

The key takeaway from this article is the statement that automation will create more jobs. I agree with this.

We’ve been automating work for 200 years. Every time we go through a wave of new technology and automation, whole classes of jobs go away and new classes get created. There is pain and challenge in that process, but over time the total number of jobs doesn’t go down, they go up, and we become more prosperous.

The fear stems from the Lump of Labor Fallacy.

For the full breakdown of what the Lump of Labor Fallacy is, how it applies to agriculture, why automation is unlikely to solve agricultures labor challenges and the Job to Action Framework to help think through what parts of a job will get automated, become an Upstream Ag Professional member:

Kyle McMahon is an impressive entrepreneur. And his company, TractorZoom, is a compelling one.

TractorZoom is multiple things, but their starting point was advertising and enabling farmers to find equipment and pricing. Today they advertise over $43B worth of farm equipment and leverage that data to help Farm Credit Associations, Farm Service Agencies, banks, equipment dealerships, auctioneers, and farmers understand real-time equipment values.

In the podcast he shares many insights, but I specifically want to emphasize his call out leaning into a business from outside ag. Outside industry analog’s can be powerful.

He aspires to build TractorZoom into the Cox Automotive of agriculture.

Cox Automotive, is an integrated provider of automotive services, encompassing a diverse portfolio of brands and offerings that address various aspects of the vehicle lifecycle.

Their assets include:

  • Manheim, a wholesale vehicle auction company, facilitating transactions between buyers and sellers of used vehicles.

  • Autotrader, an online marketplace connecting consumers with new, used, and certified pre-owned vehicles.

  • Kelley Blue Book, a resource for vehicle valuation and automotive research. It offers pricing information for new and used vehicles, serving both consumers and industry professionals.

  • Dealertrack provides a suite of software solutions for auto dealers, including dealer management systems, inventory management, and compliance tools. These solutions are designed to enhance operational efficiency and improve customer experiences.

  • Xtime delivers service management solutions that help dealerships enhance customer retention and service department efficiency. Its platform includes online scheduling, service marketing, and customer communication tools, aiming to improve the overall service experience for customers.

If you look at their service offerings you can see the similarities across TractorZoom and Cox assets, along with potential expansion or further acquisition.

TractorZoom started with the initial equivalent to Mannheim and AutoTrader (TractorZoom proper), leaned into monetization like Kelley BlueBook (TractorZoom Pro) in selling pricing data to banks or farm insurance agencies and then recently acquired their way into a Dealertrack equivalent— Anvil.

Anvil is a dealership staff specific CRM built on Salesforce that connects everything from quotes to purchase history, service requests, and more. Anvil is also integrated into major OEM systems, such as John Deere, Kubota and AGCO to seamlessly integrate rebate or discount information for the dealership.

What does the analog to Cox Automotive signal for future product build out? Are there other potential acquisition targets for Tractor Zoom? Become an Upstream Ag Professional member for the full breakdown:

6. The Everyone Trap - Ag Done Different

There are two good ways to check into a hotel: Contactless and high-touch.

There are two good options for dinner: Fast food and fine dining.

And two good retail experiences: Discount and luxury boutique.

It’s the options in the middle that are dull—the average ones that leave us wanting more.

My view is consistent with Dan Schultz— Success lies in extremes.

Trying to be everything to everyone is a recipe for failure.

It’s the middle that gets squeezed.

This phenomenon is known as “the barbell effect.” The idea is that businesses on either side in a given category will survive; it’s the group in the middle that disappears.

The interesting considerations for application ands execution come from three deeper questions:

  1. Who is my target customer?

  2. What specifically will differentiate my offering to them? (No matter what end of the spectrum.)

  3. How do I align my resources and build core competency to execute on delivering that differentiation to those customers?

Last week I highlighted Meristem Crop Performance and the insights that helped them decide who their target customer is (large farmers with application assets), what products to go after (biologicals) and why that is a differentiator (growing segment that requires specialized knowledge) and how they aligned their resources to execute (IP development, experienced sales people).

We can think about this in the context of Costco, too. A few of the things that drive their success stem from the membership model, which is in and of itself a specific customer target:

  • Membership-Based Model — By charging annual membership fees, Costco generates a steady revenue stream, allowing it to offer products at lower prices, foster loyalty AND keep certain segments of customers out. Costco an average member household income above $100,000.

  • Limited Product Selection — Stocking approximately ~3,500 SKUs—significantly fewer than typical supermarkets (~150,000+)—enables Costco to streamline operations, negotiate better deals with suppliers, reduce inventory costs and because of the bulk focus, reduce shrink in their business.

  • No-Frills Store Design — Operating in warehouse-style stores with minimalistic designs lowers overhead expenses, enabling Costco to pass savings on to customers.

  • Employee Compensation and Retention — Offering competitive wages and benefits results in lower employee turnover, reduced HR and training costs while improving productivity.

I think identifying the target customer is crucial. Their problems, fears, ambitions, capabilities and more can be concretely understood and used as the foundation for product or service development.

Because I received the question so frequently, I wrote an article surrounding Upstream on this as well, which gets at the value of dialling in a persona along with the in-depth persona I created for my “audience of one:”

One of the most common questions I receive is, “how do you determine what to write about?”

The answer, generally speaking, is very simple: I write for Doug—the ambitious agribusiness professional.

With every article, I ask myself: Would Doug care about this company, this innovation, this market shift? How could Doug leverage this knowledge to stay ahead, improve his role, or enhance his company strategy? And most importantly, what obstacles might Doug be facing that he hasn’t yet found solutions for?

The above article is available for everyone and I think provides a useful framework learned from lululemon founder Chip Wilson for thinking about a target customer persona. It also gets into how I use it every day for this newsletter.

Greeneye Technology, today announces its first field trials outside of the U.S. The company is partnering with Croplands, Nufarm’s equipment and emerging spray solutions platform in Australia, to evaluate the effectiveness of precision spraying in post-emergence applications on Australian soil.  

Greeneye is working to expand outside North America to Australia.

Australia is a geography that has been using green-on-brown precision spraying technology for more than a decade.

Croplands Australia is a leading supplier of agricultural spraying equipment, components, and accessories, a subsidiary of Nufarm.

The announcement is for Croplands to “evaluate the effectiveness of precision spraying in post-emergence applications on Australian soil,” which suggests this is a test for Croplands to determine if there is a fit for Greeneye within their portfolio to distribute in Australia. Croplands currently distributes WEED-IT and MagrowTec systems related to precision spraying.

Earlier this year Greeneye announced a distribution agreement with Boeck Seed Services in the United States, their first distribution agreement with an enterprise that sells inputs (seed, crop protection) and planters along with upgrade and repair support. Given the complexity of effectively communicating the value of precision spray technology to farmers, market access points that have a tie to agronomy and inputs (like Nufarm), and have experience selling precision systems, become their best bets— which Croplands seems to fit.

Greeneye Overview

Some of the stats surrounding the Greeneye precision spray system according to Sprayers101.com, Greeneye releases and previous conversations with Greeneye include:

  • The cost of the Greeneye system installed is ~$240,000 US. This gets the customer a Greeneye system for a 120-foot boom, a new reinforced aluminum boom, retrofit to dual tank, installation, and warranty.

    • The retrofit being compatible with the majority of sprayers in the market along with the dual tank system is a point of differentiation— for example, John Deere’s retrofit system (See & Spray Premium) only works on certain spray systems. Plus, the Premium system is NOT dual-tank like the Greeneye (cost is lower at ~$25,000).

    • Dual tank capabilities enable precision and broadcast spraying to be carried out simultaneously— eg: broadcast applying a residual herbicide product with a contact product, or broadcast applying a biostimulant while precisely applying a herbicide.

For the full overview of Greeneye functionality, the end-to-end processing needs of a spray system and why that constrains travelling speed, what they are doing beyond herbicides, and features to enhance farmer insights and engagement, become an Upstream Ag Professional member:

Or check out this foundational agribusiness guide for thinking through the impacts of precision spraying technology on crop input products:

Non Ag Article

Biopharma is a profoundly acquisitive industry. Pharmaceutical giants need to maintain their massive cash flows by developing or acquiring new products—and this balance has swung overwhelmingly towards acquisition over time.

This is a blessing and a curse. The massive incumbents provide critical near-term resources but impose a cap on long-term growth—you get snapped up as soon as you have a great product.

Attempting to build a generational biotech is a bit like the journey of a baby crab avoiding being devoured by its own mother.

The similarities to agriculture are uncanny. I think there are useful insights for founders, and for those working in incumbent agribusinesses within this article.

Other Interesting Ag Articles

“We need more startups,” concludes Gabriel. “If you compare agtech to therapeutics, there are likely more therapeutics startups in the city of Boston than all the agtech startups around the world.”