Upstream Ag Insights - Oct. 21st 2024

Essential news and analysis for agribusiness leaders.

October 21, 2024 • Read Time: 21 minutes

Welcome to the forefront of agricultural innovation and strategy with the 237th edition of Upstream Ag Insights, where over 18,400 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. McKinsey Global Farmer Insights 2024 Highlights and Analysis

  2. Simplify to Succeed: Why Removal Can Lead to Greater Gains in Agribusiness

  3. Acadian Plant Health™ and BASF Agricultural Solutions Partner to Innovate Climate-Resilient Solutions for Sustainable Agriculture

  4. How ‘vaccinating’ plants could reduce pesticide use and secure global food supplies

  5. AgTech Pitch Breakdown: Fractal Ag with Ben Gordon

  6. Vestaron Corporation Announces Strategic Collaboration with ADM for Production of Peptide-Based Crop Protection Products

  7. Syngenta Crop Protection and Taranis Partner to Drive AI-Powered Agronomy Solutions and Business Opportunities for Retailers

  8. ICYMI: The Rise of Biologicals and Specialty Fertilizer: A Report on Agribusiness Strategy, Progress and Initiatives

  9. Malcolm Gladwell's New Take on Tipping Points

  10. Other Ag Articles (7 this week)

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

Your Unfair Advantage in Precision Agriculture

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. 

The McKinsey Global Farmer Insights Report for 2024 highlights the challenges farmers face globally, such as rising input costs, extreme weather, and commodity price fluctuations. It explores the priority of improving productivity through agricultural technologies, biological products, and sustainable practices.

In the first quarter of 2024, McKinsey interviewed ~4,400 farmers in Europe (France, Germany, and the Netherlands), India, Latin America (Argentina, Brazil, and Mexico), and North America (Canada and the United States). The survey is the newest since 2022.

The survey covered five main areas:

  • farmers’ views of profit risks and opportunities

  • farmers’ outlook on future profits

  • adoption of sustainable practices

  • adoption of products and technology

  • purchasing channels and main influencers on the purchasing journey.

Key Takeaways

  1. Input prices remain the top concern, with 48% of farmers noting price increases as the main risk to profits.

  2. European and North American farmers more pessimistic on future profits. In North America, the proportion of farmers expecting lower profits over the next two years has risen by 16 percentage points compared with 2022.

  3. Adoption of biocontrols and bionutrients has been growing globally. 31% of farmers are using bionutrients, while 20 percent are using biocontrols. In the United States a blended 23% of farmers are using biostimulants and/or biocontrols, with Canada coming in at 14%. Farmers in Brazil lead in the use of both bionutrients and biocontrols, with bionutrition products coming in at 64%.

  4. About 90% of farmers using biologicals said they expect to maintain or increase spending on bio-based products. Some 63% will maintain or increase spending on biologicals regardless of changes in crop protection and fertilizer prices.

  5. Across all regions, the percentage of farmers who said they are currently participating in carbon programs is low—just 12 percent compared to 54 percent who have heard of carbon programs but are not participating.

  6. Farmers globally are more inclined to adopt new technologies that directly improve operations. The United States has the highest adoption of operations-focused technology, with 61% adoption of digital agronomy, 51% adoption of precision agriculture hardware, and 38% adoption of remote-sensing technologies.

  7. Farmers around the world cite input distributors as a key influence for recommendations on soil health. We see the same result for almost all decisions related to agronomy in other survey work.

  8. The majority of growers continue to prefer in-person interactions and use digital as a complementary channel for specific steps of the purchasing journey.

In the Upstream Ag Professional article linked above, I expand on each of these points, highlighting key images and augment with information, data and insight from various external sources including Stratus Ag Research and Upstream Ag Professional frameworks.

I recently read an article from the Collaborative Fund titled Take Something Away. It struck a chord with me, especially in the context of agribusiness strategy.

More, More, More

We often default to the idea that solving a problem means adding more—more resources, more strategies, more tools.

But sometimes, less is more.

In fact, subtracting leads to more focus, and often, better results.

Take the story of Ryan McFarland and the Strider Bike, which was highlighted in the article.

Instead of adding training wheels to help his child ride a bike, McFarland took away the pedals, forcing his child to focus on balance. By simplifying the design, he created a more effective learning tool.

This same principle applies to numerous aspects of life—whether it’s healthcare, personal finance, or business strategy.

In agribusiness, we tend to overcomplicate things in the pursuit of growth or efficiency, but over complication can lead to inefficiency, confusion, and wasted resources.

How Does This Apply to Agribusiness?

I frequently hear from ag retailers, distributors, and agronomists who feel overwhelmed by the increasing complexity of the industry. The introduction of new products, technologies, and initiatives often leads to the question, “How can we sell precision ag services, learn new software and adopt new technologies when we’re already stretched thin selling herbicide, fungicide, bulk fertilizer, and more?”

Unlock key insights by becoming an Upstream Ag Professional member such as how industry leaders like Corteva have used strategic subtraction to streamline operations, focus on high-margin products, and boost profitability. Discover actionable tactics, such as navigating the “strategy tax” and restructuring product lines, that could give you a competitive edge by simplifying your approach:

Acadian Plant Health™ and BASF Agricultural Solutions, two leaders in biostimulant technologies and global agriculture, have announced they are collaborating to develop innovative agricultural solutions to market climate-resilient products for the protection of crop yield and quality.

BASF will leverage Acadian’s biostimulant technology to complement its chemistry and biological portfolio and increase solutions that will grow more, and sustainably better crops.

Since acquiring Becker Underwood in 2012, BASF has been quiet on the biological front, relatively speaking. Key crop protection competitors have gained technology, talent, revenue and market footprints globally by acquiring companies in the biostimulant and plant nutrition space— for example, Syngenta acquiring Valagro and Corteva acquiring Stoller.

Ironically, a few weeks ago in BASF Agriculture Solutions Capital Markets Day Highlights and Analysis I stated the following about BASF biological initiatives and Acadian:

I assume they acquire and whom they acquire will depend on where they want to prioritize (product wise and market reach wise), but entities such as Verdesian Life Science or Acadian Plant Health may stand out as beachhead acquisitions in the biostimulant space, similar to what Syngenta did with Valagro and Corteva did with Stoller. There is also Rovensa, which has a broader portfolio and more global reach.

The announcement is not for an acquisition. Simply a partnership. But my statement illustrates my view that, without knowing the specific details financial details of the partnership, this is a smart move for both companies.

The partnership is global in nature and BASF is expanding distribiution of Acadian products beyond China and Europe, with many more countries preparing to launch according to Acadian.

The partnership is focused mainly on distributing newly developed, unique abiotic stress management products for seed treatment, soil and foliar applications. which suggests an aim for novel products to come to market in the future. The global seaweed extracts biostimulant market is expected to grow at a CAGR of 13.1%.

Acadian is relatively unknown, but has scale— Acadian sells their biostimulant products in more than 80 countries, in many instances selling to other manufacturers that integrate the Acadian seaweed formulation with other molecules to create augmented products for farmers.

Innovation Companies or Distribution and Commercialization Companies?

There has been emphasis at crop protection companies surrounding biologicals being around partnerships and in-licensing products and molecules, but is this enough? What happens if crop protection leaders are not bringing enough differentiated innovation to market? What needs to be done by companies like BASF to mitigate this and what does it mean for the biological space in the future?

Become an Upstream Ag Professional member and access a full break down of the above, plus an overview of what makes Acadian Seaweed products differentiated:

Addressing Ag’s Top Three Technology Challenge: Farmers Edge Managed Services

An increasing number of agribusinesses are using Managed Services to offload their biggest technology pain points: cost reduction, disconnected tech stacks and change management.

Farmers Edge Managed Services enable a 30-50% reduction in tech spend, 61% less downtime and 50% faster adoption.

Proudly backed by Fairfax Financial, Farmers Edge is the best digital builder in agriculture providing three proven pathways to propel agribusinesses forward.

  1. Tech Outsourcing: Offload complex IT to free up resources.

  1. Data Licensing & White labeling: Go to market faster and access deep insights.

  1. Custom Development: Tailor solutions to unique challenges, driving efficiency and innovation.

Farmers Edge Managed Services are end-to-end; over 100 in-house experts become an extension of your team to strategize, develop, deploy and optimize technology solutions to grow your business.

“While induced resistance has been studied for decades, its exploitation in crop protection has only recently begun to gain momentum,” said Prof Brigitte Mauch-Mani of the University of Neuchâtel, lead author of the article. “We argue in favor of a holistic approach to crop protection, which combines multiple strategies to deliver tailored solutions. Induced resistance sits in the heart of such an integrated approach.”

Plants have evolved sophisticated mechanisms to defend themselves against diseases, much like how vaccines help humans and animals build immunity. Two of the most important plant defense strategies are Induced Systemic Resistance (ISR) and Systemic Acquired Resistance (SAR).

ISR specifically can be thought of as natural ways of “vaccinating” plants, preparing them to fight off pathogens more effectively as it can be elicited by applying specific types of biostimulants or biofungicides. This has long been acknowledged by many in the industry, but is only becoming more directly acknowledged in the mainstream avenues of crop protection and agronomy.

Induced Systemic Resistance

ISR is akin to a preventive vaccine for plants, triggered by beneficial microorganisms in the soil, such as certain bacteria (Pseudomonas spp.) or mycorrhizal fungi. An example of a company that delivers this today is Ascribe Bio which produces Phytalix, a naturally-occurring molecule produced by nematodes in the soil. Plants react to Phytalix by priming their defense pathways to manage disease.

When plants interact with these microbes/molecules, their immune systems become "primed" to respond more rapidly to pathogen attacks. The signaling involved in ISR primarily relies on jasmonic acid and ethylene, which activate a range of defensive responses across the plant when needed​.

The priming effect of ISR is similar to how a vaccine works in humans—by exposing the immune system to a harmless version of a pathogen, the body learns how to respond faster when faced with the real threat. In plants, ISR doesn't prevent an attack outright but equips the plant to mount a quicker and stronger response, leading to better survival and growth under stress conditions. Additionally, it is typically broad spectrum and long lasting.

For more on ISR, it’s related System Acquired Resistance and why it is important in biostimulants, biofungicides and integrated pest management along with what the downsides to priming the plant in this way can be:

This week Ben Gordon, co-founder and CEO of Fractal Ag, Sarah Nolet of Tenacious Ventures and myself sat down to unpack the Fractal business.

The conversation covered the nuances of farmland investment and the growing appetite for agricultural assets, both from traditional investors and those with an impact-driven focus.

Fractal Ag partners with farmers by providing equity financing for farmland. Their model allows farmers to unlock capital by taking a minority position in the land, while farmers retain control over farming operations. This financing helps farmers capitalize on opportunities, such as expanding their land base, without depleting their working capital. Farmers can buy out Fractal's position after two years or extend it over a 10-year term, sharing both land appreciation and depreciation. Farmers can access reduced rates for using certain regenerative practices on their land.

Areas of discussion:

  • The opportunity in farmland markets for traditional and impact investors, and how access to this capital is valuable for leading farmers

  • The details of the Fractal model– including who pays, where the risk lies, and how the business gets buy-in from customers and partners

  • How regenerative ag practices fit in, and how they can be leveraged in adaptive ways to allow farmers to make the best decisions for their individual operations

Vestaron Corporation, a leading innovator in sustainable crop protection solutions, is pleased to announce a long-term strategic agreement with ADM for the production of Vestaron peptide-based crop protection products. This collaboration marks a significant milestone in Vestaron's mission to meet the growing global demand for sustainable and effective crop protection solutions.

ADM (Archer Daniels Midland) has a precision fermentation business segment.

They have invested in fermentation capacity as part of their strategy to expand in the area of alternative proteins and innovative food ingredients. ADM leverages its expertise in microbial fermentation to produce ingredients like proteins, probiotics, enzymes, and other bio-based solutions.

In recent years, ADM has made strategic partnerships and investments to advance its precision fermentation capabilities, collaborating with companies and startups that require fermentation capabilities and expertise.

Vestaron’s competency is development of novel peptides for crop protection. Vestaron produces the active peptide via fermentation with a specific strain of yeast, which they then filter out leaving only the peptide to process and formulate into the crop protection product. The partnership with ADM gives Vestaron access to the fermentation facilities, enabling them to scale up more quickly and with an adequate cost of goods to manufacturer their products.

“I see one of two things happening, either the biofungicides, bioinsecticides markets are just going to be driven by very large players as the small guys can’t afford it. Or the innovation is going to move to countries where the regulatory environment is more favorable, like Brazil.

The general consensus in the industry is that proteins would generally be described as the most stable, and then peptides, and then RNA.

We think that the era of proteins, peptides and RNA is going to be the bridge between traditional biologicals and chemistry. In fact, I would argue that what we have is not a biological it’s sort of a new class, something between a microbe and a plant extract and hardcore chemistry.”

Starting in 2024/2025 and over a three-year period, the collaboration will involve a significant investment aimed at supporting ag retailers in the adoption of Taranis’ AI-powered agronomic platforms so retail partners can benefit from AI-derived leaf-level remote scouting insights and generative AI (GenAI) agronomic recommendations. This collaboration is designed to revolutionize ag retailer workflows while optimizing farm decision making, facilitating grower adoption of conservation practices and increasing farm profitability.

This news is an interesting initiative by Syngenta and Taranis.

My interpretation is that for specific retailers that are interested in leveraging the Taranis digital agronomy services (drone and imagery data with layered models that delivers insights such as stand counts, disease outbreaks etc), Syngenta will subsidize the service for partner retailers— likely retails that are supporting their crop protection and seed, or that Syngenta is targeting to grow with, and equipping these retailers and their agronomists with the technology and tools to better understand their farm customers fields and better deliver a value added conversation with the farmer.

The Taranis service outcome works out to ~$2/ac per flight “mission” and they generally recommend 6 per year, so can cost upwards of $12/ac per year.

The desired outcome would be retailers increasing their recommendation level of Syngenta products in scenarios where the problem calls for them.

Incentivize the retailer and give them effective collateral, tools and confidence for engaging in a value-added discussion with farmers.

For more on how this partnership can be beneficial for Syngenta and Taranis along with Ag retailers, the watch outs and what it means for LLM infrastructure, become an Upstream Ag Professional member today:

Last week I went through the largest fertilizer and crop protection companies annual reports, quarterly earnings calls and historical announcements to aggregate key insights about each entities biological and specialty product strategy and business, including partnerships, investments, acquisitions, current revenues and targets and what they might do next.

Index

  1. Agribusiness Comparison Snapshots

  2. Largest Bio-based and Specialty Acquisitions to Date

  3. The Rising Demand for Bio-Based Crop Inputs and Specialty Nutrition Product: Four Key Market Drivers

  4. Company Overviews

    1. Yara

    2. Mosaic

    3. Nutrien

    4. ICL

    5. Corteva

    6. BASF

    7. Bayer

    8. Syngenta

    9. FMC

    10. UPL

This report has received more feedback than any Upstream report ever and is a must read if you have any interest in the specialty nutrition and biological space:

Non Ag Podcast

Malcolm Gladwell's The Tipping Point: How Little Things Can Make a Big Difference was one of his first successful books, exploring the phenomenon of how small actions or events can spark significant social changes, reaching a "tipping point" that leads to widespread impact. In the book, Gladwell identifies three key factors that drive these shifts: The Law of the Few, which emphasizes the role of influential people in spreading ideas; The Stickiness Factor, which refers to how memorable and impactful an idea is; and The Power of Context, highlighting the influence of environment and social conditions on behavior.

In Revenge of the Tipping Point, Malcolm Gladwell revisits and expands upon the ideas in The Tipping Point, but with a more critical and nuanced lens. While The Tipping Point focused on how small, well-timed actions or influencers can catalyze large social changes, the new book delves into the darker implications of these tipping points in the context of society today.

The podcast talks about some of the concepts from his new book.

Other Interesting Ag Articles

“We're proud that 28% of North American ag retail look to us to help them digitally enable not just the customer experience, but also provide best in class tools for their sales, marketing, finance, and procurement to help their teams do their best work with technology.” - AgVend CEO Alexander Reichert

“The key reason for founders to take control of the structure and operation of their board is to improve the chances that board meetings will deliver a strategic premium to founders, and in turn help to ensure the company’s success.”

  1. Global Top 20 Agrochemical Companies Saw Fall of Revenues - Agro Pages (useful image in the link)

I find the bottom half of companies particularly interesting because most of the data is less readily available than the top 9 companies.

Every entity besides ONE (#20 PI Industries from India) had negative revenue numbers from 2022 to 2023.