Upstream Ag Insights - October 28th 2024

Essential news and analysis for agribusiness leaders.

October 28, 2024 • Read Time: 24 minutes

Welcome to the forefront of agricultural innovation and strategy with the 238th edition of Upstream Ag Insights, where over 18,550 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. From Chatbots to Digital Teammates: How AI Agents Fit Into Agribusiness

  2. Meristem Crop Performance Partners with Bridgepoint to Catalyze Growth

  3. BASF Continues to Expand Their Biological Partnerships

    1. AgroSpheres and BASF Announce Major Strategic Partnership

    2. BASF and Elicit Plant Partner to Promote New Bio-Solutions in the Sunflower and Cereal Markets

    3. Strategic R&D Management in the Crop Protection Industry

  4. How market realities have tossed a wrench into Telus’s spinout plans: TELUS Ag and Consumer Goods Implications

  5. Carbon Robotics Raises $70 Million Series D Investment Round

  6. Nitrogen Fixation Still Questioned

  7. Other Interesting Ag Articles

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.   

AGpilot enables your organization to: 

  • Increase Revenue: Acquire more customers, expand customer share, and avoid displacement. 

  • Improve Productivity: Quickly view customer info, data, and tailored insights across systems. 

  • Reduce Attrition: Provide best-in-class tools to improve agronomist value, income, and relationships.  

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

AI Agents: A Digital Teammate

In the ever-evolving world of AI, LLM agents— autonomous applications powered by Large Language Models—have the potential to evolve how we think about performing day to day task as knowledge workers in agriculture.

Agents are an advanced evolution of LLMs.

An LLM agent is an artificial intelligence system that utilizes a large language model as its core engine to deliver capabilities beyond text generation, including conducting conversations, completing tasks, reasoning, and even demonstrating some degree of autonomous behavior.

LLM agents can be directed through prompts that encode personas, instructions, permissions, and context to shape the agent's responses and actions.

The key advantage of LLM agents is their ability to have varying degrees of autonomy. Based on the capabilities built during the design phase, agents can exhibit self-directed behaviors ranging from purely reactive to highly proactive.

LLM agents, with proper access to data and prompting, can work semi-autonomously to assist people in a range of applications, from the typical chatbots to goal-driven automation of workflows and tasks.

We are somewhere between Level 2 and Level 3 today in deployed agents.

Index for full article:

  1. AI Agents: A Digital Teammate

  2. OODA Loop

  3. Vertical Agents

  4. Levels of Agents

  5. Agent Use Cases for Agriculture

  6. Where Do Agents Live?

  7. Control Points

  8. Final Thoughts

Become an Upstream Ag Professional member to dive into agribusiness agent use cases for the likes of agronomy and sales teams and product managers, a look at what entities can and should deploy agents in their software, and a breakdown of the importance of “control points” in software and implications for LLMs:

Bridgepoint, a leading private asset growth investor, has announced today its partnership with Meristem, a leader in the agricultural solutions market. The transaction closed in October 2024 and financial terms were not disclosed.

Established in 2018, Meristem is one of the fastest-growing crop input companies in North America. Focused primarily on biologicals, the company sources, formulates, licenses, and delivers high-quality crop inputs to farmers, helping them produce more bushels for less cost per bushel.  Meristem's solutions are highly cost-effective and eliminate significant inefficiencies in the supply chain compared to more traditional go-to-market approaches.

Press Release link available in the full article due to sizing restrictions.

Meristem Crop Performance is an impressive enterprise that has built an exceptional business, but before getting into the importance of their new capital injection I think it’s worth highlighting what, at it’s most basic, enabled the Meristem team to get to this point.

In The Insight is the Edge I stated that insights are fundamental for the success of any business.

An insight is defined as:

the capacity to gain an accurate and deep intuitive understanding of a person or thing.

This can be into a customer, a technology or a market for example. An insight that is actionable is what differentiates a business. Acting on an insight allows a company to be different and an insight is core to having a unique strategy. As Michael Porter said in Competitive Strategy:

Underlying the concept of generic strategies is that competitive advantage is at the heart of any strategy, and that achieving advantage requires a firm to make choices. If a firm is to gain advantage, it must choose the type of competitive advantage it seeks to attain and a scope within which it can be attained…The worst strategic error is to be stuck in the middle, or to try simultaneously to pursue multiple strategies. This is a recipe for strategic mediocrity and below-average performance, because pursuing all the strategies simultaneously means that a firm is not able to achieve any of them because of their inherent contradictions.

The business needs to see something different than their competitors and lean into it.

Meristem Crop Performance is a perfect example of a company who’s founders, Mitch Eviston and Rob McClelland, had a unique insight that lead to the founding of Meristem in 2018.

Mitch and Rob had insight into several areas that have enabled them to build a profitable business generating more than $40 million in revenue per year on more than 10 million acres, with 8 million acres of those including biologicals:

  • The amount of dollars going to the channel (distributors + retailers) out of what the farmer was paying, giving them an understanding of where they could cut costs out of the end price to the farmer.

  • There was a lower margin, more competitive segment (synthetic crop protection) that everyone else could fight over and a growing, higher margin segment that they could differentiate on: biologicals. They opted to lean into biologicals. They also acknowledged that the channel was poorly positioned to readily sell these products because of knowledge base and current incentive structures. CEO Mitch Eviston even said to me: “If we launched our products through the channel, we wouldn’t be around today.”

  • They knew the challenges with biologicals and began building out intellectual property that could enable them to not only keep biological organisms living throughout the value chain, but deliver adequate levels of CFUs to the soil through current farmer practices. Some of their IP includes their BIO-CAPSULE packaging and distribution system.

  • They acknowledged that there was a segment of farmers that was sophisticated and equipped with the right assets (application equipment, storage etc) that they could sell direct to and build out their own channel. They also acknowledged that they needed experienced staff to be able to do this and hired accordingly.

When combining these insights together, you get the start of Meristem Crop Performance.

From there, their business has grown rapidly and has significant potential to lead to major partnerships with large seed and crop protection manufacturers, that could lead to an evolution in the input channel.

Bridgepoint Investment and BIO-CAPSULE

Bridgepoint Group is an international alternative asset manager specializing in private equity, infrastructure and private credit. They currently have $72 billion of assets under management.

For the full company deep dive, including more on the synergy of Bridgepoint’s investment with their Rovensa investment, horizontal businesses in biologicals, input channel evolution thanks to Meristem IP, Meristem’s potential licensing partners and what that means for the industry, along with their new product initiative, become an Upstream Ag Professional member:

Farmers Edge stepping up with a new standard: Lab and tech services purpose-built for ag retailers.

  • The Soil Laboratory – Uses advanced technology for fast, detailed insights (results in three days or less), with API integrations and online management for samples, tests and prescriptions. Retailers can pre-book soil testing now for 2025 to save 30% or more based on volumes.

  • Managed Technology Services – Addresses Ag’s top tech challenges, enabling retail efficiency, cost savings, and competitiveness in an increasingly challenging market. 

  • Vital for agriculture’s future growth, the service model includes tech advising, licensing & white labeling (such as online storefronts and agronomic software) and custom development.

Farmers Edge is focused on strengthening the ag retail ecosystem.

3. BASF Continues to Expand Their Biological Partnerships

BASF had been relatively quiet on the biologicals front until recently.

In September when they announced that they would be spinning BASF Agricultural Solutions into a separate entity, I called out their bare bones pipelines surrounding biologicals, a signal that the Becker Underwood assets and capabilities they acquired ijn 2012 have not kept up with what other entities in the industry have been building:

One takeaway for me was the low number of bio-based products. If we compare to a Bayer, Corteva or FMC pipeline it is not just small, but non-existent outside two products only in fruit and vegetable. BASF has been one of the quietest on the biological front, too. Where others have actively shared their ambitions

I suggested they are likely to acquire, highlighting potential targets like Rovensa, Verdesian or Acadian.

Last week they announced a global partnership with Acadian, an acknowledgement that they see growth in the biostimulant segment.

I suggested partnerships might not be enough when there is a requirement to innovate, suggesting the following:

But given the reliance these entities have on being “innovation” first, they need to continue to have the confidence of distribution in being a market shaping product development company across their portfolio, which is why I still believe BASF (and others) will seek more than partnerships with companies like Acadian, or other RNAi/peptide/enzyme companies.

The last sentence turned out to be prescient in that this week they announced an agreement with biomolecule company AgroSpheres:

AgroSpheres, a biotechnology leader in sustainable crop protection and crop health, and BASF, a global leader in agricultural solutions, are excited to announce their strategic partnership on a category defining novel bioinsecticide.

The companies are working together to develop biological crop protection products leveraging AgroSpheres AgriCell-powered biomolecules.  Both companies are encouraged by the levels of efficacy that have been demonstrated at low dose rates to control key agricultural lepidopteran pests.

AgroSpheres announced a partnership with strategic investor FMC earlier this year on a bioinsecticide.

A notable aspect here is that the BASF agreement is for a bioinsecticide, too. AgroSpheres also has biofungicide molecules, which just received EPA registration in September. AgroSpheres started with and has encapsulation technology that helps formulate and deliver novel biomolecules, like RNA or proteins in products known as AgriCell.

For a deeper overview of insights from the founders about the agreement, including pest focus, other licensing avenues, novel company partnerships (retail and fertilizer), current valuation and whether biomolecules companies could become the next unicorns in agtech, become an Upstream Ag Professional member:

Additionally, BASF made another partnership announcement this week:

This agreement is France specific and is essentially an agreement for BASF to distribute two of Elicit Plant’s products starting this year: EliGrain-a, for cereals, and EliSun-a, designed for sunflower.

Both are bio-solutions based on patented technology that utilizes the phytosterols. Phytosterols are plant-derived sterols with a chemical structure similar to animal cholesterol. Phytosterols are a versatile biostimulant option.

This is an incredibly well done article that Harry Teicher shared with me last week (note the date (2018) it was written and the foresight within it) that highlights how the the crop protection company playbook has evolved:

To utilise these opportunities, global corporations are increasingly making use of fourth-generation R&D management models, with the objective of generating intellectual capital through external collaborations.

These fourth-generation models are network-orientated and driven by collaborative innovation. In addition to existing Project Management and Strategic R&D Management techniques, strategic innovation and knowledge management methods may be implemented to ensure the synergistic integration of R&D strategies across organisations, cultures and fields of scientific endeavour.

The article is useful in the context of what I questioned last week in the Upstream Ag Professional edition: Are incumbents agribusinesses actually innovating?

This article is interesting in the context of the TELUS Agriculture and Consumer Goods business and the future there:

Three years ago, (TELUS) launched the first in what was expected to be a series of initial public offerings by selling a portion of subsidiary Telus Digital Experience. Feeble stock market performance, has thrown a wrench in the plan. Telus Digital’s share price is down 88 per cent since its debut.

One of the ways for TELUS to reap the rewards of their 9-figure endeavour into the agriculture software segment was a TELUS and Consumer Goods company spin out.

The article goes on to state:

The CEO now faces a dilemma. A decision that makes all sorts of financial sense – buying back all the shares in Telus Digital for a fraction of the IPO price – would kibosh Mr. Entwistle’s plans for further spinouts. Why would anyone buy the next IPO from Telus after watching investors lose money on the last offering?

For other TELUS IPOs to occur, like TELUS Agriculture and Consumer Goods, it will require a herculean turnaround at TELUS Digital:

If Mr. Entwistle does decide to take Telus Digital private at a fraction of the price the company went public, it’s a sign he has given up hope of doing further spinouts.

The article articulates well that there are three outcomes that could occur, and only one of them is (potentially) positive for the ag division:

  1. TELUS Digital continues to flounder as a public entity.

  2. TELUS Digital gets taken private by TELUS.

  3. TELUS Digital has a massive turn around.

Number 1 and 2 are suboptimal for the ag division, and number 3 gives the ag division a hope— but number 3 seems the least likely.

There are other avenues, if the ag division finds its footing, it could always be spun out in a private sale, but the business continues to sound like it is in scramble mode from every customer and previous employee I have talked to, the numbers back it up too.

In Q2 2024 TELUS highlighted revenue growth of 15%, however, their release stated the following:

Agriculture and consumer goods services revenues increased by $12 million or 15 per cent, primarily attributed to business acquisitions and improving organic growth across certain lines of business in agriculture services. This was partially tempered by an increase of agriculture customer churn and macroeconomic headwinds slowing down subscription growth and sales funnel opportunities.

The acquisition was Proagrica.

For an overview of Proagrica revenue, TELUS Ag and Consumer Goods revenue, breakout by segment of the business, and what the future of TELUS Ag might entail, become an Upstream Ag Professional member:

For more on the TELUS Ag challenges, check out this article from March: TELUS Formally Announces Proagrica Acquisition: Strategic Acquisition or Act of Desperation? - Upstream Ag Professional

Carbon Robotics, a leader in AI-powered farming, announced today that it has raised $70 million in Series D financing. The financing was led by new investor BOND with participation from existing investors NVentures (NVIDIA’s venture capital arm), Anthos Capital, Fuse Venture Capital, Ignition Partners, Revolution, Sozo Ventures, and Voyager Capital. This round brings total company funding to $157 million.

This is notable for a few reasons:

  1. NVIDIA investing

  2. No Agribusiness CVCs involved

  3. Laser Challenges

Not to mention, it’s a large investment after an undisclosed raise value in May and $8 million in late 2023.

First, NVIDIA has tripled its venture investments over the past year, investing in 30 startups across data, healthcare, robotics, and generative AI, positioning itself across the entire AI value chain. This allows Nvidia to stay close to customer needs, research, and development, ensuring its products align with market demands, something Nvidia founder and CEO Jensen Huang alluded to key to making them successful in his recent B2G Podcast appearance— there is a significant demand for GPUs on the Carbon Robotics system.

Second, while maybe insignificant, there has been ample corporate venture capital activity from agribusinesses in bio-molecule start-ups and AI discovery systems, yet there has been less in laser weeding technology— Nufarm has a relationship with crop.zone and CLAAS invested in AgXeed’s seed round. The largest equipment players, to my knowledge, have not invested in the laser weeding space. On the flipside, crop protection CVCs have invested in companies like Blue River (eg: Syngenta), Yara and BASF are invested in Ecorobotix, BASF built ONE Smart Spray with Bosch and Bayer has its own Magic Sprayer concept and equipment manufacturers have obviously invested in and acquired spray technology.

Could autonomy and strategic partnership shift laser companies to light focused crop protection companies?

If you want to hear divergent thoughts from the norm in the industry related to CVC investment in ag and laser weeding, I highly recommend listening to this Modern Acre podcast Contrarian Thinking in AgTech & Robotics with Chris Laudando.

6. Nitrogen Fixation Still Questioned

This week there were two notable articles on N fixing products— the first in The New York Times and the second in The Journal of Plant and Soil Science titled Science losing its way: examples from the realm of microbial N2-fixation in cereals and other non-legumes.

In The New York Times article, Pivot Bio had a prominent role.

One concern that I hadn’t heard before was this:

Dave Franzen, an agronomist at North Dakota State University, said he wonders whether the Pivot Bio microbes would produce excess nitrogen, which can run off fields into nearby rivers and lakes.

Overproducing seems unlikely, given the dynamics of symbiotic relationships and organism reciprocity.

It’s interesting to contrast that comment with the finding in the aforementioned journal article surrounding Pivot Bio’s microbe, Klebsiella variicola:

..the synthetic Klebsiella had a higher rate of ethylene production than the wild types. However, the highest rate of ethylene production measured was only 1.25 nmol hr−1….assuming a 4:1 ratio of ethylene:N2, this would be equivalent to 7.5 nmol N/week, insufficient to support 1 mg of plant biomass at 1.5% N. Thus, the rate of ethylene production is frightfully low, suggesting a potential rate of N2-fixation inconsequential for any plant growth.

A few key takeaways from the Journal article include:

  • Historical Misinterpretation in Research — Research on N2-fixation by microbes in non-legume crops has followed a cyclical pattern since the 1930s. Many studies have attributed positive crop responses to growth-promoting hormones rather than actual nitrogen fixation, leading to misinterpretations in understanding the benefits of microbial inoculants.

    • “Azospirillum brasilense were launched in 2010 and have been very successful with farmers: the market had grown to more than 10 million doses within 10 years. None of these more recent studies suggest that the conclusion of Kennedy should be revised – namely that the responses to inoculation were due to plant growth promotion and not N2-fixation.”

      • Which raises the question: Are most N fixation products just biostimulants that increase N use efficiency?

  • Energy Demands of N2-Fixation — The article emphasizes the high energy requirements of nitrogenase, the enzyme that converts atmospheric nitrogen into ammonia. Significant nitrogen fixation in cereals would require intense respiration, and thus high energy input, an often overlooked factor— I highlighted this in The Insight is the Edge article.

For the full key takeaways along with access to my deep dive on The Real Challenges of Nitrogen Fixing Microbes, become an Upstream Ag Professional member:

Non Ag Article

The Strategy Questions - Seth Godin (full article is the questions below)

Seth Godin released a new book titled This is Strategy along with a coinciding blog post that shares a list of useful questions to ask about any project:

  • Who is this project for? Who is my smallest viable audience?

  • What is my strategy to make this change happen? Can I articulate it clearly?

  • What is my timeline for this project? When does it ship and what is my deadline for calling it quits?

  • What systems am I currently working within? Does the system want what I have to offer?

  • What systems would need to change for my project to succeed? How can I create the conditions for that change?

  • Where will I cause tension? What resistance should I anticipate from others (and myself)?

  • What are the status roles and affiliations at play?

  • Why would someone talk about or recommend my project to others?

  • How can I create the conditions for a network effect to develop around my project?

  • Where are the feedback loops, and which ones move my work forward or slow it down?

  • Which games are being played? Who sets the rules?

  • Which games are winnable, which are oppositional? And which games don’t need to be won, simply played?

  • What can I learn to increase my odds of success? Where can I gain that knowledge?

  • Where is the smallest viable audience? How do they think about status and affiliation?

  • Am I taking advantage of the shift being caused by a change agent? Or do I need to become one?

  • What asset would transform my project? How do I acquire it?

  • If an early adopter talks about my project, what will they say?

  • Does my work align with the actual motivations and interests of the audience?

  • Am I building the scaffolding people will need to adopt and move forward?

  • Does this help the dominant forces in the system continue to achieve their goals or does it challenge their status quo?

  • How can I avoid becoming trapped by sunk costs if my initial strategy proves ill-fated? When should I pivot vs. persist? Where’s the dip?

Other Interesting Ag Articles

The article is unclear, but it seems Canadian agtech company, Semios, has rebranded as Almanac.

“The findings suggest that regenerative agriculture, as it is currently defined and practiced by multinational food and agriculture companies, lacks the ambition necessary to significantly reduce emissions or increase removals. Food and agriculture companies are not using regenerative agriculture to redesign the food production system – instead, they are superposing some regenerative agriculture practices on top of business-as-usual agricultural practices.”

Incentives remain undefeated in determining outcomes.