Upstream Ag Insights - October 7th 2024

Essential news and analysis for agribusiness leaders.

October 07, 2024 • Read Time: 21 minutes

Welcome to the forefront of agricultural innovation and strategy with the 235th edition of Upstream Ag Insights, where over 18,200 agribusiness leaders start their week discovering the latest 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. The Context Network's 2024 Biotech Traits Commercialized (BTC) Study Highlights and Analysis

  2. Incentives and Influencing the Market vs. Letting the Market Influence You

  3. Ag Retailers Slow to Add Drones + DJI Lobbying Spend

  4. Syngenta Group Adds Cutting-Edge GenAI to Cropwise

  5. How Bayer is unearthing agronomy's future with generative AI

  6. AgroSpheres Secures $37M Series B Funding – Pushes for Growth

  7. See & Spray Adoption: Farmers Success Stories & Why They Won’t Go Back

  8. Why Trying to Be the Tesla of Agriculture Is Missing the Point—and What We're Doing Instead

  9. Unlock the Power of Data-Driven Insights with Comprehensive Agribusiness Financial Workbooks

  10. Naval Ravikant & Balaji Srinivasan: Knowledge, Wealth, and AI's Future 

  11. Other Interesting Ag Articles (7 this week)

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Recently, The Context Network shared their 2024 Biotech Traits Commercialized (BTC) Multi-client Study that explores the landscape of biotech traits, highlighting the current state, company development trends, and extrapolating future initiatives that will drive the commercial success of agribusinesses globally in the world of seed.

Interesting Takeaways:

  • In soybean, nearly 45% of permits were issued to Big 4 companies

  • 2023 was a record trait launch year for both transgenic traits and non-transgenic traits with small entities outside the big four being the largest and fastest growing segment.

  • From 2018 to 2023, the total number of pipeline traits increased across every crop illustrating the expanded research & investment across all agricultural crops.

  • BASF, Bayer and Corteva have the highest percentage of their regulatory approvals globally associated with “food” based traits.

    • Syngenta is the sole entity of the big four with more emphasis on “cultivation” based traits. Notably, they had a 45% reduction in permits from 2022 to 2023.

  • Corteva also continues to expand its non-transgenic pipeline with 19 active projects targeting quality and agronomic traits, specifically in corn, soybeans, and canola. 

  • GreenLab has a a corn trait in Phase 2 focused on production of manganese peroxidase (MnP), an enzyme primarily used by fungi to break down lignin which could help farmers by accelerating the decomposition of corn residue, enhancing farmer ability to implement reduced tillage.

Check out the link for the full breakdown.

  1. Introduction

  2. Growth Drivers of BioTech Traits

  3. Insights by Company

    1. BASF

    2. Bayer

    3. Corteva

    4. Syngenta

  4. Insights by Crop

    1. Canola

    2. Corn

    3. Potato

    4. Soybean

    5. Wheat

  5. Final Thoughts

This week I read the Crop Life article Enhanced Application Accuracy, Focus on Plant Health Among Key Growth Drivers for Micronutrients Market that highlights multiple things contributing to micronutrient utilization, including that better awareness of micronutrients, more emphasis on plant health and farmers and improved products drive micronutrient utilization.

I think there are other key reasons: retail differentiation and margin opportunities.

If a retail can create a more valuable conversation with its customer, they win.

Every retailer can sell traditional crop protection products. Any retail can sell nitrogen. These products are widely accepted and what I consider usage as default products, or “functional” in the hierarchy of agronomic needs. They are also highly commoditized at the retail level, partly because they are widely accepted.

There is still uncertainty in the utilization of micronutrients, which gives retailers that support micronutrient products effectively an opportunity to differentiate themselves vs. competitors and sell a higher margin product. The retailer is the touch point that can drive usage of products.

I have previously shared the below image surrounding how uncertainty in a product is one aspect that influences the margin potential at the retail level. We can see roughly where herbicide and bulk nitrogen fertilizer lie compared to micronutrients in the image in the full article.

For useful images and examples of how differentiation drives adoption and how company cultures and mindsets surrounding the market vs. letting the market influence them are crucial to success in strong, and poor economic times, become an Upstream Ag Professional member:

3. Ag Retailers Slow to Add Drones - Precision Farming Dealer

Getting set up for a drone spraying application can be costly for a retailer:

These dealers indicated that setting up a drone crew can be expensive. The cost for equipping, licensing and training a crew averages nearly $62,000 for an ag retailer. Plus, it costs around $13,000 per month for a drone crew based on wages, fuel, repairs, maintenance, insurance and other variable costs.

One of the concerns in ag and specifically in the drone spraying industry has been how the Countering CCP Drones Act and how this would impact the viability of drone spraying in the United States due to the banning of them.

On average, it can be 2.5x more expensive to purchase non-Chinese made drones than Chinese manufactured ones.

In 2023, there was 3.7 million acres sprayed by drone in the United States. Most of these via Chinese manufactured drones, such as the largest global drone manufacturer, DJI which has an estimated market share of over 80% for spraying. In 2022, DJI stated that more than 200,000 drones by them were active globally.

What an Upstream reader brought to my attention was my incorrect interpretation of the act that I think is important for me to highlight.

There are two things the Countering CCP Drones Act will do, according to Rep. Elise Stefanik:

  • Add CCP-controlled drone company, DJI, to the Federal Communications Commission’s (FCC) Covered List;

  • Prohibit new models of DJI drones from obtaining FCC authorizations required to operate on U.S. communications infrastructure;

But one thing it will not do is the following:

  • Will not impact, ground, or ban any DJI drones currently operating or flying in the U.S. prior to its FCC Listing.

This is an important clarification. Any Chinese manufactured drone currently operating will still be able to operate. While there would still be a need for North American manufactured drones to significantly ramp up (eg: from Guardian Ag, Pyka, Hylio, Precision AI etc) it doesn’t leave as big of a gap as I initially thought (by banning all Chinese manufactured drones from operating).

For more on DJI and their lobbying efforts and spend, become an Upstream Ag Professional member:

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Syngenta Group, a global leader in agricultural innovation, announced the launch of Cropwise AI at the World AgriTech Innovation Summit in London.

Cropwise AI is a cutting-edge GenAI system designed to increase the efficiency of agronomic advisors and growers to determine the best crop management practices. Leveraging advanced machine learning algorithms and data analytics, Cropwise AI empowers growers with deep insights and enhanced decision-making capabilities to optimize crop yields, improve sustainability, and drive profitability.

This week, Syngenta officially announced their Cropwise AI, their GenAi system. I think the positioning is smart and points of emphasis make sense, emphasizing efficiency and enhancing the decision making capabilities of farmers and agronomic advisors.

Syngenta states a focus on the following:

  • Seeds recommendation and placement: providing insights on seed products and utilizing advanced predictive machine learning algorithms to deliver tailored seed recommendations.

  • Predictive Modeling: Leveraging machine learning algorithms to forecast crop growth, yield potential, and risk factors based on real-time and historical data.

  • Precision Agriculture: Providing site-specific recommendations for optimized input application, minimizing waste and maximizing resource efficiency.

In the future, Syngenta plans to expand Cropwise AI’s capabilities:

  • Advanced Disease and Pest Management

  • Sustainability Analytics

One thing Syngenta also has is an “AI Manifesto.”

I think most people would agree with everything in it. It’s a reasonable and commendable list.

One component did stand out:

“Ensuring a bias free AI experience”

Again, no one would disagree that this is a good initiative, but the execution of this for input manufacturers requires targeted management.

Today, the likely point of value creation for Syngenta through Cropwise AI will be around things like general disease prediction itself driving the farmer conversation of what fungicide to use is directed to a Syngenta representative.

But when advisors and farmers begin asking for product comparisons, there is potential for bias from input manufacturers (not specific to Syngenta), and this can lead to challenges for successful utilization of AI.

For more on the challenges that arise, what they are and how they might overcome them, become an Upstream Ag Professional member:

EY released an article highlighting Bayer’s initial learnings with their genAI system.

Bayer announced the initiative earlier this year and has companies like Lindsay Irrigation as a pilot partner.

A couple things stand out from the article:

BCS employees have successfully used the tool to put together marketing materials and train new sales reps.

This is a natural fit not only for general marketing materials, but for the future of making specific materials for specific customers.

I have previously talked about the initial use cases being finding or retrieval (eg: rates of surfactants), but expanding from there into…

For more on how GenAI will augment and enhance agribusiness professionals, become an Upstream Ag Professional member today:

AgroSpheres Inc. (AGS), a biotechnology leader in sustainable crop protection and crop health, today announced the final close of a $37 million Series B funding round led by Zebra Impact Ventures, which invests through the Regenerative Growth I strategy, run in partnership with Mirabaud Asset Management. The round also saw strong participation from existing investors Lewis and Clark AgriFood, Ospraie Ag Science Ventures, FMC Ventures, BIDRA Ventures and Cavallo Ventures, underscoring continued confidence in the company’s trajectory in establishing itself as a premier crop health company. 

AgroSpheres announced their initial Series B raise of $22 million in October 2022.

In late 2023 they announced a $3 million expansion.

This week they announced another $12 million and the final close of their raise. The raise was led by Zebra Impact Ventures, a company that also led Micropep’s Series B, joining a list of investment firms, including Cavallo Ventures and FMC Ventures, that are invested in Micropep and AgroSpheres.

AgroSpheres is a compelling start-up that has promising technology. Their technology can improve the performance, COGS and viability of bio-based products, such as proteins or RNA technology.

AgroSpheres boasts encapsulation technology that can effectively support the usage of small, bio-based molecules like peptides, and nucleic acids (RNA) along with volatile compounds such as pheromones in agriculture. It’s effectively a fermentation technology where they can put the trait into a microorganism and the microorganism produces this trait, such as a protein, or RNA. It then produces it in a stable format that is encapsulated, essentially a shell around it, and that’s what AgroSpheres delivers at the end of the fermentation process.

For more on the Agrospheres business and encapsulation technology including how companies like FMC, OCP and Wilbur-Ellis and their investment arm might come together to leverage AgroSpheres, along with an image illustrating their points of activity and influence in the value chain, become an Upstream Ag Professional member today:

This is a good video (~14 minutes) with two individuals from 21st Century Equipment, a John Deere dealership, talk about their experiences and farmer stories surrounding the use of See and Spray technology.

The individuals at this dealership are impressive in their understanding and grasp of the new approach to weed control— one question I continue to have is, how strong are equipment dealers on average at integrating good agronomics into the See and Spray conversation? And what are the implications of this for not only product adoption, but future alliances and initiatives across the input, retail, equipment manufacturer and dealership world?

8. Why Trying to Be the Tesla of Agriculture Is Missing the Point—and What We're Doing Instead - My Dad Used to Drive a Tractor Newsletter by SwarmFarm Founder Andrew Bate

At SwarmFarm, we’re not just in the business of making autonomous machines that mimic tractors. We’re in the business of creating an entirely new farming system. It’s easy to think of innovation in agriculture as making bigger, faster, more powerful machines to replace the old ones. But that’s missing the point. What Tesla did wasn’t simply about building a faster car; it was about building a smarter, more connected, and more sustainable one. SwarmFarm is doing something similar by focusing not on simply upgrading current farm equipment, but by redefining how farming itself can work.

So no, we’re not trying to be the Tesla of agriculture. We’re trying to be something even more ambitious: the SwarmFarm of agriculture

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Example image of the materials:

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Financials include data from Q4 2022 to Q2 2024 for all of the below companies broken out as three separate workbooks:

  1. Crop Protection and Seed Manufacturers Financial Data (Bayer, Corteva, Syngenta, BASF, FMC, UPL, Nufarm, Bioceres, KWS)

  2. Fertilizer Manufacturer Financial Data (Yara, CF Industries, Mosaic, Nutrien, ICL, OCP)

  3. Equipment Manufacturer Financial Data (John Deere, CNH Industrial, AGCO, Lindsay Corp., Valmont Industries, Titan Machinery)

Non-Ag Video

In this video, Naval Ravikant and Balaji Srinivasan, both wildly intelligent individuals, discuss the impact of technology on the democratization of knowledge, wealth in the digital age, and the transformative role AI will play in the future. The conversation blends economics, technology, and philosophy, providing a thought-provoking perspective.

Other Interesting Ag Articles