Upstream Ag Insights - September 11th 2023

Essential news for agribusiness professionals

September 11, 2023 • Read Time: 17 minutes

Welcome to the 184th Edition of Upstream Ag Insights!

This week’s edition includes complimentary access to a deep dive on Solinftec and the Solix autonomous platform.

  1. Illustrative AgTech Insights: Influence and the Retail Trusted Advisor

  2. The Closed Loop Challenge in Precision Agriculture and Sentera's New Launch of Precision Weed Technology

    1. DJI Agricultural Drone Report Highlights

  3. Pivot Bio Revenue Numbers Impress. What Products and Partnerships are Next for the Organization? 

  4. Blue Orca Capital Shorts FMC

  5. Biobest to Buy Biotrop for €532 Million to Expand in Brazil

  6. KWS Seeds Aigen Collaborate to Develop Robotic Weed Control for Farms

  7. In Case You Missed It: Indigo Ag: Analyzing What Went into their $3.5 billion Valuation and What Assumptions Went Wrong

Complimentary Upstream Ag Professional Deep Dive

Overview: A deep dive into the technology, business and vision behind the Solix Autonomous Platform and how it impacts ag retailers, input manufacturers and equipment manufacturers.

This week, I have made the Upstream Ag Professional deep dive on Solinftec and the Solix platform public for everybody.

The contents include:

  1. Solinftec Overview

  2. “Farming from First Principles”

  3. Stand Alone Sensing to “Living in the Field”

  4. The Solix Platform Specs

  5. The Solinftec Go-to-Market Strategy and Ag Retail

  6. Go-to-Market and Input Manufacturers

  7. Impact on Equipment Manufacturers

  8. Final Thoughts

  9. Appendix including pictures of the Solix Unit

For those wanting exclusive access to deep dives on the likes of Solinftec, Pivot Bio, Indigo Ag, InnerPlant, Bayer Crop Science, John Deere, Bushel, Nutrien, Corteva and many more, upgrade to become an Upstream Ag Professional Member Today.

Your Competitors Already Are.

To ensure your team doesn’t miss out on essential insights and analysis, please email me at [email protected] multiple team members or company-wide access. Each week there are deep dives on companies, industry trends, technology and industry reports.

In the second edition of Illustrative AgTech Insights, I focus on an aggregation of survey information shared by Stratus Ag Research that illustrates trends in the influence of the ag retail professional and break down what this could mean for the ag retailer and begin laying out what ag retail decision-makers need to lean into.

To see all the images, results and analysis, become an Upstream Ag Professional member:

Sentera, today announced the launch of its Aerial WeedScout technology, a precision weed control solution that reduces post-emergent herbicide application by up to 70% with no adverse impact on outcomes.

In the Upstream Ag Professional member exclusive article, I share full images of frameworks and charts (including of the researched battle chart below) to illustrate why Sentera’s new product offering will be challenged as a stand-alone product and what the likely outcomes are for entities like Sentera.

There are over 68 pages in this report sharing learnings from drones in agriculture worldwide

One macro takeaway: At the end of 2022, there were over 200,000 DJI units being used within agriculture on a cumulative area of more than 200 million hectares globally:

To read the full article, click the above link. To conserve space, only the first one-third of it is shared in the e-mail below.

Pivot Bio unloaded a bunch of news this week and I had the privilege to talk with Chief Innovation Officer and co-founder Karsten Temme and incoming CEO Chris Abbott last week to discuss some questions surrounding the news.

I first want to start with the numbers they shared surrounding their business in the release:

  • 60% year-over-year revenue growth

  • Over $100 million in 2023 revenue

  • 95% Net Revenue Retention in their 2022 cohort and 190% in their 2020 and 2021 cohorts

  • PROVEN on over 5 million acres in 2023

  • Forecast to have double-digit market share across U.S. corn acreage in 2024.

60% revenue growth, north of $100 million in revenue, and touching more than 5 million acres is no small feat in the biological world.

But what catches my eye the most is Net Revenue Retention (NRR). Last year, I emphasized in Upstream that customer retention is a crucial indicator to watch with Pivot.

NRR calculates total revenue (including expansion revenue) minus revenue churn (contract expirations, cancellations, or downgrades). Essentially, did current customers maintain spend/spend more, or did they churn/decrease spending on a year-over-year basis?

NRR is particularly useful in SaaS businesses, though it paints a meaningful story with a physical product that must be resold yearly. In other words, high retention says a lot with a product like PROVEN, and 95+% is an incredible metric for a physical goods agricultural product.

The earliest customer cohort has a significantly larger NRR than their new customers. My original interpretation was that this is a sign that as Pivot moves towards the mainstream, they are having a more challenging time with a new customer expanding their spending to more acres.

In my conversation with Karsten and Chris, they pointed something out to me, though— they increased their pricing from the original cohort to a higher amount per acre (closer to $20/ac) which means that is a big reason as to why there is such high NRR in early cohorts.

This actually signals something more substantial. Pivot Bio has some pricing power. Farmers seemingly like the product and its convenience enough to use it even with a higher price (Note: Fertilizer prices did increase over this time, too).

I checked the farmer market survey data from Stratus Ag Research to see how this NRR claim checked out (note: the below is 2022 data, not 2023, but I suspect relative consistency year to year):

Source: Stratus Ag Research

Pivot’s flagship PROVEN40 liquid-in-furrow product has the highest satisfaction of any crop-agnostic nitrogen fixing product on the market, with about 58% “satisfied or very satisfied” and another 28% in the middle. Only about 13% were dissatisfied.

The above and the fact that PROVEN had a reasonable intention to reuse in the survey reinforce the high NRR numbers.

Another thing that stood out to me with PROVEN was that the “Don’t Know” camp of farmers was very small. In my mind, that is a strong indicator of the strength of the Pivot Bio staff and approach. Ensuring they follow up with the farmer or that the channel they use does, illustrating that the product works, goes a long way in establishing successful outcomes. I will return to this point a bit later on in the future of Pivot Bio.

Lastly, Pivot forecasted “double-digit” market penetration in corn acreage. If we assume flat corn acres in 2024, that means ~94 million acres of corn (USDA number from 2023). Double-digit penetration means ~10% so we can speculate that Pivot sees itself touching over 9 million acres in 2024.

Considering their corn penetration and their 2023 numbers, this means they are forecasting ~75% acre growth year-over-year and revenue would then come in around $170-$180 million for 2024, and we haven’t even begun to see them tap into other crops (eg: wheat) with those numbers.

The Future

Given the revenue number, there are likely questions about whether they will look to go public soon. My suspicion is they will work to further build out two things first:

  1. Partnerships in the value chain to reinforce their staying power.

  2. More products to show a diversified revenue stream and leverage their unique distribution.

To read the full deep dive, become an Upstream Ag Professional member and don’t miss out on Pivot Bio patent commentary, their future partnerships, products, and more on their new CEO change and the future of their business.

4. Report: Blue Orca Capital Shorts FMC - Blue Orca Capital

We are short FMC Corporation because FMC has concealed from investors that it has suffered a recent string of stunning legal defeats around the globe that have enabled competitors to now launch competing generics at prices up to 80% below the price of FMC’s flagship insecticide product. Contrary to the Company’s claims, FMC’s process patents do not protect its flagship product from generic competition.

A few highlights from the Blue Orca report:

  • “Evidence suggests that FMC’s diamide gross margins could realistically fall from ~70% to as low as ~35% by FY 2024 in a post-patent world”

  • “In China, competitors are selling generics for up 80% below the price of FMC’s branded equivalent”

  • “In Brazil, we anticipate that diamide sales in the region to continue falling by 15% by the end of 2023, with more substantial declines of up to 30% in FY 2024. Additionally, as local CTPR sales force FMC to drop prices even further, we anticipate gross margins to compress from about 70% for diamide products to 35% by the end of FY 2024. This would result in a $175 million shortfall in Brazil topline revenue in FY 2024 relative to the base case – a 11% drop – and near zero growth in topline revenue relative to FY 2023 for FMC’s most import market”.

In the Upstream Ag Professional member exclusive article, I break down FMC’s revenue from the noted insecticide products, their patent strategy and more.

Biobest Group NV, a Belgian developer of biological crop-protection products, agreed to buy Biotrop Participacoes SA, a provider of biological and natural farming solutions in Brazil, for an enterprise value of about €532 million ($570 million).

Biobest is one of the largest biostimulant companies in the world.

This acquisition for Biobest is notable as they operate primarily outside LatAm, in the biopesticide and specialty horticulture markets.

With the acquisition, Biobest will add Brazil to the roughly 30 other countries in which it operates. The acquisition gives it access to technology developed by Biotrop that uses microbes as pesticides and biostimulants for row crops such as corn and soybeans, giving them row crop access and expertise.

Brazil is one of the fastest-growing markets in the biological world— with an annual growth rate of more than 40%, making it incredibly attractive to participate in.

On the investor front, Aqua Capital, was one of the largest shareholders of Biotrop, a Brazilian private equity firm that specializes in the agriculture sector and includes one of the largest ag retailers in Brazil, Agro Galaxy, in their portfolio.

There is continued opportunity to acquire and integrate biobased companies. The bio-based market is quite disparate,, and there is the ability for organizations, specifically a large biological player like Biobest, to acquire across four areas:

  1. Type of bioproduct (see image below) to increase the breadth of their portfolio.

  1. Geographic focus of the entity - In the bio space there tends to be a strong geographic dynamic to market presence, so acquiring to expand foot print enables a company to tap into current relationships, contracts, regional knowledge etc.

  2. Crop Focus (eg: horticulture or row crop for example, expanding acres across different crops)

  3. Horizontal products (amplifiers of products or formulations etc)

2022 and 2023 have witnessed many notable acquisitions and it seems unlikely that this trend will let up.

How does the Biobest acquisition compare to recent bio acquisitions?

Here are some of the most notable biological acquisitions over the last few years:

For full access to all Upstream Ag Professional images in high resolution, become a member today:

KWS Seeds and Aigen, an AI-driven robotics company, are teaming up to drive development of robotic and AI technology for controlling weeds, offering farmers a chemical- and carbon-free solution.

KWS Seeds has a significant history in sugar beets, dating to their beginning 165 years ago. Not only that, but according to a 2021 Bayer article, KWS holds a 60% market share in the sugar beet seed business globally.

Aigen is a solar-powered robotics company that has mechanical weed-removing capabilities. Their first and primary crop of focus today is sugar beets.

I have covered Aigen in the past, and one thing that stood out to me was their speed:

One robot can do just 3 acres per day.

Not a lot. If we have a 90-ac sugar beet field, it would take one robot 30 days to finish a field. Given the nature of weeds and crop growth, this is not a lot. Contrast this with Solinftec, which has a similar world-view in terms of slower-moving, solar-powered, autonomous robots that move at one mph and can do up to 100 acres per day.

There is likely a desire from KWS to capture incremental data via these autonomous units and likely a future increase in speed along.

The combination of Aigen with KWS, given their dominance in sugar beet seed, is a smart move and presents plenty of opportunities for incremental upside for both organizations.

For more on Aigen, check out this January 2022 Edition of Upstream Ag Insights.

7. In Case You Missed It

Key Takeaways:

  • Indigo reportedly raised a new funding round at a valuation of just $200 million last month, a 94% drop from the $3.5 billion at which it was valued two years ago.

  • The $3.5 billion valuation was based on three assumptions from an Upstream Ag perspective: eliminating middlemen, software gross margins and carbon market growth. These three areas have all appeared to “strike out.”

  • The future outlook is bleak for Indigo and relies heavily on the velocity of carbon markets which makes this current valuation even seem high.For full access to the most popular Upstream Ag Professional deep dive of 2023 so far, become a member today:

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