Upstream Ag Insights - September 16th 2024

Essential news and analysis for agribusiness leaders.

September 16, 2024 • Read Time: 23 minutes

Welcome to the forefront of agricultural innovation and strategy with the 233rd edition of Upstream Ag Insights, where over 17,900 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. Peptide Company Focused on Insecticides, SOLASTA Bio Raises $14m Series A

  2. Keurig for Biological Products: Indigo Ag Upends Standard Biological Seed Treatment Application

  3. Bayer, AgVend Collaboration Allows Retailers to Improve Digital Connectivity with Farmers

  4. Catalera Series A Funding to Catalyze a New Era of Biological Pest Control

  5. Regenerative Agriculture

    1. I'm a regenerative agriculture skeptic - and I finally figured out why

    2. Regenerative Agriculture Doesn’t Have to be Contentious

    3. Regenerative agriculture less popular ‘when it comes at the expense of consumers,’ says new report from Purdue

  6. Chinese ag drone maker DJI hits back as US lawmakers accuse it of ‘weaponizing’ aircraft ‘to gain leverage over nation’s food supply

    1. Sprayer drones: Losing altitude in early flight

  7. 5 Key Takeaways for Agribusiness Professionals from Stratus Ag Research Report: Boosting Ag Retailer Success Through Manufacturer Support

  8. New Agribusiness Report! 2nd Quarter 2024 Agribusiness Earnings Results: Themes, Highlights, Analysis and Financial Data

  9. Cumulative vs. Cyclical Knowledge

  10. Other Interesting Ag Articles (5 this week)

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SOLASTA Bio, a leading agri-biotech company specialising in the next generation of green insecticides, has completed an oversubscribed $14 million Series A funding round to accelerate the development of its unique peptide-based, bioinsecticides.

The investment round was led by Forbion via its BioEconomy fund strategy, with co-lead investment from agricultural strategics FMC Ventures and Corteva Catalyst.

According to Crunchbase, peptide company SOLASTA Bio has now raised over $19 million. The Company has been developing its technology since licensing IP from the University of Glasgow.

Before getting into SOLASTA, there is another notable aspect to this news:

It marks Corteva Catalysts first publicly disclosed investment.

Corteva announced their Catalyst initiative in March, calling it an “investment and partnership platform.”

Corteva stated that they will initially focus on identifying opportunities across four strategic verticals aligned with the company’s R&D priorities:

  • genome editing

  • biologicals and natural products

  • technology platforms

  • decision science

Corteva is one of the major input organizations that has committed to increasing R&D spend, along with establishing Catalyst as another avenue for finding innovation:

Notably, FMC Ventures is also involved in the SOLASTA round. FMC Ventures has also invested in peptide company Micropep, and biosolution company Agrospheres. Cavallo Ventures, Wilbur Ellis’s venture division, is involved as well, which has also invested in peptide company Vestaron along with Agrospheres.

What is a Peptide and What makes Solasta Bio Unique?

Peptides are natural molecules encoded in plant genomes. They are made of about 10 to 30 amino-acids, the natural building blocks of life. There are 20 different natural amino-acids, which give about 10 trillion different combinations possible to make 10 amino-acids long peptides.

Peptides have the potential to deliver the efficacy of synthetic chemistry with the environmental footprint of microbials and with less limitation than RNAs, offering better plant penetrability and supply chain/environmental stability.

SOLASTA Bio specializes in peptide insect control capabilities that are based on endogenous insect peptides, which govern insect physiology and behavior.

The company develops peptides based on insect “neuropeptides” to deliver novel bioinsecticide products. Insect neuropeptides are small molecules, responsible for most of the physiological activities of an insect such as signaling processes, pheromone synthesis and muscle activities. That means SOLASTA solutions act on specific targets in insect tissues, altering their behaviour and disrupting lifecycles— such as making them forget to lay eggs, or avoid feeding, rather than killing them outright.

For the full Upstream Ag Professional article overviewing the focus of SOLASTA, what makes them unique, their revenue model, their peptide production approach, along with challenges in peptides and others companies in the space, become an Upstream Ag Professional member:

2. Keurig for Biological Products: Indigo Ag upends standard biological seed treatment application - Indigo Ag

Indigo Ag today launched its ground-breaking CLIPS™ device. The device is an automatic hands-free system, which saves time, removes the hassle factor in the seed treatment process, and potentially upends standard biological seed treatment applications.

Indigo Ag’s CLIPS is unlike any other dry powder application system for bulk seed box containers. It provides fast, reliable application of dry powder formulations, in this case, Indigo’s proven biological lineup, while sidestepping restrictive on-seed stability and planting window concerns. 

This is interesting news for two reasons.

The first is because the CLIPS system is an innovation that helps overcome some of the practical challenges of microbe adoption: supply chain and on-seed stability.

What is the CLIPS System and How does it Overcome the Challenges of On Seed Microbe Viability?

The CLIPS System is an innovative design that allows for application of powder formulated microbe products directly to seed at the time of planting.

The below device is “clipped” to the top of the inside of a soybean or corn seed box where the microbes can remain viable in a encapsulated pod for upwards of 2-years:

Source: Indigo Ag

The clipping of the system is done by a retailer or seed dealer— whichever group is selling the box of seed, and could also be done by the seed company themselves.

Once the seed box is opened to tender out the seed, the “anchor weight” (ball on right in image above) that sits on top of the seed drops with the seed, releasing the microbial product onto the seed as it flows out, mixing continuously as the seed is augured into planter, effectively getting microbes onto seed at planting time.

The first challenge the CLIPS system overcomes is ensuring microbe viability throughout the supply chain. The second is ensuring a seamless experience to get the product applied to the seed, which is also manages.

Indigo, and their design partner in the project, 3Bar Bio, stated that their tests show coverage of the microbial product on the seed is more than adequate through the tendering process.

The CLIPS system does not cost extra for the farmer and each CLIPS system is sold with a pod for 40 seed units (soybean) or 50 seed units (corn seed). Each pod treats one box of seed.

The CLIPS systems (minus the pod) are reusable and will be treated similar to a bulk tote deposit, or bottle recycling deposit.

All Indigo biotrinsic dry powder products will be available via this system for 2025.

I asked Indigo what they are targeting for percentage of their products being applied via the CLIPS system vs. other SKUs and while they didn’t share a percentage, they did state that they see the “majority” of product purchases moving towards the CLIPS relatively rapidly in the future because of it opening up the usability of microbes to many more farmers.

For the full breakdown including the second reason this innovation is compelling, what the CLIPS system can evolve to in the future, what Indigo can learn from the Kuerig model and what that might mean for agribusinesses and seed companies operating in the microbe space long term, become an Upstream Ag Professional member:

Climate FieldView™, announced today a new agreement with AgVend, to help maximize farmer ROI through simplified data sharing, making it easier for agronomic advisors to tailor recommendations for their customers.

U.S. farmers will have the option to share FieldView reports directly with their trusted advisors through their ag retailer’s AgVend-built platform— including yield, harvested area, moisture, seed performance, and productivity data − to conveniently feed into their system of action.

This announcement makes sense for both AgVend and Climate FieldView. The basics of it are simple, effectively an API to deliver reports from Climate FieldView to the AgVend system— but it could be the foundation for more.

Data Convergence in Agribusiness

This announcement is about the baseline of pulling agronomic and field related reports from Climate FieldView into AgVend, making them accessible to a farmers retail advisor (with farmer approval).

This is beneficial and may be only the start.

Beyond the basics of the announcement, it lays a foundation for a future convergence of data layers to improve farmer knowledge and farmer understanding.

In Competitive Agribusiness Software Dynamics and Implications I highlighted the convergence of three crucial types of data within agribusiness software that pulls together a comprehensive understanding of a farm and a field:

  • Agronomic Data

  • Transactional Data

  • Geospatial Data

Integrating all three types of data together begins to enable high resolution insights from the field for farmers, such as real profit on a per acre basis.

Often we see companies missing one segment or another, leading to the need for integrations. AgVend has transactional data. Climate FieldView houses geospatial and agronomic.

This type of data integration would help improve a farmers understanding, along with an ag retailers insights about a farmers acre leading to better agronomic recommendations (eg: variety discussions), and helping their farmer customers manage their operations more effectively.

It’s easy to say, hard to do— data privacy and quality challenges this in reality.

For the full breakdown on what the AgVend/Bayer partnership could evolve to, what companies are positioned well at the intersection of geospational, agronomic and transactional data, why the 2023 Bayer Annual Report gives us a hint at the importance of this partnership, and what it means for the AgVend efforts moving forward, become an Upstream Ag Professional member:

Catalera BioSolutions, announced the initial close of its Series A funding round. Launched mid-May, Catalera is an independent company spun out from Terramera, an ag-tech company based in Vancouver.

The launch of Catalera is made possible through a US$8M investment round led by S2G Ventures, with follow-up investment from Farm Credit Canada Capital, and a second and final close expected in Q4 of 2024.

Catalera creates innovative biological products using a purpose-built toolkit of patented technologies to overcome the core challenges that have so far prevented the broad based adoption of biological products.

Catalera is a spinout from Canadian-based Terramera.

Terramera had been selling bio-based pesticide products like RANGO and has now spun out two separate companies: Catalera and Miraterra (soil testing technology).

The release mentions their commercially available products, like RANGO, but what is most interesting about Catalera is their formulation technology and their focus on enhancing bio-based crop protection solutions. They have more than 300 patents, most of which fall under the category of formulation technology.

Last week I highlighted another S2G Ventures investment, Exacto Inc., emphasizing their horizontal capabilities vs. focus on active ingredient or novel microbe discovery. Catalera falls into a similar horizontal bucket.

Scratch Your Own Itch

The core product Terramera sold (that is now apart of Catalera’s portfolio) included neem oil as the active ingredient— a naturally occurring compound with pesticidal activity. Because of having to navigate the formulation challenges, such as poor emulsification, challenging temperature stability and poor mixability, they created formulation tools that enabled them to overcome these challenges and effectively commercialize products with neem oil. The challenges their IP helps them overcome also happen to be useful for other botanical based molecule formulations.

Known as their Actigate technology, they emphasize the increase in bioavailability of actives in target cells, boosting uptake and effectiveness.

For example, one Catalera patent (US11839212B2) explicitly cites the following:

Compositions and methods for increasing the efficacy of pesticidal compositions containing nicotinic acetylcholine receptor disrupters

For more on the types of products this patent allows Catalera to go after, insight into other patents that position Catalera well for being an enabling formulation technology company in the biological space, become an Upstream Ag Professional member today:

5. Regenerative Agriculture

This week, I read numerous article on regenerative agriculture. The best one being from Janette Barnard:

In it she stated the following:

It's almost like regenerative agriculture is more of a mentality than a process.

It’s a great call out. That is what it has seemingly become.

I get asked about regenerative agriculture all the time. Is it good, is it bad, is it valid. The answer, to me, is it depends.

If we break the regenerative principles down to their core components it is a bundling of practices with the aim of “regenerating” the soil (an outcome)— including increasing organic matter (soil carbon) and biological activity and mitigating soil erosion.

Practices include reducing tillage, using cover crops or intercropping as a few examples. Most of these practices would be considered “beneficial” or “good” in singularity. But not all of the practices makes sense in every setting, geography or time horizon, which means unadulterated application of these practices could be “bad” in terms of hindering farmer productivity and profitability, particularly in the short-term.

I talked about the bundle in Regenerative Agriculture Doesn't Have to Be Contentious. Most “conventional farmers” use some “regenerative” practices. But there is no agreement (definition) of when a field or farm becomes “regenerative.”

Just like any “bundle” there are things people will like/value, and things they will not. In some geographies, cover crops make little sense for a farmer. In others, cover crops present an opportunity to reduce erosion and manage compaction.

On Janette’s post there is a comment from an individual named Luke that shares a great perspective on regenerative agriculture in aggregate:

The incentives I liken to a free gym membership. It may encourage you to show up, but the results are wholly dependent on your level and duration of commitment. If you put the effort in, you'll keep doing it because you see results over time. I do think these RA methods can absolutely stand on their own feet without subsidies, even if the production is being sold as a commodity. But it is a long game.

This aligns with the view that I shared in a follow-up post to Regenerative Agriculture Doesn’t Have to Be Contentious:

For the average farmer to implement every principle within regenerative agriculture effectively in a short period of time is a pipe dream. It’s intimidating and will keep many from even starting. In the next decade, and probably beyond, there is not going to be a significant percentage (eg >10%) of farms implement every principle effectively.

There isn’t a deep enough understanding among most farmers nor the support system (eg: retailers, advisors etc) available today to implement. Critically to, there isn’t the discipline to do so. This isn’t a knock on farmers, it’s a people thing. Change is hard, systems evolution is even harder and doing hard things doesn’t just take incentives, it takes discipline.

I think outside monetary incentives for regenerative practices will be fleeting (though, I’d love to be off here) and the main reason to implement any of the practices is agronomic upside that leads to better profitability (which today is primarily through increased yield).

Consider this article from AgFunder News:

Roughly 71% of consumers have little to no familiarity with the term “regenerative agriculture” or its practices, says Purdue University’s monthly Consumer Food Insights Report. Those that do know the concept may not be willing to help pay for it via higher food prices, regardless of the associated environmental benefits.

Many of us in agriculture cannot fully comprehend regenerative agriculture. How does anyone expect the average consumer to? Regardless of what one thinks about organic production, the concept is simple to understand for the consumer (“no chemicals”). I suspect this is why some began using the term “climate smart agriculture” vs. “regenerative” — a consumer can read that term and “get it.”

For more on Janette’s conclusion, wicked problems, what that might mean for the future of regenerative ag and what the real focus should be on when it comes to farmer practices, become an Upstream Ag Professional member:

Chinese firm DJI Technologies has hit back at “baseless accusations” from US lawmakers about its ag spray drones in a letter sent by 12 Republican members of Congress to USDA Secretary Tom Vilsack and Cybersecurity and Infrastructure Security Agency director Jen Easterly.

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 upwards of 80% for spraying. In 2022, DJI stated that more than 200,000 drones by them were active globally.

On average it can be 2.5x more expensive to purchase non-Chinese made drones than Chinese manufactured ones, meaning the ban on DJI could have significant ramifications on the drone spray market.

In a well done article from TELUS Global Ventures, the potential implications are highlighted:

Sprayer drones: Losing altitude in early flight - TELUS Global Ventures Linkedin

Tanmay Bhargava calls out what some second order implications are for the drone market:

If the proposed US bill is enacted, XAG will benefit the most in the near term.  It focuses purely on the agricultural market - a less threatening use case for national security. It is well-funded and VC-backed and has industrial-scale manufacturing in Guangzhou and distribution channels in the US. The company has sold over 100,000 drones worldwide at prices similar to DJI's. I imagine more dealerships will start carrying its inventory in DJI's absence.

He goes on to state the following:

If the scenario I laid out above plays out, the industry will see some large-ticket investments and M&A activity. The TAM is non-insignificant in an improving regulatory environment, with technology and adoption risks virtually mitigated. There's going to be serious money on the table.

Government intervention has a tendency to lead to opportunities. The market is still small in North America, which will likely keep large companies from jumping in, as I talked about in Is John Deere Losing Ground in Drones or Is the Market Just Not Ready?, but to Tanmay’s point, there could be an opportunity arise from this bill.

“Influence erosion” of the ag retailer is happening and challenges retail margins, however, the grip that local retail agronomists and sales representatives have on farmer decision making remains strong.

Stratus Ag Research recently released a report titled Boosting Ag Retailer Success Through Manufacturer Support and there were five takeaways for me:

  1. Key Takeaway #1: Design marketing campaign to drive the farmer to ask retailer about the product.

  2. Key Takeaway #2: Print and direct media is continuing to be more effective than digital.

    1. Ancillary takeaway: Opportunity to identify better digital channels for advertising.

For the full five key takeaways, analysis and breakdown about how to think about the data and implement for agribusiness professionals and companies of any size, become an Upstream Ag Professional member:

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Non Ag Article

Some fields have quantifiable truths, while others are guided by vague beliefs and individual circumstances. Physicist Richard Feynman said, “Imagine how much harder physics would be if electrons had feelings.” Well, people do. So any topic guided by behavior – money, philosophy, relationships, etc. – can’t be solved with a formula like physics and math.

Other Interesting Ag Articles

Cloud Store Teams Up with AgDirect - Farm Equipment Intelligence