Upstream Ag Insights - September 23rd 2024

Essential news and analysis for agribusiness leaders.

September 23, 2024 • Read Time: 20 minutes

Welcome to the forefront of agricultural innovation and strategy with the 233rd edition of Upstream Ag Insights, where over 18,000 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 positioned 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. Precision Spraying Deep Dive

    1. Navigating The Impact of Precision Spraying on the Crop Input Market

    2. AI-Powered Weed-Killing Robots Threaten a $37 Billion Market

      1. Speed of Adoption and Apprehensions

      2. Alternatives

    3. See & Spray™ Customers See 59% Average Herbicide Savings in 2024

      1. Deere Potential Revenue

      2. Herbicide Reduction

  2. Pairwise Poised to Revolutionize Agriculture with Industry-Leading Fulcrum™ Platform Following $40M Series C Funding

  3. BASF Set to Announce Ag Solutions Listing Plan in Overhaul

  4. Agrogalaxy faces its darkest hour

  5. When Kansas Drys up… in 2050 with Dan Northrup

  6. CropX Acquires EnGeniousAg for Breakthrough Nitrogen Sensing Technology

  7. Sound Agriculture and Fractal Ag Partnership Expands Efficient Acre Incentive

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

  9. Learnings from Mr. Beast

  10. Other Interesting Ag Articles (9 this week)

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

Get an 18-Month Head Start with AIpilot

Accelerate AI development by 18 months with AIpilot. Our secure, production-ready Generative AI solution integrates all the lessons from building enterprise-grade AI—packaged into an easily deployable engine.

Why AIpilot?

  •  Fast POC Creation: Quickly develop proof-of-concepts for key use cases.

  • Seamless Scaling: Easily scale POCs into production systems, avoiding LLM challenges.

  • Enterprise Expertise: Leverage our experience to avoid costly mistakes.

Save time and resources. Use Headstorm’s AIpilot and agricultural expertise to fast-track success!

1. Precision Spraying

a. Agribusiness Guide: Navigating The Impact of Precision Spraying on the Crop Input Market - Upstream Ag Professional

The world is never as straight forward as it seems— first order thinking suggests to us that if John Deere and all precision spraying companies claim a ~60% reduction in herbicide use, that means a 60% drop in total volumes sold.

The reality is that the world is nuanced and changes in one area lead to changes in another, which can mean a change in volumes down (or up!), but it can also mean a change in pricing, margins, solutions offers, rates used and much more. Especially as we consider crop protection beyond just herbicides.

To help navigate this nuance and think about the second and third order implications, I have integrated multiple concepts that are applicable to understanding potential outcomes from precision spraying into one holistic article.

The aim is to help agribusiness professionals think through the opportunity, or risk, to their business— whether you are a retailer, a crop input manufacturer, or an equipment manufacturer, there are frameworks that can help think through the implications of new technology on your business.

With new technology comes the need to re-think traditional systems along with where we stand within the system.

As Alvin Toffler said:

The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.

To apply this to the inputs space, as precision spray systems proliferate, the groups that can unlearn their current business model and go-to-market strategies and relearn or build one that fits into a new system, will have the highest likelihood of managing margins, gaining a disproportionate share in the market and being successful.

The full article for Upstream Ag Professional subscribers dives into the following topics and subjects:

Article Index

  1. Understanding Jevons Paradox

  2. Real World Examples

    1. Energy and Iron

    2. Transportation

  3. Extrapolating to Farming

    1. Yield and Quality as a Primary Revenue Method

    2. Early Examples and Practice Evolution

    3. Herbicide Resistance

    4. Not an Isolated Technology

  4. Second Order Implications

    1. Commoditization of Crop Protection Products

    2. The Jobs-to-be-Done Lens Behind Crop Input Decision Making

    3. Disruption Through Complements

    4. Access to Information

    5. Farmer Apprehensions of Precision Spraying

  5. Final Thoughts

    1. Implications for Input Manufacturers

Become an Upstream Ag Professional member today to read the full guide:

I do not think anything in this article will be new to those working in the industry, however, it did bring up two things in my mind.

  1. What’s holding back precision spraying adoption?

  2. What other precision spraying technology is out there?

For the full breakdown of Five Things Holding Back Precision Spraying Adoption, and an alternative for agribusinesses to look at beyond those in this chart in AgZen , become an Upstream Ag Professional member:

Continuing with the See and Spray theme, there were two points that stood out. The first, the aforementioned Application Savings Guarantee:

In 2025, John Deere will also introduce the Application Savings Guarantee, which will give customers added peace of mind by ensuring they only pay for the technology when there is a savings in application.

A smart addition by Deere.

And the acre coverage during 2024:

John Deere announced its See & Spray™ technology saved farmers an estimated 8 million gallons of herbicide mix* on more than 1 million acres applied during the 2024 growing season.

Deere has been very targeted with their roll-out of the See and Spray products so 1 million acres doesn’t seem like a poor number.

If we break down the acres with some assumptions: Two-passes per system and an average acreage of 3,000 per farm and we get ~165 commercial systems, albeit many of these are likely used for demos which could lower the number, too. Deere doesn’t specify what percentage are Ultimate vs. Premium.

It’s interesting to consider the revenue generated and the herbicide product saved.

Revenue

Just for fun, if Deere were to triple their acres for the next two years and then double out to 2030 and keep the same revenue model of ~$3/ac it would look something like this:

2024: 1 million acres = $3 million in See & Spray recurring revenue

2025: 3 million = $9 million

2026: 9 million = $27 million

2027: 18 million = $54 million

2028: 36 million = $154 million

2029: 72 million = $216 million

2030: 144 million = $432 million

This is an overly simplistic calculation, but it’s useful to keep in mind that Deere wants 10% of their revenue recurring by 2030. If we assume no revenue growth for John Deere out to 2030 from 2023, then their total recurring revenue target would be ~$6.1 billion annually. Recurring revenue for them is likely to come from many more areas of their business (and from beyond agriculture), including RTK, partnership with SpaceX/Starlink, and other Sense and Act technology, but it illustrates how small (7%) of a dent nearly 150 million acres of application would contribute to their 2030 target.

Herbicide Reduction in 2024

Deere decided to emphasize gallons of spray reduced.

I find it more interesting the actual herbicide volume reduced.

If we assume the average product going through the system was glyphosate at an average rate of 1 quart per acre, then we know 1 million acres would have had 1 million quarts applied in a broadcast application.

1 million cut by 59% becomes 590,000 quarts or about 148,000 gallons of glyphosate of reduction in 2024 thanks to See and Spray.

This is where Jevons Paradox comes in in combination with resistance management and improved weed control. If acres applied to get cut by 59%, there becomes room to apply higher rates to the areas that are applied to to better tackle resistance and attain higher efficacy.

Pairwise, a technology company pioneering gene editing to improve plant breeding in specialty and commodity crops, has closed a $40M Series C funding round led by Deerfield Management. Multiple returning investors, including Aliment Capital and Leaps by Bayer, are joined by new investor and global ag technology leader Corteva, Inc., through its Corteva Catalyst platform, further signaling the promise and anticipated benefits of gene editing in agricultural applications. 

Pairwise is notable for its Fulcrum™ Platform, which includes a suite of gene-editing tools, including CRISPR. These tools allow precise edits to plant genomes, enabling rapid development of novel traits. Pairwise’s technology allows for both cutting (deleting unwanted genes) and tuning (modulating traits like flavor or yield) in crops.

Most plant breeding includes uncertainty in how genes come together, which leads to getting the trait desired, but also an assortment of things you don’t want— a yield drag, poor standability etc. Gene editing can drastically cut down on the uncertainty and externalities which is why companies like Corteva have been talking about their bullishness behind it, consistent with the agriculture trend of “precision everything.”

Some of their traits include pitless cherries, increasing kernel rows in corn along with being noted for their partnership with Bayer, working to enable a next generation gene edited version of short stature corn.

The company has now raised $155 million in venture capital since their 2017 founding.

Pairwise has had Leaps by Bayer as an investor and has now added

Corteva’s investment in Pairwise is being made through Corteva Catalyst, the company’s new investment and partnership platform launched to boost agricultural R&D and sustainable food production innovations.  

The exclamation point for Pairwise was the ancillary announcement with Corteva:

In parallel to Corteva’s equity investment in Pairwise, the two companies have entered into a five-year joint venture collaboration that will focus on accelerating the pace of gene edited technologies and developing improved products.

The JV with Corteva means Pairwise now has 5 years agreements with both Bayer and Corteva, along with other agreements with companies like Tropic Biosciences (Tropic Biosciences also has an agreement with Corteva) and Solis Agrosciences.

Pairwise and Bayer had an initial 5-year agreement that produced 27 novel traits being transferred into Bayer’s testing programs— including corn phenotypes with a 20 percent increase in kernel row numbers and soy that reduces the severity of Asian soybean rust. The two entities announced another 5-year agreement, announced in August 2023, focused on gene edited, short stature corn with a targeted height of 30 to 40 percent less than traditional corn.

The Corteva/Pairwise JV did not state explicitly where they would be focused, only that they want to “expand the delivery of advanced gene edited technologies aimed at increasing crop yield for food, fuel and fiber production, despite increasing climate change.”

For more on how Pairwise executes, what the partnership might mean about innovation within ag incumbents, and what it indicates about Pairwise’s valuation and future exit potential, become an Upstream Ag Professional member:

BASF SE’s new leader is gearing up to announce a series of overhaul measures later this month, including plans for the future of its agricultural chemicals and coatings businesses, people with knowledge of the matter said. 

Chief Executive Officer Markus Kamieth is poised to tell investors at a Sept. 26-27 Capital Markets Day that the company will prepare the agricultural chemicals division for a potential listing in several years, the people said.

Next week BASF is likely to share plans on changes to their entire business, including a potential IPO for the Agriculture Solutions business.

Using comp’s to other ag companies, like Corteva and FMC, it could put the BASF Ag Solutions business value at more than €20 billion.

The news isn’t surprising, I covered the first step from BASF in December 2023 and questioned if this was the next move:

The effort ultimately raises the question of whether BASF does spin off the agriculture solutions divisions entirely. Investors want focused businesses; they want to diversify for themselves, and they do not want that to be done by the business itself operating across various industries. This means, not only are there benefits internally for BASF to move in this direction, but there is opportunity to derive better multiples from investors, increasing stock prices.

For more on BASF H1 2024 financial challenges, timelines to the spinout and what we can learn from Syngenta struggling to IPO, become an Upstream Ag Professional member:

AgroGalaxy is Brazil’s 2nd largest input retailer.

This week the company filed for judicial recovery. The process is similar to Chapter 11 bankruptcy in the United States.

The news reinforces continued challenges in Brazil.

One of AgroGalaxy’s largest backers is Brazilian firm Aqua Capital, a prominent ag investor— they have also been an investor in prominent bio company, Biotrop, which sold to Biobest last year.

In the above article there was an interesting quote surrounding AgroGalaxy and Biotrop:

“The network (AgroGalaxy) is Biotrop’s largest client and once accounted for 30% of revenue. In order to carry out the M&A (to Biobest), Aqua Capital had committed to a phase out, gauranteeing a minimum purchase of Biotrop products by AgroGalaxy”

It’s unclear what percent of Biotrop’s business is through AgroGalaxy today.

I always enjoy talking with AgTech So What host Sarah Nolet and Dan Northrup of Galvanize Climate Solutions, so I really enjoyed this podcast. In it they focus on some interesting areas, including:

  • How irrigation and precision agricultural technologies can be adapted regionally to improve a diverse array of local water outcomes

  • The way growers are exploring new tech and practices through Fantasy Farming

If you are interested in more from Dan Northrup, he wrote a thoughtful Upstream Ag Insights guest post earlier this year:

CropX continues to be one of the most prolific acquirers of technology start-ups, with this being their sixth acquisition:

  1. CropMetrics - January 2020

  2. Regen - September 2020

  3. Dacom Farm Intelligence - August 2021

  4. Tule - January 2023

  5. Green Brain - December 2023

  6. EnGeniousAg - September 2024

Source: Crunchbase

In July CropX announced venture loan from Flashpoint Growth Debt to equip them to make more acquisitions.

CropX is working to become a global and hardware/software integrated farm management system. Adding a nitrogen sensing capability augments where CropX started: soil sensing. I suspect it was an inexpensive acquisition.

The real question with CropX is, do they continue to build into a stand-alone business that can get to profitability, or are they gearing up to sell the business? And if it is the latter, what companies might be interested in their assets?

A partnership between Sound Agriculture and Fractal Ag, designed to amplify the impact of our Efficient Acre Incentive program. This collaboration opens up additional financial opportunities for farmers who adopt SOURCE® to replace synthetic nutrients. Through this program, growers can receive up to $10 per acre for reducing 25 lbs of nitrogen and 25 lbs of phosphorus.

I highlighted Sound’s new Efficient Acre program and new BLUEPRINT product in the August 25th Edition of Upstream Ag Professional, including some of the opportunities and challenges for the 2025 season.

Sound is also expanding the benefits to those participating in the Efficient Acre Incentive with Fractal Ag:

In addition to the direct financial benefits of the Efficient Acre Incentive, farmers participating in this program can access capital at a reduced rate through Fractal Ag – a passive investor partner in farm operations. Sound’s partnership with Fractal offers growers up to a 0.4% discount on their annual premium. Farmers qualify for a 0.2% discount for reducing 25 lbs of nitrogen and 25 lbs of phosphorus, with additional program eligibility requirements tied to the 2025 crop season.

One thing that I have experienced in my career is the confusion that can be created when sales teams are attempting to talk about an increasing array of programs, or features of a program, rather than the direct agronomic rationale.

Incentives are good and programs do tend to work. However, there is always a fine balance. We can see this come through in Stratus Ag’s Evolution of Grower Program Perception work, too.

It will be interesting to see how the augmented program pans out for Sound Agriculture.

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

Recently, I’ve meticulously compiled and analyzed the financial results of leading Crop Protection, Ag Equipment and Fertilizer manufacturers building a custom report for agribusiness professionals.

This report doesn’t just highlight numbers— it captures the overarching trends, key quotes, visual insights, and agribusiness results summaries that give you a robust understanding of the industry.

The report contains a distillation of dozens of hours of earnings calls, thousands of pages of financial reports, and market analysis from Q2 2024 delivering tangible insights, empowering you to save time and stay ahead of market trends.

With detailed executive quotes, insightful comparison charts, and full access to 2-years of financial data from all companies covered, you'll have everything you need to be the best informed professional in the room.

Purchasing the Report Includes Three Components

  1. 2nd Quarter 2024 Agribusiness Earnings Results Report

    1. Including macro themes, important quotes from agribusiness executives from crop protection, fertilizer and equipment manufacturers and key images about the current industry environment.

    2. The report includes more than 100 pages of agribusiness insights!

  2. Three Excel Workbooks that have Agribusiness Financial Results Data from Q4 2022 to Q2 2024

    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)

  3. A complimentary 3-month Upstream Ag Professional membership that gets you full-access to can’t miss industry insights every Sunday.

Priced at just $299 USD, this report is more than just data—it’s your guide for navigating the agribusiness landscape and making the b est decisions for your business.

Upstream Ag Professional members receive the PDF report as part of their membership and Founding Upstream Ag Professional members get the PDF full report plus the three workbooks with full company financials for the last two-years.

Non Ag Article

Learnings from Mr. Beast - X Greg Isenberg

I love learning from people that are laser focused, obsessive and strive to be the best at whatever it is they do.

Mr. Beast fits that category and has fascinated me since the pandemic— his YouTube video’s (what he’s known for) don’t interest me, but him as a person and how he thinks about his business is incredibly unique.

This week an internal company guide leaked online and seeing how he thinks, what he expects of his staff and what goes into building a YouTube/Media empire I think has learnings for anyone wanting to improve their own business or career.

The link above is to Greg Isenberg’s X breakdown of the guide vs. the guide itself to save you time, but if you are curious I suggest the full guide itself.

Other Interesting Ag Articles