Upstream Ag Insights - September 30th 2024

Essential news and analysis for agribusiness leaders.

September 30, 2024 • Read Time: 22 minutes

Welcome to the forefront of agricultural innovation and strategy with the 234th edition of Upstream Ag Insights, where over 18,120 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. Disrupting Agronomy? Mental Models for Why the Future of Agronomy is Ai-Augmented

  2. BASF Agriculture Solutions Capital Markets Day Highlights and Analysis

  3. Brilliant Harvest Emerges from Stealth with AI-powered Helpdesk for Ag Equipment Dealers

  4. The Voice of the Regenerative Farmer

  5. The Future of Ag Equipment: Is There Room for a ‘Tesla’ in Agricultural Equipment?

  6. Digital Doppelgangers in agrifood

  7. Micropep closes Series B Round at $40M after Supplemental Funding Raised from Corteva, and Sparkfood

  8. ICYMI: Navigating Precision Spraying Impacts on the Crop Input Market

  9. Other Interesting Ag Articles (5 this week)

Thank you for subscribing to Upstream Ag Insights!

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!

In this Daily Scoop podcast, Bushel co-founder Ryan Raguse talks about AI in agriculture.

Three things stood out to me while listening to the podcast:

  1. The Bushel view and what it might mean for their product feature development

  2. What goes into a crop protection or fertilizer recommendation?

  3. What will need to be true for LLMs begin to replace agronomists?

Bushel Product Development

Ryan suggests that AI will replace agronomist recommendations of fertilizer and crop protection recommendations in the next three years:

“I think a large amount of simple things like fertilizer and chemical recommendations will be automated by farmers that keep good data”

A few minutes later Ryan states that “human in the loop” will remain across most scenarios, so I do not think his statement was intended to mean absolute automation, but it does seem suggestive of future product features we will see in Bushel’s software suite in the next three years.

I think it’s worth unpacking replacement of agronomists vs. augmentation of agronomists though, what will play out and why.

What goes into a crop protection or fertilizer recommendation and the workflow of fulfilling it?

A recommendation is not just one thing, it is a series of steps taken by an individual to assess, search, sell and deliver a better result to a farmer.

I’d break it out into a three step process, with the intensity of each depending on the complexity of the problem and need:

  1. Information gathering about the underlying needs — What is the problem that needs to be solved? What are the issues that need to be addressed? What are the goals of the farmer This might include scouting a field, soil testing, asking questions or looking at sensor data for example.

  2. Searching for the right product, practice or action to manage field or farm issues, opportunities or reach goals— Given the findings from the first step, what tools would be best for a farmer to use to attain the right agronomic, environmental and economic outcomes without hindering future optionality.

For the full article including a breakdown of the steps of a product recommendation, each steps risk, or lack thereof, in being automated and replaced, what industries we can look to and learn from for AI in ag, along with what technology in AI we need to see improve before we experience drastic overtake of agronomic aspects from humans, become an Upstream Ag Professional member today:

What I think is useful to consider for crop input professionals in the near term is this:

If agronomists and farmers are going to be augmented by LLMs, how do you ensure when they prompt the LLM with questions about specific problems, your product is going to arise to the top to be considered in a scenario where it is a fit?

  1. Overview

  2. Rationale of the Spinout

  3. BASF Business Overview and Strategic Priorities from Capital Markets Day

    1. “Most customer centric organization in the agricultural industry”

  4. Biologicals

  5. Research and Development

  6. Differentiated Steering

  7. Final Thoughts

Last week, I highlighted the rationale behind the announced spin-out, this week BASF shared some components of their business and while much of their strategic points are vague, there are some interesting considerations to think about in looking at their materials:

a. Will BASF acquire a bio-based entity moving forward? Their pipeline appears bare when it comes to biologicals. Who might be acquisition targets?

b. BASF emphasized digital solutions. How will BASF deploy their emphasized digital offerings in North America when factoring in channel influence? How does adoption chain risk impact them?

c. How are they positioned with R&D expenditure and efficiency compared to Bayer and Corteva?

This week I sat through BASF’s Capital Markets Day and identified the most important takeaways for agribusiness professionals when it comes to what is happening with BASF’s strategy and future as a stand alone agricultural entity. For the full breakdown, including the most important images from their event and Upstream Ag Professional exclusive charts comparing BASF to competitors in regards to R&D, biologicals and more, become an Upstream Ag Professional member:

Brilliant Harvest, an AI-powered helpdesk designed to empower ag equipment dealer teams throughout the customer experience from purchase to repair, has emerged from stealth after signing its first major customer: Rocky Mountain Equipment.

Founded by Remi Schmaltz, an industry veteran who has built and grown two agtech companies—ag retailer DynAgra and farm management software co Decisive Farming—Calgary-based Brilliant Harvest secured $1.3 million in pre-seed funding last fall in a round led by Mark Blackwell at Builders VC alongside AI service provider AltaML Venture Studio.

This news stood out to me because it hits on a theme that I think about a lot in ag retail: customer experience.

However, Brilliant Harvest is targeted at a different, yet similar customer base: equipment dealers.

The article heading emphasizes “help desk”, but in talking with Remi Schmaltz and reading their website I think this oversimplifies the software as a potential differentiator for equipment dealerships:

Made to empower equipment dealer teams across the entire customer experience, from purchase to repair.

Streamline communication and collaboration.

Works alongside you to provide a seamless customer experience that will delight customers. It streamlines communication so that you can intercept when a human touch is needed.

The product is a white label application for dealership employees and customers to use to facilitate communication between customer and dealer, along with internal teams at the dealer.

The system also ingests product manuals (installation, service, repair) enabling farmers, or dealership employees to quickly derive answers to questions about their software or hardware issue for example, saving time.

Brilliant Harvest integrates into equipment dealerships back-end software systems (think CRM, ERP etc), layer on a seamless UX/UI along with LLM capabilities to provide streamlined communication and ambient service environment (emphasis mine):

In North America, 41% of farmers are Gen X or Millennials and they don’t necessarily want to sit in a dealer’s office; they want to self-serve online, they want convenience, and they want to be able to communicate through multiple channels.

There are some similarities between Brilliant Harvest and AgVend or Bushel, except for equipment dealerships.

For the full breakdown including how the concept of schlep blindness plays into the product offering, the scalability and key needs to be successful, become an Upstream Ag Professional member:

Check out the Canadian Agri-Food Marketers Alliance upcoming Level Up Conference

The Canadian Agri-Food Marketers Alliance thrilled to invite you to the upcoming Level Up Conference, November 6-7, 2024 at the Sheraton Suites Eau Claire in Calgary, Alberta. 

If you’re eager to elevate your marketing skills and stay ahead of the curve with new and evolving technologies and trends, our Level Up Conference is just what you need. With expert insights from our lineup of speakers, networking opportunities with fellow industry members, professional development resources to help you grow professionally and personally as well as inspiration and motivation from like-minded individuals, this is a must-attend event to help you propel your career forward.

Level Up with us!

Interested in listening to an overview of this week’s edition in podcast format?

Listen to the Edition Summary Now:

4. The Voice of the Regenerative Farmer - Stratus Ag Research

Stratus Ag Research recently released a report surveying farmers on regenerative agriculture.

The one slide from their report that stood out was illustrating that nearly 40% of farmers describe themselves as “regenerative,” which is also interesting to look at in conjunction with Bayer’s Farmer Voice Report where 91% of farmers reported use one “regenerative practice” with the average being almost 7 per farm:

The Bayer survey goes on to say about farmers:

They understand and believe in the principles of regenerative agriculture, although what it means to farm regeneratively varies widely.

The flip side to this, what it means to be a conventional farmer varies widely too, depending on region. And what’s conventional is always evolving, too.

30 years ago in western Canada, tillage was common. Today, a “conventional” farmer in any corner of the region is no-till. Are they regenerative or conventional? When does it change? Does it matter?

Most farmers in North America, in some way, classify as a “regenerative” farmer because incentives drive them to adopt new practices: they are trying to produce more with less while having lower environmental impact.

If a farmer was using a harsher insecticide chemistry (chlorpyrifos) from an EIQ (environmental impact quotient) perspective, but switched to a lower EIQ based product (chlorantraniliprole), that “technically” could be considered a regenerative effort.

Companies constantly speak to regenerative being outcome based, but fundamentally regenerative is a bundle of practices that contribute to the outcome and the outcomes are challenging to measure in specific situations (eg: organic matter increase…was there an increase across the entire field?) where as the practices are not— if we look at ADMs Sustainability report, everything that qualifies for their program is a practice.

I like what Mccain did for their potato farmers, providing a roadmap of regenerative “levels”, while imperfect I do not think there will be a perfect way to assess.

5. Digital Doppelgangers in Agrifood - Software is Feeding the World

Rhishi Pethe did a fantastic job breaking down digital twins in the context of LandScan’s patent last week.

In the article Rhishi states the following:

With digital twins, you get a continuous monitoring and reporting system that alerts you of pest-affected plants, a cow’s poor health, an equipment malfunction, soil dryness, or a temperature drop. Digital twins are also a powerful simulation and prediction tool to envision the impact of farming practices and the forces of nature on your business and prepare for possible scenarios.

In LandScan’s press release they shared the following:

By applying Digital Twin technology to agriculture, LandScan is empowering decision support to optimize precision farm management, improve crop yields, and objectively and quantitatively measure the outcomes of agricultural practices.

LandScan has a multi-step process where they take above ground field information captured via drone, then take a soil test with their proprietary sensor: The Digital Soil Core.

The probe has 7 independent sensors, including a camera, acoustics sensor, salinity sensor and spectroscopy, taking a sample down 4-5 feet and 1,200 measurements per centimeter, which is a foundational component of their 7-step process:

  1. Field Intelligence

  2. Digital Vegetation Signature

  3. Digital Soil Core

  4. Digital Soil Map

  5. Digital Deployment Monitoring

  6. Dynamic Modelling

  7. Rot Cause Analytics

The soil insight they attain with that diversity of sensors along with the frequency of testing across 30 to 40 spots in a field delivers them unparalleled knowledge about the soil.

And everything starts with soil.

Soil knowledge is the foundation of positive agronomic, environmental and economic outcomes.

The variability of soil doesn’t get discussed enough, but the change in soil parameters, no matter how flat, or hilly, looks something like below— each box represents 3 square inches of soil and each color represents different soil characteristics, with an actual chart from LandScan:

Source: Landscan

In order to have complete understanding of soil parameters, high resolution soil testing, like that of LandScan goes a long way to building a foundation for a digital twin.

The above and below ground data give LandScan the base to build the digital twin, where they then feed in other data, like weather (which also has high variance), observation data, application information and more. This establishes the “Root Cause Analytics” (RCA™) system, a digital twin, that constantly learns and improves over time and gives a deeper understanding to those informing fertilizer rates and products, along with irrigation management.

The go-to-market of LandScan is notable— they are not relying on a direct-to-farm model. LandScan works with large farming operations such as OFI, along with entities across the valyue chain including Mars, land investment companies, equipment companies, ag retailers and agronomy consulting groups. They do this with a focus on high value specialty crops today.

It’s important to look outside the industry for inspiration and ideas to unlock innovation.

Agribusiness professionals can often find insights by examining successful strategies from non-ag companies and adapting components of them to agriculture. If you ask Jake Joraanstad of Bushel, he might mention drawing inspiration from Plaid or Bailey Stockdale of Leaf understanding Twilio as a model for API businesses— applying external industry concepts can create opportunities within agriculture.

Patrick Honcoop explored whether there is a “Tesla of Ag Equipment,” but his question isn’t about simply having an electric tractor company. Instead, his article is astutely about the potential for an upstart company to gain a meaningful foothold in agriculture and what that might look like. He goes onto suggest some potential groups that could be the Tesla of ag, like SwarmFarm and Monarch Tractor. Maybe they can be, though the odds are slim.

I’d suggest the framing can be useful for another reason, too: Sometimes the most compelling part of using industry agnostic analogs is not in finding the absolute answer (eg: yes or no there is a “Tesla” of ag and it is xyz start-up), but to breakdown the principles that made Tesla unique and apply the applicable logic to ones own business, supply chain, product or investing thesis, whether a start-up or not.

For the full Upstream Ag Professional breakdown diving into what ag companies, including OEMs can learn from Tesla in looking at specific aspects of Tesla strategy and tactics and how to apply them, become an Upstream Ag Professional member:

Micropep Technologies, the global leader in micropeptide crop protection technologies, today announced it has successfully closed its Series B funding round with an additional $11 million commitment. This investment, from new investors Corteva Inc., through its Corteva Catalyst platform, Sparkfood SA, as well as all existing investors brings the total Series B round to $40 million and elevates the company’s total funding to over $60 million.

The capital will propel ongoing support for Micropep’s pipeline of sustainable micropeptide solutions by harnessing the power of its proprietary discovery platform, Krisalix™, to develop affordable, effective crop protection solutions.

Micropep initially announced the close of the round at $29 million in July.

Corteva has now announced three investments via their Catalyst platform, with Pairwise announced last week and another peptide company, Solasta, the week before that.

In July for the initial Series B close, I wrote an overview of the Micropep business, including patents, pipeline, potential revenue models along with a breakdown of other peptide companies and the opportunity and challenges for peptides used as crop protection and biostimulants:

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 offered, 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.

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

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 best 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 Content

Thomas Laffont of Coatue - All-In Summit 2024

If you want a breakdown of the current Venture landscape, beyond just agriculture, this is a great presentation called The State of the Unicorn Economy.

Other Interesting Ag Material