Bayer Crop Science 2023 Innovation Summit Highlights and Analysis
Highlights and analysis from Bayer's media and investor event.
On June 20th Bayer Crop Science held an Innovation Summit in New York City where their leadership team went through not only their pipeline of products for the next 10+ years, but unveiled their new positioning around this pipeline, emphasizing the enablement of regenerative agriculture with their products and systems.
I first want to disclose that Bayer Crop Science invited me to attend this event in person and did reimburse my hotel accommodations and air travel. I am under no obligation to cover the event and will share the materials and my views just as if I watched it virtually. Having been in person it did afford me the opportunity to ask questions and interact directly with their leadership team which I believe drastically enhances what you will read below so thank you to the group at Bayer for that opportunity.
The enormity of Bayer’s pipeline across the globe and what they presented would be challenging to cover in its entirety, so as usual, I will focus primarily on the news that impacts the North American industry with extrapolations elsewhere when possible. Because of the breadth of topics, products and areas, I have done my best to keep it flowing, but there is an index below if you prefer to navigate to one specific area.
To go through the entire Bayer presentation, see here:
Bayer Crop Science Innovation Summit Materials - Bayer Crop Science
Seed: Breeding and Traits
Preceon Smart Corn System
Farm of the Future and Retail Enablement
Miscellaneous and Interesting
Big Seed: A Divergence in Corteva and Bayer Strategy
Summary and Final Thoughts
1. Strategic Priorities
Two of Bayer’s priorities priorities aren’t overly surprising (#1 and #4), but two (#2 and #3) are unique to them across their major competitors:
Three of these are worth touching on:
Leadership position: Bayer sits in a #1 or #2 spot from a market share perspective in corn and soybean seed and traits and herbicides, fungicides, and vegetable seeds. I think this leadership position has upside along with potential challenges for them as they endeavor to evolve their business, which I will highlight in different areas below.
Shaping regenerative agriculture was the theme of this entire event. Bayer acknowledged that there is no agreed-upon definition of what regenerative is, but view this as an opportunity to help shape it and inform farmers on a global basis about it along with bringing the tools to enable it. As I alluded to in the June 18th 2023 edition of Upstream, I think some purist regenerative ag individuals may have qualms with this or view it as opportunistic. However, the strategist in me commends the Bayer effort. For them to plant a flag with a term that is known, but not well understood and to then begin to define, evangelize and associate their products and systems with aligns incredibly well with the concept of category creation (My friend Dan Schultz at AgTech Marketing Insight does a great job breaking this concept down). I believe Bayer is approaching regenerative agriculture with a similar lens to how I approached it in Regenerative Ag Doesn’t Have to be Contentious, which is looking at regenerative ag not as an absolute destination, but a continuum that is an ever evolving endeavor for progress that comes with compounding upside potential for farmers.
Besides growing their bottom line, they have ESG goals aligned around the regenerative initiatives:
It is worth noting that the concept of regenerative agriculture is growing in acceptance.
One way to frame this is through the concept of The Overton Window which is an approach for looking at ideas, concepts, or policy on a spectrum of acceptability. The Overton Window is continuously moving around concepts and how popular, or unacceptable they might be.
It is usually applied to government policy and cultural issues, but I think it can be used surrounding concepts that are accepted in industries, including agriculture:
It has been apparent that regenerative ag had been progressing from obscure and radical, to more widely accepted and sensible.
Once an organization as influential as Bayer begins readily using a term, we know it is soundly at the points of acceptable and even sensible point.
Bayer has stated that they want 100% of digitally enabled sales by 2030. It’s an ambitious effort, one that we can see beginning with the Preceon Corn system and expanding with their hybrid wheat efforts (more on both of these below). They have been stating “100% of sales digitally enabled” for about two years now. My concern here though is two fold:
They have yet to state what percent of their sales are digitally enabled today.
They haven’t defined what a digitally enabled sale is.
We can extrapolate out a bit what a “digitally enabled sale” is by looking to their Preceon Smart Corn offering, where I have speculated it would be the catalyst for the digitally enabled sale. However, there hasn’t been an explicit definition shared yet.
Through all of these strategic efforts, Bayer framed up an expanded addressable market for their products and offerings:
The six areas include:
The number has similarities to John Deere’s claim of $150 billion market that is unlocked through their new technological offerings, but the segments where this unlocked addressable market will come from are unique to Bayer.
Bayer doesn’t explicitly share where these numbers come from, but if we look at statements like €30 billion biological market from their presentation or read McKinsey’s forecast for a $50 billion voluntary carbon market by 2030, or consider the nitrogen portion of the crop nutrition market we can begin to see where significant chunks of that addressable market are coming from.
a. Strategic Summary
If I was to distill their strategic priorities down to one word it would be systems.
The two priorities that stand out are the two that are non-obvious: digital enabled sales and shaped by regenerative ag.
For the other two priorities, my baseline mental model for “is something truly strategic” is asking the following question:
Does the opposite of what they say sound stupid or entirely obvious?
Applying this thought experiment to “maintaining leadership” and “investing in innovation” and we can see it is not a unique approach compared to their largest competitors.
Systems are crucial to digitally enabled sales and shaping regenerative ag. Both require systems thinking in regards to not only selling, but also their R&D initiatives and crop production itself.
I have talked numerous times in Upstream about the importance of thinking in systems, including in Powering Agriculture with Systems Thinking.
Most of us have been taught to think linearly. We see things in a cause and effect fashion. We learn about a beginning and then an end. We see a problem and then a solution. For example, we see a weed and we spray a herbicide or see an insect and spray an insecticide.
There is nothing inherently wrong with this, but it ignores that every action brings a reaction and a 3rd or 4th order implication.
This is especially true in crop production, where when you change the seeding rate of a crop or the row spacing, you fundamentally change the risk of disease, or the likelihood of lodging, which brings in the need for different nutrient management approaches or fungicide timing and more.
Bayer is leaning into systems approaches versus standard one-product emphasis which is unique compared to competitors, specifically because it isn’t a traditional “programming” based bundle, but a crop optimization bundle that includes access to services and digital tools and goes beyond traditional crop protection and seed. More on this below.