Upstream Ag Professional - July 16th 2023

*New announcement for agribusiness leaders!

Jul 16, 2023

∙ Paid

Welcome to the 177th Edition of Upstream Ag Insights!

I am excited to launch an industry-leading subscription for agribusiness professionals this week! See the first story for details.

Index for the week:

Upstream Ag Professional: Your Competitive Edge in Agribusiness
Stratus Ag Research Retail Biostimulant Survey Highlights and Analysis
Farmers Business Network Launches Farmland Evaluation System, AcreVision
Fixing Our Perspective on N-Fixing
Aphea.Bio Secures € 70 million Series C Funding
Bayer Crop Science Spinout Rationale
Cargill Regenconnect and John Deere announce Collaboration to Enable New Revenue Streams for Farmers Adopting Sustainable Practices
Syngenta Brings Together Biologicals Businesses Under Syngenta Biologicals
Regenerative Agriculture: An Agronomic Perspective
On-Farm Electrification Isn't an Equipment Change, It's a Systems Change

Thanks for reading, sharing, and subscribing!

1. Upstream Ag Professional: Your Competitive Edge in Agribusiness

"What is happening in the world of agribusiness?"

It's a simple yet powerful question that almost nobody in the industry is answering.

Agribusiness is full of disparate signals and uncertainty — a daily barrage of emails, news alerts, and head-scratching announcements that demand immediate attention with no north star, all on top of your day-to-day obligations.

It's enough to keep you up at night thinking, "What did I miss and what do I need to know?"

They say that knowledge is power, but the reality is that not all information is equal.

As our inboxes continue to be flooded by news alerts, meeting requests, partner presentations, event schedules, new technological innovations, shifting competitive landscapes, and compounding customer requests, the question echoes in our minds, "Am I accessing the best possible intelligence to make the decisions I am responsible for?"

In other words, "Do I have the industry insights I need?"

In fact, the agribusiness leaders I talk to every day say that quality insights and industry analysis are necessary differentiators for them and their teams— and over the next few years, our industry will only become more complex to navigate, making answers to these important questions imperative to the future success of our businesses and our careers.

So what is driving change in the world of agriculture? What does it mean for your business and your career?

If you're not sure then I have an answer for you - Upstream Ag Professional, the definitive edge you need to propel your business and career to the next level while giving you the confidence that you have what you need to cut through the clutter surrounding your daily decisions.

Starting Sunday, July 23rd 2023, I am releasing Upstream Ag Professional, an ungraded subscription service empowering leading agribusiness professionals to be the best-informed individuals in the industry.

Upstream Ag Professional will be delivered weekly to your inbox on Sunday mornings, curating, researching and analyzing the most important innovations, strategic initiatives, market dynamics and ideas shaping the world of agribusiness while saving you time.

Editions include the likes of:

Awareness of new ideas, technology, and innovation insights.
Frameworks and mental models for understanding farmer and customer behavior and building agribusiness strategy.
Industry trends, reports, breakthrough concepts, and emerging opportunities across the agribusiness landscape.
Publicly traded agribusiness earnings breakdowns, R&D pipeline insights, and annual report analysis from the perspective of an industry professional.
Breakdowns of industry partnerships, M&A, and competitive landscape assessments.
Insights into venture capital funding, start-ups, and business strategy.

Plus, much more!

After writing 177 editions over more than three and a half years on a part-time basis, I am now dedicating myself full-time to the subscription service moving forward.

What does an Upstream Ag Professional Subscription Include compared to the Free Upstream Ag Insights Edition?

Subscribe today to Upstream Ag Professional:

Additional features of Upstream Ag Professional to be released include:

Upstream Ag Office Hours to Have Discussions on Topical News and Events.
Resource database to access all images, charts, and reports shared.
LLM search and summary functionality of Upstream Ag Archives (beta version soon!)
Agribusiness Executive and Founder Interview Audio Recordings and Transcripts
Incremental access to Shane Thomas

For those interested in subscriptions for multiple team members or company-wide access, please email me at shane@upstream.ag

Want to expense Upstream Ag Professional?

You can use this customizable expense request template to streamline a message to your manager.

Examples of what Upstream Ag Professional subscribers access include the likes of this current edition, the April 30th 2023 Edition and the March 5th 2023 Edition, along with breakdowns of industry research reports and agribusiness investor events, such as the USDA 2023 Precision Technology Adoption Report Highlights and Analysis, and the John Deere Leaps Unlocked Analyst Event. As well as deep strategic insights, including Equipment Companies to Crop Input Companies: “Your Margin is My Opportunity”.

For more depth regarding the above battle chart explaining what is included in the Upstream Ag Professional subscription please check out this link.

2. Stratus Ag Research Retail Biostimulant Survey Highlights and Analysis - Upstream Ag Insights

This week Stratus Ag Research released their Tracking Biostimulants Retailer Survey which shared incredible insight into the perception retailers in the biostimulant realm in both the USA and Canada. I went through to highlight and analyze some of the most important points, including:

Opportunities for biological manufacturers in marketing, positioning and educating retailers on biostimulants with a guiding framework.
Horrendous retailer understanding of biostimulant performance and the opportunities for improvement.
Which product segments are performing the best in the eyes of the trusted advisor

Plus more.

3. Farmers Business Network Launches Farmland Evaluation System, AcreVision - Yahoo Finance

FBN developed AcreVision to provide U.S. farmers with accurate, comprehensive information to evaluate potential parcels – instantaneously and at no cost. FBN research found an overwhelming 93% of farmers engage in land research before acquiring farmland and determining a field’s compatibility with their operation. AcreVision^SM offers a streamlined solution, consolidating essential information about farmland parcels and local market trends into a single, user-friendly report.

Land is the most valuable asset a farmer owns. Not only in the literal balance sheet value sense but in that the quality of land increases the potential for output every year. Access to basic land information is available but disparate in nature— who owns it and public information like SSURGO soil maps are available but tedious for the average farmer to evaluate.

Now there are increasingly more platforms that are decreasing the disparate nature and the information asymmetry that goes along with farmland, with FBN being the latest to launch their offering into the marketplace.

AcreVision offers farmers access to crucial information regarding land. Some of that information includes:

Soil quality and productivity maps (eg: SSURGO)
Cropping history
Historical NDVI
Tillable acres
Elevation and slope

All important information for a farmer looking to purchase land and deliver the three P’s of farmland purchasing:

The P’s are obvious, but given the lack of easy access to land information plus the fact that there has been a grow-at-all-costs farmer mentality, land has roughly been valued equally across a general area, no matter productivity limitations or potential. But farmland is not of equal value to each farmer because each farmer will have different weightings regarding each of the “P’s”.

Tools like AcreVision support farmers who want to find the best fit for their farm and allow them to assess the land and the price more precisely. AcreVision also reinforces the view from Matthew Pryor of Tenacious Ventures that “the factory has no roof.”

AcreVision is consistent with FBN’s ethos of transparency. It is also supportive of an FBN business unit.

FBN has a land financing business unit that recently launched instant approvals, designed to streamline farmers’ ability to buy land and, therefore, access capital through FBN themselves. There are numerous challenges to acquiring land for a farmer, but the two primary challenges are access to capital and identifying which land to prioritize.

FBN is deploying a friction reduction approach to land purchasing which supports their finance business. Ease the access to capital and information to increase the utilization of a product you sell— financing in their case.

I have talked about friction reduction in the crop input world significantly within Upstream; however, the principles can be applied throughout various verticals of agribusiness.

The principles of friction reduction include:

It’s a smart launch for FBN in that regard, especially seeing as they have more than 55,000 members to launch it to as potential users.

AcreVision isn’t unique in the market, though.

AcreTrader, a farmland investment platform based in Arkansas, launched Acre in October of 2022, a land analysis platform with desktop and mobile functionality that provides access to data for 150 million U.S. parcels, local insights and comparable sales. Again, Acre is an enabler of AcreTrader’s core business.

There is also CamoAg, a spinout of Tillable, which has similar functionality too. Though it isn’t directly competitive and is targeted at and customizable for agribusinesses such as real estate professionals, ag lenders, rural appraisers and investors plus it can be augmented with other unique or proprietary data sets. The CamoAg platform interests me because of its ability to add ancillary data.

The AcreValue offering from FBN is targeted directly at farmers, but the platform approach that CamoAg has built becomes interesting for agribusinesses of all kinds.

There are constantly questions about the value of digital technology within agriculture. While the significant upside across most ag verticals remains to be seen, it becomes obvious that the digital tools highlighted above can have high utility for various different segments across the industry landscape.

4. Fixing Our Perspective on N-Fixing - 3Bar Biologics

In April, North Dakota State University released a study regarding crop-agnostic nitrogen fixing products in the USA market.

The results shared weren’t positive. I highlighted and broke down the situation in the April 30th 2023 Edition of Upstream Ag Insights.

3Bar Biologics, a customized delivery technologies company for living agricultural microbes, recently dug even deeper into the results and the principles that are necessary to understand when it comes to living organism performance in the field. As a note, 3Bar previously announced a partnership with Pivot Bio, one of the prominent players in the N fixation space.

Two areas discussed in their article that I want to highlight are:

Statistics Methodologies in Agriculture
Challenges of N Fixation

1. Statistics Methodologies

3Bar calls out the challenges with the research approach used in the studies and suggests the need for a Bayesian approach vs. a traditional p-value approach.

Traditional p-value approaches quantify the discrepancy between the data and a null hypothesis of interest, usually the assumption of no difference or no effect of a given practice.

A Bayesian approach allows the calibration of p-values by transforming them to direct measures of the evidence against the null hypothesis, called Bayes factors.

When dealing with high complexity, a dynamic environment with relatively small variances (yield differences), novel approaches to assess are needed. This has been acknowledged within agriculture for decades. For example, problems can be caused by outliers and by jumps in fertility that can be tackled via hierarchical t formulations— said another way: you can better account for variance.

The results of the study were lackluster, but what 3Bar is suggesting is that the results weren’t as bad as they appear, and proper statistics could be used to assess better where the products work best and under what scenarios— a necessity with biological products.

2. Challenges with nitrogen fixation

There are challenges to overcome at numerous points in a living organism’s lifespan from origin to its successful utilization.

A few weeks ago, I created an image illustrating what 3Bar calls key to success for living organisms: survival, establishment, colonization, and interaction

The specific area I want to zero in on is where 3Bar talks about the technical dynamics of N fixation:

Challenges with biological N-fixation largely stem from the energy expense to the bacteria, coupled with oxygen sensitivity of the bacteria’s nitrogenase complex required for reducing dinitrogen to ammonia. This oxygen sensitivity further complicates energy requirements of the bacteria as energy is most efficiently produced by the bacteria using aerobic respiration in the presence of oxygen.

This energy sensitivity is highly impacted by the environment, such as how dry or wet it is in the soil, and illustrates just how sensitive organisms can be to perform consistently. This influences the total N fixed rate and the transfer rate to the plants, as I highlighted in April and brings up the concept of the “oxygen paradox” and starts to get at part of what the likes of the company Switch Bioworks is working at to improve performance of N-fixing microbes.

Biological products need to perform consistently to grow in utilization. However, there is a need to understand what drives good performance and bad performance (see second #2 this week for more on this subject), so that better and more consistent outcomes can be achieved.

3Bar goes into numerous other areas regarding microbes and I highly recommend the read.

Related: Industry veteran Pam Marrone touched on the same results in the June Edition of BioAgWorld

5. Aphea.Bio secures € 70 million Series C Funding, Accelerating the Company’s Commercialisation Efforts - Agro Pages

Aphea.Bio, announced today the successful closing of its Series C Funding round, securing € 70 million. The round was led by Innovation Industries, joined by Korys Investments and supported by Bill & Melinda Gates Foundation, SFPIM, BNP Paribas Fortis and received strong support from returning investors ECBF, Astanor, AIF as well as other existing shareholders.

This is a large funding announcement in the realm of biologicals.

Aphea.Bio has multiple patents and is set to launch its first commercial product in Europe later this year.

The product, ACTIV, is a biostimulant containing a proprietary bacterial strain of the species called Stenotrophomonas rhizophila, which is targeted at wheat crops. The strain possesses multiple interesting traits surrounding adhesion, biofilm production, motility, chemotaxis, uptake and transport of nutrients from the plant, enabling it to colonize the root endosphere more readily. The strain has the potential for P solubilization and the production of siderophores to enhance the plant update of other nutrients.

Aphea.Bio states they have more than 30 products in the pipeline. Given the size of the raise, I would expect them to have a novel discovery platform, though this isn’t entirely clear from their public information or in reading patent grants or applications.

In the past, we have seen VC investment into singular-product agbio companies, which I don’t entirely understand— unless a company has a uniquely differentiated molecule that checks all of the boxes around performance across broad crops and pests, low cost of production, supply chain vitality, ease of formulation, environmental impact and does all of those in the top 1% range, it seems difficult to justify investment for the average VC. And that is very rare! If a company doesn’t have all the aforementioned high-quality attributes, then we know distribution tends to be king, as pointed out in the #2 linked write-up this week.

While investments have been made in singular product companies, VC investing moving forward seems most likely to be reserved for biological companies that are horizontal in nature or have a differentiated discovery platform/technology that enables novel discovery.

You can read more on Aphea.Bio in checking out this presentation from their CEO in late 2021.

6. Bayer Crop Science Spinout - Reuters

I highlighted this last week but didn’t comment and did receive some questions.

Bayer acquired Monsanto for $66 billion USD in 2018 when Bayer itself including all business units (Crop Science, Animal Health, Consumer Health and Pharmaceuticals) had a market capitalization of approximately ~$90 billion USD.
Then the lawsuits surrounding Monsanto and glyphosate arose.
This caused Bayer's market capitalization to drop below the value they paid for Monsanto and pushed them to sell their animal health business.
The Bayer market capitalization remains below the value they paid for Monsanto, even with all of their other business units, currently about $56 billion USD.
The deal has been called one of the worst deals in corporate history because of the value destruction brought on by the acquisition.
Activist investors Bluebell Capital and Inclusive Capital Partners, began publicly urging for the separation of the businesses in the last 12 months with CEO Werner Baumann stepping aside for new CEO Bill Anderson.
Separating the other business units from the Crop Science unit would increase the valuation of the separate Pharma and Consumer health divisions (they alone are worth more than Bayer’s current market capitalization based on basic revenue multiples) and give those units access to incremental capital to reinvest in their business, pay down debt and break away from the negative publicity associated with glyphosate.
Bayer executives have suggested that there are R&D synergies to having all entities under the same company, which the activist investors disagree with.

This initiative hasn’t been verified by Bayer, but the likelihood that this spinout comes to fruition seems high. Day-to-day operations from a Crop Science perspective at the field level are unlikely to change.

7. Cargill Regenconnect^® and John Deere announce Collaboration to Enable New Revenue Streams for Farmers Adopting Sustainable Practices - Cargill

Cargill and John Deere are announcing a collaborative effort to streamline the digital and in-field experience for farmers using John Deere technology and electing to participate in the Cargill RegenConnect^® program.
Cargill RegenConnect provides farmers a financial incentive for positive environmental outcomes through the adoption of regenerative agriculture practices, while helping to improve soil health and decarbonize the agriculture supply chain. John Deere’s precision ag technology and digital platform, Operations Center, helps farmers to implement and document the practices they choose to adopt as part of Cargill RegenConnect.

This partnership makes complete sense for both organizations.

Cargill needs access to the field-level data for MRV purposes, and John Deere is of course, a significant player in important field-level data.

For John Deere, I anticipate this is one of many collaboration announcements moving forward, given what they enable in the value chain.

From my highlights and analysis of the John Deere Leaps Unlocked Event last year:

I don’t anticipate them (John Deere) being a carbon aggregating company themselves - too competitive, too much risk, not enough upside and not their core competency but they can be an enabler for their customers to seamlessly connect into any program (sustainability, IP, biofuel etc) they want with their data making John Deere better off focusing on collaborating with other organizations..They can play a pivotal role in MRV.

Collaborations with the likes of Cargill and others will be aimed at easing enrollment and data delivery for their farm customers.

Given Cargill’s influence and access to the downstream portion of the value chain, Cargill presents a good starting point for Deere as well.

What is worth mentioning with Deere surrounding this initiative, specifically with Operations Centre, is that they so tightly integrate everything together to create a better farmer experience.

In Winning in the Ag Machinery Space: Integrated Tech Stacks and Precision Technology I highlighted the benefits/needs of integrating software and hardware together to benefit customer experience and machinery performance.

Deere is amping this up further via partnerships.

With Deere working to “help farmers adopt and use precision technology and synchronize the flow of information when they opt-in to share data between systems. Farmers will be able to use existing planting, harvest and tillage documentation data stored in the Operations Center, easily fill in missing information, and enroll in the 2023 Cargill RegenConnect program”.

Not only is the Deere tech stack delivering better equipment performance and customer experience, but now they are delivering access to programs, markets, and premiums in a convenient fashion, establishing value creation for farmers, their partners, and themselves. This further reinforces a coherent ecosystem strategy from Deere that helps to eliminate the previously walled gardens within agriculture and begins to wield the hundreds of millions of engaged acres they have in a way that benefits their customers and themselves. Not that entities weren’t already targeting Deere, but this announcement also lays the foundation for an incredibly quick ramp-up for program-based companies, like Cargill, given Deere’s engaged acre base.

8. Syngenta Brings Together Biologicals Businesses Under Syngenta Biologicals - Syngenta

Syngenta today announced Syngenta Biologicals, bringing together Valagro – the pioneer in biostimulants and specialty nutrients it acquired in 2020 – with its in-house biologicals business, setting the stage to shape rapid growth of the global biologicals market.

Bringing Valagro fully under the Syngenta name is a good move. Leveraging the brand equity built up in the Syngenta name helps bring incremental trust to products like biologicals among farmers.

9. Regenerative Agriculture: An Agronomic Perspective - Saje Journals

Last week I wrote a follow-up to Regenerative Agriculture Doesn't Have to be Contentious.

I tend to come at regenerative ag from an agronomic perspective more than anything else, attempting to break the concept down into the basic principles and apply them to a specific setting or farm.

The linked article does a good job of diving into regenerative ag concepts and some of the scientific literature behind them.

10. On-Farm Electrification Isn't an Equipment Change, It's a Systems Change - Matthew Pryor Linkedin

Matthew Pryor of Tenacious Ventures always shares insightful commentary.

This week he dives into the requirements for systems change as it pertains to on-farm electrification of tractors, along with tying it into the potential future of electric weeding and the reality that electrification isn’t the only possible future (eg: hydrogen).

Matthew highlights the challenges to electrification on-farm, and in large-scale row crop farming these challenges are amplified, specifically as it pertains to battery technology, and not just in the short term— charging speed and infrastructure are challenges, but I want to emphasize the battery weight and cost of production aspects.

John Deere CTO Jahmy Hindman talked about the reality of weight and cost as it pertains to 8R tractors, stating that if you were to power it with a lithium-ion battery, it would be twice the volume, twice the weight, twice the mass, and four times the cost. Cost aside that would add some major soil compaction issues.

I have talked about Wright’s Law as it pertains to the electrification of equipment, but even with that learning curve compounding, it will take some time before electric tractors are a reality in large-scale crops.

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