Upstream Ag Professional - December 10th 2023
Upstream Ag Professional - December 10th 2023
Essential news and analysis for agribusiness leaders
Welcome to the 21st Edition of Upstream Ag Professional!
As a note, this will be the 2nd last edition of Upstream Ag Professional for 2023. Next week’s December 17th Edition will be the final one of 2023.
The first edition of 2024 will be on Sunday, January 7th.
Index for the week:
Theory of Innovation Adoption in Agriculture: An Application
Highlights from the CropLife 100 for 2023
Follow-up on The Implications of FTC Suing Corteva and Syngenta and Motion Dismissed
Green Brain Acquired by CropX
Pairtree Intelligence Secures Investment from SVG Ventures
2024 Digital Advertising Benchmarks For Agriculture
Gene-Editing Startup Ohalo Emerges From Stealth as Dave Friedberg Takes the Helm
BASF to Give Increased Autonomy to Agricultural Solutions Business: What it means for the future
Serenity Prayer for Agritech Founders and Investors
Regional Growth Opportunities in the Crop Protection Industry
2023 Tenacious Ventures Impact Report
One (Three) Upping Indigo Ag: New Initiatives from Farmers Business Network
Soft Power in Tech
1. Theory of Innovation Adoption in Agriculture: An Application - Upstream Ag Professional
Key Takeaways:
Key Factors Influencing Adoption: The adoption of agricultural innovations hinges on six key considerations: the relative advantage of the innovation, its compatibility with the farmer's operational context, the complexity of the innovation, its trialability, the observability of results and the incentives in the value chain. Understanding and addressing these factors can significantly enhance the effectiveness of technology adoption strategies in agriculture.
Agribusiness professionals should recognize that farmers' decisions are influenced not only by the economic and functional performance of agtech innovations but also by personal and social factors. This means considering how a technology aligns with a farmer's identity, social acceptance, and the experience it provides, much like consumer-driven dynamics.
Two months ago, I published Predictably Irrational: The Dilemma of AgTech Adoption, which was intended to bring to light that we often oversimplify agtech adoption and underappreciate important aspects of innovation adoption within agriculture.
This led me to begin talking more with founders and farmers, reading 3rd party research, and being retrospective on my experience to find more concrete considerations.
There has been a lot of work done surrounding innovation adoption within agriculture.
In fact, what is not often acknowledged is the fact that the “Innovation Adoption Curve”, made popular by Geoffrey Moore in the book Crossing the Chasm, was based on corn hybrid adoption research in Iowa done in the 1940s to learn about the diffusion of innovation.
The adoption research has been known to have shortcomings, such as the fact that the context of each individual is always different.
Digging into contextual considerations led me to research from Geoff Kaine out of New Zealand.
He applies many consumer-driven insights to technology adoption within ag, something I have been adamant about within farming. We think of farming as a purely B2B situation— dollars and cents driven. But farmers have much in common with the decisions of a consumer, such as a desire for simplicity or the realities of being socially accepted and signaling specific attributes to friends or neighbors. This is distinct from generally accepted B2B business considerations.
Consumer Driven Dynamics
Broadly speaking, there are three sources of consumer-driven adoption - interest, sign, and hedonic.
Interest concerns the performance of the product or activity in utilitarian, economic and functional terms. Sign concerns the contribution of the product or activity to how they view themselves and impression management (signaling). Hedonic is the extent to which the product or activity satisfies pleasure or experiential goals.
This can similarly be applied to farmers.
In The Adoption of Agricultural Innovations, Kaine introduces five important considerations from previous research that can be used to identify a farmers willingness to adopt:
The relative advantage of the innovation over the current standard or other options.
Compatibility of the technology within the farmer's operational context.
The level of complexity of the innovation.
Trialability of the innovation.
Observability of the result.
I would add a 6th, based on the work of Ron Adner— adoption chain risk, or value chain incentives that considers how an innovation makes it to the farm.
At a high level, these all make sense, and they are worth breaking down to consider how agribusinesses and agribusiness professionals can leverage these insights as a framework for improving the uptake of their innovations.
For the full Upstream Ag Professional subscriber exclusive article diving into adoption, including access to a PDF framework and examples, check out the link in the heading.
2. CropLife 100 for 2023 - Crop Life
Interesting Takeaways:
CropLife top 100 Ag Retailers represent ~75% of all the Ag Retail locations in the United States.
82% of Ag Retail’s total revenue is from Crop Protection and Fertilizer.
75% of retailers experienced an increase in biological sales.
Custom application was up at 68% of retailers.
86% of the Ag Retailers provide custom applications.
Over the course of the last 23 years, ag retail revenues have grown at a 6.5% compounded annual growth rate.
Back at the start of the 21st century in 2000, the nation’s top ag retailers had overall revenues of $10.9 billion. According to the 2023 CropLife 100 survey, this figure has skyrocketed over the past 23 years, now topping out at $46.7 billion – more than $35 billion higher!
Over the course of the last 23 years, ag retail revenues have grown at a 6.5% compounded annual growth rate. For context, the US economy grew at around 4% over the same period, and net farm income grew at about 5% according to the Federal Reserve Reserve Economic Data (FRED) Note: Revenue and ‘net’ farm income are not apples to apples.
It is challenging to derive deep insights from the CropLife numbers as they do not contain exact revenues or margin numbers, for example (not CropLife’s fault). However, one number that stands out to me is custom application. Organizations with a higher custom application percentage should be better positioned to reduce the churn of their fertilizer and crop protection business, potentially driving higher margins too.