Welcome to the 76th Edition of Upstream Ag Professional!
In this week’s audio edition, accessible above, I cover FMC restructuring it’s VC arm, the FTC Suing John Deere and the importance of service for dealerships, then highlight interesting John Deere patents. If you are looking for flexibility in consuming Upstream, there is always an audio edition accessible at the top of this email.
Index
FMC Restructures VC Arm: What does it mean and what are the implications?
Monopolistic Inertia in the Agribusiness Value Chain
Five Technology Patents from John Deere and What They Might Mean for the Future of Precision Agriculture
US FTC Sues Deere Over Equipment Repair Restrictions
Empowering Farmers Through Innovation: John Deere Expands Self-Repair Solutions, Furthering Farmer Independence
John Deere Brings Enhanced Machine Connectivity to Farms with the Release of JDLink® Boost
Deere's Software-as-a-Service Model with Matt Percy
CNH rolls out new AI tool for instant customer support
Pivot Bio Expands Retail Network with Logan Agri-Service
Sentera Unveils SmartScript™ Weeds, Formerly Aerial WeedScout, with Enhanced Features for 2025
Sentera to Launch Precision Weed Management Service: Is it a See and Spray Killer?
The Future of Canola Could Lie in its Components
Other Interesting Ag Articles (7 this week)
1. FMC Restructures VC Arm: What does it mean and what are the implications? - Upstream Ag Professional
Key Takeaways
FMC Ventures has been reorganized, eliminating roles and moving under corporate development. This mirrors broader industry trends of reducing long time horizon investments during challenging economic conditions.
FMC planned to reduce R&D spending by ~$50M in 2024 (~15% of 2023 levels), signalling a broader innovation deprioritization.
FMC Ventures’ successes, like the BioPhero acquisition, highlight its value, but the move away from dedicated venture efforts reflects a broader CVC industry focus toward caution.
FMC Corporation has changed the organizational structure of its VC investment arm FMC Ventures, letting go of staff in the process.
Mark S. Brooks, managing director of FMC Ventures, confirmed that all three members of the FMC Ventures team would see their roles eliminated.
AgFunderNews reached out to FMC Corporation and received the following response from executive vice president and CFO Andrew D. Sandifer:
“FMC remains committed to innovation in agricultural technology. While we have made changes to our organizational structure to optimize operations, FMC Ventures continues to operate and manage its existing portfolio of investments under the leadership of Zack Zaki, Vice President of Corporate Strategy & Development.”
The FMC news, shared by AgFunder, came in the same week that Intel announced a spin-off of its corporate venture capital arm.
In December, Bayer and Trendlines announced the initiative to dissolve their joint AgTech Fund.
When assessing that news, I shared the following:
It’s unlikely that Bayer and Trendlines will be the only discontinued AgTech fund.
CVC wasn’t where that comment was specifically targeted at, but CVC is not exempt from needing to consider the current financial landscape agriculture companies find themselves in. There is a similarity between the spin-off of Intel Ventures and the “structure change” at FMC Ventures— the businesses invest off of their own balance sheet and are not in a strong financial position and when your business is not in a great place it becomes difficult to justify capital allocation to riskier areas that are unlikely to drive any short term upside.
FMC is currently one of the most shorted stock on the S&P 500 and the destocking issues in LatAm remain particularly challenging, a region where over ~33% of FMC business is derived and their fastest growing geography.
R&D Cuts
FMC isn’t just deprioritizing VC investment. They are deprioritizing innovation investment overall.
In the Q3 2024 Crop Protection & Seed Earnings Themes, Highlights and Analysis I highlighted FMC commentary on cutting costs and the main area for 2024 was R&D expenditure. The plan was for about $50 million according to the earnings call, with the primary amount coming out of R&D expenditure, which would be about 15% of their 2023 expenditure. Their expenditure in Q1 through Q3 (available quarters currently) reinforces that reduction:
FMC CEO Pierre Brondeau put some spin on the change, suggesting it was an efficiency effort in the early part of the discovery process.
But FMC doesn’t operate in a vacuum. All of their competitors have access to, and do leverage, similar tools and processes. FMC competes against all of these entities spending more than them on R&D:
FMC has not proven they are any more effective than their largest competitors at commercializing R&D discoveries.
Consider this stat from their 2023 annual report:
Approximately $590 million in 2023 revenue came from products launched in the last five years, representing 14% of the total revenue.
That percentage is not objectively better than competitors— UPL had the same percentage as FMC in 2023 (at lower total R&D spend).
In 2023, 39% of FMC revenue comes from two active ingredients acquired from DuPont when they merged with Dow to form Corteva (the diamides), with Rynaxypyr alone making up almost 80% of the diamide business, which means around $1.4 Billion, and >30% of FMC revenue comes from one molecule.
That suggests they will need innovation in the coming decades.
Late in, Early Out, but Meaningful Impact
BASF launched its CVC in 2001.
Syngenta launched its CVC in 2009.
Bayer launched its leaps CVC in 2015.
FMC launched its CVC in 2020.
Corteva launched Catalyst in 2024.
A late entry by FMC suggests a more reactionary effort.
But what FMC did effectively is leverage their venture efforts into commercial opportunity.
BioPhero was an early investment for FMC Ventures, which turned into a $200 million acquisition, catalyzing their fermentation capabilities which are crucial to cost-effectively commercializing pheromone products that are being launched in Brazil, and soon to be globally— including the addition of 12 patents and 5 pheromone active ingredients.
