Upstream Ag Professional - March 24th 2024
Essential news and analysis for agribusiness leaders
Welcome to the 34th Edition of Upstream Ag Professional!
Index for the week:
Takeaway from the World Agri-Tech Innovation Summit in San Francisco: Survival
Stratus Ag Research Report: 2023 Tracking Biostimulant Use and Satisfaction Survey Highlights and Analysis
Biostimulant Battlegrounds: The Legitimacy of a Program and Market Implications
Corteva Launches Corteva Catalyst
Certis Biologicals Acquires Howler and Theia Fungicides From AgBiome
AgTech News …So What? March 2024 with Shane Thomas
Bayer’s New Way Of Doing Business: The Future is Now For Crop Science
Smartwyre® unveils Grower Compass: Unlocking the power of grower data for ag retailers
Upstream LLM Search Functionality
Ambition’s Mass
1. Takeaways from the World Agri-Tech Innovation Summit in San Francisco
Last week, the World Agri-Tech Innovation Summit took place in San Francisco.
As always, the event was exceptionally well executed, delivering an unparalleled opportunity to connect with the entrepreneurs, investors and agribusiness professionals building and enabling the future of agriculture.
It was great to connect and meet many of you— thank you for your continued support of Upstream and for taking the time to say hello.
There are many smaller takeaways, like the fact that generative AI was a hot topic, and that there was a lot robotics excitement, but I think the one macro takeaways for me from the event was this:
Survival
The ag economy is not ultra hot.
Drier bias persists in the corn belt and much of Canada.
Prices for commodities like corn and soybean are forecast to be lower than the past few years:
The Purdue Ag Economy Barometer is flattening out at lower levels:
Ag equipment companies are forecasting a challenging 2024/25:
Crop protection and seed companies have their own challenges— longer than expected de-stocking challenges in North America along with LatAm, plus challenges for many in their own unique ways— Bayer with continued lawsuits and operational changes, Syngenta unable to IPO (and wanting to have finances buttoned up for when they do) and FMC with pressure on revenue and the stock price as just a few examples.
Most start-up companies that raised in late 2020, 2021 and early 2022 have elevated valuations. Many would call them unrealistic valuations. These same companies are looking to raise again and founders, nor the investors on their cap table want to forego these elevated valuations.
To top it off, venture funds, generally speaking, are not flush with cash to deploy:
Lastly, taking learnings from the AgFunder 2023 AgriFoodTech Report, it seems unlikely that changes to funding will occur in any immediate future (within next 12 months).
Combine these factors together and we get three things for start-ups:
Raising capital remains a challenge (more specifically beyond seed stage), especially if wanting to maintain previous valuation numbers.
Growth in sales will be challenging on average due to lower farmer sentiment.
Exits to agricultural incumbents will be few and far between when agribusiness acquisition has been the most prominent exit route for agtech companies and the likliest exit route for many moving forward.
A consistent comment I heard was companies not wanting to take a down round— and it is totally understandable that they don’t. But that’s the friction point.
On the flight to San Francisco I listened to Founders Podcast episode #342 The Lessons of History. The Lessons of History is an all-time favorite book of mine. On the podcast, a quote was highlighted that I think is apt to frame the current situation, similar to what I talked about in The AgTech Paradox: What Biology and Historians Can Teach Us About the Agriculture Industry in 2022:
Nature and history do not agree with our conceptions of good and bad; they define good as that which survives, and bad as that which goes under.
Great companies can’t be built if they run out of money.
The #1 cause of death in start ups? Running out of cash.
Seeking an up round above prioritizing survival is a death wish. In the words of Ryan Holiday, ego really can be the enemy.
In the next 18 months, capital is unlikely to become more abundant. Acquisition activity from the leading agribusiness is unlikely to accelerate. Farmer’s are unlikely to have excess cash to invest in new or unproven technology.
All of this will put continued pressure on valuations and revenue growth.
The major takeaway from conversation this week was survival— likely continued cuts and some down rounds. The best companies are likely to be fine, but for those on the cusp will continue to see headwinds.
I’m aware it is very easy to say all of this from the chair I sit in vs. those currently navigating the situation with skin in the game. The observation isn’t intended to come across as negative, either. I think the sentiment of the event was positive, but a major takeaway for me was that challenges remain for agtech start-ups and surviving is going to be the biggest importance for companies in the coming 12 months.
2. Stratus Ag Research Report: 2023 Tracking Biostimulant Use and Satisfaction Survey Highlights and Analysis - Upstream Ag Professional
This week I went through a publicly available survey from Stratus Ag Research called “Tracking Grower Perceptions of Biostimulant Products in North America” (available for free in the preceding link) where they surveyed thousands of farmers from Canada and the USA to breakdown farmer views, sentiment and experience with/towards biostimulant products that are available in the market place.