Upstream Ag
Upstream Ag Insights Podcast
Upstream Ag Professional - May 19th 2024

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Upstream Ag Professional - May 19th 2024

Essential news and analysis for agribusiness leaders.

Welcome to the 42nd Edition of Upstream Ag Professional!


  1. Q1 2024 Agribusiness Results, Themes, Highlights and Analysis

  2. Is “agtech” a different industry than “agriculture?” and do you really need a farmer on your leadership team?

  3. Lindsay Irrigation and their FieldNET Service

  4. Aimpoint Research and CamoAg Partner to Bring Farmer of the Future to Digital Intelligence Platform

  5. Investing in new technology featuring AI to detect herbicide-resistant weeds

  6. David Friedberg’s Newest Breakthrough: Ohalo Shares News on Plant Breeding Approach

  7. FMC Corporation and Optibrium Announce collaboration

  8. Case IH ‘gatecrashes’ agricultural drone market with two models

  9. LLM Search Functionality

Thank you for your support of Upstream Ag Professional! I hope you have a great week.

1. Q1 2024 Agribusiness Results, Themes, Highlights and Analysis - Upstream Ag Professional

Over the last week I consumed more than 40 analyst call transcripts and 30 quarterly agribusiness earnings results, synthesizing the themes, trends and key takeaways across the crop protection, seed, fertilizer, retail, equipment manufacturers (irrigation, tractors) and tech providers segments of agriculture.
This weekend I share six trends from Q1 2024, another six notable quotes, images and takeaways from the transcripts and highlights and analysis from more than twenty prominent agribusiness. The full overview can be found in the above link.

Key Agribusiness Themes from Q1 2024

a. Macro Farm Indicators in Decline

As has been discussed and forecast for several months by ag companies, there is a projection of continued decline in net farm income levels plus lower crop prices. This is topped off with some variation in weather impacts on grower sentiment, particularly in markets such as North America and Brazil.

The macro economic conditions have been contributing to lower farmer spending, increased uncertainty leading to decreased revenues and a more challenging portion of the cycle for many companies, from equipment manufacturers to input manufacturers.

Of the major crop protection, fertilizer, retail, and equipment companies looked at, 100% had their revenues decline in a YoY comparison of Q1 2024 to Q1 2023.

b. Just-in-time Input Buying

Higher interest rates and less supply chain uncertainty has led to farmers and retailers transitioning to a “just-in-time” purchasing approach.

I began hearing about this for industry professionals in ~February and receiving questions about it from many throughout the industry, and it played out consistently across input providers.

On investor calls Nutrien stated they are tightening up their inventory levels across their trade area, consistent with Brazillian retailers like AgroGalaxy and Lavoro, and had major input manufacturers such as Bayer Crop Science, Syngenta Group Corteva and FMC all commenting on this playing out as a hinderance to their Q1 revenue.

The sentiment was that farmer demand for inputs was still in tact and expect those sales to trickle into Q2.

A quote from FMC CEO Mark Douglas on their May 7th analyst call:

In the U.S., we’re still selling products that are used very early in the season, even in May, which is unusual. What does that tell you? It tells you that the inventories of those products have been totally depleted. We’re selling for products that will be used right now.

c. Inventory in Brazil/LatAm still Normalizing + Friction Between Input Manufacturers and Distributor Relationships

Brazil was topical for almost every segment of agribusiness— input manufacturers, retailers, equipment manufacturer (irrigation and tractor). The “destocking” was still occurring, but most forecast for it to normalize through Q2 2024. Corteva executives stated the following on their analyst call:

Available data suggests channel inventories are trending down in Brazil. While they're still higher than historical average, inventory levels have come down versus 2023 year round. So, the channels making progress towards a more normalized inventory level and the demand at the farm gate in Brazil remains healthy and the expected increase in planted area supports additional Crop Protection applications.

The increased inventory levels combined with declining input prices contributed to challenges for businesses operating in the LatAm region. This lead to some friction between input providers and retailer/distributors in the region. From FMC CEO Mark Douglas:

We talked before about being very careful how we do business in the Southern Cone and in Brazil. We’ve been very – extremely diligent in protecting our balance sheet. We saw an issue with a distributor that we had in Argentina, and we decided to take material back from that distributor and that relationship. So that’s the type of activity that, yes, it slowed down the top line. But from a balance sheet perspective, it was absolutely the right thing to do.

An exclamation point on this friction came when AgroGalaxy, the 2nd largest retailer in LatAm, and Bayer Crop Science decided to end their relationship:

The companies cease operating in the Brazilian states of Paraná, São Paulo, and Minas Gerais. In these locations, AgroGalaxy operated with distribution brands Agro100, Grão de Ouro Agronegócios, and Grão de Ouro Comércio de Insumos.

According to the companies, the end of the partnership is due to "different business strategies”

d. Tractor Sales on Low End of Expectations

AGCO, CNH Industrial and John Deere all have started their years off lower than their forecasted sales declines (for all three, revenues 12 to 16% down YoY in agriculture segments), or on the bottom end of their guidance, illustrating the challenges in the tractor market.

e. Employee Restructuring

Continued efforts to evolve cost structures and organizational design have been topical for many of the largest crop protection companies:

Bayer CEO Bill Anderson highlighted the reduction of 1,500 jobs:

Our senior leadership circle is already noticeably smaller than it was a year ago. In the first quarter alone, we've reduced 1,500 roles. Approximately two thirds of these were management jobs.

Bayer has stated these reduction will continue.

BASF Board Chairman Martin Brudermuller alluded to the need to trim the internal structure:

I think what is important that my team, which is very much also, to a large extent, Markus' team, we have been working on trimming the structures of BASF. And I think this is the basis also for going forward that we really have been looking how we get closer to the customers, how we get more efficient, how do we get cost out, how we differentiate between the businesses.

The commentary sounds a lot like that of Bayer CEO Bill Anderson on the rationale behind their DSO implementation.

FMC has committed to an 8% reduction in head count as well.

John Deere had a minor reduction at a manufacturing facility, as well.

Singular Takeaways and Quotes

i. Dicamba vs. 2,4-D in North America

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Shane Thomas