Upstream Ag Professional - November 5th 2023
Essential news and analysis for agribusiness leaders
Welcome to the 16th Edition of Upstream Ag Professional!
Index for the week:
Agriculture – On the cusp of a rapid evolution (guest article!)
Level Setting the AgTech Landscape
Ten Common Challenges to Overcome in Digital Ag
Hefty Seed Company Selects Meristem’s Patented BIO-CAPSULE Technology: What does this mean for the future of Meristem?
GROWERS Debuts Two Native Apps, GROWERS and GROWERS Retail with substantial updates to enhance farmer, retailer, and manufacturer relationships and The Plight of Marketplaces in Agriculture
Corteva Updates Expectations for Third Quarter and Full Year 2023 and Follow-up on FMC from Last Week
FieldView and Combyne Platform Integration Helps Farmers Better Manage Grain Marketing and Build Profitability Insights
Bayer Crop Science ESG Investor Webinar Sustainability Update: Biodiversity & Crop Protection
Empowering Agribusiness Growth Using Private Equity
Funding Innovation for Ag: Getting Tactical, Part 2 - Redeemable Equity
1. Agriculture – On the cusp of a rapid evolution - Upstream Ag Professional Guest Dan Northrup
Key Takeaways
The agricultural sector is expected to increase productivity while reducing its emissions, which make up 10% of US emissions. In addition to mitigating emissions, agriculture has a unique potential to remove large amounts of carbon from the atmosphere and generate carbon-negative energy.
Significant transitions in agriculture are difficult because modern agriculture is an interlocking, complex system of genetics, chemistry, equipment, and agronomy. The component technologies operate as a system, and improvements to one of the categories are only effective if the new capability is met by synchronous improvements to the other categories.
Complex systems transit long periods of gradual change that are interrupted by short periods of explosive innovation. The coincidence of technology maturation, input volatility, consumer demand, and government support is placing the agricultural industry at the cusp of a rapid transformation.
This week marks the first-ever guest-written article within Upstream!
Dan Northrup of Galvanize Climate Solutions has written a thoughtful article on what is coming together to catalyze change within the agriculture industry— from technology to geopolitics to government investment and beyond.
Below is a portion of the article, with the full article available to all Upstream Ag Professional subscribers at the above link.
Every sector of industry is expected to make dramatic transformations to meet net zero emission goals and mitigate climate change. The agricultural sector is expected to increase productivity while reducing its emissions, which make up 10% of US emissions[1]. In addition to mitigating emissions, agriculture has a unique potential to remove large amounts of carbon from the atmosphere and generate carbon-negative energy.
Significant transitions in agriculture are difficult because modern agriculture is an interlocking, complex system of genetics, chemistry, equipment, and agronomy. The component technologies operate as a system, and improvements to one of the categories are only effective if the new capability is met by synchronous improvements to the other categories.
Significant near-term emission reductions from agriculture can be achieved by increasing efficiency[2]. Precision agriculture is a set of technologies and methods with the potential to boost productivity using fewer inputs. Given its economic alignment and climate potential, precision agriculture could have many benefits, but despite large investments and research into software systems, sensors, and data tools, adoption of precision agriculture tools remains limited[3].
In our view, slow adoption created a mistaken impression that the agricultural industry is incapable of change. In fact, valuable technologies are adopted faster in agriculture than many sectors owing to the annual cropping cycle. The rate of adoption of genetically modified crops[4] and auto-steer tractors[5] rivals the uptake of the fastest technologies in any sector[6].
The difference between new agricultural technologies that saw rapid adoption and those seeing slow adoption is their position in the ecosystem. While GMOs and autosteer enhanced the existing system independently, precision agriculture is an ecosystem shift that requires advancements in each technical category to create value. For example, gathering data for decision support requires durable sensors and field access, and generating value with this data requires a capacity for timely reactions which to date have been limited by field access, crop genetics, and legacy equipment. Without each system component, the potential efficiency and productivity gains derived from precision insights were limited.
Despite the frustration, research and investment in component technologies is beginning to bear fruit. The substantial maturation and productization of critical technologies has occurred against the backdrop of global events, market forces, and customer sentiment that significantly change the value proposition for precision ag technologies. The convergence of technical maturity and shift in business models put agriculture in a position for rapid and dramatic transformation over the coming decade with significant economic and environmental benefits.
2. Level Setting the AgTech Landscape - Upstream Ag Professional
Key Takeaways
There are thousands of agtech companies— but there are tens of thousands of marketing technology companies and thousands of fintech companies.
Often it gets stated that there are “too many agtech companies”, but we need to have many ideas and companies started to identify what will work and what will not in order for the industry to innovate and move forward.
I often hear that there are “too many agtech companies.”
The Mixing Bowl released their 2023 Biological Landscape, where they stated they found over 1,200 bio companies.
Better Food Ventures released their Farmtech Landscape most recently in 2020, listing over 600 companies.
There are a lot of companies in the space. But it’s important to contextualize things.
Recently, the 2023 Marketing Technology Landscape was released with a whopping 11,038 companies.
Fintech is another popular area, and recently I was reading about the Australian Fintech landscape, where KPMG identified 775 fintech companies based in Australia alone. The USA has a GDP about 22x the size of Australia— so imagine the size of even just a North American company list.
Navigating that number of companies sounds challenging; however, as I talked about in The AgTech Paradox: What Biology and Historians Can Teach Us About the Agriculture Industry, numbers are important:
In evolutionary biology it is well accepted that having a proliferation of off-spring is required for a species to thrive. There is a need for lots because that brings variation to a population in an uncertain world and environment and gives the best chance of having the right traits that keep the species thriving for the long term (you never know what trait might find a use). The aim of all life.
If we take this biology concept and think about it in agribusiness, it illustrates that we need new ideas, new technology, new businesses and the entrepreneurs that have the vision and the guts to take the risks across a variety of verticals to add value to farmers, ensure food security and ensure positive environmental outcomes, no matter the events and challenges thrown at us. The agriculture industry relies on this.
In other words, we need to have many ideas and companies started to identify what will work and what will not.
Given the current environment, we are likely to see some atrophy of agtech companies, as highlighted in Illustrative AgTech Insights: AgTech Investment on the Decline and What that Means.
Nothing is perfect, and there are shortcomings to every scenario— too much capital, too little capital, too many companies, too few companies and everything in between. However, I think it is a good thing we have seen a lot of companies founded within the agriculture industry, and when you compare to other industries, it almost seems like there hasn’t been enough!
3. Ten Common Challenges to Overcome in Digital Ag - Patrick Honcoop Linkedin
Key Takeaways
Patrick Honcoop laid out challenges to overcome and manage for many digital ag companies, such as poor user experience, a lack of strong value proposition, poor incentives within the channel, a lack of interoperability, and many more.
The comment section of the article had a range of feedback, which further illustrates just how complex technology adoption is within agricultural systems.
This is a well-written article by Patrick Honcoop overviewing challenges within digital ag.
The article establishes a nice “checklist” for digital ag companies to think through and manage.
There is nuance to each point, depending on the type of digital ag product. That’s what stood out to me in the comment section of Patrick’s article. The comments ranged from “farmers aren’t entrepreneurial” (which I do not agree with) to “we need more funding” (which I do not think is a main problem either) to “scope creep” (which I think is an accurate comment) along with a host of others.
The comments illustrate a macro challenge to the problem: the complexity of farming systems.
The complexity of adoption for many digital products is incredibly high, something Dan Northrup articulated well in his article above:
The difference between new agricultural technologies that saw rapid adoption and those seeing slow adoption is their position in the ecosystem. While GMOs and autosteer enhanced the existing system independently, precision agriculture is an ecosystem shift that requires advancements in each technical category to create value.
Next week I will be sharing some thoughts from reading through Geoff Kaine’s The Adoption of Agricultural Innovations and one of the takeaways is that speed of adoption and likelihood of adoption is correlated to the complexity of the innovation:
The third characteristic of innovations that influences their rate of adoption is ‘complexity’ which is the degree of effort needed to understand and use an innovation (Rogers 1995). The more complex innovations are, the more difficult are the tasks of understanding the principles underpinning them, implementing them and of anticipating the consequences of adopting them. Hence, more complex innovations place greater demands on the learning and implementation skills of decision-makers. The rate of adoption of an innovation is negatively related to complexity.
This is why ROI is only so important if innovation is complex and implementation support is lackluster— something I emphasized in The Dilemma of AgTech Adoption.
Check out next week’s edition for more surrounding adoption and the diffusion of innovation in agriculture.