Upstream Ag Professional - October 29th 2023
Essentials news and analysis for agribusiness leaders
Welcome to the 15th Edition of Upstream Ag Professional!
First off, my apologies to everyone for the Monday e-mail last week. I accidentally sent the free Upstream Ag Insights edition to all subscribers instead of just free subscribers on Monday afternoon.
Index for the week:
Pivot Bio Realigned Resource Allocation and What it Means for the Business
Rankings of Global Top 20 Agrochemical Companies in FY2022 + Revenue, EBITDA, R&D and Revenue per Employee Comparisons
FMC Corporation Provides Adjustment to Expectations + Is Blue Orca Right?
C-Suite Scott Kay of BASF: Specialists in the Field - What are crop input companies doing to position themselves for a world where precision spraying is the norm?
The Patronage Conundrum of Co-operatives
LLM Powered Autonomous Agents and Agribusiness Software Workflow
Paying Strategy Tax with Shane Thomas of Upstream Ag Insights
Decisive Farming by TELUS Agriculture and GrainFox Launch Strategic Partnership
Challenging Assumptions About Regenerative Agriculture With John Kempf
A General Assessment of the Role of Agriculture and Forestry in U.S. Carbon Markets
Kynetec Releases Forecast for Global AgroChemicals Market
1. Pivot Bio Realigned Resource Allocation - Upstream Ag Professional
Pivot Bio is readjusting where they allocate resources, leading to layoffs this past week. This comes a week after news of AgBiome layoffs. Both have raised significant venture capital, with Pivot Bio raising $617 million and AgBiome raising $250 million (both according to Crunchbase).
Pivot Bio is focusing in resources on increasing N fixation capabilities of its products, improving the performance of the product through enhanced shelf life and complementary technologies, delivering more performance data directly to the market, and establishing itself as a key partner with larger agribusinesses and other technology companies.
One area we will see Pivot Bio working at is decreasing customer acquisition cost— Pivot Bio has a direct-to-farmer strategy and has amassed over $100 million in revenue, with bookings of 130% of that for 2024, but I suspect they still operate with negative unit economics.
This week, Pivot Bio CEO Chris Abbott released a letter citing operational updates.
A portion of that included the following (emphasis mine):
We will be reallocating and focusing our resources on the products that deliver the most value to our growers ... These changes include an update to our teams and how we resource against our key initiatives and investments. To make these investments requires adapting some areas of our business and our employee footprint. We don’t take these decisions lightly, but we believe these changes will help us deliver the innovation growers expect from us.
A softer approach to stating layoffs.
It isn’t clear the number of layoffs, however, it seems unlikely that it would be mentioned if it wasn’t 10%+ of staff. According to LinkedIn, they have 477 employees— using my assumption, this would likely indicate it’s above 50 layoffs total.
The news comes a week after AgBiome suggested they will have to make significant layoffs.
Notably, these are the two biological agriculture companies that have raised the most venture capital, with Pivot Bio raising $617 million and AgBiome raising $250 million (both according to Crunchbase).
The difference, though is that Pivot Bio has product-market fit, announcing that they have over $100 million in revenue for 2023 earlier this year. It is unclear whether AgBiome has any meaningful revenue through its two commercial products.
The high revenue numbers for Pivot indicate the cuts aren’t as dire as AgBiome, but worth paying attention to. Chris Abbott was named CEO in August, and this move is likely the first step in his moving the company forward, consistent with his views of what is necessary for the company to become profitable and on an ever-growing number of acres.
Given the macroeconomics environment and the stage the company is at (the company is 12 years old), that likely means focused priorities based on their current product offering to manage expenses and profitable unit economics.
Profitable unit economics are important for all businesses. Especially agtech startups in the current environment.
Check out the link for the full Upstream Ag Professional article with a dive into the realities of customer acquisition costs, the layout of where Pivot Bio is focusing moving forward, and what changes may mean for their direct-to-farmer strategy.
2. Rankings of Global Top 20 Agrochemical Companies in FY2022 - AgroPages
Syngenta and Bayer still hold their #1 and #2 positions as the largest crop protection and seed companies.
Corteva continues to improve its EBITDA margin but still lags behind most other major players today.
The combined pesticide sales of the top 20 totalled US$85.762 billion in fiscal year 2022, representing an 18.18% year on-year increase from US$72.569 billion in 2021.
Four major agricultural giants (Syngenta, Bayer, BASF and Corteva) accounted for over half (55.00%) of total sales on the list. With the exception of Nanjing Red Sun, all companies surpassed US$1 billion in revenue. There were 13 Chinese companies on the list, with total sales of US$37.069 billion, making up 43.22% of total sales.
AgroPages put together their annual list of top agrochemical companies for fiscal year 2022 which highlights the largest crop protection companies by revenue, specifically for their crop protection business.
Recently, I have been putting together a comparison of the top 6 crop protection and seed companies by revenue, breaking out their EBITDA, EBITDA margin, and revenue per employee, which made sense to share in the context of the AgroPages release: