Upstream Ag Insights - June 13th 2021

Essential news and analysis for agribusiness leaders

Welcome to the 70th edition of Upstream Ag Insights!

Thank-you to the ~550 readers that filled out the Upstream Ag Insights survey! There was a lot of excellent learnings for me, many of which I will summarize in the July 4th Editions where I go through some of the highlights of the 1st half of 2021.

For anyone that didn’t fill it out, I am always open to feedback and suggestions. I cannot promise all of them will happen, but I will do my best to consider the ones that I believe will make Upstream Ag Insights a more useful resource, especially as I look to invest more into a stand alone site, enhanced proprietary reports and an actual editor!

Index for the week:

  • The Future of Seed

  • e-commerce Alone Won’t Cut it for Ag Retailers

  • Remote Sensing and Satellite Imagery in Agriculture

  • Further Nutrien and Yara Carbon Announcements

  • A great thread on marketing in agriculture!

  • Gingko Bioworks Collaboration with Sumitomo

  • Sentera closes $25m Series C Round to Scale its Digital Ag Platform

  • Farm Inputs Index Fund

  • Syngenta Beginning IPO Process

Have an excellent week!

Stay informed on the future of agribusiness by joining thousands from around the world and subscribe to Upstream Ag Insights!

The Future of Seed - Upstream Ag Insights

I was inspired this week after reading this article on quantum computing:

The Quest For The Ultimate Seed Begins with Quantum Computing - Oilseed and Grain News

It got me thinking about the future of varietal decision making and bundling. Quantum computing has a lot of potential, but is still a ways out from influencing seed. With that said, there is still a lot of computing and analytics influence coming into farming and this changes the way we sell and bundle seed.

I put some thoughts together to start a conversation around seed; starting with where seed technology has came from and discussing where it may go from a selling and decision perspective (not specifically into traits, genetics etc).

I left a comments section in the article for you to leave thoughts about the future of seed as well!

This weeks edition of Upstream Ag Insights was sponsored by AGvisorPRO!

Have you noticed an increase in sales calls and emails over the past couple of years? It’s hard to deny that the old way of doing business is evolving, and competition is tough! Relationships are becoming increasingly harder to establish and the upcoming generation thrives in the online environment. 

We all know this, but do you have a plan to truly engage with this new trend? 

At AGvisorPRO, we have taken an innovative approach to connecting the Agriculture community; considering all the limitations of the existing infrastructure. Like you, we care about relationships and understand that the future looks a little different.

Here’s what that means to you: 

We can connect you with the entire Agricultural community. Farmers, retailers, manufactures, government agencies or independent experts. And the best part is, you can connect to them from anywhere; no travel required.

Learn More Here

eCommerce Alone Won’t Cut It for Ag Retailers - Crop Life

eCommerce is one piece of a much broader online grower experience. What is required is a digital engagement platform. This offering connects commerce with personalized information and communication tools that make it easier for growers to do business with their preferred ag retailer.

An integrated online platform opens new avenues for engaging customers. AgVend Partner Retailers find that 95% of their portal use has nothing to do with eCommerce. Instead, usage is centered around making it easier for growers to do business on their terms.

This is spot on. This is the message that so often gets overlooked. It is the area I have been emphasizing: it is not just about transacting, but about the customer experience. How is the farmer being engaged with, managing the in-between (between transactions) aspects of relationship building and selling. This is consistent with the area I want to further break out in the coming months around ambient ag commerce.

The topic itself (e-commerce and digital engaging farmers) topic reminds me of an interview with Jeff Bezos where the interviewer continues to emphasize the need for Bezos to differentiate between being an “internet” company or a physical retail company (encourage you to watch the whole video, but to get to the point I reference skip to the 2:45 minute mark and listen until roughly 3:30):

He states it doesn’t matter whether they are an internet company or have physical assets, it’s about investing in what is best for the customer.

The alignment for us in ag is this: it isn’t about being e-commerce focused, or digital or physical or anything; it is about providing value to the farm customer. To me this includes both physical and digital foot prints with a way of coherently integrating them.

The author (Alexander Reichert, CEO of AgVend*) referenced the recent Mckinsey study that I referenced in the ambient ag commerce link, with a consistent perspective:

While necessary for any comprehensive solution, eCommerce should not be the primary focus of your digital customer experience. What’s most important is that your platform makes it easier to do business by providing one central place for a grower to manage their account, engage, and purchase on their terms across your business units.

This is a great article worth giving a read.

*Disclosure: I am an advisor to AgVend (so the aligned view point on this is no surprise!)

Margin Pressures in Ag Retail: The Increasing Cost to Serve Growers - Proagrica

Last week Proagrica held their first of three webinars talking about the generational gap in ag retail. There were some great take aways around the generational gap and attracting talent from outside the industry.

Here were two actionable insights from the webinar:

  • Mentorship Approach - Pairing new staff with an experienced individual as their go-to person for questions and guidance can be powerful. This helps speed up knowledge transfer, provides a consistent avenue to ask questions for new staff and ensures farm customers do not suffer in any transition.

  • Historically, ag retail has had a mantra of “sink or swim” for new staff. But now, younger individuals tend to learn more effectively through collaboration and team work. Organizations adapting to this new approach to learning and driving the culture is not just good for the individual, but the organization. This accelerates the learning process for staff and a major source of competitive differentiation in ag retail, and all business, is learning faster than your competitors. If you can understand what the customers want and need and deliver on that, you will win out more often than not, especially if it’s already known by others on your team!

This weeks webinar topic goes hand in hand with dynamic knowledge transfer across your organization: margin erosion.

Margin erosion has continued to be a challenge in the crop input space. This stems from an inability to differentiate and add unique value to farmers. What underlies that are other challenges: talent constraints, supplier relationships, farm and manufacturer consolidation, increased information access and more. While it can be easy to sit back and feel defeated, what interests me is what is being done about it by leading retailers.

In my mind there are two major ways to influence margin erosion directly:

  1. Augment product and service offerings

  2. Enhance staff through training, culture, tools etc to enable better customer relationships, experience and loyalty.

There are numerous approaches to executing both of these. In the Proagrica webinar on June 16th I look forward to hearing insights from Nic McCarthy, Senior Vice President of Agronomy at Central Valley Ag and Ryan Risdal of Proagrica who will discuss some of the approaches to successfully navigating margin erosion.

To be able to learn from this discussion, sign up at the above link and join the June 16th webinar at 2:00pm ET!

*Sponsored content

Satellite Imagery Applications in Agriculture

Demystifying Earth Observation: The Multi-Billion Market* in Space Tech - Terrawatch

The business of satellite imagery in agriculture has fascinated me for years, but it has never been an area I understand well. In doing more research on the subject lately I stumbled on this newsletter where the author does an exceptional job of breaking down the layers, and players, within the space.

This image is a very useful framework:

In this article the author gets into “insights”, which are specific take aways for an industry. The author sees these companies verticalizing and focusing on a specific industry aka go deeper into understanding what’s occurring via satellite imagery.

Agriculture is one specific industry. And an example of what that could be for agriculture is stress identification for certain crops, or identifying specific nitrogen content of crops in season. This data is always going to be more valuable with additional layers of information - from soil, from weather etc.

That leads to an article from Planet Labs:

Monitoring Crop Nitrogen Status with Satellite Data - Planet Labs

At Planet, we’re excited that recent research is showing how satellite data can provide a reliable estimation of the crop nitrogen content. Those estimations are a vital piece of intelligence that can serve as the basis for nutrient management programs.

This is beneficial for sure. Nitrogen is important. Imagery, or plant tissue diagnostics are a snap shot in time impacted by the soils ability to supply nitrogen to the crop in a given area. But it still very much lacks a “so what?” that can be proactively managed or precriptive.

The fact other nutrient information is missing mitigates some of the value derived from this offering too. There is still a need to test for other nutrients, so a tissue test will still be required in many instances. With that said, I don’t want to take away the potential this has and the fact this is just a starting point and will evolve over time:

Several researchers have shown that the red-edge band can be used to determine nitrogen content for a range of major crops, including potatoes, soybean, corn and wheat.

If you can continuously acquire data and combine it with soil information, NDVI, weather information and yield/quality information there is a better capability to understand future application needs for nitrogen and better predict yield. This is where organizations like Regrow, Farmers Edge or a Croptimistic for example are better positioned to leverage this nitrogen measurement capability than some other platforms. They have a soil understanding that integrates with the imagery to give a more robust, useable layer to inform decisions.

The red-edge band in Planet’s SuperDove constellation will enable agronomists and farmers to receive a daily update on the crop nitrogen status of their crops. This technology provides a better diagnostic tool, reduces costs associated with physical sampling, and facilitates corrective nutrient applications, especially important given that application windows are narrowing. 

I don’t think any farmer wants a daily update of the nitrogen status. What farmers and agronomists want is an alert that cuts through the noise; when to apply nitrogen based on a deficiency or an opportunity to enhance yield. The variation of day to day nitrogen levels in plant tissues is caused by too many factors including stress related fluctuations from moisture or heat, accounting for yield variation between areas of a field and the conditions and and understanding of at what point action is needed. The opportunity is really to combine this with layers of other data and create better models or real alerts where action is deemed necessary.

The really exciting part of this capability is what will come next, when other pieces are used in conjunction to complete the puzzle.

Farmers Edge Extends Relationship with Aerospace and Data Analytics Company Planet - Farmers Edge

This was a bit peculiar to me at first. Farmers Edge had a relationship with Planet previously, but that ended at the end of 2020.

In Farmers Edge IPO prospectus they stated this:

During the fourth quarter of 2020, the Company signed new multi-year contracts for satellite imagery and cloud hosting services. The new supplier of satellite imagery will reduce the annual imagery costs by approximately 60%.

The new supplier was stated as AirBus. Also from their prospectus:

During the fourth quarter of 2020, the Company entered into a new multi-year satellite imagery contract with Airbus at a significantly lower cost than the current contract that ended December 31, 2020 with another supplier.

Planet Labs has great imagery (high resolution, high frequency) that I think is an asset to Farmers Edge, or any ag organization that uses it. What stood out to me at the end of the new press release was this:

Farmers Edge will meet its cloud and imagery cost savings guidance provided during the IPO process by adding this new contract in combination with other contractual commitments.

I am making an assumption here, but it seems to me like Planet Labs was having some challenges attaining other ag related imagery contracts and came back to Farmers Edge with an extremely compelling offer. This contract will allow Planet to continue gain experience, and data, in agriculture to hopefully feed future agricultural contracts and show a lack of churn to their investors.

Given the statements from Planet in the previously cited article surrounding remote nitrogen measurement, there likely is an initiative within Farmers Edge to leverage this capability as part of their Smart Carbon program (probably for variable rate product use cases too), though the nitrogen specific imagery from Planet is via their “Super Dove” constellation (8 band imagery), not their traditional Dove constellation (~3m resolution). I could see Farmers Edge working to task these higher resolution satellites to better support their Smart Carbon customers along with enhancing their own nitrogen modelling capability in conjunction with their soil expertise.

CubeSats Deliver New Insights Into Agricultural Water Use at Daily and 3 m Resolutions - Nature

We produced the first cloud-free 3 m daily evaporation product ever retrieved from space, leveraging recently launched nano-satellite constellations to showcase this emerging potential. Focusing on three agricultural fields located in Nebraska, USA, high-resolution crop water use estimates are delivered via CubeSat-based evaporation modeling. Results indicate good model agreement (r2 of 0.86–0.89; mean absolute error between 0.06 and 0.08 mm/h) when evaluated against corrected flux tower data.

I was sent this interesting news by my friend Matt Pryor at Tenacious Ventures. There are a lot of similarities with this announcement to the article on planet measuring nitrogen use, except this is regarding water use (evapotranspiration).

Matt also had a great twitter thread that he posted as well:

Global Launch of Agoro Carbon Alliance Recording - AgWired

Yara announced the launch of Agoro Carbon Alliance this week. Their new stand alone carbon venture focused on driving adoption of carbon sequestration practices by farmers in order to access carbon offsets.

The “alliance” part indicates they aren’t doing it alone and on the call they talked about companies that are apart of the Alliance, like Sentera, Cloud Agronomics and Pivotal Rating a new venture for them focused on measurement capabilities.

I have talked about Yara’s initiatives before along with some of the uphill battles they will have in the carbon space in North America.

The spin out of Agoro as a stand alone approach is interesting to me. I think there are pro’s and con’s to it. The are challenges with being fluent in carbon programs for the average individual, especially when layering it in with other roles like selling fertilizer and having strong soil fertility knowledge. So having specialists focused on the carbon explicitly has benefits. However, the need for alignment across the traditional business unit that sells bulk nitrogen and specialty fertilizers with the Agoro team could be a recipe for challenges. I actually think if anything tighter integration of carbon with their core business would benefit both sides: talking soil fertility is the baseline for carbon discussions. How you apply your nitrogen, when you apply it, crops being grown, digital tools and so on are natural conversations for both fertility, digital initiatives and carbon. Breaking that up seems like it increases overhead, increases chances for confusion within the organization and with customers.

Nutrien Unveils Portfolio Approach to Carbon Program - Nutrien

Nutrien also announced more on their carbon program this week:

Nutrien Ltd. today unveiled a portfolio approach to its 2021 North American carbon pilots to identify the best path to successfully scale its carbon program introduced in 2020. The portfolio leverages Nutrien’s unique end-to-end capabilities while engaging a broad base of key industry partners and supply chain stakeholders across Canada and the U.S. including American Farmland Trust, BASF, Corteva Agriscience, Ingredion, Maple Leaf Foods, PepsiCo and Syngenta.

Bayer is missing, while the other three of the big four are participating with Nutrien. Based on Bayer being the largest seed and chemistry manufacturer in agriculture it leads me to assume Bayer is their largest supplier of products making their absence notable.

Nutrien will be using these groups, all big players in the carbon protocol space:

Leveraging established protocols from government programs and standard bodies – Climate Action Reserve, Verra and Gold Standard – the pilots will also include execution partners Soil and Water Outcomes Fund and the Ecosystem Services Market Consortium (ESMC), of which Nutrien is a founding circle member.

Nutrien is looking to run numerous pilots in the USA and Canada this year and learn from them for 2022, actually doubling their pilot acres for 2021 than originally planned. What I think is smart, and we haven’t seen this targeted as much in the carbon space (they tend to prioritize reduced tillage and cover crops first) is a starting point surrounding nitrogen:

Growers in Alberta, Saskatchewan, and Manitoba will work with Nutrien to improve carbon performance through nitrogen management and conservation tillage practices to generate carbon assets.

This is right in the Nutrien wheel house and will ultimately support their core business as well and fits nicely because of 300x warming capabilties of nitrous oxide emissons versus the often referenced CO2

. I’ve referenced this emphasis being a good fit before in my highlights of their 2020 Annual Report Overview,

Worth noting: When looking at two of the largest players working to deploy a carbon offset program focusing in on collaboration and partnerships, it makes you wonder how smaller organizations as stand alone players will be able to execute effectively. Farmers Edge for example has announced alignment with Radicle Balance, but no one else.

Marketing in Agriculture

I found this great Twitter thread this week from Steve Kozel of Osborn Barr Paramore highlighting the differences between legacy ag companies and their marketing approach vs. start-up’s and their approach. He also highlights some of the opportunities from both groups:

If you are interested in marketing there are a lot of keen insights within it, many of which align closely with my experience being involved in marketing at both smaller and larger organizations.

One quote from a tweet that stood out to me was this:

BOTH legacy ag brands AND ag startups tend to... Misunderstand how to align brand strategy with market position/growth stage (e.g., disruptor, challenger, leader)

A lack of cohesive strategy has been something I have noticed frequently, often coming through as simply a desire for “more content”.

Ginkgo Bioworks Announces Collaboration with Sumitomo - AgFunder News

Ginkgo Bioworks, Inc. ("Ginkgo") today announced the signing of a program in a partnership with the Sumitomo Chemical Co., Ltd. ("Sumitomo Chemical"), one of Japan's leading chemical companies. Ginkgo is building the leading horizontal platform for cell programming, to serve customers across industries seeking to develop better products. Sumitomo Chemical seeks to leverage Ginkgo's long-established expertise in organism engineering to significantly increase the production efficiency and sustainability of a key bio-based commercial product.

Gingko Bioworks is a synthetic biology company that recently announced they were going public via SPAC.

Sumitomo is the 3rd ag chemistry driven company to partner with Gingko, following the recent announcement from Corteva and the joint venture between Bayer Crop Science and Gingko, Joyn Bio.

As cell programming has evolved to become faster, more precise and cost-effective, companies across industries have been able to replace petroleum-based products, or optimize existing biology mediated manufacturing processes, through engineering microbial strains.

Sumitomo is looking to expose themselves to biological based products through partnership and collaboration.

To me Gingko, and synthetic biology companies like them will be large drivers in agriculture in the future because of their capabilities to design DNA.

We will continue to see organizations like them, along with organizations like Novozymes, will continue to be looked to by agriculture organizations.

For more on Gingko, I covered a bit on their SPAC announcement here.

BASF introduces Ideltis™ as Seed Brand Name for its Future Hybrid Wheat - BASF

BASF’s hybrid wheat is intended to provide farmers with higher and more stable performance in yield and quality to advance one of the world’s most important crops. “Ideltis stands for our commitment to hybrid wheat and the transition of the wheat crop system in the longterm,” said Vincent Gros, President BASF Agricultural Solutions. “With Ideltis, we are unlocking the full potential of wheat. Through our global research platform, we provide growers and the entire value chain hybrid wheat that is tailored to their local needs and consistently delivers better, more stable yield.

Ideltis is supposed to be available in the middle of the decade, initially for farmers in key wheat growing regions in Europe and North America.

I still remember my first ever agronomy conference in 2012 listening to a wheat expert talking about a 2020 launch of hybrid wheat in North America.

One reason for this delay is that the economics have been challenged. Meaning the yield bump gained through hybrid wheat has not meant enough increased revenue to offset the incremental costs associated with accessing the hybrid wheat, specifically in lower wheat yielding regions (Northern Great Plains, western Canada). This also stems from the realities of re-planting hybrid wheat (you shouldn’t/can’t) and the seed proliferation challenges in producing hybrid wheat seed.

My assumption is those are a few of the functions BASF is looking to alleviate consistently before going to market later this decade.

Sentera Closes $25m Series C Round to Scale its Digital Ag Platform - AgFunder News

Sentera today announced a $25 million Series C financing co-led by Canadian pension fund manager Caisse de dépôt et placement du Québec and US agrifoodtech VC S2G Ventures.

Also joining the round were new investors Baltimore-based Akroyd LLC and Mexico City-based KuE Capital, as well as existing investors Continental Grain Company, iSelect Fund, and Middleland Capital, all from the US.

Sentera has been around for a while and continues to grow. The number of countries they operate in is impressive:

With product-market fit figured out, Sentera has set its sights on scaling. The startup is steadily building its global user base, and claims its platform covers “millions of acres” in more than 70 countries and is also in use at nearly 100 universities and research institutes.

I also like their focused approach:

Instead of trying to provide an entire marketplace for something like carbon credits, for example, Sentera is looking at how its existing technology can add value to players already in the space. This includes calculating carbon sequestration and integrating industry-standard sustainability models into its analytics.

Specifically on the carbon front I noticed during the Yara Agoro Carbon Alliance launch event this past week that Sentera was joining the “alliance” to support areas like verification.

Do Farmers Want Apps from Ag Brands? - WS

I used to think every one should have an app. I was wrong. There needs to be a specific use case that integrates with your business and products.

Consider how adoption of your proposed app will contribute to your overall business objectives and marketing outcomes. Will it drive product purchase, offer customer support, or be a communication tool to help you stay connected to your customers? What will success look like? Beyond metrics like downloads and app opens, make sure you have a vision for how your app fits into your customer’s experience – and then don’t waver. 

I first started looking at apps for farmers in 2012 and while the complexity to build them has seemingly come down, the bar for going forward with an app is actually higher. This article is a great starting point to look at.

Farm Inputs Index Fund - Carl Lippert

Carl is one of the most interesting forward thinkers I talk to in the ag industry. He puts forward an interesting concept in his most recent post that’s worth looking at further:

A farmer signs up to a specific nutrient portfolio ( or fertilizer portfolio etc ) and an entity aggregates / contracts / curates supply in such a way that the farmer no longer has to become a non emotional sophisticated trader to get the benefits of risk reduced access to controlled cost, predictably delivered inputs.

Syngenta Taps Banks for Shanghai IPO at $60 Billion Valuation - BNN Bloomberg

Syngenta Group Co., the agriculture giant owned by China National Chemical Corp., has picked banks for an initial public offering on Shanghai’s Nasdaq-style STAR board, according to people familiar with the matter. An IPO would turn a new page for Syngenta, which went through a reorganization after ChemChina acquired the company for $43 billion in 2017, clinching China’s biggest foreign takeover to date. Syngenta Group incorporated other ChemChina agricultural units including Adama Ltd. and the agriculture business of Chinese conglomerate Sinochem Corp. last year.

I recently covered the Syngenta AG business here.

Non Ag Article

Inside IKEA’s Digital Transformation - Harvard Business Review

I believe agriculture can learn a lot from other industries. While imperfect because of the nuance between consumer businesses and farm business, there are nuggets of learnings that can support more seamless change management in agriculture when it comes to various digital technologies.

Some of my favourite quotes:

We are revamping customer interactions both digitally and, in the store, and we’re connecting them…You might start planning your new kitchen at home on, and then you come to the store or connect with a remote customer meeting point…we should be able to meet you where you are. 

We are focusing more on what we should do with data, rather than what we could do with data.

The DNA of IKEA doesn’t change, and it’s important that it doesn’t. Operating model wise, it means we’re adding data, increasing speed, using analytics in all our decision-making. Also, the skills we’re using are changing. I recall when I started at IKEA, my boss, Jesper Brodin said, “We’re changing everything — almost.” To me, this means we’re changing how we do things, but the soul of the company stays the same

Other Ag Articles

FarmQA Adds Map Layers to Expand Suite of Digital Tools for Agronomists - Crop Life

xarvio Launches “Connect” - xarvio

Semios Acquires Altrac to Deliver More Value to Growers Through Control and Automation - Semios

Grand River Ag Society & RH Accelerator make an Impact Investment in IntelliCulture - Grand River Ag Society

John Deere Execs Forecast a Stronger Ag Equipment Industry Upswing Than 2013 - Ag Equipment Intelligence

Climate-conscious sovereign wealth funds opt for energy, transport investments over agrifood: study - AgFunder News

FMC Corporation's Fluindapyr Fungicide Receives U.S. EPA Registration - PR Newswire

CommoditAg Expands Its Suppliers with the Addition of Soil Technologies - The Daily Scoop

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