See and Spray Technology Implications for Agribusiness

John Deere's Blue River to Launch See and Spray Select this Year. Numerous other players in the space including WEED-IT, Precision.ai, xarvio/Bosch, Greeneye just to name a few.

John Deere Announces June 2021 Launch of Blue River See and Spray Select Technology

In 2017 John Deere acquired Blue River Technology for >$300million USD. This is one of the largest agtech exits to date and one of the most talked about companies and technologies out there. Blue River is a see and spray technology - Up to 36 RGB based sensors mounted onto the boom of a John Deere sprayer that is trained with machine learning to be able to identify when there is a weed in a field. This then signals a nozzle to spray, reducing the broad field application by upwards of 77% according to Deere.

This is far from the first technology on the market like this; WEED It is one and Bosch is working with xarvio on another just to name a couple.

I think there will be three core phases to offer.

1. “Green on brown”

Deere launched this as a 1st phase of “green on brown” - being able to identify when there is a weed in a bare field fallow setting or a pre-burn/post-harvest setting where there isn’t any actual crop in the field. Worth noting, they can only travel at 12mph to start - this is reduced from what would be around ~16mph. Ideally, this speed reduction is made up from reducing tank fills, but it is something that I would anticipate we see improve over time.

This initial launch brings two benefits:

1. Resistance management - Using higher rates of glyphosate or a more expensive tank mix with numerous groups across the entirety of a field adds up. If you reduce the area sprayed by say 70%, that makes a tank mix of 2 or 3 herbicide groups at higher rates much more palatable for the farmer. This also reduces the likelihood of resistance occurring by an order of magnitude.

2. Less herbicides in their entirety - This is a cost reduction on input expense and also could mean less water hauling and sprayer fill time, cutting labour expenses too (*the slower speed may decrease some of this initially). This also plays into the recent carbon and sustainability buzz. Chemistry has a carbon foot print. This could be associated with future carbon offsets too.

2. “Green on green”

This initial launch is cool, but just the start. The real cool part is the next phase: deciphering weeds from crops.

This means in-crop herbicide applications a sprayer would only spray the weeds. This is where it is compelling. Now, you can manage resistance much better in-crop too. The first focus sounds like it will be cotton, corn and soybean in North America. This has three benefits:

1. Using less expensive herbicides in crop at higher rates - Not only can you use less herbicide, but now you can use less expensive herbicides (eg: 2,4-D) at rates that might injure the crop sprayed across the field. While this might not be the primary use case, I can see some of the applicability here.

2. Managing resistance - This is one of the biggest concerns for farmers. But now, being able mix higher rates of products in crop, or have separate small tanks with a direct inject system on the sprayer for specifically hard weeds to kill with a specific active ingredient, could help alleviate many immediate resistance challenges. This could even change the economics and regulatory dynamics around current active ingredients in the pipeline, or bring forth old active ingredients that were written off due to costs on a per acre basis. This also may bring up opportunities for biopesticides. The cost to efficacy ratio may not be on par with synthetics, but if there are carbon offsets available + the ability to apply a higher rate only on a small portion of the field, then that fundamentally shifts the economics in a more favourable direction.

   I’m getting ahead of myself on those latter examples, but when you bring in these capabilities the door opens for unique approaches, especially when considering other trends at play.

3. Less herbicide stress on the crop - Herbicides are generally safe on the crop, no argument from me there. But they take energy and time to metabolize for a crop, most specifically for a crop that is under cold stress or drought stress for example. I associate it with humans and alcohol consumption: I can drink 5 shots of tequila and still function the next day, but I won’t be as productive as if I drank zero. That’s how I think about herbicides applied to crop. This has the potential to support better yields through less herbicide metabolism, and even quality in some instances for farmers.

3. Beyond Herbicides

*None of the below has been announced by John Deere, I am simply applying a “what next” logic to their capabilities.

Once you equip a sprayer with sensors, it simply comes down to what you train those sensors to “see” next. Weeds are a natural entry point because of their consistency of detriment to profitability. Most insects are likely too mobile for it to be of use. However, identifying stress, nutrient deficiency, disease sporulation or even soil nutrient levels (maybe carbon?!) is a possibility. This could move to a treatment perspective for deficiencies, and coincides with John Deere’s "treating the plant” vision. There is also value in creating maps of the former and layering that data into yield prediction or quality capabilities or tag teaming with a drone.

I think John Deere will focus on getting the herbicide side of things right first and foremost however, what they have done is created a “killer app” for their sprayers capable of delivering unique insights and enabling better outcomes for farmers.

What differentiates John Deere and Blue River?

I haven’t been able to confirm that what John Deere is doing is any better than any other companies do on the market with their “see and spray” technology. It appears WEED-IT can have the sprayer move faster when spraying and has higher resolution which is a differentiator for them.

One thing I do know is that distribution is king. These other companies have to gain distribution, whether through partnership with other major players or through their own channels. Deere has a distribution advantage from the get go, they just need their technology to perform. Through this they can more easily align incentives for their sales people in the dealerships. Third party B2B businesses like WEED-IT have to overcome more challenges around sales person psychology and incentives than John Deere will have to.

If you want to talk about data, the layers of data JD will have through this integration will set them far apart from many companies and make them extremely well informed with data that crop input companies would want.

Challenges

1. Have to manage farmer psychology - Change brings uncertainty and that uncertainty needs to be alleviated. Farmers today know where their sprayer is delivering pesticides - everywhere! With see and spray it will take some time to instill confidence since there is a intangible dynamic around the technology. Even once there is confidence: Will it work how I anticipate? What happens when there is a weed escape? Who’s fault is that? Operators? Chemistry company? John Deere? How will a farmer purchase their inputs? They know they have 300acres to spray, but how much spray is required (I think this is a business model evolution opportunity for retails and crop inputs manufacturers…)? What does the workflow look like? These are just the beginning.

2. Return - There is up front savings from a reduction of herbicides. The up front cost of this add-on to the sprayer could be significant though and initially, in the green on brown phase, is only so valuable to the majority of farmers. These pieces of equipment are one of the highest expenses on many farms and farmers are not scratching to spend more money on something unless they can see a meaningful savings, or benefit. I think this will come, but the initial launch of green on brown is only so valuable to the farmers, especially that aren’t on the larger side of things.

I do think the potential benefit to the farmer if this technology works as positioned, and evolves beyond green on brown, has the potential to bring as much value to farmers as auto steer, through management resistance as just one avenue. In western Canada alone, studies show resistance costs farmers $1.5Billion per year. Couple this with potential input savings and better output through enhanced management (plant level) and it checks a lot of boxes.

What does it mean for the traditional crop input channel?

Lets look at an example.

Between Canada and the USA I will assume in Canada the majority of acres get a pre-burn application, or around 65 million acres. In the USA I will assume that the soybean and corn acres all get a preburn application, so somewhere around 200 million acres. This equals 265 million acres (I am sure this is high, but for examples sake).

I will assume 360 grams/ac of glyphosate is the norm (0.66L/ac of a 540 formulation) which we will put at $4.00/ac in cost.

If we assume over the course of the next 3 years we see a 15% adoption rate (this is right around what’s considered the “tipping point” or crossing the chasm) of Blue River or similar technology and a 70% reduction in product use then:

265 million acres x 15% x $4.00/ac = $159,000,000 x 0.70 = $112,000,000 reduction of sales from glyphosate in North America.

If we assume 50% of those acres get a $5.00/ac tank mix product that isn’t a soil residual based herbicide then this equates to:

265million x 15% / 50% = 20 million acres x $5/ac = $100,000,000 x 0.70 = $70,000,000 forth reduction from tank mixed acres being broadly applied.

This in totality at 15% adoption of the technology and a 70% reduction in spray per acre means slightly less than $200,000,000 million in reduction of expenditure in North America.

This isn’t that significant on a North American scale, but at 30% adoption, that number is doubled. And this is just pre-burn applications. There is a post harvest logic that could be applied as well as the in-crop logic that can be applied as that comes to the market over the course of the next 2-3 years.

This begins to influence farmer and distribution programs down a different path, which are focused on growth at the retail level and matching full acres at the farmer level.

The crop input channel sells volume. This technology is a direct hit to volumes. There is opportunity to sell higher value tank mixes, but the also opportunity in new business models and future plant level management strategies. I would be surprised if we don’t see large retailers, specifically in the mid-west USA where custom spray fleets are common, look to shift their selling process with this sort of technology - not specific to John Deere, but see and spray overall. Instead of selling a farmer a jug + custom spray service, sell a weed free field outcome and/or an enhanced sustainability metric. For retailers and manufacturers there is an opportunity to understand this technology better than your competitors too and differentiate in the context of how products perform, what surfactants or adjuvants may work better, nozzles etc. and how you sell products, manage programs and communicate benefits of the products.

The opportunity in this for retail organizations specifically there is the chance to purchase smart spray technology and package that as a service offering within their current business.

If marketing/product managers and crop input leadership haven’t been considering the implications of this, it is prime time to start.

This launch has been around the corner for years, so it wasn’t a surprise and will surely continue to be a hot topic across the industry - for farmers, equipment manufacturers, crop input manufacturers and retailers.

Image from John Deere