Upstream Ag Insights - April 17th 2022

Essential news and analysis for agribusiness leaders

Shane Thomas

Apr 17

Welcome to the 113th Edition of Upstream Ag Insights!

Index for the week:

Nutrien 2021 Annual Report Highlights and Analysis
Ag Retails Biggest Mistake Today
SVG Ventures|THRIVE & Koch Agronomic Services join Forces to Identify Open Innovation Opportunities
Planet Launches Planetary Variables
Tokenisation of Agriculture
John Kempf’s innovation-forward regenerative agriculture business Advancing Eco Agriculture raises $4.7m
Titan Machinery Inc. Announces Partnership With Augmenta AgTech
Agricultural Variable Rate Technology Market to Grow to $13.7 billion by 2027 at a CAGR of 13.2%
The Boneyard Principle: Why the Next Big Thing will Emerge from a Failed Idea

Thanks for reading and Happy Easter to all of those celebrating this weekend!

Nutrien 2021 Annual Report Highlights and Analysis - Upstream Ag Insights

Nutrien is one of the companies I watch most closely across the agriculture landscape.

I find them and John Deere to be extremely interesting in terms of how they integrate their business and work to innovate (or strategically acquire). Coupled with their size and the fact they are publicly traded makes them extremely compelling and organizations that are wonderful to learn from.

In this annual report breakdown I dive into Nutrien’s proprietary products and segment breakdowns plus their digital initiatives in their ag retail division and then their carbon programs and soil sampling effectiveness along with others areas of their business.

Ag Retail’s Biggest Mistake Today - The Scoop

In ag retail we need to get comfortable with the fact that digital tools and infrastructure are not only here to stay, but an essential differentiator for your business. In order to tackle this endeavour it is going to take identifying someone (a team) with a digital first mindset plus the interest, skill set and autonomy to think beyond agronomic and precision technologies and into how every cross functional department can become more effective, how customer experience can be amplified and how new revenue opportunities can be identified.
Digital capabilities are the foundation that underpin every business segment. Get used to it.

The above article is one that I wrote as part of a series at Farm Journal.

The series has three other great articles from industry experts surrounding the future of technology in agriculture:

The Next Era of Ag Gains - The Scoop

The Power Of Technology To Bring Positive Change - The Scoop

Ag Data’s Achilles Heel - The Scoop

SVG Ventures|THRIVE & Koch Agronomic Services join Forces to Identify Open Innovation Opportunities - THRIVE

SVG Ventures|THRIVE, is delighted to announce Koch Agronomic Services (KAS) as the latest company to join its Venture & Innovation Platform to focus on identifying and engaging with scalable solutions across the rapidly transforming crop nutrition ecosystem.
KAS will leverage THRIVE’s expanded corporate innovation platform capabilities to apply industry-focused, venture capital deal flow, processes, and analysis to navigate the flood of novel crop nutrition solutions emerging globally. By utilizing THRIVE’s horizontal visibility across global innovation ecosystems, KAS will be positioned to apply its scale and plant nutrition strategies to strengthen its industry-leading product portfolio more effectively.

Koch is the latest major agriculture company to leverage THRIVE as a component of their innovation strategy. BASF most recently announced their partnership with THRIVE and the AgroStart program.

The relationship with Koch seems equally, if not more, beneficial for THRIVE. Through these relationships with incumbents, THRIVE gleans a better understanding of what large agriculture companies are looking for and missing which helps THRIVE better identify companies to invest in via their SVG Venture’s funds or what companies have a better fit within their accelerators, all while getting paid for it. Smart model by them.

I had a conversation this week around the validity of this approach to innovation for large ag companies. On one hand, I think it’s extremely smart to connect into 3rd parties who focus on looking at the technology landscape. On the other hand, if an organization has no internal group focusing on innovation and the technology landscape with a strategy and set of priorities, then this endeavour is akin to outsourcing a significant portion of a companies innovation strategy, something that would make me bearish of any company solely approaching innovation that way. I do not know how Koch handles things, but I suspect they do have other internal innovation initiatives.

Planet Launches Planetary Variables - Payload

This week Planet announced Planetary Variables, the first combined initiative of Planet with VanderSat since the acquisition, a new analytics product that spans three preprocessed data feeds including:

Soil Water Content - daily observations of the amount of water in soil at 5cm depth at 100m resolution
Land surface Temperature - “Accurate, continuous insight” into surface temps at 100m resolution
Vegetation Biomass Proxy - Daily crop biomass data at 10m resolution

Last year I talked about the opportunity for Planet to productize more in agriculture. I took it a layer too specific, getting into ML based imagery offerings, where as Planet has focused on productizing more macro based offerings that can be used by the likes of grain merchandisers or even logistics professionals (eg: rail or trucking prioritizing their needs). In my mind it’s not a super exciting offering. It has some small use cases, but it won’t move the needle for farmers in my opinion like their website suggests. How they use it as a stepping stone to continue to build verticalized agriculture offers off of will be worth watching.

Tokenisation of Agriculture - Medium

This article is a great write-up on some of the potential use cases of tokens (blockchain technology) in agriculture, getting into “semi fungible tokens”.

There are challenges within the complex agriculture value chain to be sure, but the examples used surrounding semi fungible tokens illustrates a potential to actually move traceability forward.

What’s even more interesting is the applicability into green lending and potentially even speed of contract settling at the grain elevator, to make it relevant for the large scale North American farming too.

I have often thought of small holder farms and less economically stable countries (eg: Argentina) as natural fits for blockchain technology. However, the reality is there are opportunities for this technology anywhere there is slow, manual processes surrounding financial needs in North American agriculture as well.

Related: Blockchain-Powered Agritech Startup TraceX Raises $1M in Funding - Precision Ag

John Kempf’s innovation-forward regenerative agriculture business Advancing Eco Agriculture raises $4.7m -AgFunder News

Advancing Eco Agriculture (AEA) has announced the close of $4.7 million of financing to accelerate growth and propel regenerative agriculture across North America and beyond. This is the first outside investment for AEA, which has been a leader in regenerative agriculture since its inception in 2006.
Financing was led by seasoned ag investor Tree Trunk Light, with other non-equity financing.

John Kempf has been a staple of vision and wisdom surrounding soil health, crop nutrition and regenerative agriculture for as long as I have been in the industry.

When I was starting out as an agronomist, John was one of the first individuals to get me interested in in-depth, balanced fertility, something he actively focuses on.

He has a business called Advancing Eco Agriculture which really has focused on three areas:

consulting
analytical services
biostimulants, microbials and nutrition products

These three areas go together nicely. The consulting engages the farmers on production, the analytics (plant sap testing, soil microbiome testing) helps inform the consultants and the nutrition products help work towards the outcomes the consultants identify. Because AEA tends to be on the forefront of plant health and nutrition, it can be difficult to find products that fit the needs of their customers.

On the sap analysis side, this is an area I have been interested in for a while. Tissue testing is a common practice to identify nutritional make up within the plant, however, nutrients have different plant characteristics such as their mobility, or lack thereof, making it difficult to always identify levels of nutrients within the entirety of the plants system. With sap analysis there is an ability to get a more immediate understanding of what nutrients are available, or over powering, within a plant helping inform in season fertility decisions or even crop protection decisions since nutrition is actually the first line of defense against disease.

The investment is targeted at the following:

Growing AEA’s first-in-class agronomy team, pursuing R&D trials in new and innovative areas of regenerative agriculture, and building AI and tech platforms that will bring regenerative agriculture decision making and best practices directly to farmers.

If interested in a fascinating video, check out this AEA presentation on plant health:

6 Steps to Plan for Successful Digital Adoption - AgVend

This week AgVend shared 6 steps for successful digital adoption on their Linkedin, which had me go back and read the article that highlights these 6 steps:

Adoption is the hardest part of implementing a new digital strategy.
Here are six initial steps we have found most impactful:
1. Create the vision
2. Align your leadership team and share the vision
3. Make it a conversation
4. Create a coalition
5. Communicate regularly and set goals
6. Celebrate small wins

This week I also was going through the Nutrien annual report and noted that they didn’t have a strong of adoption as I was anticipating. I do not know why, but I highly suspect it is driving buy-in and change directly at the location level. I speculate the sluggish adoption stems from not tightly aligning incentives.

In point two AgVend highlights the need for alignment and point five mentions goals. I firmly believe that aligning expectations, key performance indicators (goals) and incentives is key to moving the needle in the right direction surrounding digital adoption.

*Disclosure: I am an advisor to AgVend

Buy Smarter Online - Agriculture.com

I do not think the majority of farmers will buy the majority of their products online, however, there will be a percentage of farmers that do want to purchase some of their inputs online. This article has a couple interesting quotes I found noteworthy:

Larger farms and more educated farmers tend to buy more online. In fact, 24% of survey respondents who hold graduate degrees say they regularly buy input products online.

I do not know if it’s a typo or not, but this quote explicitly calls out “graduate degrees” which in my mind is a masters degree. I do not know many farmers that hold masters degrees (~6 years of post secondary education) so the relevance may be limited, however, if the same truth holds out for undergraduate degrees (aka four-year bachelor degree) and education indicates a higher propensity to purchase inputs online, then it’s an interesting stat.

When farmers were asked if they have the option to purchase farm products online, 50% said they don’t have the option, 21% said they don’t know, and 29% said they can.

Related - Influence Erosion in Ag Retail - Upstream Ag Insights

Titan Machinery Inc. Announces Partnership With Augmenta AgTech - Globe Newswire

The alliance will offer U.S. farmers, particularly in the Midwest access to the Augmenta System, a revolutionary VRA control device that fully automates a range of in-season inputs such as nitrogen, fungicides, plant growth regulators and desiccants. It analyses, learns and applies in-field and in real-time to optimize inputs according to actual need. This reduces waste, soil chemical loads and input costs while maximizing yield potential. As a result, sustainability opportunities are created and profitability improved.

This is notable because this gets a massive dealership involved with a company (Augmenta) that directly influences crop input utilization. At a high level this is a smart move by Titan.

It’s also smart for Augmenta.

Augmenta plugging directly into the dealership is great from a distribution perspective for them as well. Augmenta currently has a relationship with CNHI via investment (which is the primary company that Titan dealerships sell).

Agricultural Variable Rate Technology Market to Grow - Markets and Markets

The global agriculture VRT market is estimated to be valued at USD 7.4 billion in 2022. It is projected to reach USD 13.7 billion by 2027, recording a CAGR of 13.2% during the forecast period.

Non Ag Article

The Boneyard Principle: Why the Next Big Thing will Emerge from a Failed Idea - Every

Most successful products walk through a boneyard of failures before achieving victory. Before TikTok came Vine, before Tinder came Match.com, and before Instagram and Snap came Flickr. Each of these groups shared the similar high-level ideas of social video, dating, or social photos. But the boneyard often hid big ideas in plain sight. "There are very few genuinely new ideas," as Marc Andreessen observes. "Invention happens over long periods of time, by lots of very smart people playing each others’ ideas against each other."

This is highly relevant to agriculture in my mind and plays off the fact that timing is important + understanding the subtle nuance of why a product or service failed and then adjusting that accordingly in conjunction with some good UX/UI insights.

Upstream Ag Insights