Upstream Ag Insights - December 19th 2021

Essential news and analysis for agribusiness leaders

Dec 19, 2021

Welcome to the 98th edition of Upstream Ag Insights!

Thanks to every one for reading and supporting Upstream Ag Insights throughout 2021! This will be the final edition of Upstream for 2021.

The 1st edition of 2022 will be Sunday, January 9th.

I hope you all have a happy and safe Holiday Season!

Index for the week:

Upstream Ag Insights 2021 Review
BASF Digital Innovations for Sustainable Crop Production
Ag is Ready to be More Gender Inclusive
Blockchain in Agriculture: Changing Crop Protection Programming
Venture Investments: Ukko Agro, Agrofy & Greeneye Technology
John Deere Acquires Electric Battery Company
The Digital Crop - Ag Data
& more!

Thanks for reading and for sharing!

Upstream Ag Insights 2021 Review - Upstream Ag Insights

Last year I went much deeper highlighting key take aways from the 2020 year and digging more into background on the Upstream newsletter.

This year I have focused more on popular editions and stats. In the January 9th edition I will do more to look at the year of 2022.

BASF Digital Innovations for Sustainable Crop Production - BASF

I couldn’t directly link to the slide deck. This links to a Google Search where you can click on the 4th link appearing titled “Digital innovations for sustainable crop production - BASF” where you will get the slide deck highlighting new approaches for BASF.

The slide deck highlights their “Agronomic Decision Engine” as the foundation and centrepiece of the digital strategy. When I think about, at least in part, what is going to differentiate companies in the digital world there are two things that immediately come to mind:

increased quality of decision making they can support
distribution of their solution (access to customers)

xarvio from an agronomic competency perspective is well positioned to have built a high quality decision making tool, and given some of their announcements like xarvio CONNECT, will be in a better position moving forward to enhance this competency and understanding.

Here is some of what goes into their decision engine:

So they are working hard to differentiate with the first bullet on quality, the next step is being apart of a larger ecosystem and accessing a higher number of customers aka distribution. This week xarvio announced another step towards accessing more customers:

xarvio® Digital Farming Solutions and John Deere collaborate to help European farmers optimize crop production and reduce environmental impacts this season - xarvio

John Deere is the largest equipment company globally, and as my friend Matt Coutts says, is the “Apple of Agriculture”. A great relationship to augment distribution that comes along with other digital distribution mechanisms like Agrofy in LatAm as one example.

What is most interesting to me on top is that xarvio’s decision making tool is portable. It can plug into other ecosystems and become a broadly applied decision support tool. This is a software first mentality. If they do have superior decision making capabilities and business models surrounding those capabilities, that becomes compelling in terms of enabling the entirety of their business:

This directly shows a novel outcome (they call it solution) based business model where the purchase a farmer makes is for the implication or outcome (eg: no weeds) and the decision making engine determines the best products to consider, precision offering etc in conjunction with a contractor (I presume retailer, or agronomist). Then execution, which xarvio has been building out with smart spraying and zone spraying capabilities as two examples.

When I think about decision making capabilities in digital agriculture my mind inherently goes towards non-product selling companies and companies that are software and analytics first driven. I think of it like a decision operating system and with the right partnerships I would have guessed this is where organizations like Microsoft or Google would come into the fray to participate in the tech aspects of agriculture. Their core competency is data and software and their entire model is around empowering people and businesses, which could easily be farmers and agribusinesses.

I am excited to see how these launch endeavours play out in Europe and how BASF’s partnerships will grow more in the future.

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This week’s edition of Upstream Ag Insights is brought you by Inclusion by Libra

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Ag is Ready to be More Gender Inclusive - WS

When considering how your ad copy or content may be interpreted, consider the other words you’re using in conjunction with the term “farmer” (or “grower”, “producer”, or “rancher”). Husband or wife can be replaced with the word spouse or partner (the latter also makes no assumptions about legal marriage between two parties).

Blockchain for Agriculture - TheoryMesh

This is a good overview on blockchain in agriculture.

We have heard a ton of the emphasis on traceability, carbon, sustainability initiatives, data management and food safety. This probably all has potential, but there is an area I have been digging more into as of late to see if blockchain/smart contracts have a fit within an area that has a lot of complexity and time lags: crop input manufacturer programs.

Today, there is a lack of transparency, usually by design, but also significant time lags and complexity in terms of understanding payments and when those payments get delivered to the farmer or retailer.

There is also a lack of incentive and infrastructure to deliver transactional data in real time from retailers to the manufacturer. But what if smart contracts could change this?

There is the potential to leverage smart contracts via a blockchain like Ethereum, to deliver a few valuable aspects to agriculture:

Reducing costs
Although blockchain incurs upfront expenses a blockchain-based program should reduce system management costs with smart contracts that report secure, tracked, transparent transactions to legacy systems, reducing costs associated with errors, manual input (such as in excel spread sheets) or the use of 3rd party providers.
Making the process near real-time
Blockchain can enable a transaction to be recorded and accessed by multiple involved parties in near real time, increasing the chance of influencing the customer in a specific direction and allowing dollars to trade hands without the 6+month delay we see today. From a retailer perspective, this could mean incentive dollars earlier and same for a grower.
Creating unique business opportunities
Building a blockchain based program could allow for more targeted and specific grower offers and also allow for cross company collaboration much more easily. This could mean more specific programs created for customers in specific geographies as well as allow companies like FMC and UPL for example to collaborate together to make their offerings more competitive with the big four as one example.

Even though there is a benefit to manufacturers to having a float of capital for an extended period of time in the current form, I think there is bigger opportunity in this for them to be able to get more creative with their programming and better manage customer relationships in season. I am sure as digital decision support increases and we see other carbon based initiatives come together, programs will change - but I think there will be an incentive to have them for a while yet and there is amply opportunity to improve them.

As I dig into this it becomes apparent there may be ways to do this without blockchain, thinking along the lines of what Smartwyre is building today. It may simply require a re-thinking of the system itself.

I suspect even progressive ERP system companies are looking at capabilities like this, whether it is via blockchain or not, and organizations with portals can help centralize this together at the retail and grower level.

Related: Marketing Programs and Farmer Rebates: Good or Bad? - Upstream Ag Insights

Venture Investments

Decision *Ukko Agro Closes $5.1 Million Seed Round - BetaKit

Toronto-based software startup Ukko Agro has secured $5.1 million CAD in seed financing and the support of Canadian agriculture investors to fuel the growth of its AgTech platform.
The company’s all-equity seed round was led by Emmertech, and supported by Ag Capital Canada, Telus Ventures, Whitecap Venture Partners, and PIC Investment Group.
Through its plug-and-play, predictive analytics platform, Ukko aims to help farmers and other agriculture sector players determine when to apply water, nutrients, and pesticides to certain crops and geographies by leveraging IoT tech, machine learning, and data science.

Digital decision support capabilities are what drive a lot of my interest in the agtech space. Starting my career as an agronomist I know the amount of time spent driving around because of a lack of information to support efficiency of time and I recognize the amount of recommendations that get made based on gut feel without adequate information - because there hasn’t been better options.

The use of data and models can help not only farmers, but agronomists, retailers and input manufacturers to support their recommendations, the conversations and the value added to their farm customers.

Better information to inform decisions and conversations with customers is a true differentiator for agribusinesses and I look at companies like Ukko working to create analytics capabilities and dashboards being a unique opportunity for organization to differentiate.

Much like I talked about earlier with the xarvio decision engine, Ukko is building a system that can plug into other platforms and systems and be the decision operating system.

*Disclosure: I am an advisor to Ukko Agro

Agrofy Adds $30m in Yara-led Series C Round to Grow ‘Agfintech’ Services - AgFunder News

Argentine farmer marketplace Agrofy has raised $30 million in Series C funding. The deal takes its total funding to date to $66 million across four rounds.
Yara Growth Ventures, the VC arm of Norwegian agrochemicals giant Yara International, led the Series C financing. Several of Agrofy’s existing investors, as well as unnamed private backers, participated in the round.
Agrofy’s other shareholders include Bunge Ventures, Cresud, Syngenta Ventures, SP Ventures, Fall Line Capital, Acre Venture Partners, and Brasil Agro.

Yara International has made a couple investment announcements the last couple weeks (Tarfin earlier this month), both with an emphasis around fintech:

It will use the fresh funding to strengthen its three core business areas: its e-commerce platform which connects farmers with a variety agricultural products; its farmer fintech suite including the Agrofy Pay e-wallet and Agrofy Credits; and the expansion of its operations in Brazil, including the launch of Agrofy Pay in the country during H2 2022.

For more on Agrofy I talked about them earlier this year when they announced a partnership with xarvio.

Integrated digital platforms like Agrofy and Dehaat in India are getting a lot of attention in agricultural regions with less traditional infrastructure than the North American market.

Greeneye Technology by JVP raises $22 for AI Precision Spraying System - JPost

Greeneye Technology, the pioneer of AI-enabled precision spraying technology for agricultural applications, announced Thursday the completion of a $22 million (USD) funding round led by Jerusalem Venture Partners. The round also includes participation from Syngenta Group Ventures, the world’s largest manufacturer of crop protection chemicals, Hyperplane Venture Capital, and One Way Ventures. They are joined by leading agricultural machinery manufacturers, AGCO, and KDT.
The investment will be used to support Greeneye’s commercial launch in the U.S. in 2022 and its expansion across North America in 2023. It will also be used to advance the technology’s analytical capabilities and extend its usage to new inputs and crops, increasing the financial and environmental benefits of precision spraying to farmers beyond herbicides. Ahead of these milestones, Greeneye will double the size of its R&D team in Israel and its sales and operations team in the U.S.

I’ve commented on this numerous times and I won’t dive deeper at this time, but what I have been expecting and have not seen yet is a fertilizer, nutrition or plant health company looking to associate/partner directly with see and spray based companies (at least not publicly). Maybe they do not see a fit and that’s why - plant level precision for nutrition might be overkill. On top, the focus right now is weeds/herbicides, but looking at it from a macro perspective of what can be gained or understood leveraging on sprayer sensors and training algorithms surrounding plant health, deficiency symptoms or abiotic stress aspects at large seems directly beneficial to future progress for nutrition organizations.

For more on this subject, check out this article from earlier this year: See and Spray Technology Implications for Agribusiness.

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John Deere to Acquire Majority Ownership in Kreisel Electric - Newswire

Deere & Company has signed a definitive agreement to acquire majority ownership in Kreisel Electric, Inc., a battery technology provider based in Rainbach im Mühlkreis, Austria. Kreisel develops high-density, high-durability electric battery modules and packs. Additionally, Kreisel has developed a charging infrastructure platform that utilizes this patented battery technology.
Kreisel is a leading innovator focused on the development of immersion-cooled electric battery modules and packs for high-performance and off-highway applications. The company has a differentiated battery technology and battery-buffered charging infrastructure offering and currently serves a global customer base across multiple end markets, including commercial vehicles, off-highway vehicles, marine, e-motorsports, and other high-performance applications.

This is a compelling acquisition by John Deere, showing they are getting more serious about electric tractors.

I wrote about electric tractors in ag a bit deeper in the December 5th edition of Upstream where I highlighted my view of how Wright’s Law could impact the electric tractor market.

The Digital Crop - Ag Data - Niall Haughey Agri-fintech

Niall always brings a great perspective to the fintech aspect of agriculture and his most recent write-up didn’t disappoint:

Data is ubiquitous in Agriculture. But data as an asset with some economic profile attached to it? That is not so common.
I like to think of data akin to any other agricultural commodity and love using Corn as an example. Can you imagine, growing just 50kg of corn (equivalent to about 2 bushels in the US) and then taking this to market? The value will be quite low.
That is the same with a small volume of data. But aggregate, grade and clean it and it starts to add more value the more processing and aggregation that occurs.

I have historically taken a different view of data, focusing on leveraging data to make better decisions via models or add value to a commodity if being associated with it (eg: a tonne of grain or carbon). I talked about this at length about a year ago. But as more technology like blockchain for NFT’s becomes viable, I could be proven wrong on this where there may be a specific market for the data itself.

I still think there is a lot of misunderstandings surrounding data in agriculture today - for one data ownership is important, but the question always goes directly to “who owns the data”. The answer is inevitably the farmer in most instances, but in my opinion the question needs to be reframed as “What are you going to be doing with my data and how will I be able to become more profitable through that?”. There is not enough emphasis on the usage and implications surrounding its use. Owning and asset is not the same as putting that asset to work and getting a return on it.

Trends Boosting AgTech and 2022 Predictions (VC Roundtable) - Future of Agriculture

For this Future of Agriculture episode, Tim Hammerich brought together opinions, thoughts and conversation from some of the sharpest minds in the agtech arena including my friends Sarah Nolet of Tenacious Ventures, Janette Barnard of Merck Animal Ventures (and her newsletter Prime Future) and Mark Kahn of Omnivore Ventures.

If you are interested in hearing what leading venture professionals are thinking about in agtech, then this is a great listen!

The CropLife 100 Report: Lots of Winners in the 2021 Race for Ag Retail Profits - Crop Life

Irrigation Technology Report - Meister Media

There is a lot of useful information in this irrigation technology report so it’s well worth checking out.

Earlier this year, I collaborated with my friends at the Agthentic Group to write The agtech adoption dilemma: irrigation where we talked about aspects of irrigation technology adoption that aren’t often discussed: the psychology behind adoption and how it has hindered adoption in irrigation technology.

Tomorrow.io to Grow Weather Constellation through SPAC Deal - Pine Technology

Tomorrow.io said Dec. 7 it stands to raise up to $420 million for its planned network of weather satellites by merging with Pine Technology Acquisition Corp., the latest special purpose acquisition company (SPAC) to invest in the space industry.
The meteorological intelligence startup will become a public company listed on the Nasdaq by mid-2022 if the merger goes ahead.

Having better weather intelligence is a big thing for agribusinesses. Our weather forecasts are not optimized to help people or businesses make operational decisions. Tomorrow.io strives to change this with it’s intelligence software, “helping teams prepare for the business impact of weather by automating decision-making and enabling climate adaptation at scale”.

While there is applicability for retailers looking to manage their equipment fleet more effectively in season for example, there is also a huge applicability in the insurance space as we see more parametric insurance options come about.

Overall, Tomorrow.ai looks like a really interesting company for the agriculture space.

In the July 26th edition of Upstream I highlighted and talked about Climate ai and the potential use cases for better weather and climate insights for agribusinesses across short, medium and long term time horizons, a company doing similar thing to Tomorrow.io.

Prediction: Agriculture Tech is Going to be Big in China - Chinese Characteristics

A peculiar phenomenon swept through Chinese tech in 2021; founders stepped away from their hard-won tech empires to emerge as agricultural converts. Colin Huang is going deep into food science after leaving the role of Pinduoduo Chairman in March 2021. After a year of laying low, Jack Ma resurfaced, decked out in a white lab coat, the founder of Alibaba looked cheery as he traversed across Europe's greenhouses.

(Note: There is a pay wall, but the writer allows a relatively large chunk of the article to appear for free where you can still derive a lot of information.)

This is an article from a Chinese analyst who looks at what is going on in China from a technology, financial political etc perspective. This post isn’t written through the lens of someone who works in agriculture, but she does a good job encapsulating what is happening in agtech in China.

The reason I wanted to highlight this article is Syngenta. The author focuses in on tech companies (at least in what I can read), but what is notable to me is the Chinese government purchase of Syngenta and the hyperbolic growth trajectory they have been on in China since, particularly focusing in on technology and services:

Syngenta Group China delivered strong growth across all segments. MAP sales tripled to $1.5 billion in the first nine months by helping farmers improve soil health, reduce greenhouse gas emissions and improve the quality and value of their crops. The MAP beSide™ program is a consumer product brand that connects farmers with consumers and stands for high quality, sustainably-grown and nutritious food. As of the end of the third quarter, there are now 51 food products on store shelves with the MAP beSide™ logo and QR code, with 33 of those products introduced this year. The number of MAP centers has increased to 438, supported by over 200 strategic partners.

They are growing at almost double the next closest Syngenta business unit in 2021, at about a rate of 50%!

Just like I suspect we will continue to hear more from the large North American tech companies in the agriculture in 2022 and beyond, it seems likely to see the same in China with the likes of Alibaba, Pinduoduo and Tencent.

Non Ag Article

The Revised Psychology of Human Misjudgment, by Charlie Munger - Farnam Street

Charlie Munger gave a famous speech called the Psychology of Human Misjudgement at Harvard in 1995 that has become a must listen.

This is a long article that is a re-written version of his speech, but in my opinion is foundational to grasping a better understanding of why we operate the way we do and the litany of misjudgements we make. He speaks about the framework for decision making and the factors contributing to misjudgements.

Upstream Ag Insights