Upstream Ag Insights - June 5th 2022
Essential news and analysis for agribusiness leaders
Welcome to the 120th Edition of Upstream Ag Insights!
Index for the week:
2022 Ag Media Survey
BASF Acquires Innovative Company Horta to Strengthen its Digital Farming Portfolio
Top of Mind Challenges for Ag Retail Leaders
How Ag Retail Will Be Judged By Farmers and Employees On Their Tech Use
How Co-ops Can Lead the Way for DIY On-Farm Broadband
FarmWise Raises $45M Series B To Expand AI-Powered Farm Equipment in U.S. Farms
TheoryMesh to Accelerate Burcon Nutrascience Research and Process Optimization with Microsoft Data and AI Platform
John Deere Leaps Unlocked Highlights and Analysis
The Addiction Economy and Gamification in Agriculture
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2022 Ag Media Survey Highlights and Commentary - Upstream Ag Insights
This is a presentation from a webinar put on by the Ag Media Council and survey data from Readex Research around the consumption of information by farmers.
What was notable to me was the stagnation from 2018 to today - consumption by medium DID NOT change much at all, and if anything the consumption of information on digitally enabled mediums, like e-newsletters and websites all declined and social media was essentially flat. The most notable dynamic surrounding this is that the survey actually was likely to have bias towards digital consumption as the survey was taken all online and participating groups were sent e-mail invitations initially. Podcasts and webinars did jump most consistently.
What was compelling, though not surprising, is that the larger your operation the more likely you are to consume information from various sources:
In 22 Mental Hacks for Agribusiness Leaders I talk a lot about always learning and “capturing new information”. It’s apparent that the more sizable operators are attempting to improve themselves across every area they have access too. There is always a correlation vs. causation dynamic in these sorts of survey’s, but I would suggest that having a bigger operation means you need to consume more information to stay on top and I would also suggest that because these individuals are continuously looking for information across numerous mediums enables them to derive better business outcomes, leading to larger revenues.
Overall, for anyone interested in marketing to farmers, reaching farmers or influencing farmers it’s worth checking out either the survey link itself or the Upstream Ag Insights highlights linked above.
BASF acquired Horta S.r.l., an Italian company specialized in digital farming solutions. Founded in 2008 as a spin-off of the Catholic University of the Sacred Heart, Horta is an established player for the development of highly innovative agronomic Decision Support Systems (DSS) for crops such as grapes, tomatoes, cereals and olives.
Horta is focused on decision support surrounding agronomic outcomes of the aforementioned crops.
The acquisition is augmentative to BASF’s xarvio portfolio. In December 2021 I highlighted BASF’s Agronomic Decision Engine which is a centre piece to their success in digital systems:
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.
The UX/UI of the digital solutions is an aspect I didn’t mention, but at least from a performance and customer acquisition perspective those two points are important. The acquisition gives BASF access to more customers and data to improve their distribution and the quality of decision BASF can support and enable.
Here is some of what goes into the xarvio agronomic decision engine today:
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. A small part of what this acquisition supports.
What is most interesting to me with xarvio is that xarvio’s ADE is theoretically portable and modular. It can plug into other platforms 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.
Last week I highlighted the John Deere Leaps Unlocked Event overviewing the opportunity for John Deere to collaborate further with agronomy competent companies, like BASF, and the Agronomic Decision Engine can help inform some of the future “decisions” the John Deere equipment will make, such as See and Spray fungicide. The benefit goes both ways because BASF also has the need to acquire more data, something physical assets like John Deere equipment can support and acts as access to customers. What gets interesting to me in the context of agriculture is the need for more open collaboration, especially among equipment companies like Deere and input manufacturers like BASF as well as how collaboration is managed among competitive organizations. For example BASF has a see and spray alliance with Bosch, AGCO and Raven, so does BASF only work with AGCO, or in a hypothetical relationship between Deere and xarvio (and xarvio leveraging the portability of their decision engine) fine if their partners who are supporting decisions through their equipment, are also augmenting competitors systems as well?
Top of Mind Challenges for Ag Retail Leaders - The Daily Scoop
Getting the leaders of some of the largest ag retailers in the USA together is bound to deliver some good information. At the 2022 Council of Producers and Distributors of Agrotechnology Adjuvant and Inerts Conference, four executives and influential leaders from the largest ag retailers shared their view of the top challenges (I like “imperatives” vs. challenges as Brett Bruggeman framed them), for the ag retail business in the next 10 years.
Each has their own view, but I attempted a brief summary from their comments into four areas that are controllable for retailers and act as a flywheel for their businesses:
Talent Attraction and Development
The entire industry needs to attract more talent, especially as it pertains to technology, and I think ag retail most specifically has struggled to attract talent. Ag retail in my opinion could use a re-brand, but culturally has struggled to enable that evolved rebranding into an exciting place to work vs. sleepy and old school. Without competent and capable individuals, it doesn’t matter how great your technology or what products you have in stock, the business will struggle so this was a great comment from the group.
Execution with Innovation and Technology
Creating and identifying innovative ideas is hard, but executing with them is even harder. The need to leverage new technology and be creative to deliver impact to your business and your customers is going to be one of the biggest differentiators in the ag retail world in the coming decade.
Next week I will have a write up on Innovation Theatre in Agriculture and the negative implications of it, which is why I wanted to emphasize the execution and implementation aspects.
There was of course mentions of supply chain management. I view supply chain management as at least one part the function of leveraging technology and talent to have a higher level of intimacy with the customer which leads to a deep understanding of product needs, timings and optimization for their business which ultimately leads to success of the retailer. Executing on those first two areas with strong processes and expectations in place lays the groundwork for customer intimacy.
Sustainability and Profitability
Sustainable practices, outcomes and profits can be delivered to farmers when you have great people, strategic services, products and technology and customer intimacy. With the increased microscope on environmental outcomes and the need for profitable outcomes, this area of agriculture whether talking Nutrien Use Efficiency, Water Management or Soil Health will all be important in the coming decade to have a point of view on as well as be able to enable for customers.
What didn’t get mentioned on the panel according to the summary article was management of supplier(s). There is still significant reliance on suppliers as a retailer, obviously. Executing on the above puts a retailer is a powerful position, but it still doesn’t entirely remove retailers from the grips of influence erosion and commoditization. In my mind, the really important aspect here is around the “innovation” aspect. This isn’t specific to digital, but innovation around service offerings, new go-to-market approaches and novel physical product offerings whether via backwards integration through acquisition like Nutrien or being strategic with current and potential suppliers and gaining access to specific unique product packaging eg: co-packaging of specialty products and herbicides.
The good news is that there is no shortage of opportunities for ag retailers to put their business in a position to thrive if they are willing to invest in the ways things are moving, not in the way things were.
Related: Supply: You’re a Hero If You Have It, A Zero When You Don’t - The Daily Scoop
How Ag Retail Will Be Judged By Farmers and Employees On Their Tech Use - The Daily Scoop
I don't know if it'll be 12 months, but I believe it's in 24 or 36 months, I'm going to call it judgment…I think our customers and our future employees are actually going to be judging us on our digital portfolio and our technology use to determine not if they want to come to work for us or if they want to do businesses with us.
This is a great comment from Drew Garretson of Ceres Solutions. I think he is 100% right and I think it is related to the above panel highlights.
In my experience we already see this play out with other types of products in ag retail. For example, the appetite for specialty nutrition or biological products at a corporate level has been variable in terms of what companies they work with and which products they are willing to bring in to sell customers. I always found the best sales, agronomy and marketing people want to be able to work with their customers with all different kinds of products, especially those that allow them to go deeper with their customer, such as into in depth fertility conversations.
The best staff were attracted to retails providing training and access to sell these products and the best farmers always want to interact with the best staff and products for their operations. This exact same impact, and probably on an even more pronounced level with digital tech, is likely to play out like Drew states.
I always enjoy listening to Drew’s perspective and encourage you to listen to this podcast.
Precision agriculture applications have the potential to deliver significant operational and financial benefits to cooperatives as well as their farmer member clients and owners. And now with a lower-cost broadband solution to address the persistent connectivity issues, this is the time for agriculture cooperatives to embrace these new technologies. The ability to build carrier-grade, customized private wireless networks at costs that were unthinkable a few years ago is a tremendous opportunity for the U.S. agriculture industry.
Considering the benefits that farmers can accrue from reducing input costs and improving operational efficiencies, deploying a private 5G network appears to be financially compelling. With an upfront cost of about $55,000 and a recurring annual cost of $6,000 (before grant funds, subsidies or tax benefits), co-op member farms may be able to recoup their investment within 2-3 years.
The finding of this report are interesting. Considering the incentives for any of the large carriers seem misaligned with remote investment in connectivity, the numbers actually show to be more palatable than I would have anticipated.
I have often considered an equipment dealership to be better positioned to execute on something like this as well because it directly benefits their core products (equipment) and leads to a natural monetization of services aligned with their products while Co-op’s and retails are, for the most part, still attempting to build out the services they could monetize, but that might be ill-informed.
The other angle that I am wondering about is this: After listening to John Deere state they are looking at RFP’s for satellite internet capable tractors last week, I wonder if this big up front investment is going to drive significant opportunity if connectivity via tractors and satellite internet deliver adequate speeds and latency numbers.
Farm automation startup FarmWise Labs, Inc. today announced that it has completed an oversubscribed $45m Series B funding round, led by leading AgTech venture firms Fall Line Capital and Middleland Capital, with participation from GV and Taylor Farms, a leading grower and processor of leafy greens and fresh vegetables. Existing investors Calibrate Ventures, Playground Global, SVG Ventures and the venture arm of Wilbur Ellis also participated in the round. To date, FarmWise has raised $65 million in equity. With this round, Clay Mitchell, co-founder and managing director of Fall Line Capital and a fifth-generation Iowa farmer joins the FarmWise board of directors.
TheoryMesh to Accelerate Burcon Nutrascience Research and Process Optimization with Microsoft Data and AI Platform - Business Wire
TheoryMesh Corp, an innovative software company delivering data driven solutions for food and agriculture supply chains, today announced the launch of a project with Burcon NutraScience Corporation, a global technology leader in the development of plant-based proteins for foods and beverages, to deploy the TheoryMesh platform to optimize plant protein research and scale up production. Burcon will leverage the TheoryMesh platform to digitize their industry leading plant protein research and processing, accelerating time to market for plant protein research and ensuring the highest food safety and functional qualities for protein products. Using the TheoryMesh platform will give Burcon complete traceability on their processing products from seed to retail package.
I received a ton of questions and feedback surrounding the John Deere Leaps Unlocked Event last week so I wanted to share this again for anyone that missed some of the significant announcements and ambitions laid out by John Deere. Their approach heavily influences all areas of agriculture so in my opinion it is in everyone’s best interest, whether a seed, digital, equipment, retailer, fertilizer, VC and everyone in between to be aware of what they are doing and where they are headed.
Non Ag Article
The Addiction Economy - Every
This article gets into the addicting nature of social media platforms primarily. It has a generally negative bent towards those, though I am going to take a slightly different angle here and apply the “addictive” nature to agriculture.
In agriculture we emphasize utility and value. Social media doesn’t deliver true utility as much as it does constant hits of dopamine. But do these things have to be mutually exclusive, specifically in agriculture? We have a lack of gamification in agriculture that could drive dopamine hits and a competitive urge to engage.
Last week in listening to the benchmarking of anonymized data aspirations of John Deere, the opportunity is to go beyond and really engage farmers or agronomists in real time and proactively.
I use my stationary Peloton bike every week. The Peloton is one of the best gamified systems I regularly use. I can compete with myself from last month, I can compete with my previous record output, I can compete with others from around the world, I can compete with friends, I can win awards and I feel a sense of dread when my consecutive day or week streak might come to an end, nudging me to get onto the Peloton on days I might not have otherwise. My Peloton subscription via well developed features, functionality and software has enabled me to be in better shape than I would without it. An effective was of delivering utility. This brings me to agtech.
We hear about making the AgTech tools apart of every day use. You don’t get there through adding utility above a certain point. You get there through gamification. We have few gamified products in agtech. Yet, I bet there could be gamification across many different areas.
Let’s just consider two basic examples:
Who’s spraying the most acres per hour in a 100 mile radius of my farm? 50 miles? Where do I rank? How can that awareness be built right into the workflow and screens in real time vs. after the fact where I need to go into a separate area on a desktop or laptop?
For retail driven agronomy software, who’s scouting the most fields per day? Per week? How can that be signalled during the normal use?
Why not nudge a farmer or agronomist to use systems more through delivering novel or unique insights into their business or process as they are using the digitized systems?
There is still a factor surrounding having the right incentives to get the behaviour you want. This includes managing for safety and best practices/outcomes along with UX, but that gamification directly leads the UX to delivering dopamine.
When I worked in sales my mantra was to be the best dopamine dealer. Meaning, deliver a novel insight or solution to the customers business every chance possible. Humans are driven by dopamine. Novelty directly activates the dopamine system, which is responsible for associative learning. On top, games make our dopamine levels spike because our brain releases it in response to the challenge of the game and the achievement of a goal. This is the reason why playing is so attractive, which helps increase usability and delivers better outcomes, such as more acres sprayed per hour. If we think about farmers, they are always comparing yields, pricing they got for their soybean or wheat and I bet if you gave them the platform, their acres sprayed per hour or managing their costs per acre.
This is all easier said than done, but I suspect this is exactly where John Deere is going and I think an opportunity for many companies to build out the incentives for dopamine hits within their products.
Other Interesting Ag Articles
Innovating AgTech - Sound Cloud (Podcast series)
Solinftec Expands New AgTech Robot in Canada - Solinftec
Make the Data Dominoes Fall In Your Favor - The Daily Scoop