Upstream Ag Insights - March 21st 2021

Essential news and analysis for agribusiness leaders

Welcome back to Upstream Ag Insights!

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Index for the week:

  • Nutrien 2020 Annual Report Analysis (most in-depth)

  • Developing Competitive Differentiation

  • Direct to Farmer News and Biological Emphasis

  • Tenacious Ventures RapidAIM Investment Notes

  • Climate Smart Agriculture Report

  • Pixxel Hyperspectral Imagery Investment

Nutrien 2020 Annual Report Analysis - Upstream Ag Insights

Nutrien is one of the companies I watch most closely in the agriculture landscape. I find them to be extremely interesting in terms of how they integrate their business and work to innovate (or strategically acquire) even given their massive size and the fact they are publicly traded.

I have covered Nutrien a lot over the last year, but there were some new insights delivered through their Annual Report, Management Discussion and Earnings calls. I’ll cover some of the main highlights and provide some context where appropriate.

I cover their digital strategy and carbon initiatives more in-depth in this analysis.

Developing Competitive Differentiation in Agribusiness - Upstream Ag Insights

Competitive differentiation is how a company’s product or service is distinct from what its competitors offer. It is based on what customers value, such as functionality, brand, pricing, or customer service. Digital systems can be one aspect of this differentiation, and better yet, human capital aligned with digital systems can further reinforce the level of differentiation.

In this evergreen write up I talk about the way digital systems and a tech stack can be beneficial to differentiating in agribusiness.

This week’s edition of Upstream Ag Insights is brought to you in partnership with Agragene!

Agragene is focused on managing invasive crop pests using biological insect control technology. We are working with growers to establish new, more effective integrated pest management (IPM) solutions. Agragene is commercializing sustainable Biocontrol-as-a-Service. Agragene will utilize Precision-Guided Sterile Insect Technology™ worldwide on target crops affected by key insect species. Agragene’s initial IPM system for biocontrol of spotted wing drosophila (SWD) has begun field trials in Oregon.

Agragene will initially commercialize Border Patrol™, an attract-and-kill lure, that will also be used as part of the SWD IPM.

To learn more, check out the Agragene website!

Sprouting Reads #4: Zack Fuss on Breaking Down the Food Ecosystem - Agribusiness Matter

Agribusiness Matters is a regular read for me from Venky Ramachandran. He tells great stories while conveying a deep understanding + insights of the ag space. In this recent write up he talks about the Law of Conservation of Attractive Profits from Clay Christensen and does a wonderful job of showing how this theory plays out in numerous industries, including crop inputs:

Broadly speaking, every industry value chain has two types of value chain lego blocks: Integrated blocks and Modular blocks. Integrated blocks operate in a tight interdependent fashion and every nut and bolt of it - from design to manufacturing to distribution - is fully owned inside.

In the crop input space he views it like this:

This is important to consider in terms of how companies like FBN for example approach the market.

Law of Conservation of Attractive Profits predicts that incumbents who once integrated backward, competing through exclusive supplier relationships, will now be taken over by aggregators who aggregate modularized suppliers to integrate forward with customers at scale.

I will cover more of this in the next few weeks in touching on the ag retail bundle.

Direct to Farmer News and Biostimulant Emphasis

FBN Direct Launches Biological Products - FBN

Last fall FBN announced they were going to create a trial based initiative around biologicals to better support farmers in which bio based products they used. They have also launched Gradable in that time.

The number of disparate biological based products out there is vast. FBN has essentially hand selected the ones they want to offer to their customers based on these categories:

  • soil prebiotics

  • soil probiotics

  • photosynthetic enhancers

  • carbon sources

  • advanced micronutrients

Essentially, they’ve picked products that target different areas of soil biological or plant physiology, but they are ultimately all biostimulants.

This announcement is what you’d expect FBN to do:

Obtain access to biological based products, integrate them into their portfolio and integrate these into an all encompassing sustainability based initiative for their Gradable customers all while working to collect data to better understand where each of them work (or don’t work) and work to build their own proprietary products

We seen earlier this year Paine and Schwartz exit their Verdesian PE roll-up. There is a lot of technology out there and in this space the emphasis should be around portfolio building. That’s what FBN has done here, built out a portfolio approach.

Meristem and Planet Earth Agronomy Team Up to Develop Innovative Biologicals - Meristem

Meristem Crop Performance Group, LLC ( and Planet Earth Agronomy, LLC, today announced a new strategic product development alliance designed to bring innovative biological products to American farmers. Under the relationship, Meristem and Planet Earth will work closely to develop and market yield-enhancing technology.

Meristem, a direct to farmer play as well, launched their own biological focus this week as well. This was done in conjunction with a group focused on understanding exactly what products/organisms to bring to market.

Biostimulants are a passion of mine so I have always had a soft spot for them. They still have hurdles to overcome though.

Here is a reference from Crop Life’s Biological survey of retailers:

This is specific to a retailer - you can bet a farmer has even less trust in performance on average.

This is where the opportunity for FBN and Meristem is:

Focus on understanding the products better than competitors and work to create the right products and position them effectively.

This goes further, where for FBN they can actually work to adjust the incentives around them too with Gradable eg: If I am a farmer I have little incentive to change from a synthetic product to a biostimulant based product. If there are carbon based incentives, or unique business models associated with the use of biologicals that reduces apprehension from the farmer by transferring risk of ineffectiveness to the selling company, that can begin to change the conversation (Note: they haven’t actively done that example yet).

To me, the biggest challenge to adoption is confidence in the products and misaligned incentives.

There are of course still unknowns that I’ve talked about before in biologicals, from shelf life and transport challenges to consistently of effectiveness in the field.

On the confidence front, I found this part of the survey on education discouraging:

As to how biological products could enjoy better industry adoption percentages, 2021 Biological Survey respondents were almost universal in their view: More training is needed, mentioned by 76% of participants. However, what forms this training takes ranged across the board. A slight majority, 20%, favored webinars detailing the benefits of biologicals. Eighteen percent thought off-site workshops looking at the category would be helpful, with another 17% looking for in-house training courses. Twelve percent believed online training courses would be the most useful, with another 9% favoring video tutorials. The remaining 24% wanted other forms of information on the benefits of biologicals, including 17% that thought case studies/testimonials in print would be beneficial.

Just 17% cited in-house training as an opportunity. With survey’s, the question and answer options can always sway feedback so it is always tricky to decipher 100%, but it’s interesting to me that there wasn’t an emphasis else where from the groups taking the survey, such as:

  1. A focus on one specific area of biostimulants to become the leader in that space in your companies foot print.

  2. Seek out biological companies (or ONE company) to partner with and align yourself with to rely on for the training. Work to understand the specific challenges of staff and customers in your specific geography and build training initiatives from there.

  3. Designate a biological champion within the organization to become the go-to expert.

  4. Focus trialling initiatives on biologicals - designate a specific number with specific observational expectations.

  5. Align incentives to the staff in becoming competent and/or working to educate their customers on the space.

One opportunity that may be out there to get buy in is this:

Look at buildings assets to manufacturer their own biostimulant based products.

It’s apparent organizations see opportunity, but there is a need to align actions to take advantage of that opportunity. After all, 79% said they are increasing their biological offerings in the future! Yet, very few appear to be focusing on controlling their own biggest opportunity: education and confidence.

Worth noting is that FBN and Winfield have done at least two of the above examples - trialling focus and identifying specific products to bring in and offer their customers.

If someone is looking for a beneficial online course on biostimulants, I actually took this one from ATP Nutrition last week and thought it was well done.

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New Input Supplier Goes Direct From Formulators And Some Retailers To Farmers - The Daily Scoop

A company similar to Meristem is New Dawn, who even focuses on a similar product segment of surfactants and drift controls as Meristem started out with. The number of direct to farmer input companies has grown in the USA, and even in Canada. The interesting part is they don’t need to make a big splash and capture large market share because they have significantly reduced their overhead and costs through a unique business model of holding less inventory, having less staff and less assets - whether stationary or rolling stock. They can be profitable selling a lot less.

They have focused on the customer that has their own assets (sprayers, shed space etc) that can take advantage of the decreased price.

This is where true disruption occurs in the Christensen sense: targeting the over serviced customer!

If the farmer has the assets to apply their own products, has the storage assets on farm for crop input products, plans their inputs accordingly and maybe even uses their own consultant, they may have less requirement of those services from a retail. And margin, at least in part, tends to accrue to the the value added infrastructure in the supply chain and to the integrated blocks (referencing Venky’s article from earlier).

As farms get larger and the bundle changes for retails, these business models get more viable.

I’ll touch on this in the next couple weeks with my write up on the Ag Retail Bundle.

I talked about this more in this October 4th Edition of UAI.

Corteva Enters Agreement with Starboard Value - PR Newswire

Corteva, Inc. today announced an agreement with Starboard Value LP and its affiliates pursuant to which three new independent directors proposed by Starboard—David C. Everitt, Janet P. Giesselman, and Kerry J. Preete—will join Corteva's Board of Directors effective immediately, each with terms expiring at the company's upcoming 2021 Annual Meeting of Stockholders ("2021 Annual Meeting"), currently scheduled to be held on May 7, 2021. The company has also agreed to nominate the three new independent directors for election as directors at the 2021 Annual Meeting.

Starboard has been looking to make a change at the CEO position of Corteva. There were changes made to the board of directors this week.

Google Rankings: Using Customer Questions to Get To Page One - WS

One of the most common challenges I hear from start-ups is around marketing and accessing the customer. The channels to do so are often expensive, or impenetrable. This article resonated for two reasons:

  1. It covers the need for a content strategy (I get questions on content strategies often).

  2. It emphasizes how to layer in customer persona’s, which have psychographics as a component of them. This topic was the most popular article from UAI last week.

I think there is something worth diving into for large and small agribusinesses within this article.

Investment Notes: RapidAIM - Tenacious Ventures

One of my favourite things to read is investment logic from venture capital groups. Their thinking tends to be 10+ years out and involves deep due diligence, and while it could be incorrect, they can deliver unique directionally accurate insights.

I covered this investment last week at a high level and didn’t dive into the specifics of the companies tech or business model, but luckily Tenacious covers some of that in this piece.

What is RapidAIM?

RapidAIM, a CSIRO spin-out, is a Brisbane-based digital pest analytics and management company with strong scientific underpinnings. The RapidAIM platform consists of two components: (1) a patented, novel, low-power sensor that enables real-time pest detection and monitoring; and (2) a suite of analytics services that provide data flows and actionable insights related to pest pressure and management actions. 

What’s their business model?

RapidAIM currently provides a subscription service for two main use cases: regional pest surveillance, and on-farm border security. The regional pest surveillance service enables customers to get regular updates about when and where pests have been detected in their local areas. This enables growers, advisors, and biosecurity agencies to monitor pest pressures in their regions in real-time to assess emerging risks and mobilize rapid responses to outbreaks. The border security service allows users, namely farmers, to detect pests in their fields in real-time, empowering them to make informed and timely pest management decisions (i.e., where and when to act) and monitor the impacts of management decisions (i.e., whether control is working). 

Why did they invest?

Current pest control practices largely rely on the use of chemical insecticides as a blunt instrument: wide-scale spraying conducted ‘just in case’, as an insurance mechanism giving growers peace of mind that they are protected. These practices are rational and understandable given that pests are difficult to detect, highly mobile, and can cause severe damage before they are even noticed. Chemical spraying gives growers control and peace of mind in managing pest-related risks on their farms--regardless of what is going on around them, they can confidently protect their crops. The end result, however, is that chemical insecticides are overused, resulting in otherwise avoidable costs for growers and significant ecological impacts. 

One of my favourite comments was this one:

RapidAIM also addresses the coordination and trust challenges that accompany biological pesticides, which can require very different application methods and the implementation of regional control strategies. For example, technologies such as mating disruption cannot be successfully implemented by any one grower. The pest risk that any individual grower faces would also depend on the control strategies employed by their neighbors--as pests are not limited by farm boundaries. By providing information about pest pressures at scale, RapidAIM can help build confidence in regional management approaches by giving growers real-time information on pest activity beyond their individual properties. 

The scale part is so important and one that I wish I would have touched on deeper last week.

While RapidAIM’s solution has initially been targeted to growers, crop advisors, and biosecurity agencies, the future ambition is to also serve corporate crop protection providers who will need to build confidence in their new, biological product lines. 

Two major challenges for biological based pesticide products is incentives to change and confidence in that change for farmers, as mentioned earlier. In order to deliver that confidence, there is going to be a place for this type of technology.

How Spot Spraying will Affect Sprayer Design - Sprayers 101

This topic has shown up in Upstream 3 straight weeks starting first with my thoughts on implications for agribusiness and then a follow up with some thoughts from one of the experts at Sprayers 101, Tom Wolf. This week Tom wrote a good piece on what it means for design of sprayers, which could have further implications for what is possible for crop input products.

This technology will have significant impact on sprayer design philosophy. At present, productivity is synonymous with capacity, and large tanks with commensurate heavy and powerful tractor units dominate. Spot spraying savings will depend on weed density and hardware resolution, but 50 per cent to 90 per cent reductions in spray volume can be expected. A 1,600-gallon tank would no longer be necessary. The savings in frame weight and horsepower would be significant, as would the time savings from less intense tendering demands. These savings would offset the lower driving speeds that accompany sensing technologies, and, overall, provide a lower bar for autonomous operation. We may see lighter specialty spot sprayers.

For more on this see the implications for agribusiness write up from UAI here and the Sprayers 101 write up here.

Transformative Investment in Climate-Smart Agriculture: Unlocking the potential of our soils to help the U.S. achieve a net-zero economy - US Farmers and Ranchers

This is a really well done report. I haven’t read it in it’s entirety yet, but I have found some great take aways in it. It is worth doing a deeper dive in the future on this I think, but here are a couple images I found interesting:

Here is a layout of companies supporting the carbon space by category from the report:

AgriFoodTech Alchemy Issue 12: A Framework for AgTech Startups to work with farmers better - AgriFoodTech Alchemy

Walt Duflock is one of my favourite AgTech writers, but he isn’t just a writer - he’s worked in tech start-ups, is a farmer, a lawyer, and executive in the agtech space so he brings a wealth of experience with numerous hats. That’s what makes his perspective so on point.

Why are farmers so resistant to new AgTech? There are 3 big reasons for this resistance. First, innovation is not a “must have” until it ties to problems around labor, food safety, and water. Second, there are too many AgTech startups reaching out to farmers. Third, many startups are not prepared to engage with farmers. 

I love his point about too many.

Many startup pitches I watch begin with buzzword-compliant alleged value propositions for “soil analytics”, “improved yield”, and “improved economics.” A request to all AgTech startup sales and marketing executives — banning those phrases from your website, literature, and sales team training and replacing them with phrases around pain caused by labor, food safety, and water problems where they fit will improve your chances of getting an initial meeting or Zoom call. As my Western Growers colleague Dennis Donohue says often, no farmer wakes up in the morning thinking “geez, I really need some soil analytics” today.

I do think on this there are some opportunities in other areas outside of high value crops to better manage inputs, yield and quality. Walt’s colleague is right though - no one wakes up needing soil analytics. This to me gets a bigger point of the basics of “features” or “benefits”, but also implications. What are the implications of utilizing a specific product or service for a farmer? And how does that tie back to something that resonates with the farmer?

Walt goes through a great process that can be useful for targeting farmers specifically.

India’s Pixxel Scores $7.3m Seed Funding to Bring Hyperspectral Imaging to Ag & Beyond - AgFunder News

Pixxel claims its hyperspectral tech can provide “50x more information” by capturing that reflected light in much narrower bands — between 150 and 300 of them — and therefore in far greater detail.

For context, Planet Labs who just launched more satellites that would be in the 8 band range and just getting that to commercial use. The thing about more light bands, aka hyperspectral, it has opportunities in terms of simplifying some processes, such as using imagery to differentiate crops in an image like corn vs. soybean, but the data being acquired is also much larger for each and every image. Hyperspectral can also mean early signs for things like plant stress based on being able to identify the nuance of light reflected from say nutrient deficiencies.

This could also have implications for remote sensing tools for carbon measurement or verification of practices too.

It plans to make money by selling its imagery — plus add-ons such as processing and labeling of the images, machine-learning modeling, and delivery of actionable insights — to governments and ag cooperatives.

Having the processing and modelling is a nice add on for this group. That’s an integration that we haven’t seen as much from by the likes of Airbus or Planet who have focused on delivering their imagery to ag platforms for the processing and AI applications.

Ahmed says the startup will use its seed funds to accelerate development of its second and third satellites “as well as build the foundation for the upcoming constellation next year,” with the aim of launching 30 satellites by the end of 2022. It will also use some of the capital to boost its commercialization efforts.

This is a huge lift in this time frame. The $7.3 million is a small amount and they are likely to go back for more capital before they launch those satellites. For background, Planet has raised over $400 million.

Each of its satellites will provide a five-meter resolution along with high spectral resolutions.

Thanks to my friends Mark Johnson, co-founder of Descarte Labs and Zara Khan at Planet for giving me a quick breakdown of the technicals in the imagery space!

COVID-19 and Its Impact on Talent Management in Agribusiness - Crop Life

Build vs. Buy Your Talent. Regardless of your investments in talent management marketing and process, it still will not be enough to attract a list of highly qualified candidates. Winning the war for talent will require most companies to create a learning environment that allows you to not only train your new employees, but also engage them long enough to grow your talent and succession strategy from within.

It is no secret that training is a win-win for everyone. What may surprise you is how much employees value the opportunity to participate. SAP conducted a recent survey with their customers and industry partners where they discovered that 94% of employees would stay at a company longer if it invested in their career development. The same survey found that, for candidates, training is a more compelling factor to join an organization than starting salary!

I like the above quote from the article.

One other comment:

We talk a lot about talent management in agriculture. Managing talent starts with emphasizing strong leadership - not focusing on years of experience but potential and identifying core leadership traits: excellent communication, humility, integrity, the willingness to be wrong, curiosity and the ability to empower. Having people with those traits as a starting point in positions of leadership makes the attraction and retention of talent that much easier. This sounds basic, however, we still see many jobs filled not based on leadership competency (not unique to agriculture obviously). Leadership is a skill just like being a strong sales person is a skill, it can be cultivated and developed.

Cargill Restructures Corporate Venture Group Into Newly-Centralized Unit - AgFunder News

US agrifood giant Cargill has recreated Cargill Ventures, a dedicated VC unit to lead its startup investment activities.

A few years ago, Cargill decided to change the way it interacted with startups and invested in them, preferring a decentralized approach which saw separate business units engage in external innovation endeavors.

This seems like a smart change. Having decentralized allocation of capital turns into redundancies and inconsistencies, neither of which are good for driving long term success or returns, especially given the size of their business.

Cargill to Acquire Precision Ag - World Grain

This announcement out of Saskatchewan was surprising to me. It’s not a large acquisition (4 locations), but Cargill has exited crop input retailing in Europe, the USA and eastern Canada the last several years, with western Canada being the only geography they have a retail business.

This acquisition was actually a 50% JV with them before hand, so that could have something to do with it and may have had a first right of refusal that made sense to acquire them outright.

My anticipation for the next announcement on Cargill ag retail was actually themselves exiting, however, there is at least a couple good reasons to stay in to support other areas of their business in Canada:

  1. They have a successful distribution business (AgResource) in western Canada that benefits from these locations being locked up purchasing from that business.

  2. Their canola oil crush plants can be better supported by the ag retail business selling their seed with an integrated approach. This could be extrapolated out to their grain origination facilities as well.

Non Ag Article

Culture: Offense and Defense - Kat Cole

Architecting a culture that gets stronger as you grow

Kat Cole is an impressive thinker and executive that I always learn from in her writing or podcasts. This week she wrote an article on culture. To me culture should be one of the most focused on aspects in an organization. It helps to attract and retain the right people, contributes to execution and quality of work and builds strong leaders and outcomes for the organization.

How we make people feel when we are on cultural defense and showing what we are committed to both send direct and subtle messages to the company. A culture can be best spotted by what people are committed to when leadership is not in the room, including what they stand up for and will not allow. A cultural beacon is hearing someone say, “we don't do that here” or “we do X here”.

Other Ag Articles

Agronomy Outlook: A Time to Plant, a Time to Prosper - CoBank

Agriculture Industry in 2021: Leaving The Dark Ages and Entering the Renaissance - Linkedin Anastasia Volkova

Invest like Bill Gates: Farmland Never A Down Year? - Contrarian Thinking

BASF Invests in Biotechnology Start-up Bota Bio - BASF

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