Upstream Ag Insights - October 10th 2021
Essential news and analysis for agribusiness leaders
Welcome to the 88th Edition of Upstream Ag Insights!
This week is a bit shorter edition. I didn’t dive into some of the topics (like the FinTech announcements and a couple partnerships announcements) as deep as I would have liked due to some time constraints.
Feel free to reach out if there are any topics/stories you’d like to explore more.
Index for the week:
Eroom’s Law in Crop Protection
Invitation to CubicFarms AMPLIFIED Event
Enko and Nufarm Partner
Novozymes and Anuvia Plant Nutrients Parter
Apps and Infrastructure in AgTech
Stable Raises $46.5M to Help Businesses Manage ‘volatile’ Commodity Prices
Growers Edge Launches Digital Ag Lending Platform
SWAT Maps and Combyne Integration
Q3 2021 AgTech Venture Capital Investment and Exit Round Up
Syngenta Explores Insect Scanner Technology in Agriculture
Farmers and Startups: Tips for Collaboration
Rivian S-1 Applicability to Agriculture
Happy Thanksgiving to all the Canadian readers and Happy Sunday to everyone else!
Eroom’s Law in Crop Protection - Upstream Ag Insights
Crop protection was what got me interested in the agriculture industry and has always been my favourite area of the industry.
The rate at which new chemistry has came to the market has been continually slowed for decades while dollars invested has increasingly grown.
I wanted to highlight some of the concepts contributing to this phenomenon and then layout some of the implications and what we might see more of moving ahead.
To do this I go through Moore’s Law in computer technology, Eroom’s Law, a factor in pharmaceutical discovery and then overview how that ties into the crop protection discovery space.
An Astronaut, Ag Experts, and 900+ People Will be There—Will You?
CubicFarms is inviting Upstream Ag Insights readers to the highly anticipated 1-hour virtual CubicFarms AMPLIFIED event on Thursday, October 21, 2021. Powerhouse guest speakers astronaut Chris Hadfield, sustainability expert Henry Gordon-Smith, and leaders in the agriculture industry will reveal how new technologies can solve the most urgent concerns of our time.
Globally, we’re experiencing severe drought, heatwaves, food insecurity, and disruptions to the supply chain. Innovative local chain ag-tech enables farmers to keep growing sustainably. See the latest commercial scale indoor growing technologies available and get an exclusive look at what’s next for the future of farming.
It’s free to attend. Click to register for your complimentary ticket:
Enko, the crop health company, and agrochemical company Nufarm announced their partnership to develop novel chemistries and expand the supply chain of critical new herbicide solutions in Australia, the U.S. and Europe.
This is the third announcement with a major crop input manufacturing company this year for Enko. Syngenta and Bayer Crop Science were announced in June and July.
And if you want to understand further back story I think the first linked article that I wrote this week, Eroom’s Law in Crop Protection, highlights at a macro level what’s driving these organizations to partner with organizations like Enko.
What is noteworthy to me on the Nufarm partnership is this: Nufarm spends about 1% of their revenue on R&D, making them the lowest spender as a percentage of revenue in the top 10 chemistry companies globally. Not to mention, some of the lowest EBITDA margins of any of the crop protection manufacturers.
Related: 22 Active Ingredient Patents to Expire by 2030 - Agribusiness Global
Novozymes and Anuvia Plant Nutrients Join Forces To Bring Sustainable Bio-Based Nutrients to Commercial Agriculture - Globe News Wire
Novozymes, the world leader in biological solutions and Anuvia Plant Nutrients, an innovative plant nutrient company, today announced that they have joined forces to develop a range of combined biotechnologies that will reduce the need for synthetic fertilizers in commercial agriculture.
This seems like a great combination. Novozymes has numerous partnerships in the chemistry space, but for macronutrient based fertilizer this is a first:
The partnership aims to “double the nutritional value of Anuvia’s products”, which essentially means to make their product 2x as efficient through optimizing availability to plant roots in the soil.
How will they be doing that?
The companies will work together to identify additional microbes and enzymes that could improve the nutritional efficiency of crops and are dedicated to innovations in the nutritional efficiency and health of crops.
As a first step, the partnership will combine Novozymes’ phosphate solubilizing microbial solutions with Anuvia’s sustainable bio-based fertilizer products to enhance macro-nutrient efficiency with a focus on phosphate.
The partnership envisions several generations of the new technology. The first generation is anticipated to add up to 10 units of phosphorous. Subsequent generations will target the replacement of additional units of macro and micronutrients, such as N, P and K.
Novozymes has the biological Penicillium bilaiae which helps solubilize soil P (frequently sold under product name Jumpstart in North America). This product is traditionally put on the seed as a seed treatment, however, delivering it or something like it via a granule would free up space on the seed and could even allow for a higher effectiveness depending what sort of rates could be formulated into the the granulated fertilizer.
On top of this, once you start formulate microbials, which is actually the challenging part in my mind, Novozymes is actually a leader in enzymes, which theoretically should be more managable to incorporate into granules.
The next opportunity is to stack numerous microbes / enzymes into the granule and enhance the availability of other nutrients, potentially N or S or even micro specific over time.
One can also begin to think through how this could influence other crop protection capabilities as well. Think about applying a biofungicidal microbial that is embedded within a fertilizer granule, eliminating a need for a fungicide pass in the future. In parts of the world this has been done by coating fertilizer granules with active ingredients like tebuconazole.
A biofungicide integration is likely a ways away, but begins down the path I could anticipate seeing an organization like Anuvia go.
A line that caught my attention as well was this:
There will be no incremental cost to the grower.
I did reach out to Anuvia to clarify the statement and they were kind enough to answer my question. They do intend to offer the SymTRX + Novozymes microbe product for the same price as the SymTRX product alone is today once the new product launches. This will run at a premium on a per pound of P basis to traditional MAP or DAP, but factoring in their efficiency aspect they are confident total pounds of P applied can be decreased which means up front cost to the grower per acre should remain equal or less.
These are the sort of partnerships that make a lot of sense for both organizations and one I am excited to watch progress in the coming years.
Related: The world has a big fertiliser problem. Here’s how to fix it - WIRED
This is an insightful article from the team at Leaf. The frameworks used are excellent to begin to think through the development of and deployment of technology.
In their 2018 article, The Myth of the Infrastructure Phase, Dani Grant and Nick Grossman explain how the history of new technologies shows that apps drive the need for infrastructure and not the other way around.
Their examples include the light bulb (the app), which was invented in 1879, and preceded the electric grid (the infrastructure), implemented in 1882. Likewise, the airplane (the app), was invented before there were airports (the infrastructure) in 1928: “the breakout app that is an airplane came first in 1903, and inspired a phase where people built airlines in 1919, airports in 1928 and air traffic control in 1930 only after there were planes.
Leaf then applies this thinking to agriculture based products, encapsulated well by this image:
Stable Raises $46.5M in Greycroft-led Round to Help Businesses Manage ‘volatile’ Commodity Prices - Tech Crunch
Stable, an insurtech aiming to help minimize a businesses’ risk due to volatile commodity prices, today announced it has raised $46.5 million in a Series A round of funding led by Greycroft. Notion Capital, Anthemis, Continental Grain and existing backers Syngenta and Ascot also participated in the financing, which brings the Chicago-based startup’s total raised to about $50 million since its 2016 inception.
The concept of risk mitigation for farmers is important and a topic I am certain we will continue to hear more about. Farmers have risk coming at them from numerous angles.
I break out the risk into 5 basic categories:
Stable specifically helps tackle the commodity risk via parametric insurance.
How does it work?
So if the index is currently $100 and the client is a food buyer — they might know they lose money if the index reaches $120. Stable charges a premium and then provides a “payout” if the index goes higher than $120 in that case. Our payment replaces the client’s lost income and provides the financial stability they are looking for.
From founder and CEO Richard Counsell (emphasis mine):
I set about creating a platform that combines modern tools like machine learning (AI), great UX and a clear and client-focused purpose to get back to our industry’s grassroots and become relevant again for businesses with a real risk to manage
This has a focus like Robinhood and retail stock trading apps focused on simplicity and seamless UX/UI, something that has in general not made significant in roads to agriculture.
Where my mind goes with an insurance product like this is into connections with companies like Bushel - being able to access parametric commodity insurance right where a farmer does other forms of business and manage risk in a way that seems (to me at least) less intimidating than buying options for example.
To take this another step specifically to agribusinesses is how a retailer or seed seller or whoever could actually access this insurance as well since commodity prices impact their business outcomes as well.
It makes money as if it were a broker, by charging a fixed commission for the business it brings back to its re-insurers.
Rapid customer acquisition will help elevate this business even faster, which in my mind means more embedding within agtech related tools makes even more sense, like the Bushel example.
Growers Edge Launches Digital Ag Lending Platform - Growers Edge
Growers Edge, a provider of data-driven financial technology (fintech) solutions for the agricultural industry, today announced the launch of a fully digital financial software and services platform for the agriculture industry.
The customizable platform is built for ag retailers and input manufacturers of any size to process and manage loans quickly and efficiently. Powered by Growers Edge technology and software, the retailer’s branded online platform features apps for loan submission, management, and payment to simplify the process for both retailers and their grower customers. The platform also features a suite of tools and services to analyze and manage the retailer’s lending portfolio.
Related: What’s Possible With Fintech in Agriculture - The Daily Scoop
SWAT MAPS and Combyne Bridge Soil Management and Crop Marketing Sectors with New Integration - Business Wire
SWAT MAPS and Combyne will be launching their integration. Farmers will be rewarded for using SWAT MAPS to significantly reduce their environmental impact on the soil, water, and air. Across North America, farmers have been unlocking their soil potential on millions of acres with SWAT MAPS and thousands of farmers have also been using Combyne to get the conversation started with their grain buyers to confirm deals. For the first time ever, farmers will be able to show buyers their digital soil management practices on an offer to buyers with the click of a button.
Collaborations like this help move the industry forward and also help create realties around some of the topics that are often discussed within the industry and within Upstream, like the beginning of carbon offset creation or “low carbon” commodities.
Through this initiative they announced the launch of “SWAT Certified” which is the ability to signal on Combyne that a farmer uses SWAT Maps and be able to seamlessly share data (if a farmer wishes) with a grain buyer.
One thing I am passionate about is the value in understanding the soil. The soil is an important underlying asset that impacts agronomic decisions and outcomes. SWAT Maps makes sense of the soil and it’s variability very well.
There are tons of area to continue to move the needle forward on all these topics, but this is a great start that helps pave the way for incremental layers of data can be shared or partners can be incorporated.
A YouTube Video of the launch webinar can be viewed here.
Related: What Will it Take to Get Soil Carbon Credits Right? - The Regeneration Weekly
Staying on top of industry trends is tough and critically thinking about their implications on your business can be even tougher.
This article presents some good ideas to manage this.
Our answer was to build a futurist team. This team was created to look outwards and develop a culture of all-in participation, one that regularly honed their skills of collecting, analysing and drawing insights from data. Led by our Intelligence department, the team created a framework for finding and sharing the most insightful, interesting, and relevant trends influencing both the industries we serve regularly and society as a whole.
If your company has a smaller intelligence or insights department, the true no-brainer for keeping your team nimble and punching above its weight in innovative thinking is to cultivate a culture of insight. Even though everyone is working towards the same outcome, delivering the best product service for your customers, departments can tend to become siloed. Weekly meetings focused only on exercising insight muscles work towards stronger inter-departmental cohesion and a more robust knowledge of the client or customer’s issues.
I work with many organizations to support them in this very way. I think what’s interesting about it too is that it not only helps set a company or department up for the future, but improves their thinking about the present by inverting their thinking and approaching challenges in unique ways.
Last quarter set a record for venture capital investments into AgTech startups. In total, $4.016B was raised by 171 startups in Q3. To put this in perspective, last year AgTech companies raised a total of $5.15B, so this this a huge haul in just one quarter. In the first three quarters of 2021, 441 AgTech startups have raised over $8.3B.
This is a great summary of the investments throughout the quarter throughout ag and food tech.
Syngenta’s Diopsis insect scanner to give growers insight into the balance between pests and beneficial insects in their crop. Syngenta is exploring the application of insect scanner technology in agriculture. The challenge is to make biodiversity measurable in the field and to develop a decision support system that gives growers insight into the balance between pests and beneficial insects in their crop.
What does Diopsis mean?
Diopsis stands for “Digital Identification Of Photographically Sampled Insect Species. It is an advanced system for photographing, recognizing and monitoring insects in a fully automated way. The insect camera is a digital camera with software designed and built specifically for Diopsis. Insects are attracted to the screen and are photographed when they are on the screen. Specialized deep learning software then analyzes the photo and compares it to a large database of all kinds of insects that have been named by specialists.
This has some cool potential if you can remotely sense and accurately assess the pest and beneficial levels and actually be supportive of concepts I have talked about within Upstream before around uses prophylactic bio based approaches.
Bushel Quarterly Update - Bushel
I stumbled on this initiative from Bushel and thought it was pretty cool and unique within the agtech start-up community. Bushel put together a video showcasing how they are improving their product, how they are engaging the industry, reinforcing their vision plus a Q&A period, all delivered by various individuals on their leadership team.
Farmers and Startups: Tips for Collaboration - AgTech So What?
The divide between farmers and startups can seem like a chasm. Tech culture and agriculture have evolved from completely different backgrounds, and even seem to have their own languages. So how can agtech bring together two very different groups?
In this episode, you’ll hear practical tips from farmers and agtech experts on how to build mutually beneficial relationships. For startups, this includes approaching farmers as partners, rather than ‘customers,’ and understanding ‘grower economics’. And for farmers, it’s about finding opportunities to access and help shape new products as the startup iterates. This might look like an equity partnership, an advisory relationship, or even becoming a co-founder.
This panel is full of individuals from the agtech community that I have a massive amount of respect for including Emma Weston, Sarah Nolet and Walt Duflock. They bring some great tips and suggestions to the forefront are on point.
Technology is the Future: Why Technology of Tomorrow May Already be Operating in Some Fields Today - AgWeb
The future is already here, it just isn’t evenly distributed.
- William Gibson
The reality is that most technology we will see common place in 2040 is likely in a field being tested somewhere today.
Non Ag Article
Rivian S-1 Teardown - G2VP
This is a slightly different non-ag article than I would traditionally share, but I think it has a couple interesting take aways.
G2VP is a climate focused investment fund (interestingly, they are invested in agtech company Pivot Bio) and they started a new series focusing on breaking down companies with a climate bent to them. This weeks post was on Rivian.
Rivian is an electric car maker going public with an interesting new business model and approach to integration:
Rivian is throwing the conventional automotive business model out the window. Rivian is shifting the industry away from the model of “# of cars sold per year x average selling price.” Instead, Rivian is leveraging “Rivian Cloud” and its proprietary data and analytics platform to offer a host of value-added services including telematics-based insurance, data-driven resale, FleetOS for commercial customers, charging-as-a-service etc. We were interested to learn that >50% of Rivian’s estimated market is driven by services revenue over the lifetime of the customer. In effect, Rivian has created the foundation for a SaaS-like business model which, if successful, could completely transform how investors look at the automotive industry.
There are similarities between agriculture and the car industry. We are typically # of jugs of chemical, pieces of equipment, bags of seed etc x average selling price (or avg margin etc).
Rivian is flipping this on its head with a model that is over 50% from high margin SaaS or insurance based businesses. This isn’t to be confused with the traditional services business of dealership which has different margins and scalability.
Rivian still needs to execute, but I think the mind set to come into the car business and approach it without the shackles of traditional models and focusing on being a digital first business presents a good mental exercise for agriculture companies.
“If all of our revenue wasn’t in selling more units of product x, what products might we create, how might we come into the market and what could a new revenue model look like?”
The easy agriculture tie is looking at companies like John Deere or CNHI, but I think valuable for all throughout the supply chain in considering new business model evolution.
Lastly, I find their approach to vertical integration to be noteworthy as well:
The S-1 highlights that Rivian’s strategy entails high levels of vertical integration, only rivaled by companies like Tesla and Apple. From the development of vehicle technology (e.g., custom battery pack/module) to manufacturing (e.g., insourced stamping) to operations (e.g., charging infrastructure, insurance), you can find vertical integration in almost every facet of their business. While this strategy carries additional execution risk and capital needs, Rivian is betting that vertical integration will lead to (i) a lower cost structure, (ii) faster pace of innovation, (iii) reduced supply chain risk, and (iv) exceptional customer experience.
Other Ag Articles
Kubota to Acquire AgJunction in All Cash Deal - Ag Equipment Intelligence
Top Takeaways from Supply Chain Risk Mitigation - Agribusiness Global
Dealers Report Price Increases as High as 22% - Ag Equipment Intelligence
Crypto Tokens to Reward Carbon Smart Farming - Forward Food Tech Podcast
Help Your Growers Manage Their Data - The Daily Scoop
Turning Point: Paul Schickler - YouTube