“Software is Feeding the World” is a weekly newsletter for Food/AgTech leaders about technology trends.

Greetings from the San Francisco Bay Area.

I received significant feedback for last week’s newsletter, which highlighted potential analogs in agriculture and AgTech. Here are some additional examples suggested by readers.

1. Tesla of Agriculture - An OEM company which can potentially bypass the existing OEM infrastructure, and go-direct-to-grower with a radically different product (all electric with built in autonomy). There is only one Elon Musk, so I doubt we can find a company with a CEO like Elon Musk (If we find one in agriculture, they will be called Elon Husk!). One potential example is Monarch Tractor from Livermore, California
2. Salesforce of Agriculture - Bushel fits the description, as they provide enterprise tools for the industry to connect different parts of the food and agriculture value chain.
3. Genentech of Agriculture - Ginkgo fits the bill as they innovate to create new crop varieties. Benson Hill can be similarly described, though their business model is different compared to Genentech.
4. Warby Parker/Castlight health of AgTech - Warby Parker tried to disrupt the eyecare and lens industry by offering a very different experience, and much lower prices. The brand premium charged by the mainstream industry often didn’t match the performance of the products. Castlight Health tried to create a crowdsourced dataset of pricing for medical procedures to help consumers negotiate better with health care providers. Farmers Business Network has tried to challenge the dominance of input players, through their own products, and through better price transparency.
5. One of the readers joked that many AgTech companies are similar to Enron or Theranos as they peddle snake oil, and make unrealistic promises. I hope there are not many out there, as they will quickly go out of business (as they should)!

Strategy is what you don’t do

When I joined The Climate Corporation (now called Climate LLC) in 2017, I had written a strategy memo as part of the interview process. The memo articulated a platform to build an agriculture ecosystem, and to accelerate innovation within the industry. The platform would use the large customer footprint among row crop growers in North America.

From Platform Strategy Memo (February 2017) written by Rhishi Pethe

My mandate was to build a set of tools and capabilities as part of Climate’s product portfolio and create an ecosystem around it. My goal was to enable and empower additional solutions in the market and power them with data and tools from Climate. It was an exciting time. The idea to create a seamless ecosystem, with incremental value to growers, agribusinesses, and solution providers was enticing. With a strong collaboration with commercial teams, we were able to sign partnerships with more than 65 different entities within the ecosystem.

There were two challenges.

1. There were some questions about data privacy, and data usage, but most of them were put to rest due to the strong privacy policy, and controls put in place by the team. The Climate-Tillable incident from 2020 created headwinds, but overall the approach was not heavily challenged.
2. The second challenge was more significant. It was about resource allocation. There was always tension between resource allocation to build tools and capabilities which benefit the ecosystem, vs. direct grower-facing applications.

For example, a project to help Channel (Bayer brand) provide a better service to their customers, which used a combination of FieldView, and some APIs to improve the grower experience was of higher priority vs. APIs to help integrate with a crop insurance provider.

Everyone agreed with the thesis that if FieldView customers plug into other products and services (even if they were not offered by Climate) more easily, it will create more stickiness, increase LTV (LifeTime Value) and reduce CAC (Customer Acquisition Costs). The challenge was to figure out how many resources to allocate to this process.

Should they buy or build or partner for these capabilities?

This is true for almost all input companies. In most cases, the digital portfolio is to help the input company sell more effectively and to sell more of their core products. In the late 2010s, the market and growers suspected it, but it was not always clear if that was the case.

Over the last few years, as incumbent input companies have realized the challenges to push digital tools, they have become more clear about their strategy, which is a welcome change.

We have seen it happen with Bayer and The Climate Corporation (which is now more closely integrated with Bayer as Climate LLC). For the specific case of data connectivity, Bayer has gone down the path to buy the capabilities vs. build them, through the use of tools like Leaf Agriculture.

Leaf Agriculture takes away the burden of connecting disparate agritech systems with each other, and lets companies focus on their core competencies, which is to focus on their seed and chemical business.

On the tools front, Bayer has partnered with Microsoft (though it is still not clear what the partnership entails), to leverage Microsoft’s technology expertise.

As I had pointed out in edition 83, Jeremy William’s head of digital farming at Bayer was clear about where Bayer’s focus will be. (emphasis from me)

Microsoft positioned their value proposition as an enabler of digital transformation.

Corteva shuts down Granular Agronomy

Last week Corteva was quite explicit, when it announced its plans to shut down Granular Agronomy.

Over the last few months, with a revamped management team at Corteva, they have gone through a rationalization of their strategy to focus on what they believe is their core business - seed and chemicals. Based on my unofficial sources, Coreva has reduced the size of their carbon team significantly. I would not be surprised, if they look to buy or partner for carbon capabilities, if they believe it is an area they need to play in.

Overall I am pleased with the clarity of strategy exhibited by these companies, though digital enthusiasts might shed a tear. The big input companies have survived the ups and downs of the world economy for many decades, and a large part of it comes from knowing which battles to fight, and most importantly which battles to not fight.

OEMs like John Deere, and CNH have been much more clear about their strategy. Their strategy is to sell more steel (it could be carbon or whatever material in the future) of a particular color and brand. John Deere’s operations center, its digital tools, API infrastructure, its acquisitions like Harvest Profit, are to improve the stickiness of their customer with the John Deere brand. It is to increase the likelihood that a customer continues to stay with John Deere, and continues to upgrade to new products, brought to market by Deere.

Within the commodity row crop space, digital tools like FieldView, and Granular have been central to many discussions around digital agronomy and AgTech for many years. The large (for Ag) acquisition prices for Climate, and Granular jump started the space, brought in many entrepreneurs, and VC dollars.

Some of the moves from input companies might seem discouraging to outsiders (like me, and maybe to insiders as well), but it creates more opportunities for companies like Leaf Agriculture, startups providing digital tools, and infrastructure services, pure play technology companies which can bring in new ideas, skills, and approaches.

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​At the end of the day, strategy is not only about what you should do, but also about what you should not do.

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About me

My name is Rhishi Pethe. I lead the product management team at Project Mineral (focused on sustainable agriculture). The views expressed in this newsletter are my personal opinions.