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

Greetings from the San Francisco Bay Area.

In this week’s edition,

1. Selective spraying and its impact on agriculture retail.

2. Payment infrastructure for North America commodity farmers

3. McKinsey report on survey of global AgTech adoption.

Also in the news, CRISPR tomatoes, new rice varieties, Combyne acquired by Bayer, how autonomy will reshape ag, sorghum and its impact on U.S. farms, carbon conversations from Farmprogress, Bunge and traceability, BII invests in Africa Agtech ecosystem, India promotes millet growing, conservation and smallholder farmers,

Ag Retail and Selective Spraying

Robotics, automation, and targeted applications has been the rage within agriculture in North America for the last few years. Last year many people unsubscribed from the newsletter as they felt I was spending too much time on robotics and automation.

This newsletter obviously pays a lot of attention to technology and its impact on food and agriculture systems.nI am a techno-optimist. I believe in the power of tech to drive meaningful change over the long term.

See & spray technology for selective application of herbicides, and other crop protection products, can and will have a profound impact based on how it is delivered, who delivers it, and what are their incentives. One potential outcome of selective spraying is the reduction in usage of crop protection chemicals. The reduction in product usage is one of the key variables marketed by technology companies. For example, as I highlighted in edition 128​

In North America, crop protection services are typically delivered by a service provider, often your local agriculture retailer. The agriculture retailer provides a portfolio of products and services to their grower customers, which often includes inputs like seed, fertilizer, crop protection products, and services like scouting, application, etc.

Any technology which cannibalizes the sales of their existing products (in this case crop protection products) could be a challenge for agriculture retailers.

Progressive retailers will keep an eye on the developments, and will get involved with the testing and prototyping of this technology to make sure they understand the impact.

For example, even with this technology, growers will look for pre-emergence broadcast applications to reduce the chances of weeds coming up in the first place. The selective spray system can kill any weeds which emerge post planting to get more control. This allows for modular and menu driven delivery of a service, though combining the two will help in subsequent years.

If you know where you are seeing weed pressure year over year through the selective spraying system, it can help to plan planting, and application in subsequent years.

Agriculture retailers should engage with this technology, and test it. They should understand how they can continue to provide value to their customers, and how their business model will evolve.

Ultimately, growers are looking for weed free fields, which protect and enhance their yields at the lowest cost possible.

Note: You should read Shane Thomas to understand the agriculture retailer business.

Technology Trends

Building infrastructure is not considered flashy but is very effective

In 1962, in his book “Profiles of the Future: An Inquiry into the Limits of the Possible”, science fiction writer Arthur C. Clarke formulated his famous Three Laws, of which the third law is the best-known and most widely cited:

Today I want to talk about another kind of magic. This kind of magic is pervasive, and it becomes part of our life, and we notice it only when there is a glitch in the process.

Do you remember the Adobe Marketing commercial from about a decade ago?

A baby is sitting on the floor and keeps pressing the Buy Button on the fictional Encyclopedia Atlantica product page. It creates a whole chain of events with hundreds of orders, additional trucking and shipping requirements, more lumber needs, and a spike in the stock price of the fictional company!

The ad assumes an existing infrastructure of order, inventory management, logistics, and supply chain, which can respond to a change in demand quickly and efficiently. Most of us didn’t bat an eye-lid, and assumed it would work. Today, we can sit on our sofa, order socks on our smartphone, and they show up the next day. Amazon has invested billions of dollars over the last 25 years to create an infrastructure to fulfill your Amazon order in less than 48 hours, and often in less than 24 (depending on your location).

All the investment didn’t often make front page news, compared to the launch of some device.

Companies (and states, governments) often find areas of opportunity to build infrastructure (for example, Amazon or Stripe). Companies can also take existing infrastructure, and take it to an industry where it does not exist.

The massive Unified Payment Interface (UPI) implementation in India,

The pilot program was launched in 2016. In January 2023, it did 8 billion transactions and supported 385 banks! The UPI rollout combined with the proliferation of smartphones in India, has completely transformed the payment transaction experience for millions of people, and small & large businesses in India.

The invoicing and payment settlement process for row crop commodity farmers in the US still needs an improvement in customer experience. Many growers still rely on physical checks, and many of the upstream and downstream systems don’t have good integration with payment processing rails.

​Bushel is working on one end of the grain supply chain and provides infrastructure and applications to enable money movement between grain companies and their farmers in a paperless manner.

It provides the service to 2000 grain facilities across N. America through its suite of digital products. Bushel recently announced another partnership with Agriservices of Brunswick.

As with any financial transactions, the technology infrastructure in this case provides a routable bank account, which is FDIC insurance, and complies with SOC 2 standards.

There is enough opportunity to provide basic infrastructure within agriculture in different markets.

We don’t have to chase the shiny object all the time.

​Farmer adoption of AgTech (McKinsey Report)​

For the last few years, the global consulting firm McKinsey has done farmer adoption surveys with some surprising and mostly not so surprising results. For 2022, the survey went global to understand how AgTech usage may differ across regions globally, and what barriers may be impeding broader adoption. The survey included 5,500 row- and specialty-crop farmers in 2022 across Asia, Europe, North America, and South America.

AgTech adoption has been highest in Europe and N. America, and is at less than 10% in Asia. What are more interesting are the most popular use-cases by region. For all the doom and gloom around the business model of farm management software in North America, it is still the most popular use case.

I was surprised to see farm automation and robotics as the most popular use case in Asia, vs. providing downstream market linkages or financing for inputs.

The survey echoes many of the points I had made in edition “129. FMS, thin markets, and loss leaders” last week.

The challenge for AgTech providers is many fold. Customers have low willingness to pay (mostly driven by farm management software), and at the same time have cited the high cost of technology as a barrier to adoption.

• AgTech providers will have to invest in R&D to develop new and value added solutions.
• The time to recoup their investments is long due to slow and seasonal adoption lifecycles, combined with low willingness to pay challenges.
• In the new non-zero interest rate environment, VCs and corporate investors will look at smaller investments, and will take longer to make decisions.
• AgTech providers will have to explore business models, which can help them recoup their investments in a reasonable time, while still being able to respond to grower needs of low willingness to pay, and low initial investments.
• Point solutions might struggle if they don’t hit the mark.

As the McKinsey report rightly points out, business models with,

McKinsey also points out the potential to unlock more value by tapping into data from different sources to ensure that

The combination of data from multiple sources to draw value insights is not a new area. It is still not a completely well solved problem due to challenges with data acquisition, data quality, analysis at scale, and the delivery of context specific insights.

The problem is a technology infrastructure problem, which when solved properly will feel like magic to begin with, and we will notice it only when there is a glitch in the matrix!

In the News

AgTech and Agronomy

“Crispr-edited tomato, approved for sale in Japan, has enhanced nutritional qualities. In other crops, Crispr is being used experimentally to increase yield, reduce pesticide and water use, and protect against disease.”

"One new advancement is a rice variety that contains 8-10% resistant starch. Cooked rice usually has one to two percent starch that resists digesting, making the newer varieties more beneficial to human health. Resistant starch has many health benefits, like the prevention of diabetes, fat loss, better insulin resistance and reduced risk of colorectal cancer."

​Combyne app (grain marketing) acquired by Bayer. “It was free to use at first but as of February, the company plans to charge an annual subscription fee of $150 for its basic service.”

Robotics and Automation

“How Autonomy Will Reshape Ag According to Deere, Case IH & AGCO Leaders.”

Sustainability

“An Ancient Grain Made New Again: How Sorghum Could Help U.S. Farms Adapt to Climate Change.” “Sorghum requires less fertilizer than corn (resulting in fewer emissions of the powerful greenhouse gas nitrous oxide), and there is some evidence that suggests the production of sorghum ethanol might result in fewer overall emissions. Sorghum’s role lies more on the adaptation versus the mitigation side of climate change.”

“A regenerative agriculture system is defined as a semi closed system optimizing inputs and minimizing waste — and, consequently, benefits the environment, soil health and soil biodiversity, and optimizes productivity and economic returns. The key is matching these practices to local or regional climate to achieve best results.”

“Bunge today announced it has achieved 80% traceability and monitoring of soybeans from its indirect supply chain in the Brazilian Cerrado. The pioneering, large-scale initiative to track indirect purchases in the biome is part of the Bunge’s Sustainable Partnership Program.”

Smallholder

“British International Investment (BII), the UK government’s development finance institution (DFI), plans to designate $250 million to African startups by 2026. This could have big implications for Africa’s Agtech sector. BII is eyeing embedded financing, with a focus on full-startups and marketplaces.”

​“India’s promotion of millets is great but will likely fail”​

“Conserving Nature is Nurturing Livelihoods of Smallholder Farmers”

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About me

My name is Rhishi Pethe. I lead the product management and technology delivery teams at Mineral, an Alphabet company. The views expressed in this newsletter are my personal opinions.