The integration of Global Positioning Systems (GPS) with agricultural machinery catalyzed the digitization of farms in the early 2000s, enabling farmers to visualize yield variation within their fields. Since then, the definition of digital ag has evolved to include features beyond just basic yield mapping, such as variable rate prescriptions, irrigation guidance, seed variety benchmarks, and pest outbreak alerts. Decision support features abound, but the present state of the industry is fragmented. Most developers are start-ups who provide one aspect of decision support, and their solutions work in silos alienated from the rest of farm operations. Continue reading
China’s 13th Five-Year Plan (FYP) includes intentions to focus on science and technology, specifically clearing a path to support approvals of genetically modified organisms (GMOs) for agriculture. Approvals will be prioritized first for indirectly edible cash crops, then for edible crops. Because of corn’s myriad non-food and ingredient uses, GMO corn varieties will likely be first up, with GMO soybeans following close behind. These policies align well with additional plans to reduce emissions per unit GDP and to increase the proportion of the country’s energy use that comes from non-fossil fuels. Thanks to their status as a legume crop with less reliance on chemical fertilizers, soybeans are up to the task of reducing emissions from agriculture. For the world’s most populous country, even small moves that affect the food supply can have worldwide implications. Even though there is significant uncertainty in predicting exactly when things might change, we’ll take a look at some of those potential global impacts, and what they could mean for you and your business. Continue reading
Lux Research recently spoke with Marjolein de Bruin, Manager of the BrightBox project in the Netherlands. BrightBox is a research initiative supported by Philips Lighting, the HAS University of Applied Sciences, Botany Agro R&D Services, and the Province of Limburg, NL. The project is a part of Philips’ umbrella “GrowWise” initiative, focused on advancing the vertical farming industry. Marjolein said that BrightBox’s goal is to be an open innovation research center offering infrastructure for applied research. Vertical farming companies, plant breeding companies, and multinationals can work with BrightBox through two main arms: research and production. Through the production arm, parties can conduct business case evaluations with BrightBox to determine whether entering the vertical farming industry would be financially viable. Through the research arm, parties can work with BrightBox to improve their farm’s efficiency and train staff. Continue reading
For millennia, agriculture has relied on extensive and often back-breaking human labor. Despite numerous productivity-boosting technological advances, labor is still a major part of farming, accounting typically for 10% to 15% of production costs on U.S. farms, and leaving growers vulnerable to labor shortages. Now, however, precision agriculture – a diverse set of tools, techniques, and technologies used to increase the efficiency of agriculture, either by minimizing required inputs or by maximizing yields – is driving activity in robots and automation for agriculture.
The most significant drivers of robot adoption today are limited labor availability, regulatory pressures, and the increased accuracy and precision that robotic solutions can provide. For now, cost remains the most significant barrier to adoption, and few developers offer solutions that are compelling today. Going forward, however, improving technology and rising labor costs are going to bring many more solutions to viability within the next 15 years, and in some cases sooner, as shown above for lettuce growing in Europe.
The field of developers is still highly fragmented and immature. But as solutions become more and more competitive the market opportunity will grow – and the field is likely to consolidate. Companies should look hard at the landscape to see where their capabilities may fit, and consider the strategic opportunities to become a dominant player in agricultural robotics – as well as the threats these solutions may ultimately present to agricultural equipment incumbents.
By: Sara Olson
Trimble and DuPont Pioneer recently announced a partnership that will improve the ease of data transfer between DuPont’s Encirca services and Trimble’s Connected Farm platform. While the two solutions both offer tools for monitoring and managing aspects of farm operations, both have unique attributes. A grower seeking a complete solution today would have to subscribe to both services – as well as a potential host of others – and it would be that grower’s responsibility to integrate the findings from the two platforms before making decisions about how to manage the farm. This is an obvious shortcoming and a real pain point for many would-be adopters of precision agriculture. The challenge is due mainly to the models by which precision agriculture service providers operate. Lux has divided the precision agriculture service provider landscape into three distinct models to demonstrate the difficulties: the individual service provider model, the partnership model, and the utility model (see figure).
In the individual service provider model, myriad small-scale developers offering solutions for individual agronomic issues like irrigation management, nutrient management, and harvest monitoring market their services directly to growers. The growers must manage individual log-ins and platforms for each solution, often having to perform calculations and make judgments themselves, as the individual solutions don’t offer interconnectivity. Solutions in this category include those offered by Spensa Technologies (client registration required), Mavrx, and Heavy Connect (client registration required), among others. Growers using such solutions typically miss an overall analysis of their farms and may miss key data points that remain obscure. There has been a proliferation of providers attempting this model, the majority of which are likely to fail or be rolled up into solutions that fit one of the other models described below.
In the partner model, some consolidation takes place. Continue reading
Monsanto Growth Ventures (MGV) announced its first investment portfolio on January 6, 2016. MGV, the venture capital arm of Monsanto, has committed to significant relationships with several companies over the last three years. Steve Padgette, VP of research and development (R&D) strategy, said that the group utilizes three avenues to form relationships with companies: R&D deals, equity investments, and acquisitions. MGV expressed that it seeks companies working in areas related to RNA platforms, seed treatments, microbial and biological treatments, genotyping technologies, and novel crop traits. The group also invested heavily in companies developing precision agriculture solutions, including analytics, data storage and cloud technologies, robotics, and image analysis. MGV has formed relationships with 11 companies in its first portfolio of investments, several of which Lux Research has spoken with.
In 2015, Lux Research analysts profiled 1,189 companies across 20 different emerging technologies. As the year end approaches, we polled the analyst team to select the top 10 companies we covered in 2015 that are poised to make a significant impact on their target industries. These companies may be targets for partnership, investment, or acquisition, but their success also points to new growth areas and business opportunities that clients can capitalize on.
As always, each firm gets a “Lux Take” that ranges from “Strong Caution” to “Strong Positive,” to provide a bottom-line assessment of its prospects, with a “Wait and See” rating for companies that still face too much uncertainty for a definitive call. Full access to the detailed information and analysis in the profiles is for clients only, but the list with a brief explanation of each is available here for everyone.
- NeuroSky (Positive – BioElectonics; Sensors) — NeuroSky develops a number of bioelectrical signal detection and processing systems, most notably its electroencephalography (EEG) sensors that have enabled mind-reading brain-computer interface devices like Uncle Milton’s Star Wars Force Trainer – and will also enable future diagnostic and monitoring solutions as health care shifts to digital technologies.
- Organica Water (Positive – Water) — In addition to providing significant reductions in energy consumption, sludge production, and overall footprint for wastewater treatment, Organica builds low-cost greenhouses around its treatment plants to reduce odor, allowing it to locate plants closer to wastewater sources and enabling cost-effective reuse within cities.
- PFP Cybersecurity (Strong Positive – Connected Objects and Platforms) — PFP uses a physics-based approach to detecting cyber threats by analyzing the electrical patterns of processors, ideal for securing for Internet of Things (IoT) devices that can’t support modern security software or are limited by memory or compute constraints.
- Norsk Titanium (Positive – Advanced Materials) — 3D printing is best known for producing customized but pricey plastic pieces – Norsk’s plasma arc deposition allows it to 3D-print parts from titanium that are up to 70% cheaper than those made via conventional machining methods, due to greater material utilization.
- Nutrigenomix (Positive – Food & Nutrition) — Offering genetic testing to provide individualized recommendations on seven specific dietary components, Nutrigenomix is a step in the right direction for personalized nutrition.
- Fulcrum BioEnergy (Positive – Alternative Fuels) — Biojet fuel and renewable diesel are going to be major plays in 2016 and Fulcrum is well positioned to make both fuels from municipal solid waste (MSW) – it has strong partnerships along its entire value chain, and is the only Fischer-Tropsch biojet process developer with proven production at some scale.
- Zerlux (Positive – Exploration and Production) — The use of lasers in the oil and gas industry isn’t widely known, but Hungarian player Zerlux is a leader, with high-powered lasers for well stimulation, hard-scale removal, and subsea pipeline remediation.
- Hillcrest Labs (Positive – Sensors) — As the number of sensors in products from cars to mobile phones continues to grow, sensor fusion – integrating the interpretation of data from different sensors – is becoming more critical; strategic relationships with Bosch, Atmel, and ARM position Hillcrest to be a dominant player in this market.
- ENS Europe (Wait and See – Intelligent Buildings, Sustainable Building Materials) — More efficient electrostatic filters from ENS Europe can help clean indoor air, much like a HEPA filter does, but the technology has the potential to scale up to clean smog and address other city-wide air quality issues.
- AgDNA (Positive – Agro Innovation) — Finding successful business models for precision agriculture has been challenging, but AgDNA has been able to get traction licensing its technology – which integrates data from existing equipment into a decision-support system for growers – to OEMs like John Deere.
Other notable companies nominated by the analysts earned an honorable mention:
- Alsentis (Positive – Wearable and Flexible Electronics; Sensors) — Touch screens don’t work in high-noise environments – with wet surfaces or gloved hands – but Alsentis is changing that with its multi-touch sensor chips, used now in industrial and automotive applications with planned release for consumer devices in 2016.
- Elevance Renewable Sciences (Positive – Bio-based Materials and Chemicals, Alternative Fuels) — Elevance already has commercial scale production of specialty chemicals from crude palm oil (CPO), and is planning to expand by building or retrofitting plants in the U.S. and in Malaysia – notably deploying its technology outside the “conventional” regions of Europe and the Americas.
- Mapdwell (Wait and See – Solar) — Using Lidar data and an online portal, Mapdwell allows consumers to estimate the solar potential of any rooftop in cities it covers, helping to bring down soft costs associated with customer education, targeting, and system design.
- Sakti3 (Caution – Energy Storage) — Solid-state batteries are one of the key technologies for enabling higher density energy storage beyond the current Li-ion batteries today; while its unproven production process is reason for caution, its acquisition by Dyson later in the year could give it the boost needed to make the leap to commercial production.
- EasyMile (Positive – Autonomous Systems 2.0) — Lightweight, driverless, electric automobiles could revolutionize urban transport and change the current paradigm of car ownership. EasyMile – a joint venture of Ligier Group and Robosoft – is developing autonomous shuttles that could be the basis for future personal rapid transit systems.
Potential supply chain disruptions present significant risks for corporations. Managing and mitigating risk is a core operational and financial activity for many organizations. Nowhere is this more apparent than in the production of food, where increasing population growth, increasing demand with rising wealth, and a changing climate combine to put unprecedented focus and pressure on effective resource utilization. More specifically, the idea of protein security – securing stable sources and production methods to supply protein – is increasingly becoming a key issue for companies, industries, and nations.
Rather than recommending a specific strategy or claiming that one protein source is globally better than the other, our analysis demonstrates the need for specific location-based data to address critical, but currently unanswered business and policy questions such as: What sort of livestock farming can satisfy growing demands for meat, and where should such operations be sited? What other plant and animal sources can provide needed protein in a world that must learn to use energy, land, water, and food crops more rationally? What is the combination of small-, medium-, and large-scale farms that can de-risk protein supply chains? To illustrate, we introduce the concept of beef parity, measuring a group of discrete resource inputs across the entire supply chain needed to produce 1 kilogram (kg) of beef protein, and the equivalent amount of other protein options in terms of resource consumption on a per-kilogram-of-pure-protein basis (i.e., non-harvestable unit, meat, or meal).
At a high level, beef, salmon, and chicken operations that are vertically integrated may struggle to perform well in water-constrained geographies. Among plant-based alternatives, algae is presently constrained by its water needs in a way that canola is not, for the simple reason that canola does not require the 20% irrigation rate that we specified in our model. For algae, as with salmon, the major innovation opportunities revolve around water recycling. For land-based crops, and especially where cropland areas are committed to specific varieties, drought- and salt-tolerant varieties will be essential to growing more food with less fresh water.
In terms of fossil fuel needs, the energy use in production should be traced all the way upstream to input activities like feed production and animal rearing, as well as downstream to activities that are closer to the consumer, such as meat and meal processing. Beef again performs poorly, but both chicken and salmon production methods have significant electricity demands as well. These meats are therefore less attractive for production in regions with high energy costs. In cases where producers are committed to growing these meats, on-site renewable energy installations or forward-looking electricity price contracts can lessen the long-term costs as well as the environmental impacts of production.
Chicken stands out as the most labor-intensive of the protein sources in this study, requiring more people-per-protein than any other source we analyzed. Automated feeding and cleaning are among the biggest opportunities in reducing labor requirements. Algae production requires nearly as much labor as beef and much more than the other alternative proteins on a per-kg protein yield basis, which we believe is partially a consequence of the relative immaturity of the industry. Automated pond management, harvesting, and drying technologies would benefit the algaculture industry greatly. For beef, animal monitoring technologies can help automate some of the processes that currently require hands-on effort during cattle rearing.
Beef production is also a relative land-hog, meaning innovations that reduce the land needed to produce protein from beef will likely be met with considerable willingness to pay from producers. Among the other protein sources in the study, chicken commands the next largest land use, owing mainly to its need for land both for growing feed and for growing the chickens themselves. Salmon production’s grow-out phase represents its greatest land constraint, including nearshore marine growing areas. Here again, geographical dependence is a major part of sustainable protein production.
Numerous other considerations have to be made when comparing protein types, not the least of which are the protein quality in terms of digestibility and nutrition, and the non-protein product and waste components. This is easily done to resolve the most sustainable paths for protein provision. With this in hand, technology developers can focus on future-enabling innovation, and those in the protein supply chain can proactively de-risk their future.
Syngenta was the subject of breathless press coverage once again this week, with headlines about Monsanto’s takeover intentions capturing a significant portion of the coverage, and BASF’s newly revealed activities taking a close second. For those clients who are unaware of the ongoing posturing in the space, here’s a quick recap:
Monsanto has previously made multiple offers, over multiple years, to purchase Syngenta. These offers have carried varying valuations for Syngenta, with the most recent and seemingly serious proposal valuing Syngenta at $45 billion. Syngenta CEO Michael Mack has spoken up, calling the offers to date an undervaluation of the company, and that the anti-trust implications would be significant; additionally, Syngenta has posted promising growth figures recently, making it a poor time to consider offers. Meanwhile, Monsanto executives have been working in the background, claiming to have verbal support from various Syngenta shareholders. Very recently, BASF announced its intentions to block Monsanto’s efforts, stating that they had raised bridge funding for a potential takeover. Rather than take an active role, however, BASF intends to remain reactive and claims it will only advance its efforts in the event that Monsanto brings a formal proposal forward.
In light of these battling titans, Lux asks the question: What would the impact(s) on the agribusiness industry be if either titan is successful?
If Monsanto is successful in convincing Syngenta to accept its overtures, it will retain Syngenta’s chemicals businesses and divest the company’s seed businesses. Monsanto believes this will assuage concerns of anti-trust regulators, though it’s possible Monsanto will have to divest essentially all of its seed businesses and become a pure agrichemicals company to truly satisfy those demands. BASF will number among the would-be buyers for a portion of the seeds side. Based on comments in the press, Monsanto is likely to treat the transaction as a means to access Syngenta’s existing facilities and customer base, rather than its R&D pipeline. Current Syngenta R&D efforts may be shuttered in favor of ongoing Monsanto efforts.
Monsanto is likely to move its headquarters to Basel where Syngenta is already headquartered, thereby taking advantage of the more attractive corporate tax situation in Switzerland compared to the U.S., saving billions of dollars that it may well use to sweeten the deal for current Syngenta shareholders. Current dealers of Syngenta seeds and chemicals will lose out, likely to be forced to shift to Monsanto-branded products. Growers currently using Syngenta seeds may switch to other agrichemical providers rather than purchasing Monsanto products, a potential boon for the eventual purchaser of Syngenta’s current seeds business. Monsanto’s precision agriculture offerings will likely become more accessible to European growers (and will be marketed to them more aggressively), leading to an increased cost of production and increased yield for corn, soy, and wheat in Europe. Within five to eight years, European row crop farm incomes will be much more volatile. There will be little noticeable change for U.S. growers beyond the disappearance of the Syngenta brand from available options, and potential marketing pressure to switch to Monsanto-branded products.
BASF has said it will only make a formal offer as a defensive move in the event Monsanto follows through with a formal offer of its own. If BASF succeeds, it will be because it brought a more attractive offer to the table than Monsanto could. Anti-trust concerns would dominate the initial joining between these two as well, likely prompting sell-offs. As BASF has been much less vocal in the press about its intentions, it is harder to predict its strategy. Lux would expect BASF to focus on chemistry over seeds as well, perhaps making Syngenta’s seed business available for purchase. The potential tax implications are not so impressive in this case, and it is unlikely BASF would move its headquarters. The combined company would likely move quickly to dominate the European market, potentially at the expense of market share in the U.S. That could end up being a boon for Monsanto, which would likely intensify its focus on gaining U.S. market share. The long-term result of a BASF success would likely be increased regionality among the major agribusinesses.
In any event, if either attempt is successful, the result will be a even smaller group of leading companies in an already well-consolidated industry. Rather than the “Big Six” of agriculture to date, the new group will be the “Huge One and Big Four” going forward. A smaller number of major players can often stifle innovation in an industry, as it means fewer potential partners and licensees for startups trying to innovate. Either overtaking company should double down on open innovation to ensure that the long-term impacts of its actions don’t include a drought of novel ideas for agriculture.
Seed treatments are a rapidly growing aspect of commercial agriculture. From seed disinfection to fungicidal and insecticidal treatments that protect growing seedlings, more and more seeds carry technology with them when planted. To identify opportunities and threats within the commercial seed treatment market, we analyzed the breadth of options available for a selection of major crops, specifically corn, soy, wheat, and vegetables. As part of the analysis, the chemical seed treatment offerings on the market today were also catalogued to identify and categorize the active ingredients behind each product, and the associated modes of action.
This analysis focused on insecticides, fungicides, and nematicides, although the offerings for nematicides were limited in vendor (Syngenta) and active count (three), so we focused more deeply on the former two. What is clear is that there is significant risk in the seed treatment industry: leading agrichemical suppliers have relatively broad portfolios of products, but those products rely on active ingredients with a small number of modes of action. There is a high risk of resistance emerging in both insects and fungi as a result, and regulatory changes pose threats to seed treatments, evident from the European ban on neonicotinoids. With neonicotinoids representing more than one third of the available active ingredients in these crops, European growers face the greatest challenge in protecting their seeds and will be most desperate for alternatives.
These risks demonstrate an unmet need for actives with novel modes of action. To respond to this, insecticide options (and insecticide developers) will need to diversify as regulatory pressures will play a role in neonicotinoids losing their market dominance, while emerging insect resistance will further reduce growers’ options for seed protection without new approaches. Polymer adhesives, plasticizers, and colorants need to be more refined as seed treatment development focuses on maximizing the activity of small molecule pesticides. In order to use ultra-low doses of these types of novel actives, carriers will be needed, while functional polymers, especially those which help the seed scavenge soil moisture or minimize water infiltration into the seed before germination, will need to continue their advancement.
There are numerous glaring opportunities for incumbents and new entrants alike, and a meaningful set of start-ups and SMEs who have already started down the path of development, for those looking to accelerate penetration through M&A or partnership. What is certain is that the need for new technology is pressing and this opportunity is not yet being fully addressed.