The Parting Out of AgTech

Dec 20th, 2023: My 42nd Edition of Easy Observations in AgTech (with some fun BREAKING news items...I think...)

Opening Thoughts:

Oh it seems I’m back with my normal shenanigans. As I caught most of you up last week I’m trying to get back into my writing again, but keeping it shorter with some semi-popular past quips I’ve written about on Linkedin and beyond. I’m sure it’ll get wordy with this one though.

This weeks addition comes with something I mentioned actually around my former employer. While I hope the best for them, they’ve been going through a lot of changes and it showcases some fun facts in this crazy world of Ag and Tech.

There are also a little fun extra piece around that too plus another breaking story some might find interesting.

Without further ado….

So long suckers!

(from my Linkedln post)

I’ve been hearing from many now, Telus Ag seems to be buying Proagrica. Bold if true and just goes to show Ag acquisitions by large outsider groups are not quite what they thought. They seem to be parting out older Ag acquisitions (think Corteva with Granular pieces, DTN Ag’s side, Trimble’s Ag division, and “others”) in an attempt to “reset”.

What does that mean? Well it shows the valuations and projections weren’t realistic to expectations. It means there isn’t as much real money in parts of AgTech as thought. It means software solutions in Ag have a tricky business process. It means some of these things need to be tied to more holistic Ag processes instead of trying to stand on their own.

The other thing it means is likely a great value for someone else. It depends on many factors, but most of the ones being “parted out” get sold for pennies on the dollar. While that still might bring legacy issues for the one buying it, the cool factor is that group is likely full aware of what they are getting without false assumptions and expectations. They’ll know what to do with it realistically.

(More on my extra piece regarding this last paragraph below…)

While I’ve been talking about an AgTech reset for awhile, it’s still interesting to see it all play out in its weird ways. Maybe major AgTech conglomerates don’t work well, but maybe minor ones can. Part of the issue is corporate culture honestly messing things up. I experienced it and know it doesn’t fit well especially for smaller acquired groups that were built the old fashion way or that just have a small business mindset.

I do think these groups parting things out is the best move as atleast the tech and people that are moving on can have another shot at growing instead of being swept under the rug inside the corporate veil. I think it also may quell these pompous evaluations and will get everyone back in a more sustainable process.

Of course what I find sort of funny in all this is some of the latest “thoughts” from large AgTech groups and VC investors on the state of things. Their tail is between the legs yet how they say it is like hearing a public apology from a famous actor after they did drugs, got arrested, or cheated on there spouse. It’s so forced.

To add to this original post above, some also don’t want it publicly stated either as it looks bad so keep reading for those stories and more….

So…what else?

As I wrote that last week some other news came my way. Something tied to the same horse as one might say. Apparently Telus Ag was selling off Conservis which it has/had a Joint Venture with Rabobank to none other than Traction Ag. More fun stuff…

I thought, “Yeah that makes sense, they did buy the part of Granular with its financial side and Conservis was one of the other competitors plus I’m sure it was a good deal.” They probably couldn’t say no!

Also, how could one not get it for cheap? I know more of the old original details of the Telus/Rabo/Conservis deal that I won’t share out, though here’s a quick reminder of the basics. Rabo I guess wanted to buy all of Conservis then but for some reason couldn’t (banking rules or something like that). They needed a partner, found Telus, and it took like a bit to hammer it all out. I never heard a direct exact number of that deal, but some rumblings I’ve heard from outsiders ranged in the upper 8 figures. I could be way off so don’t take it for much. Regardless, a lot of cheddar. At the time it was a piece of the puzzle Telus Ag needed that they didn’t have with the past want at the time. So all in all it seemed like a good fit.

From there I left a little after that and don’t know much more beyond some items I won’t share out of respect. Clearly something wasn’t working for Telus Ag or shall I say Telus Ag and Consumer Goods. P.S - You can probably see why they changed the name…

Why Traction? Why not, they are for one getting a good deal I’m sure and also around 30 people from what it seems that have an understanding and passion for the product. Win Win! It fits their exact business needs and like I mentioned above situations like these prove they are also fully aware of what it is and isn’t. They are way better positioned to make it into something it should be versus something that gets thrown to the wolves of corporate culture. Yeah, it’s a thing.

Out of curiosity to confirm this I reached out to Ian, the CEO and co- founder of Traction Ag after I heard this to get the skinny. He did not get into the full details of it, but he did share something in that he’s stepping down as the CEO to act as COO (this came out I think recently) and they are getting a SAAS tech experienced person to fit the bill and expansion. I mentioned that can be teetering path, but I feel it can make sense in the right context. With a group like themselves I think it can make sense, they have expanded rapidly, but in that world with your basic competition being Quickbooks and the likes you need to have a different mindset.

To no disrespect to Ian and crew, him stepping aside probably just gives him break from the tedious day to day and that’s okay. He’s been playing the game for awhile like many I know and leading stuff with the size they are now (50+) takes a lot out of a person. No harm no foul here kids. They’ll be fine.

The financial and tax side of Ag that they are dealing with takes a way different process than say software for agronomic purposes. Numbers and taxes takes number and tax people and it sounds like they’ll have that through and through. They didn’t really get that with their Granular parts purchase so they need a bigger crew. This purchase gets them a relatively cheep and fast acquihire process too which enhances their past endeavors.

All in all, because this is all tied to my one post I wanted to just talk about it. It’s also a growing trend of smaller groups buying parts from others for really good deals. Think AcreValue (from Granular parts) to Ag-Analytics and Farmlogs to Bushel and others. There isn’t many AgTech conglomerates and not many pieces to them, but there are still pieces that likely can and will be parted out as their visions mature and evolve. Time will tell…

Surprise! There’s more!

Of course there is and it’s like when I post one thing I hear of another connecting thing and just have to talk about it. I’m cursed I suppose.

So what the hell is it?

Corteva (It’s still Pioneer to me) is passing off their long acquired software in AgStudio to none other than Ever.Ag. The details, it’s a customer transfer with a dash of people from AgStudio. Apparently this all starts the beginning of next year and they really are not planning to make a big splash about it or release. Seems odd but whatever.

I’m not really sure why it’s happening beyond something I heard awhile back after the Granular mess. More or less, AgStudio isn’t setup to aggregate data the way Corteva wants. It’s more of a software built in the old times, the long long ago of Precision Ag, not AgTech. It’s meant to help with agronomic processes and that seems to be something they don’t want I guess while getting someone else to deal with it.

After the Granular stuff I heard there was a massive internal process to grab all the data grower and agronomic data from everywhere and from all places and store it elsewhere for future needs. That can mean a lot and it also sounds a little odd. They clearly are building something internally that is different. I’m sure it’ll work great………………… No ag data transparency issues here to see………………

This just proves out my AgTech reset thought and parting it out and as I’ve spoken about before around DTN (owned by TBG) doing the same. Even Trimble did it recently. Naturally Proagrica’s owner RELX group is following the path and well Corteva starting the process with Granular IP. As with Telus Ag, it is now letting go parts with Conservis and also to be rumored AgIntegrated tech which is where I used to work (I heard that indirectly)! Yet they want to double down with Proagrica I guess. The powers at be have a plan I suppose and it’ll be interesting to see!

Fun freaking stuff right! For some yes, the buyers of those groups will get crazy good deals and likely a way to jump start these business processes. For the seller, it means they tried and it didn’t work. Beyond that, the mess of AgTech continues…

So, the question is what the hell is going on?

In Closing:

I’m not going to dive into that more than I already did beyond what was explained in above. In short what I really think is going on is a lack of understanding of value and how to grow it within AgTech and Ag as a whole. Many of these groups lost their core creators or just their passion in what they were doing. I saw that directly and I know others have had the same problem.

That’s the real problem with any company being acquired by another regardless of who. Passion and experience is the key. I’ve seen it time and time again and some can continue that passion, others can’t. It’s tricky. I can’t blame anyone for it not working either. There is a want, its meticulously looked at, decisions are made on both ends, and a switch happens. It’s a risk on all fronts.

All in all, I think the real problem these larger AgTech conglomerates are having is that they are taking on a lot really fast. That might be multiple groups in a short time frame or the weight of how much they acquired that group for (cough Granular). Many jumped in fast to get what they could get quick so some other compeditor didn’t. I sort of feel that’s where Ever.ag is going. If they can figure it out is tough to tell now. There’s a lot going on there.

In the end, many others and well as myself are confused on where AgTech is heading in any direction. The last 10 years showed that money doesn’t solve problems. Maybe time will solve problems in the next 10 years as it all evolves into reality. Not sure, but it’s something I’ll continue to write about. Hang 10 my friends…

Thanks for reading Easy Observations! Please Share, Subscribe, and Comment if you would be so kind. I’d also be happy to get together and meet if you’d like to talk more in-depth about AgTech. Feel free to contact me at my website. All the best!