🚜The Agtech sector may be rebounding

^ENTERPRISE
Bayer urges Patience from investors

Bayer has slashed its full-year earnings outlook as weak agricultural markets and regulatory pressures take a toll on the company’s performance and ambitious turnaround efforts. The chemical giant reported a third-quarter net loss of €4.18 billion, driven by pricing challenges from cheaper glyphosate generics and declining business in Latin America. Bayer’s crop science division saw a 3.6% drop in sales and a 25.8% decline in adjusted EBITDA.

Key Challenges:

• Pricing Pressure: Competition from lower-cost glyphosate generics is squeezing margins.

• Regulatory Issues: Ongoing litigation related to RoundUp and regulatory hurdles around dicamba continue to create uncertainty.

• Global Market Slowdown: Adverse weather and disease outbreaks in Latin America have exacerbated financial strain.

CEO Bill Anderson has implemented significant restructuring, including job cuts and a revamped operating model, but emphasizes that patience is needed for the turnaround to bear fruit. The company has delayed plans to break up its divisions to focus on stabilizing finances, with a renewed push for innovation in crop science despite litigation headwinds.

Despite the turmoil, Bayer reports better performance in consumer health and pharmaceuticals, signaling some resilience. However, CFO Wolfgang Nickl forecasts a challenging outlook for 2025, with likely declines in earnings as the company navigates a turbulent agricultural landscape.

^INVESTMENT
The Agtech sector may be rebounding

After a tough period for AgTech, investment values are showing signs of recovery. According to Pitchbook, deal values grew over two consecutive quarters, totaling $1.6 billion in Q3, a 15% increase from Q2. However, the number of deals dropped by 18%, highlighting a “cautious optimism” in the market as investors prioritize high-quality startups over a sheer volume of investments.

Key Trends:

• Selective Investments: Despite fewer deals, startups addressing automation, sustainability, and carbon removal are drawing more venture capital.

• Shifting Focus: Interest in autonomous robotics and carbon solutions is strong. Monarch Tractor raised $133 million for electric smart tractors, and Eion secured a carbon removal deal with Microsoft.

• Challenges Remain: Indoor farming continues to struggle, with Bowery Farming recently shutting down. Sustainable, profitable models are still elusive.

Context & Outlook: AgTech investments peaked at $13.9 billion in 2021 but are down to $4.3 billion as of September 2024. While some companies struggle to secure funding, top-tier startups are benefiting disproportionately, signaling a market that favors innovation and proven models. Investors remain cautious but are increasingly drawn to solutions that promise efficiency and sustainability in agriculture.

^STRATEGY
How to pick a good Agtech investment

Proven Return on Investment

Agricultural technology must demonstrate clear, measurable financial impact for farmers. The most successful investments focus on solutions that either significantly reduce operational costs or drive meaningful revenue growth. In today's challenging agricultural economy, technologies that can't show concrete bottom-line improvements within a reasonable timeframe rarely gain traction. Your investment decisions should prioritize solutions with demonstrated ROI through real-world testing and validation.

Practical Agricultural Impact

Success in agtech requires solutions that address fundamental challenges facing modern farming operations. The most valuable investments target critical issues like labor shortages, weather volatility, and operational efficiency. While emerging technologies are exciting, the focus must remain on practical applications that solve real problems farmers face daily. Technology that streamlines existing processes or introduces achievable improvements tends to outperform solutions that require dramatic operational changes.

Strong Leadership Foundations

The quality of the founding team often determines an agtech venture's success. Look for leaders who combine technical expertise with genuine agricultural experience. Founders who have previously built and scaled agricultural businesses are particularly valuable, as they understand both the technology and the unique challenges of the farming sector. The best teams maintain strong connections with the farming community and actively seek input from producers.

Agricultural Stakeholder Engagement

Investments backed by active farmers and agricultural professionals typically show stronger performance. Early involvement from producers helps refine products to meet real-world needs and accelerates market adoption. Consider the level of farmer engagement in product development and testing - strong support from the agricultural community often indicates market viability and practical utility.

Strategic Growth Potential

Recent success stories like Cover Cress, which secured acquisition by major industry players, demonstrate the importance of strategic positioning. The most promising investments show clear paths to scale, whether through industry partnerships, market expansion, or technology advancement. Look for solutions that can grow beyond initial markets while maintaining strong agricultural focus and utility.

^INVESTMENT
African AgriFoodTech Booming with Ag Marketplaces & Fintech Leading the Way

The African agrifoodtech scene is undergoing a significant transformation, led by startups in Ag Marketplaces & Fintech. According to AgFunder’s 2024 Africa Agrifoodtech Investment Report, these categories are driving change and attracting major funding: $65 million spread across just 17 deals in 2024. Despite a challenging 2023 that saw a 62% decline in overall funding, investor confidence remains strong in this high-potential sector.

Key Market Highlights:

• Kenya Dominates: The country secured $40 million from just 8 deals, cementing its status as a leader in agricultural innovation on the continent.

• Game-Changing Digital Platforms: These solutions are revolutionizing the sector by connecting farmers directly with consumers and integrating vital services like financial products and weather updates, boosting efficiency and resource access across the agricultural supply chain.

Funding Trends & Growth:

• The sector has closed 198 deals over the last decade, with total funding hitting $544 million, highlighting the sustained investor belief in technology's power to transform African agriculture.

• Notable Deals in 2024: Pula Advisors raised $20 million in Series B funding, Apollo Agriculture secured $10 million through a debt round, and Ghana’s Complete Farmer clinched $9 million in Series A funding. These investments are expanding the reach of agritech solutions across and beyond traditional markets.

Impact & Outlook: Ag Marketplaces & Fintech are not only connecting farmers to markets but are also empowering them with critical tools for growth. The sector’s resilience and ongoing investment show a bright future where technology continues to empower smallholder farmers, making agriculture more efficient, sustainable, and profitable.

^TREND
Microgreens: A big Trend in horticulture

The global microgreens industry is experiencing significant transformation, evolving from a niche segment to a substantial player in agriculture. With a $1.7 billion market value in 2022 and projected 8.6% CAGR through 2030, the industry shows promising growth potential driven by health-conscious consumers, technological advances, and sustainable food production trends.

Key Market Dynamics:

1. Vertical Integration and Technology

• Indoor vertical farming is growing rapidly at 23.6% CAGR (2020-2025)

• Driven by urbanization, limited agricultural land, and demand for year-round production

• Enables consistent quality and higher yields in smaller spaces

• Offers better control over growing conditions and reduced environmental impact

2. Geographic Distribution

• North America leads with 60% market share

• Asia-Pacific showing rapid expansion due to:

  • Growing health consciousness

  • Rising disposable income

  • Increasing urbanization

  • Demand for local produce

3. Consumer Trends

• Premium positioning in the market

• Strong preference for nutrient-dense varieties

• Growing awareness of health benefits

• Integration into mainstream retail channels

Market leaders like Gotham Greens, BrightFarms Inc., and Plenty Unlimited Inc. are differentiating themselves through technological innovation, sustainable practices, strategic urban locations, and advanced supply chain management.

Key Opportunities:

• Expansion into emerging markets, especially Asia-Pacific

• Integration with existing retail networks

• Development of value-added products

• Implementation of automated growing systems

• AI-driven cultivation optimization

• Sustainable packaging solutions

Primary Challenges:

• Maintaining year-round quality consistency

• Managing production costs

• Efficient scaling of operations

• Consumer education

• Price competition

• Distribution logistics

• Brand differentiation

Success in this market requires:

• Strong technological capabilities

• Efficient operational systems

• Clear brand positioning

• Strategic market expansion

• Quality control protocols

• Workforce development

• Strong distribution networks

^INNOVATION
Dry Fermentation = 60% Reduction in water

Green Spot Technologies, a French startup, is revolutionizing food waste management with its sustainable, dry fermentation technology, branded as Ferment’Up. Using 60% less water than traditional methods, Ferment’Up transforms food industry by-products, like spent grains and fruit peels, into nutrient-rich ingredients. This circular economy approach reduces carbon emissions and soil degradation while creating alternatives to environmentally costly ingredients like cereals and cacao.

Key Impacts:

• Diverted 150,000 kg of food waste, avoiding 235 tons of CO₂ emissions.

• Developed scalable technology producing 100,000 kg annually, aiming for profitability by 2027.

• Anticipates €132 million in revenue by 2030 with 0.9% market penetration, addressing the booming $68 billion cacao and chocolate market.

The company is currently raising €6 million in Series A funding to scale operations. Adopting this technology could offer ag businesses a profitable, eco-friendly edge in ingredient manufacturing, driving environmental and economic benefits.

^MORE

America’s pistachio production is booming (Chartr)

Pistachios have surged in popularity in the US, becoming California’s sixth-largest agricultural commodity, thanks to their hardiness and lower water needs compared to almonds. In 2023-24, production rose 69%, while almond farming struggled with climate challenges. Despite pistachio profits, farmers remain cautious, recalling past oversupply issues with almonds.

Cox Farms becomes largest indoor farming operator in North America (AgricultureDive)

Since March, Cox Farms has rapidly expanded, doubling acreage and becoming North America’s largest greenhouse operator. Backed by Cox Enterprises' $23 billion revenue, the company continues investing in indoor farming despite industry struggles. Cox Farms now harvests over 450 million pounds of produce annually, focusing on sustainability and meeting consumer demand for fresh produce.

McDonald’s and Syngenta team up to create a more sustainable hamburger (AgricultureDive)

McDonald’s USA is collaborating with Lopez Foods and Syngenta to cut emissions from its beef supply by using Enogen corn as cattle feed. This initiative aims to save 164,000 metric tons of emissions annually while improving resource efficiency. Ranchers will receive incentives, and the first Enogen-fed cattle are expected in 2026.

The 2024 South American Wildfires: A Glimpse into a Blazing Crisis (LinkedIn)

The 2024 wildfires devastated South America, with 346,112 hotspots and 85.87 million hectares burned, severely impacting agriculture and ecosystems. Brazil’s Cerrado experienced a historic drought, affecting soil and water resources, while the Amazon’s low river levels complicated irrigation. Consequences include biodiversity loss, soil erosion, water contamination, and altered microclimates affecting farming sustainability.

China’s Mexico Strategy: Adapting to U.S. Tariffs and Reshaping North American Trade (LinkedIn)

Mexico has overtaken China as the U.S.'s top supplier, thanks to nearshoring and strategic Chinese investments in Mexican factories. By relabeling goods as "Made in Mexico," Chinese firms avoid U.S. tariffs under USMCA. While Mexico gains economically, infrastructure challenges and political risks could disrupt this advantage in the coming years.