The DIALogue #56
Kubota Makes SaaS Bet, Cargill Served Rocky Road, and the State of Foodtech
Happy Friday.
Welcome back to the 56th edition of the DIALogue. The DIALogue is a weekly insights newsletter from DIAL Ventures, Purdue University’s food and agriculture venture studio.
Stories:
Kubota adds SaaS to its crop rotation: On Bloomfield Robotics
What’s going on at Cargill?
Farmers grapple with rising healthcare costs
State of the Union: Foodtech
Kubota adds SaaS to its crop rotation: On Bloomfield Robotics
Kubota has acquired Bloomfield Robotics, a Pittsburg-based company that uses image analysis and AI technology to determine optimal specialty crop harvest timing and provide yield prediction services.
Who is Bloomfield? Bloomfield Robotics is an AI-SaaS startup that offers farmers real-time plant health analysis. Their tech is used for grapes, blueberries, and other specialty crops. Bloomfield spun out of Carnegie Mellon’s Robotics Institute in 2017 by George Kantor and Tim Meuller-Sim.
Strategic Fit? Equipment manufacturers are increasingly moving toward digital service models. John Deere, for example, wants 10% of its annual revenue to be software service fees by 2030. Analagous to shifts in industries like healthcare, OEMs are moving from selling equipment to selling outcomes.
It’s also much more profitable:
Data collection and analysis companies are increasingly relevant to OEMs as they shift to these digitally-enabled business models.
Sound Bite: "Combining AI-driven technology with our legacy quality products will enable Kubota to solve real issues facing agriculture. This acquisition is a key milestone for Kubota's strategic vision to provide comprehensive smart agriculture solutions.” - Brett McMickell, CTO for Kubota NA
Surprising? I think not… Kubota leading the digital charge is not news to us at DIAL Ventures — Brett spoke about this very thing at our workshop last spring.
To Read More:
Kubota North America acquires Bloomfield Robotics
Highlighted Hits
Something’s Poisoning America’s Land. Farmers Fear ‘Forever’ Chemicals. (New York Times)
Produce companies see solar energy as a natural fit (The Packer)
Farmers rely on connectivity and data to support a growing population (TechRadar Pro)
How farmers interact with agribusiness reps (Purdue University)
What’s going on at Cargill?
Global trading house Cargill will undergo structural changes after missing internal earnings goals.
In Brief: Commodity-trading giant Cargill faces tough times as wheat, corn, and soybeans prices fall. This year, profit sunk to $2.5 Billion from the record $6.7 Billion it collected in 2022. In response, CEO Brian Sikes announced an enormous structural change, combining their previous 5 business units into just 3.
Soundbite: “As all healthy businesses do, we constantly review our performance and portfolio to ensure we are positioned to deliver for our customers and win in the marketplace,” Cargill said. “As we look to the future, we have laid out a clear plan to evolve and strengthen our portfolio to take advantage of compelling trends in front of us.”
Are they the only ones? No, Cargill isn’t alone in the industry. All three of the big “ABC” commodity-traders (ADM, Bunge, Cargill) are suffering from macro-economic downturns.
Cargill, however, is more impacted by low profits. As Bloomberg points out, Cargill finances acquisitions with retained earnings, whereas public companies Bunge and ADM use shares to acquire rivals. Accordingly, low profit alters Cargill’s M&A strategy.
To Read More:
Cargill’s CEO Shakes Up Business After Profits Miss Goals
Exclusive: Cargill internal memo describes structural overhaul to streamline company
News from DIAL Ventures
Oaken selected to join SVG Ventures’ Academy V Cohort:
Gripp featured on the Midwest Moxie Podcast:
Scott Nelson and Tracey Wiedmeyer take the stage at Alloy:
Farmers grapple with rising healthcare costs
Long-term care needs are one of the biggest threats to small family farms. Farmers go to great lengths and years of planning to protect their land in their golden years. (NPR)
Estate taxes have lost their crown as the biggest threat to a farmer’s estate. That title now belongs to long-term healthcare costs.
The Conundrum: Long-term care costs anywhere from 20-100k per year. Long-term care is covered by Medicaid, but individuals with large assets (like farmers with farmland) don’t qualify. When savings run out, farmers are forced to sell their farmland to cover costs. Children expecting to farm in the future are forced to look elsewhere.
Solutions? Forward-thinking farmers can devise clever legal workarounds to the Medicaid limits. These workarounds work best when farmers plan them 5 years in advance. However, long-term care isn’t always something you can plan for.
Soundbite: “Most farmers live very frugally. They don't have living expenses of $100,000 a year. So when they get a $100,000 bill from the nursing home every year, that's just not in their budget.”
A Strategy:
State of the Union: Foodtech
The second quarter of 2024 was eventful for the foodtech industry. It was marked by strategic shifts, innovative product launches, and significant regulatory developments. Despite economic challenges, the sector continues to adapt and evolve, driven by consumer demand for sustainable and convenient food options.
Pitchbook just released their Q2 Foodtech Report. Food technology is truly a unique and fascinating space!
Big Picture: $2.5 Billion was invested across 219 deals last quarter. This is a slight drop but tracks with the post-2022 hype period. Notable acquisitions include
Ibotta, a CPG Marketing platform, to Koch Disruptive Tech for $2.4 Bn
Kitchens@, a ghost kitchen service provider, to Invesdor for $145 Mn.
Changes in CPI, Important to Remember:
Restaurants prices has inflated more than grocery, primarily because labor costs weigh heavier in their revenue. Grocery stores have introduced food-at-home options, eroding restaurants’ market share.
Pitchbook points out how this inflation is cooling down. Besides having a positive effect on restaurants, this will shake up the grocery/restaurant delivery business.
Shoppable Recipes on the Rise: Just like OEMs, Foodtech has embraced selling “outcomes”. Pitchbook does a great dive on them. Upstream agriculture will find this increasingly relevant as they begin to seek comprehensive consumer nutrition datasets.
That’s all for today. Thanks for reading!
Will certainly be addressing this next week if Purdue pulls through:
(though hopes aren’t too high)
See you next week.