Standing here in 2026, where caring is apparently “cringe,” it’s difficult to describe the way in which “feed 9 billion” became an earnest call to arms for so many across the industry. In the show Silicon Valley, there is a punchline that every tech company in the early 2000s just wanted to “make the world a better place.” The agriculture industry’s version of this was that every company just wanted to help “feed the world.”

While Janette Barnard has beaten me to the punch by several years in explaining why “feed the world” is sooo 2009, this industry rallying cry did motivate the agriculture industry to focus relentlessly and singularly on increasing yield.

Lately, I’ve noticed a vibe shift, particularly in the US commodity crop corner. No longer is it “feed the world” or “feed 9 billion.” There’s a new message I’ve been hearing more and more, a steady drumbeat getting louder:

“We are overproducing.”

To be fair, environmentalists have been saying this for a while. However, more and varied voices are joining the chorus, with diverse reasons beyond environmental concerns:

Often, “overproduction” is used as a set-up to a favored solution: stop farming poor ground, chug more biofuels, decommodify commodities, break up monopolies, diversify crop mix, make “food is medicine” instead of “food is food/fuel/fiber,” or insert-your-agriculture-agenda-here.

Before we declare the culprit as “overproduction” and that becomes the marching order for the next fifteen years, I want to know if it’s true. And if “overproduction” is the villain, what does that actually mean?

Let’s dig in!

Reality check: what does the data say

You don’t hear people saying “we grow too much spinach!”

Instead, the “overproduction” label is applied squarely to commodity crops like corn and soybeans. This makes sense as corn and soybeans are grown on a majority of the farmed acres in the US and world, and when harvested are exported globally and used for biofuels and livestock feed. We’ll focus on this argument today.

So how much corn and soybeans are actually produced in the US? And how does that compare to how much is left over in any given year?

When we look at soybean production in the US over the past nearly two decades, the trend is up and to the right. American farmers grow nearly 60% more soybeans today than in 2007. Now that’s what I call yieldsmaxxing!

At the same time, the “Ending Stocks,” or how much is left over in storage from one year to the next, has remained steady as a share of production, around 8%. This means that even though production has increased dramatically, somehow, over 90% of soybeans have found a job and demand has kept up.

Subscribe now

You’ll notice one discrepancy in this chart. In 2018, with the first blows of the US-China trade war, the ending stocks ballooned up to 20% of the total production that year. Farmers reacted in 2019 by growing much less soybeans. In the most recent rounds of the trade war, ending stocks have not spiked and have remained steady instead.

Corn production over the past two decades has increased by 30%. While this 30% is about half of the relative growth that soybeans experienced, keep in mind that the corn crop is much larger than the soybean crop (the average acre of corn produces ~200 bushels and the average acre of soybeans ~60 bushels). The increase in corn production over the time period represents nearly 4 billion more bushels (about the size of the entire 2025 soybean crop).

Despite the increase in corn production, the amount left over in any given year has remained steady around 11% of production. In 2025, the ending stocks ticked up to 13%. Given 2025 featured a monster crop over 2 billion bushels bigger than 2024, that is expected.

Looking at this data, we’ve established that American farmers are certainly growing more corn and soybeans than ever before. However, this new supply is getting absorbed, as the ending stocks haven’t been rising along with production.

No doubt we are producing, but what might we actually mean when we say “overproducing”?

Creative way to call out low prices

When corn was flying high at $8 per bushel back in 2012, of course farmers wished they were growing more. But no one was shaking their fist on LinkedIn that the entire agricultural sector was “underproducing!”

When people decry “overproduction” today, it’s likely they are really just saying “prices are too low.” Specifically, that prices are too damn low for farmers to turn a profit.

This is the likeliest culprit – especially when we look at farmers’ bottom lines. In 2025 in the US, farmers were losing an average of $50 to $60 per acre of corn or soybeans.

In a market-driven commodity market, when more is produced than demanded, prices drop until a new steady state price is reached. Today, that price is 40% below the all-time high for soybeans and almost 50% lower than the all-time high for corn.

Meanwhile, prices for the inputs to produce a crop, like fertilizer, fuel, labor, interest, and crop protection have remained stubbornly high, squeezing the farmer.

Even though demand has kept up with the increasing supply enough to soak up all of the billions of additional bushels grown in the past 20 years, this new demand has not translated into farmer profitability.

Is it really about where the supply is coming from?

My media diet is heavily attuned to US Midwestern row crop farmers. However, the biggest story in corn, and especially soybeans, in the last decade is Brazil.

Today, Brazil is the undisputed leader in soybean production, growing 40% of the world’s soybeans. That was not the case a decade ago, when the US was in pole position.

In the past 10 years, Brazil has also more than doubled corn production. While Brazil is still a distant third to the US and China, it’s important to note that very little of China’s corn is exported, which again leaves the US and Brazil competing to fulfill global export demand.

In the not-so-distant past, a huge portion of exported corn and soybeans were produced in the Northern Hemisphere. This meant that every autumn, there was one big harvest that would get exported around the globe. Prices would drop as the market flooded with new grain in the fall. As the year wore on, prices crept up as stored grain dwindled, before the next harvest provided certainty around how much grain would be available for the coming year.

These price fluctuations meant that farmers who could store their grain could take advantage when prices would spike.

Brazil, as you may be well aware, is in the Southern Hemisphere. Brazilian grain is harvested around March and April for soybeans, and from February to August for the two corn crops per year. Instead of one big motherload of grain hitting the global market once per year, now grain enters the market several times per year.

Grain buyers suddenly have more options, and more certainty, meaning that the “summer price rally” is no longer a profit-taking opportunity for farmers. It costs more to produce grain in the US than in Brazil, so the North American farmer feels this squeeze more, too.

Is it really about demand?

Corn and soybeans are commodities. By definition, soybeans grown in Missouri are interchangeable with soybeans grown in Mato Grosso (I know some of you will say that the grain composition might differ or there might be regional quality differences, but bear with me here). At any given moment, there is one global price for corn or soybeans.

The physical reality is quite different. A single harvested bushel of corn is a 56-pound collection of ~80,000 tiny little pieces that have to be carefully protected from moisture and stored with specialized equipment. Now, imagine the 17 billion bushels of corn produced in the US in 2025 alone – heavy, bulky, and generally a pain in the ass to move around. As a result, the price that a farmer is able to sell their grain is based on where they can sell their grain.

Where a farmer can sell their grain is highly dependent on who nearby can export or make use of that grain. There has been diligent investment to create demand for the billions of bushels grown every year, from biofuels, to more livestock to feed, to new materials, to new export markets. This demand isn’t unlimited, however.

As trade disputes have cleaved the world anew, farmers’ access to export markets has changed. And while market access has shifted, the existing infrastructure and sheer physics of moving grain has not.

Notably, China previously bought about a quarter of US soybeans. As trade tensions worsened through the fall of 2025, purchases from the US screeched to a halt. Since November, China purchased 12 million tons of US soybeans (about half of what was purchased in 2023) in line with a US-China trade agreement. Since that commitment was met, China has returned to importing soybeans from South America that are ~$0.50/bushel (about 5%) cheaper than US soybeans.

Creating new markets to replace the previous demand by China requires building relationships and infrastructure, both of which can take years, if not decades, of effort. Growing more livestock, creating more demand for biofuels, or inventing new materials takes time as well, and there are no guarantees that new demand will magically materialize.

Beyond “overproducing”

It’s high time that we move beyond the simple rallying cry of “feed 9 billion.” And yet, “we’re overproducing” is an over-simplification, too.

Just as there is no one-size-fits-all in farming, there is likely no one-size-fits-all rallying cry that can capture all of the challenges, nor prescribe what to do next.

Perhaps a new slogan isn’t necessary. The low market prices say it all.

Leave a comment

I would love to hear your idea of what the next agriculture rallying cry (or cries) should be in the comments!

Topsoil is handcrafted just for you by Ariel Patton. Complete sources can be found here. Thanks to Tina Marsh Dalton and Kevin Kohler for reviewing earlier drafts of this edition. All views expressed and any errors in this newsletter are my own.

If Topsoil has helped you understand the fascinating world of agriculture a little better, please like using the heart button below, subscribe, or share with an ag-curious friend!

Gentle pinch. Twist. Tug. Plop!

The thousandth grape drops into the bowl. As the wilting days of summer soften into crisp fall mornings, I pick bunches and bunches of grapes from my garden. I dutifully wash and separate the fruit from the stems, one grape at a time.

I love this annual ritual of making grape jelly. Decades ago, my mom taught kids how to preserve fruits and vegetables through the local 4-H youth group. A half a dozen kids would come over and spend summer afternoons chopping loads of peaches and stirring hot, spattering pans of plum preserves. Last year, I became a Master Food Preserver through the University of California extension to teach others how to freeze, can, dehydrate, and ferment California’s finest produce.

Once several pounds of grapes are in a pan, I cook down the fruit. Over the high heat, each grape pops and releases its juice and flavor.

There is a misconception about making jelly: that the best fruits for preserving are overripe or bruised, those weeping berries or gouged pears. This is not true. What is true is that there is a shelf life to everything; some things simply cannot wait. As the fruit gets more mature, there are more sugars, sure. But the pectin and acid, responsible for the lovely, wobbly texture that jelly is named for, declines as the grape turns from puckering green to ripe purple. To preserve produce at its peak demands urgency. Not quite the urgent intensity of a dog’s eyes minutes before dinner, but certainly more than a nagging email.

After the grapes are cooked, liquid resembling mulled wine is left, without the spices or alcohol. Every grape is exhausted of its contents, and it’s now time to strain the mixture to separate the grape skins from the deep purple, flavor-and-pectin-rich liquid that will become the jelly. As the liquid cools overnight in the fridge, tartrate crystals form on the surface. I pass the liquid once more through cheesecloth to remove these tiny snowflakes, the precursor to the mysteriously named Cream of Tartar you find in the baking aisle.

On day two, I carefully pour the strained liquid into a shallow preserving pan along with scoops of warmed sugar and freshly squeezed lemon juice and crank the heat to high. All fruits naturally have some level of pectin. It is a long-stranded carbohydrate; imagine a mane of silky hair. When combined with sugar, acid, and heat, these strands of pectin get tangled up, trapping microscopic pockets of water to create a gel.

I stir and I wait. There are many ways to know the “gel point” is reached, the moment the molecules align to form a delectably firm grape jelly. I’ve gotten better at seeing the specific glossiness on the surface, watching as the bubbles ascend more slowly through the boiling liquid, sensing how the spoon traces a deeper pattern in the bottom of the pan. My cheat code is using an instant-read thermometer – once it reads 220°F (exactly eight degrees above boiling at sea-level), the cooked jelly is ready.

After many years of using mason jars only as trendy early-aughts decor, I welcomed the gentle rhythm of food preservation during the pandemic. Canning was a way to measure out time, to bottle it up, to tick it off, to mark its passing. In my pantry, the bright jars of apricot preserves, next to chunky peach chutney, followed by smooth pear jam were clear and inarguable evidence that months and seasons were indeed rolling by.

I pour the still-boiling jelly into hot, clean mason jars. I wipe the rim of each jar, and tighten the two-piece lids. This too, requires attention to get right – tightened enough to seal, but not too tight that it prevents hot air from escaping. One by one, I nestle all the jars into a pot of boiling water to disarm any remaining bacteria. When ten minutes are up, I fish out each jar from the boiling water and place them on the counter to cool.

While there is a thrill in being a one-woman assembly line, making grape jelly is the opposite of how I typically spend my days. It’s inefficient. It’s inconvenient. It’s manual and tedious. As much as I personally enjoy this process, I emphatically do not believe we would have a better food system if everyone had to do this any time they wanted a PB&J. If anything, this annual ritual makes me marvel at the complexity hidden in every bite of food.

Pop! Pop! Pop!

Is there anything more satisfying than hearing the jars on my counter seal, as the tiny breath of hot air within each jar cools and creates a vacuum? I’ll save you the two-day journey to find out: the answer is no. Through the alchemy of preservation, what was previously five pounds of grapes threatening to decompose is now six jars of jelly that will last at least a year in my pantry.

To preserve is to grasp the ephemeral and save the very best at its peak for another day. To be able to lick summer off a spoon, past when the leaves have turned and fallen, when our tiny patch of Earth is tilted its very furthest from the sun.

Subscribe now

Topsoil is handcrafted just for you by Ariel Patton. I was fortunate to be a part of the Roots of Progress Blog-Building Fellowship this year, which challenged me to write this personal essay. I hope you enjoyed it! All views expressed and any errors in this newsletter are my own.

If you are interested in doing home food preservation, the UC Master Food Preservers host multiple free workshops via Zoom each month and have tons of research-backed resources to get started.

If Topsoil has helped you understand the fascinating world of agriculture a little better, please like using the heart button below, subscribe, or share with an ag-curious friend!

This is how I feel whenever the farm safety net comes up in conversation. Yeah, yeah, subsidized crop insurance, disaster aid, got it. But whenever farm news mentions “base acres,” or “reference prices,” I am lost. What do each of these do again?

As many farmers are currently harvesting crops that they are projected to lose money on, and rumors are circulating of a multibillion-dollar farmer aid package, I wanted to actually understand the farm safety net. While we will focus on the American-flavored version, governments across the globe use similar policies to bolster their farmers and agricultural economies.

Over the past 100 years, the farm safety net, although imperfect, has succeeded in keeping more farms afloat than otherwise would have without it. As the next US Farm Bill which authorizes these programs is being actively debated, it’s important that the farm safety net evolves to address farmers’ current challenges and maintain America’s agricultural productive capacity.

The alphabet soup of the federal farm safety net

Think of the federal farm safety net as policies and programs woven together to help farmers across the country contend with poor yields, low prices, or natural disasters.

The US Department of Agriculture (USDA) is home to the agencies that administer farm safety net programs. There are two main pillars of the farm safety net – crop insurance and commodity programs – plus one secret menu item (direct farm payments).

Crop insurance

Most people understand insurance. Maybe not the nitty-gritty details, but the big idea. Take car insurance, for example. Drivers pay money each year in case something bad happens, like an accident. If a driver gets into a fender bender, the insurance company pays money to the driver to help them fix or replace their car.

On farms, a lot of bad things can happen. Drought, severe weather, tanking commodity prices, a disease outbreak – any one of these can spell disaster. A single bad year can put a farm out of business, since farms operate on razor-thin margins even in the best of times. Crop insurance is one tool that farmers use to manage that risk.

Farms that grow and sell commodities earn money based on crop yield multiplied by market price. Crop insurance policies protect against either low yield or low revenue (yield times price). Most policies are “multi-peril” because they cover multiple risks (like the factors that influence global commodity prices or yield), instead of covering a single risk, like drought. Farms enroll in policies based on either their own individual farm’s historical performance or the performance of their surrounding area (like the county yield or revenue).

Crop insurance is administered through a public-private partnership. On the public side, the Risk Management Agency (RMA) manages the Federal Crop Insurance Corporation (FCIC), a government-owned public corporation. The FCIC works with roughly a dozen privately-owned companies, called Approved Insurance Providers (AIPs), that employ thousands of crop insurance agents who sell to farmers.

There are three notable things about US federal crop insurance. First, unlike your car insurance, the government subsidizes premiums (the fee paid for farmers’ coverage). Farmers pay an administrative fee and about 40% of the premiums, with the federal government picking up the remaining tab.

Second, the same level of coverage costs the same regardless of the insurance provider selling the policy. Whether a farmer buys from an agent next door or another agent a county over, the cost is the same. So, instead of competing on price, crop insurance agents compete based on their relationship with the farmer and the quality of the service provided.

Third, the vast majority of farmed acres in the country are covered by some level of crop insurance. As of 2025, over 100 different crops are covered across 543 million acres. Nearly 90% of commodity row crop acres (like corn, soybeans, wheat, and cotton) are insured. Coverage is lower for fruits and nuts (74% of acres) and vegetables (34% of acres), but is growing.

As of 2024, the federal crop insurance program costs about $14 billion each year to operate, with 70% going towards premium subsidies. The program is “actuarially sound,” meaning that more money comes in (premiums) than is paid out (indemnities).

The chart below shows the actual amount paid out since 1990, with “drought and high temperature” being a leading cause in recent years:

Commodity programs

Farmers who grow commodity row crops, like corn, soybeans, wheat, and cotton, are eligible to participate in commodity programs that payout when prices or yields fall below certain thresholds. There are two main options that farmers can select from:

• Agricultural Risk Coverage (ARC): Payment is triggered when the actual revenue in a given year drops below the “benchmark revenue.” The benchmark revenue is the average price multiplied by average yield, where the averages are calculated based on the past 5 years with the highest and lowest years removed. Farmers typically enroll in ARC using county-level averages, though an individual farm-level option is available.

• Price Loss Coverage (PLC): Legislators set national “reference prices” for each commodity (for example, the reference price for corn is currently $4.10). Payment is triggered if the actual price in a given year dips below either the reference price, or below 88% of the average previous 5 years of prices (with the highest and lowest prices removed).

Farmers enroll in commodity programs through one of the 2,300 local Farm Services Agency (FSA) offices across the country. It is free to participate in commodity programs, and payments can be up to $125,000 per person, per year. Commodity programs are paid out through the Commodity Credit Corporation (CCC), another government-owned public corporation. The total amount that the federal government spends on commodity programs varies by year, but averaged about $6 billion per year from 2018 to 2021.

Instead of being paid out on actual planted acres in a given year, like crop insurance, commodity programs are paid out depending on “base acres.” The FSA allocates a certain number of base acres of an eligible crop to specific parcels of land, based on historical averages going as far back as the 1980s. This year, 243 million base acres were enrolled in either ARC or PLC.

Subscribe now

Farmers with eligible crops can, and often do, enroll in both commodity programs and crop insurance. This can result in some odd, but perfectly legal, situations. For example, a farmer may have a field that has eligible corn base acres that he enrolls in either ARC or PLC. He may have planted corn last year on that field, but to maintain a healthy crop rotation, he plants soybeans this year. He enrolls his planted acres of soybeans in federally subsidized crop insurance. Depending on how corn prices or county-level revenues shake out, he may receive a check for his corn base acres, without planting a single kernel of corn this year. This is in addition to any crop insurance indemnities on his soybean crop (if triggered).

Commodity programs are one instance where the farm safety net cushions some farmers more than others. Specialty crops, like fruits, vegetables, and tree nuts, are not eligible for commodity programs. Only row crops, which are primarily used for biofuels and livestock feed, are eligible. If a farmer does plant more than 15% of their base acres with fruits or vegetables, they lose out on payments that year.

The hidden “third pillar” of direct payments

There is a less obvious “third pillar” of the farm safety net: direct farm payments.

These direct payments are not necessarily planned in advance (they are “ad hoc”). Cash is more likely to be distributed in years that farm income is low, and is often in response to extreme weather-related disasters. Recently, there has been a steep increase in the amount of direct payments per year. When farmers were buffeted by the US-China trade war in 2018 and 2019, farmers received $24 billion in direct payments. In 2020, when the pandemic struck, farmers were thrown another $23.5 billion lifeline. Currently, another $10 billion is expected to be announced, again in response to trade woes.

Direct payments are in addition to crop insurance and commodity programs. In fact, farmers must purchase crop insurance to be eligible for most direct payments.

Since 1998, more than $148 billion has been distributed, compared to $192 billion of commodity program payments and $89 billion of crop insurance indemnities for the same time period. The fact that this represents over a third of the total payments to farmers is a clear indicator that direct payments are an increasingly important thread of the farm safety net.

How we got here

If you were a superintelligent AI tasked with designing a perfect set of policies and programs from scratch to efficiently use taxpayer dollars to maximize production of nutritious, safe, affordable food while supporting rural communities and protecting the environment – the current US farm safety net is probably not what you’d design.

But if you can tease apart the warp and weft of the agricultural economy over the past century, the current farm safety net makes a lot more sense. The farm safety net that we know today has been crafted over the past 9 decades through 18 different Farm Bills to support farm income. Three events in particular shaped the farm safety net.

The Great Depression lasted more than a decade from 1929 to 1941. High rates of poverty and unemployment lowered demand for farm goods, dragging down commodity prices. As a double whammy, farmers were still paying back the loans they took out the prior decade to farm more land to meet the demand of World War I. Farm bankruptcies during this time more than tripled.

To make matters worse, the Dust Bowl also hammered farmers throughout the American Great Plains in the 1930s. The first Farm Bill was passed in 1933 and shortly thereafter, the US government introduced the first national crop insurance program in 1938 to help farmers recover from these twin disasters.

Fast forward forty years. The 1980s farm crisis devastated many farms and rural communities. In the 1970s, US farm productivity exploded as new technologies vastly increased the yield of each acre, and farmers were encouraged to plant “fencerow to fencerow.” Poor harvests abroad drove up prices in the 1970s, and inflation was rampant. Farmers borrowed to keep up with the demand. As interest rates rose to a high of 21.5% in 1981 and lending rules tightened, farmers, and especially those with any debt, were hit hard. By 1987, a new annual high of 1 in every 500 farms declared bankruptcy.

In response, Congress encouraged more farmers to participate in crop insurance by increasing availability to more crops and regions and paying part of the premiums. The first billion-dollar ad hoc disaster payments were also introduced in the late 1980s.

The most recent Farm Bill was passed in 2018. Now, farmers are waiting expectantly for the next Farm Bill, after more than a two-year delay, to address the challenges of today.

Has the farm safety net worked?

As the saying goes, “farms are the only businesses that buy retail but sell wholesale.” Farming is inherently a high-risk, low-margin endeavor. A farm’s multi-generational, centuries-long legacy can be broken by a single bad year. This is a real concern that many farmers face and should be taken very seriously.

Even if one cannot find it in their cold little hearts to sympathize with farmers, there is still a case that a functioning agricultural system is important to the national interest. Not just to “feed ourselves” (much of what the farm safety net supports goes to exports, livestock feed, or biofuels), but because this productive capacity, once lost, will be extraordinarily difficult to bring back.

Consider everything it takes to harvest an acre of land: the land itself, ideally with healthy soil and plentiful water, the equipment and inputs, the infrastructure to store and ship each bushel, and of course, the people with the knowledge, skill, and wherewithal to actually work the land. In essence, the farm safety net is valuable to maintain that productive capacity, and does a better job supporting some of those pieces than others.

There are many valid critiques of the farm safety net. It’s expensive – tens of billions of dollars a year. It’s not fair that some farmers, crops, and regions benefit more than others. It may influence farmers to take risks they otherwise wouldn’t. It gives input companies and landlords yet another reason to keep prices and rents high, squeezing farmers’ profit margins. And, it chafes against the image of the American farmer as an independent, rugged individual striving valiantly in a free market. A farmer quoted recently in the Wall Street Journal sums it up, “We don’t like to get government handouts, but we don’t like to go broke either.”

Subscribe now

In many ways, the farm safety net has achieved its goals. The number of farm bankruptcies in the 1980s was in the thousands, with a peak of 4,812 farmers filing for bankruptcy in 1987; more recently, there were 216 bankruptcies in 2024. More farms have been able to weather hard times and are still operating today. Even if consolidation has been increasing among farms, it’s likely that there would be even more consolidation had the farm safety net not been in place.

The work is not done. The farm safety net that has gotten many farms from the 1930s through the 1980s, all the way to 2025, will need to evolve. Today, many farmers (unless you raise cattle) are facing the worst economy of their lives. Two long-term shifts in particular are reshaping the status quo, and the farm safety net must adapt to this new reality.

Farmers are unfortunately victims of their own astonishing productivity; there is oversupply and thus cripplingly weak prices for many commodities that dominate US farmed acreage. An increase in yield per acre is ultimately a good thing for efficiency, but a challenge to contend with for the farmers who face the resulting low prices.

A reshuffling of global trade will continue with fewer export opportunities to drive demand. China is an example of a previous buyer that is likely not coming back for US farm products, or certainly not to the same pre-trade-war levels. The demand that does exist for crops like soybeans and corn is frequently being met by rising agricultural powerhouses, like Brazil.

Given all that, what should a farm safety net look like in 2025? How might it support farmers, mitigate risk, and ensure a productive future for American agriculture?

I’d love to hear your ideas in the comments below.

Leave a comment

Topsoil is handcrafted just for you by Ariel Patton. Complete sources can be found here. All views expressed and any errors in this newsletter are my own. Thanks to Mike Riggs, Allison Lehman, Hiya Jain, Tim Durham, Colleen Smith, Smrithi Sunil, and Karthik Tadepalli for feedback and discussion on this edition.

If Topsoil has helped you understand the fascinating world of agriculture a little better, please like using the heart button below, subscribe, or share with an ag-curious friend!

Today we are changing that.

I had an opportunity to interview my friend, Dr. Andrew McGowan, about all things soil. Andrew earned a PhD in Agronomy at Kansas State University, where he was a soil researcher. He has applied his expertise at several companies, including The Climate Corporation, Pattern Ag, Mineral, Vayda, and currently at Terradot. Throughout his career, he has helped bring farmers several soil-based innovations, from models and hardware that rely on soil data to tailored management practices based on soil.

Soil is vast, complex, dynamic, and highly diverse. These features are one big reason why agricultural innovations that interact with the soil (spoiler: most innovations) are difficult to apply universally. Today, Andrew will share basic understanding of soil science and how it impacts innovation in agriculture.

Let’s dig in!

Soil Searching is the new Birding

After forming over hundreds of millions of years, soil quietly, relentlessly provides functions that humans rely on every single day. It supports plant life by providing a growing medium, nutrients, and water. It is home to nearly 60% of the entire planet’s living species, many of which are yet to be discovered. It keeps carbon locked away. It stores and filters water. It allows the dead to live on again through nutrient cycling.

As Andrew describes, “There’s something kind of magical about discovering this whole new world that’s been around you the whole time and you just weren’t aware of it. It’s literally around us, everywhere. And yet, you can’t really work with soils without adopting a systems framework because of how complex and interconnected the pieces of the soil system are.” (Side note: any quotes are from Andrew unless otherwise noted).

“When I know I am going to be visiting a farm in a new place, I like to look at the US Soil Survey maps and read about the soil types and hopefully I’ll have a shovel with me and I can dig a little bit and check them out. And part of it is kind of like birding, ‘I haven’t seen this type of soil before! I want to see it, feel and understand what it’s about and how it might be impacting what’s going on in the area.’”

Subscribe now

The fantastical diversity of soil is also what makes it a natural limit to scale for many innovations and practices in agriculture. “The most common misconception that people have about soil is that they understand soil. Pick your favorite topic in agriculture where there is a soil component, and I guarantee there are some issues that came up from oversimplifying the soil system and making some assumptions that turned out to not be true. Moving from one geography to another, things can change. Things can even change if you’re looking at the first foot of soil versus a few feet further down.”

To get a sense of what Andrew is talking about, take a look at these maps of the US and Brazil, color-coded for Soil Orders or Classes (the broadest soil taxonomy for each, respectively). Both are vibrant patchworks:

Andrew teases apart some of the complexity by looking at soil through three lenses: soil chemistry, soil physics, and soil biology. These three interwoven pillars help explain why soil in one field can differ from anywhere else in the world, and how to evaluate the ways that farming practices impact soil health.

Soil chemistry

One thing that struck me about my conversation with Andrew was the vast time scale he thinks about when considering soil formation. To understand the chemical makeup of a particular soil, we must go back tens to hundreds of thousands of years. “The minerals, rock fraction, and even the clays in the soil change over time, slowly degrading. We call that weathering. Elements are released as part of that process that impact the overall characteristics of that soil.”

Andrew gave a great example comparing how soils from two of the most productive agricultural zones in the world formed: the United States Midwest and Brazil. “Having just come back from Brazil, I’m thinking about that a lot. The soils in the area we were in are considered much older. The material from which that soil formed sat in place for much, much longer and under much hotter, more moist conditions that accelerated chemical transformation. The chemical properties of those soils are completely different from what you would find in the Midwest, where soil scientists consider the soils relatively young. Those Midwestern soils were deposited from glacier events and windblown sediments and haven’t been around for nearly as long.”

As a result, soils in many parts of Brazil have a deep red tinge and US Midwestern soils often have a rich, dark brown or black hue.

Much of the applied agricultural research on soil chemistry is specific to soil fertility: how soil can provide the nutrients that a crop needs to grow. Each of the major crop nutrients (nitrogen, phosphorus, potassium), as well as micronutrients, can move and cycle through the soil. Agronomists apply this type of soil science to provide recommendations to farmers as they consider what nutrition their crop needs throughout the year.

Soil physics

Andrew says, “When I am trying to understand a soil in a new area, soil texture is one of the first things that I look at. It impacts so many aspects, like how water moves through the soil, how a plant would grow in the soil, and more.”

Texture describes the distribution of the particle sizes in soil. We usually break it down into:

• Clay, which is the finest particle in the soil

• Silt is medium-sized particles

• Sand is the coarsest – picture beach sand

When you ask a farmer what kind of soil a field has, they will often reply with phrases that describe the texture, “heavy clay” or “light” (meaning it is sandier). The relative proportion of sand, silt, and clay determines soil texture, shown in the texture triangle below.

After looking at a soil’s texture, next Andrew asks, “How dense is the soil, does it have a lot of air in it? Soil is a collection of these small particles stacked together.”

This has practical applications for farmers, and anyone designing tools for farmers. Picture a 35,000 pound sprayer rolling through the field. While the large tires of the sprayer distribute that weight, each pound presses down on those four points. Every time the sprayer runs over a patch of the field, the tiny air pockets between particles collapse, leaving denser soil behind. This is referred to as compaction. Compacted soils don’t absorb water as well. When roots meet tightly compacted soil, it’s like hitting a brick wall that they struggle to grow through.

Soil biology

“Plants have a huge impact on soil. Their roots grow in the soil and release exudates, really driving the biology.” Exudates are substances that contain sugars and other compounds that feed and influence microbes in the surrounding soil. The plants and microorganisms in the soil create a deeply alive, underground ecosystem.

One of the critical functions of soil is nutrient cycling. “Soil is where a lot of dead plants and animals end up, and the soil microorganisms break all of that down so that the nutrients can be available for other living organisms.” Soil microorganisms are critical to other aspects of soil health, including water holding capacity and providing nutrient support for plants.

“Soil biology is one of the most exciting areas in soil science because people are realizing how little we know about it. There have been a lot of advances that are allowing us to get a sense of how complex it is and how many different types of organisms are down there. We don’t know what a majority of them are, let alone how they interact with each other.”

Subscribe now

Agricultural practices that improve soil

“When we degrade our soils, we’re making our jobs a lot harder.” Beyond making it more difficult to grow a healthy and productive crop, “soil can be one of our biggest buffers to have resilience to climate change: good water holding capacity, having organic matter that helps improve infiltration during extreme weather events, reducing flooding, having more water available during dry patches.”

Farmers in the U.S. and in Brazil are finding innovative ways to restore and build up soil health.

Andrew has worked with row crop farmers in the Mississippi Delta in the US who are now practicing cover cropping or no-till. Cover cropping, or growing a crop in the off-season that is not harvested, adds organic matter and nutrients back into the soil. You simply let the crop grow, die, and turn into fertilizer for the next crop.

No-till or low-till is what it sounds like: farming without tillage (or disturbing the soil mechanically), which protects against compaction and erosion. “A lot of the farmers were viewing these practices as inevitable. It was more like, ‘we better figure this out now because we know that this is the direction that things are going.’” As with any new practice, there is a lot to figure out, like what modifications are needed on planting equipment to cut through last year’s crop residue.

In many parts of Brazil, Andrew notes that farmers have adopted a range of soil-enriching practices: rotational diversity, intermittent pasture, no-till, terracing, intercropping, and cover cropping. Protecting soil from erosion is one motivating force. The major agricultural areas in Brazil get 40 to 100 inches of rain per year (compared to 25 to 40 inches of rain in the US Midwest), meaning that “massive gullies can form in a single season if the soil is left unprotected.” Unlike in the Midwest US where “we’ve been kind of spoiled in many ways with deep organic matter from when the land was tall grass prairies,” Brazil’s older soils are naturally low in organic matter, so “you see the benefits of those practices right away on soil quality and productivity and so the adoption has been higher.”

Soil research and technology

Many technologies in agriculture rely on quality soil data, like models to recommend how much nitrogen or water to apply to a crop, or carbon marketplaces that sell credits for carbon sequestration in soils.

“In the US we are lucky that we have the US Soil Survey maps (SSURGO) that are accessible in a number of ways.” After the Dust Bowl, the Soil Conservation Service was founded with public investment, “to protect our soils and understand them more.” This has been a long-term investment in soil research. “We need to keep making progress on addressing issues around soil quality and how we keep our croplands productive.”

There are also entrepreneurs who are working on bringing new soil sensor technologies to farmers. Creating reliable tools that can gather data across an entire farm is difficult. “Something might work in a lab, but then epically fail in the field environment.”

One example of an innovation succeeding in the field is soil compaction mapping. Historically, farmers and agronomists painstakingly pushed special equipment into the soil at several points throughout the field to determine if there was compaction, and how deep it was. Now, there are sensors that can be mounted on an ATV to provide a “new data layer that could be used directly for a management decision.”

“Anytime we get a new way of looking at soil, especially at scale and at a price that makes sense for farmers is a huge opportunity.”

Share

Deeper reading on soil

While we just scratched the surface of the world of soil, there are many resources to learn more. A few of Andrew’s favorites are below:

• Nature and Properties of Soils: The classic introductory textbook

• Soil Health Institute: For resources and learning about soil health

• SoilWeb: Comprehensive data about the soil in your area (if in US), developed by USDA NRCS (with easy-to-use map developed in partnership with UC Davis).

• University Extension websites are a great resource, with the bonus that they usually focus on regional topics. One example is UMN on soil management and health.

• The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl by Timothy Egan

Topsoil is handcrafted just for you by Ariel Patton. Complete sources can be found here. All views expressed and any errors in this newsletter are my own. A sincere thank you to Andrew McGowan for sharing his soil expertise and enthusiasm. I can’t look at soil the same way! Thanks to Mike Rigg, Tim Durham, and Steven Adler for thoughtful feedback on this edition.

If Topsoil has helped you understand the fascinating world of agriculture a little better, please like using the heart button below, subscribe, or share with an ag-curious friend!

A better metaphor is, “a mine that harnesses millions of workhorses called ‘plants.’”

Crops like corn and soybeans produce raw materials that are manufactured into thousands of other products.

Those raw materials are carbohydrates, protein, and oil. The fact that corn and soybeans are broken down into these building blocks make the abundance and absurdity of the agricultural value chain possible; that every year trillions of plants are grown to make everything from ethanol to Otter Pops.

Today we will walk through how something as tiny as the molecules in a seed shape global supply chains, and what this idea might hint about our agricultural future.

Let’s dig in!

Grain and oilseed composition

A whopping 45% of acres that are farmed in the US grow just two crops: corn and soybeans. The vast majority of these nearly 180 million acres are not growing corn-on-the-cob for your summer barbecue or edamame at your favorite sushi joint.

Instead, these acres churn out almost 16 billion bushels of corn grain and 4 billion bushels of soybeans (like those pictured below) every year in the US alone.

Before we get into the corn-and-soybeans-as-raw-materials line of thinking, it’s worth remembering that each kernel and soybean is a seed – a perfect package to grow a new plant and start the cycle of life all over.

With this botanical lens, it makes sense that each part of the seed has a purpose honed over hundreds of millions of years of evolution to ensure reproduction. Humans have only been involved for the past 10,000 years or so to make these seeds serve our purposes of food, feed, and fuel.

Each tiny part of the seed serves a purpose. There is a protective outer coating (the pericarp or the testa). The germ or embryo (the epicotyl, hypocotyl, and radicle in the soybean illustration) holds the genetic information for the new seedling. Once the seed germinates, it will use energy stored in the endosperm or cotyledons to grow before photosynthesis takes off.

Now, let’s take a closer look at the chemical composition of each kernel of corn and soybean:

When you see the percentages of protein, carbohydrate, and oil, don’t think of it like a Nutrition Facts label on a snack you’re considering munching on. I repeat: these types of field corn and soybeans are overwhelmingly not directly consumed by humans. Instead, think of the protein, carbohydrates, and oil as building blocks that are broken down and re-assembled into new products through processing.

Subscribe now

In an ultra-simplified description that may make the chemists among you roll your eyes, you can think of the following:

• Carbohydrates = easily accessible energy

• Oil = very dense energy

• Protein = building blocks for tissue

Breaking down to build up

After harvesting, farmers haul the corn and soybeans to buyers. Buyers either export or process the grain. Today, we’re talking about the processing piece of the puzzle. Processing is where the annual cropping cycle, with one harvest per year, meets the steady mechanical beat of a factory that must be fed every day of the year. Vast amounts of storage connect these two cycles.

Through processing, the grain is broken down and fed to livestock, or converted into fuel or other ingredients:

Roughly 75% of corn that is processed is dry-milled and 25% wet-milled. Dry-milling produces ethanol and dried distillers grains which are fed to livestock. Wet-milling produces a greater variety of products (like corn oil and high fructose corn syrup). In either case, the corn is broken down into its chemical components through a series of steps, including grinding, steeping in acidic solution (wet-milling), fermentation, cooking, distilling, and refining.

Soybeans are split into two main ingredients: oil and protein flakes. After the soybeans are cleaned, cracked, dehulled, heated, rolled, and soaked in a solvent, the oil is separated and further refined. The remaining flakes are chock full of protein and are dried, toasted, and ground to become livestock feed.

Billions of dollars have been invested in building the storage, transportation, and processing infrastructure for corn and soybeans. There are over 60 soybean processing facilities in the US and over 200 facilities that process corn, most of which are based near where the crop is grown in the Midwest:

Ever-changing over time and place

The chemical composition of corn and soybeans is not like an iron law of physics. It’s more similar to how you might think of yield – the average corn yield is around 200 bushels, but averages are just that; they don’t hold true everywhere.

If you walked into a field of corn and sampled the chemical composition from one corner to the other, you’d get different readings throughout the field. The amount of protein, carbohydrates, and oil varies field to field, county to county, and beyond. A field is a living, breathing, system with uncountable variables above and below the ground. Like yield, composition is shaped by genetics, environment, and management practices.

Generation of crop after crop, the amounts of protein, carbohydrate, and oil have shifted over the years based on market demand. Processors downstream signal to plant breeders upstream what is more or less valuable. Crops can even be bred to produce greater quantities of specific types of carbohydrates or protein (like lysine or prolamin) that are easier for livestock to digest.

For example, your dad or grandad’s corn from the 1970’s contained about 13% less carbohydrate than today’s varieties of field corn. Since the Renewable Fuel Standard was passed in 2005 and demand for corn for ethanol skyrocketed, field corn has been bred to produce a higher percentage of carbohydrate and oil.

Processing ensures that these biological variables are smoothed out to produce consistent ingredients that can be manufactured into thousands of other products.

Greater than the sum of its parts?

I’ll admit — there’s something a little icky about describing farms as ‘mines’ for raw materials. It conjures up extraction, uniformity, and a faceless interchangeability that is all a bit unsettling.

However, this assumption, that commodity crops are only as valuable as their molecular building blocks, explains a lot about how our modern agricultural system works. It is a key feature that makes the global agricultural value chain modular, consistent, and ceaselessly hungering for new sources of demand.

Focusing on just three macronutrients also makes it easy to miss that within each kernel of corn, there are over 150 unique chemical compounds. 150! And in sweet corn, that number clocks in at over 500. There is depth and complexity in every seed that is not fully captured by this simple framework.

The seeds of the future

I want to be very clear. In 2025, farmers of the vast majority of row crop acres in the world are paid primarily by one metric: yield.

After quality standards are met, it’s a volume game. Grain buyers are not measuring the protein, starch, or oil content of each load of corn and soybeans. Moisture is accounted for simply because that can shift volume. More bushels equals more money. Period.

However, whether or not you think of a kernel of corn as nothing more than the molecules it contains, you can imagine a future that is either mildly or wildly different from the agriculture we know today:

• Paying farmers based on grain composition, not just yield. This happens in some cases today. For example, farmers can be paid a premium for higher protein wheat, or for growing special varieties of soybeans with unique oil profiles (like high oleic). “Nutritional density” might be the hottest two words in 2025 after “artificial intelligence,” and this shift would be a step in that direction.

• Farming specific molecules with plants. We’ve invested heavily in corn and soybeans as the supremely productive plant chassis for producing high yield. Think of “molecular farming” as genetically engineering plants, so they can produce specialized proteins like casein (stuff that makes cheese melty), antibodies for vaccines, or pharmaceuticals.

• Phytomining. This concept makes “farms as mines” a reality. Certain plants can draw up specific compounds from the soil. Then, the plant biomass is processed to isolate those compounds, like nickel or rare earth minerals.

• Inventing new crops. As different ratios of protein/carbohydrate/oil become desirable, plant breeders and plant scientists can develop new crops. Although rapeseed has been grown for thousands of years, in the 1970’s, canola was developed by plant breeders to have a more favorable fatty-acid profile for human consumption. Canola is now grown on over 22 million acres around the world.

• Cutting out the middlemen (plants). If you go deep down the rabbit hole of we-only-farm-for-the-molecules, you might imagine some odd future scenarios. Like asking, why do we even need plants? What if there were a way, like artificial photosynthesis, that carbon dioxide could be transformed into protein, oil, and carbohydrates without farming 180 million acres? This is a good thought exercise to consider the purpose of farming beyond just producing molecules.

The fact that corn and soybeans are broken down into building blocks that can be used in thousands of other products means that farms today are inextricably tied to more industries and supply chains than ever. I bet if you told the average person in 1975, when practically no corn was used to make ethanol, that 50 years in the future, a third of all corn grown in the US will be used for fuel, they would not have believed you.

What might be possible in the next 50 years?

Leave a comment

Topsoil is handcrafted just for you by Ariel Patton. Complete sources can be found here. All views expressed and any errors in this newsletter are my own.

If Topsoil has helped you understand the fascinating world of agriculture a little better, please like using the heart button below, subscribe, or share with an ag-curious friend!

Subscribe now

There is an invisible driving force that wordlessly fuels many everyday miracles in agriculture.

Mouth-wateringly crisp apples, in abundance. Tractors that plant seeds in an unwaveringly perfect line. A system that produces far more calories than 8 billion people can consume.

Research and Development (R&D) is that powerful force. Agricultural R&D is pretty much what it sounds like: systematic work to create and apply knowledge of plants, livestock, nutrition, food safety, agronomy, production systems, and natural resources.

To pull the curtain back on R&D and how it underpins agriculture, I wanted to speak with an expert. Dan Northrup has tackled R&D from many different angles throughout his career – from academia (he earned a PhD from University of Pennsylvania in immunology), to operating at a start-up (Benson Hill), to working with government research agencies (ARPA-E), to assisting investors (Galvanize Climate Solutions). Dan conducts research at Iowa State University (a Land Grant University).

Today, I’m excited to share what I learned about R&D in agriculture from Dan. (Side note: any quotes are from Dan unless otherwise noted).

Let’s dig in!

Do More With Less

Besides being the marketing tagline for pretty much every agriculture company right now, one of the biggest stories over the past several decades is that farmers are doing more with less. They are producing much more (in terms of yield) using less land and fewer inputs.

The fancy economist word for this more-with-less concept is called total factor productivity. R&D is one well-known way to increase total factor productivity. Whether tiny improvements that add up (evolutions) or new ideas that change the game (revolutions), R&D works as a kind of magic.

What do you do with an idea?

So how does a new idea eventually become something that can help farmers?

Dan walks through the process: “It starts with a hypothesis. You may have a modeling framework you can work in, sometimes called ‘in silica.’ You may be able to test this ‘in vitro,’ like an enzymatic assay that would let you evaluate a bunch of different proteins. You might move on to an ‘in vivo’ experiment that could be in the plant, the insect, the microbe – whatever organism it is that you are testing. Then you move to a greenhouse where you could have real soils but you have total control over the weather. And finally you get out into the field which is the key place where the product needs to perform.”

“In the end you have to get out there and demonstrate relevance to farmers. As the stages go along, you get a better and better sense of the value of the idea or product. You move from asking, ‘Does it work?’ to ‘What are the conditions where it works?’”

Throughout every step in product development, researchers balance two factors: relevance and control. They want to make the results as relevant as possible to the real world. However, they need to control as many variables as possible to observe and measure the actual phenomenon of interest.

You can think of this balance of relevance and control like this scatterplot below along the path to commercialization:

As ideas get closer to the field, relevance increases, but control decreases. In a computer model or a lab setting, variables can be perfectly controlled, but it’s a far cry from the messy, chaotic 3D world where agriculture takes place. Farmers trust localized field trials more than lab experiments because the relevance is higher, but experiments typically get more expensive as they move to the field. Wildcards like weather, soil type, and differences in equipment can make it difficult to interpret results and tease out real effects.

Subscribe now

R&D funding: follow the money

Dan outlined the main sources of funding for R&D in agriculture:

1. Public: “You've got the public sector. For the US government this is housed in several agencies: Department of Agriculture (USDA), Department of Energy (DOE) because of biofuels, National Science Foundation (NSF), Agency for International Development (USAID), and to a smaller degree the National Institutes of Health (NIH).” In addition to Federal funding, state and local government agencies contribute to agriculture R&D. Beyond governments, commodity groups and checkoff programs fund farmer-guided commodity-focused research to improve production and develop markets.

2. Private: Private funding includes money from corporations and investors. Dan describes, "A large portion of industry research is focused on product development like acreage expansion with some budget dedicated to new products or stretch research.” Venture capital (VC) invests money in start-ups and ideas that may be outside of the mainstream, riskier, or take more time to develop.

3. Philanthropic / Non-Governmental Organizations (NGOs): Finally, there are several NGOs or non-profits that invest in agriculture R&D around the world and can attempt more “transformative types of interventions.” Dan explains how influential this source of funding can be: the Rockefeller Foundation sponsored the work of Norman Borlaug, who is credited with preventing hundreds of millions (!!!) of people from starving.

A Closer look at Public and Private

Since 2002, US public funding of agriculture R&D has declined by over 30%. This was even before the most recent cuts this year that have impacted nearly every agency that contributes to agriculture R&D.

While public funding of agriculture R&D has declined in the US, private R&D has increased:

No big deal, you may be thinking. Awesome that Bayer and Corteva and PepsiCo and Nestle are picking up the tab to the tune of billions of dollars each year. Why should taxpayers foot the bill anyways?

There are indeed good reasons why publicly funded R&D is critical for agriculture:

1. Public research for public goods and longer timelines: "Public research can benefit the greater good, whereas private companies may not undertake research if it doesn't benefit that one specific company." Dan shares an example: “There was a large public investment in soil stewardship after the Dust Bowl of the 1930’s. Some trends take decades to emerge, some of the longest running agricultural experiments are over 100 years old. There are lessons you can only learn by studying on timelines that are longer than the business cycle.”

2. Diversified funding sources are important: Many researchers including Naomi Oreskes and Marion Nestle highlight the ways that funders (public and private) influence the scientific process. Having multiple people approach the same question from different angles can reduce bias.

3. Building a skilled workforce: "Public R&D is a great training ground for young people. No one starts great at their job, and industry or startups don’t have time to provide on the job training. It's an important feeding ground for industry." Good science is a craft as much as it is something to be learned in a classroom.

4. Preparing for the unexpected: "Another reason is that you get surprised sometimes and the world changes and suddenly something that was off the commercial path is important.” An example Dan gave is that during the COVID pandemic, an effective vaccine was made quickly because years and years of fundamental research on mRNA had already been completed. “Revolutions [in agriculture] often come from people doing things that they think are interesting, before anyone understands exactly how they are going to make money.”

Outside of the US, countries like China and Brazil have drastically increased spending on public R&D for agriculture. China more than tripled investment in agriculture R&D since 2000, to over $10B in 2015 (roughly twice the amount that the US spent that year).

Adding to the challenge of shrinking public funding of agriculture R&D in the US, the efficiency of each dollar spent in agriculture R&D may be declining. Shane Thomas explains this well, called “Eroom’s Law.” Instead of productivity doubling every two years (like Moore’s law in computer chips), the time it takes to develop a new crop protection active ingredient has doubled over the last 20 years. This is to be expected after decades of harvesting the “low hanging fruit” of ideas.

The future of R&D

Despite tightened budgets, Dan says, “People need innovation.” And, he has ideas on how R&D can become more efficient and reach the farmers and consumers it benefits. Dan envisions a future where "every farm is an experiment station.”

Today, many farms already conduct small scale trials as they sample new products or practices to incorporate into their production system. A new product applied across one or a few fields. A test strip here or there. Trying out a new piece of equipment. In these cases, any discoveries are often kept private to that farm.

Dan believes that both relevance and control of any given R&D project could be vastly improved if more farms conducted on-farm trials and shared that data and research with other farmers and the companies and researchers developing new products and practices. And of course, farmers must be compensated for that effort.

With precision technology becoming widespread, farmers can be more scientific in their observations and more easily share consistent data. Beyond the equipment to apply inputs precisely, equipment like drones could take measurements throughout the season to make on-farm R&D cheaper and more widespread.

Not only would this help to advance agriculture R&D with improved products being developed faster, it also creates “a much more interesting way for growers to sell their data than today. It almost goes without saying that these datasets need to be created for agricultural R&D to benefit from the massive investments in artificial intelligence.”

Ultimately, Dan believes that beyond improving practices within any single farm, this new paradigm would mean that “farmers can drive innovation and encourage new entrants to invest in product development relevant to the farmer’s pressing challenges.” Dan is optimistic that agricultural R&D will continue its track record of success.

Share

Topsoil is handcrafted just for you by Ariel Patton. A sincere thank you to Dan Northrup for debating ideas and sharing his knowledge. Complete sources can be found here. All views expressed and any errors in this newsletter are my own.

If Topsoil has helped you understand the fascinating world of agriculture a little better, please like using the heart button below, subscribe, or share with an ag-curious friend!

Before we launch into biologicals, I want to share a podcast appearance from last week. I joined Tim and Tyler Nuss on the Modern Acre podcast to chat about crop inputs like seed, crop protection, and fertilizer. You can listen here.

A brief word from our 2025 Winter Sponsor, AgList

Biologicals are one of the hottest areas in agriculture. But discovering what products actually work for your farm isn’t easy today.

AgList was made by farmers as the only independent platform for farmers, agronomists, and researchers to provide real, honest product reviews for biologicals they have tried on their farms. Think of it as the “Yelp for biologicals.”

No matter how you interact in the biologicals industry, AgList is for you.

Try AgList for Free

I’ll be honest. Despite my curiosity, I’ve been intimidated to dip my baby toe in biologicals. Having never directly worked in this corner of agriculture, I knew I needed to chat with an expert.

Fortunately, Pam Marrone, whose name is synonymous with biologicals, was gracious to share insights with me from her storied 30+ year career. She is the founder of 3 biologicals companies – Marrone Bio, which went public in 2013; AgraQuest, which was acquired by Bayer Crop Science for nearly $500M; and EntoTech, a subsidiary of NovoNordisk. She is one of the only agtech founders with an IPO and a $100M+ acquisition to her name. Today, she continues to innovate as an advisor to several biologicals companies and is the Co-Founder of Invasive Species Corporation, which develops and markets bio-based solutions to control invasive species.

Today, we’ll cover seven key things I learned from Dr. Pam Marrone about biologicals.

Let’s dig in!

The biologicals market is broad and crowded

Starting with the basics, biologicals are crop inputs that are – or derived from – living organisms or other natural materials that farmers use to improve their crops. This is in contrast to chemical inputs, which as the name suggests, are often synthesized from petrochemicals and other raw materials using chemical processes.

Pam points to the categorization by DunhamTrimmer (below) as the easiest way to understand what’s under the biological umbrella:

This can be boiled down to three main categories: biofertilizers, biostimulants, and biopesticides.

As of 2023, there were over 1,200 agriculture biologicals companies solving a variety of problems from farmers – from pest control, to improving nutrient uptake, to tolerating abiotic stresses like heat or drought, and more. Especially when looking at the biostimulant and biofertilizer segments that are less regulated than biopesticides, Pam neatly summarizes: “it’s really crowded.”

Biologicals should be part of an integrated program

Pam stresses that biologicals are best used with other tools on the farm, whether that is chemical inputs, improved crop genetics, and management practices to improve soil health. In study after study that Pam has seen throughout her career, when biological products are integrated, farmers see “better results than chemical-only programs.” (Side note: any quotes are from Pam unless otherwise noted).

This is not unlike how chemical inputs are used today. “Farmers don’t use chemicals alone. How many herbicides are mixed together because there is weed resistance?”

The biologicals market is growing and global

Today, the biologicals market is dwarfed by chemical inputs, but is growing 3 times faster. Globally, there are $11 billion worth of biological inputs sold, compared to over $60 billion of chemical inputs.

While biologicals are sold around the world, Pam notes that Brazil and the European Union are particularly hot markets.

Farmers in Brazil have faced devastating outbreaks of fall armyworm and soybean cyst nematode. These pests destroyed billions of dollars of crops and are becoming more difficult to manage as populations develop resistance to chemical pesticides. Brazilian farmers were desperate for solutions.

Pam describes how the Brazilian government worked with farmers to address this problem. Brazilian federal and state governments made investments to educate farmers about biologicals. The Brazilian regulatory approval process was streamlined so it took only 13 months, instead of almost 3 years in the US. She notes the government’s stance was, “farmers need these products so we are going to get them through.”

Today in Brazil, more bio-based nematicides are sold than chemical nematicides.

In the European Union, biologicals are growing in popularity as the EU passed regulation to restrict chemical fertilizer use. Now, every big agricultural company is working on bringing to market biofertilizer and biostimulant products to fill the gap.

Biologicals are becoming mainstream

When Pam started working on biological products decades ago, she was told by distributors, “we’ll try it in organics, and if it works, then maybe we’ll put you in conventional.” Biologicals were seen primarily as a niche set of products for the oddball organic market.

Today, that perception has changed.

Biologicals are another tool to integrate within many different farming systems, whether organic, regenerative, or conventional. They are used in specialty crops, like fruits and vegetables, as well as commodity row crops, like corn and soybeans.

This drift to the mainstream is also evidenced by who is participating in the biologicals space.

After billions of dollars worth of acquisitions of biologicals companies and R&D by the traditional major agricultural input companies, Pam observes, “big ag chemical companies are now also big biological companies.”

Biologicals’ strengths also can make them challenging

One thing that struck me from my conversation with Pam is that the things that make biologicals beneficial are also some of the trickiest challenges for innovators to tackle.

Many biological products are highly specific. Instead of working on all insects, for example, they may only target a specific species. This sniper-instead-of-a-shotgun approach is wonderful for reducing unintended environmental consequences. But it also leads to two challenges.

One, the total addressable market (TAM) for a given biological product might be smaller than for another product with a broader application. In turn, a small TAM might constrain how much investors are willing to spend to develop a product.

Second, Pam explains, “parameters of how and when to use the product are really critical in biologicals.” Especially in cases where the product is highly targeted, there is a learning curve for farmers to know where and when to use the product. Pam says it’s a misconception that “they don’t work” or “they don’t work consistently.” The key is that biologicals are “consistent when you know how to use them.”

Pam mentioned that “most biologicals are very biodegradable.” In a world awash in fears of forever chemicals and farmers carefully planning around the residual effects of certain chemical inputs, the ability to biodegrade has many benefits. However, innovators must develop formulations that stabilize the active ingredient until it serves its purpose in the field.

Subscribe now

Biologicals are ripe for innovation

While developing a biologicals product is “not for the faint of heart,” there are a few tailwinds.

Even in this difficult agriculture economy, there is continued M&A activity in biologicals. Pam notes that as recently as last month, the CEO of Corteva expressed continued interest in acquiring biologicals companies. When there are exit opportunities for companies, it makes it easier for investors to place bets in earlier stage companies.

The industry is aware of the perception that biologicals can be “snake oil” (or as Pam colorfully describes “bugs in a jug” or “bathtub brews”). For that reason, Pam and other leaders in biologicals have been advocating for, and developing, industry standards to set a minimum bar. As one example, the Biological Products Industry Alliance (BPIA) developed standards for biopesticides that member companies live by; now, the BPIA is working on doing the same for biostimulants.

Beyond voluntary standards, the regulatory environment allows for faster commercialization of biological products when compared to chemical inputs. While biopesticides are registered through the Biopesticides and Pollution Prevention Division of the EPA, biostimulants and biofertilizers are not regulated by the EPA.

Speed matters, because as Pam explains, “when you’re a small company, time is your enemy. When you’re funded by investors, they want to see things fast. But agriculture doesn’t work fast. So that is the balance that investors need to understand and you can still work quickly.”

One approach Pam has taken throughout her career is to launch and iterate – a very different approach than the existing paradigm. “The Big Chem model is to spend $300 million up front and then launch a product big. And I always said, ‘No – we’ll get into the market with our Gen 1 and we’ll improve it with our 2.0, etc.’ Everyone in the industry hated it! And I said, ‘Wait a minute. Growers want my product because they have an unmet need. Their chemicals can’t do everything.’ As long as the product has good data, it works, it’s safe, we’ve proven all that and there’s a farmer for it – let’s launch it!”

Manufacturers must prove the value to the farmer

Pam shared “Around the globe, 40 to 50% of farmers use biologicals and the rest don’t. And the ones that don’t are afraid to use them because they don’t have the knowledge on how to use them and have heard scuttlebutt that ‘they don’t work.’ But once they start using them, and the key is understanding how to use them, then they rank them extremely highly, like 7 to 8 out of 10. So it’s really the education gap.”

Pam emphasizes that biologicals manufacturers have the responsibility to reduce this education gap and “have good field data.” Manufacturers must provide, at a minimum, “enough data to show what product does, how it works, and the value it brings.”

Specifically, farmers want to know the conditions in which a product works and doesn’t work, when to use it, when to apply given the stage of the crop, how often to apply, how to mix with other products, how it works across different soil types and weather conditions, and at least a simple explanation of the science behind the product.

“You better not tell a farmer they need to sign an NDA to understand how your product works.”

Once those baseline facts are established from rigorous field trials, then Pam would encourage a farmer to trial the biological product compared to their standard program on their farm.

Pam said that a common mistake is when a farmer tries a biological as a last ditch effort: “My chemicals won’t work and I have this huge problem!” She says that that is definitely not the right time to try a biological for the first time.

Pam has some final words of wisdom for innovators developing biologicals products for farmers:

“Just because it’s an exciting technology doesn’t mean it’s going to make it in the market. If you’re using new technology to get the same result in the field as everybody else, it’s not differentiated. You’re not going to fare well. It really has to show that return on investment to the grower. With so many 5% yield increases, that doesn’t cut it anymore. You have to have 10% and an 80-90% win rate or above otherwise it’s just noise. With so many players, the bar is higher.”

Topsoil is handcrafted just for you by Ariel Patton. A heartfelt thank you to Pam Marrone for sharing your knowledge. Complete sources can be found here. All views expressed and any errors in this newsletter are my own.

If Topsoil has helped you understand the fascinating world of agriculture a little better, please like using the heart button below, subscribe, or share with an ag-curious friend!

A couple things before we get into crop inputs. First, I was delighted to join Tim and Tyler Nuss on the Modern Acre podcast to talk about last month’s edition on crop prices. We get into tariffs and the pumpkinpocalypse on their farm. You can listen here.

Second, we have a sponsor for the first time! Big thanks to AgList for becoming our Winter Sponsor.

A brief word from our 2025 Winter Sponsor, AgList

Biologicals are one of the hottest areas in agriculture. But discovering what products actually work for your farm isn’t easy today.

AgList was made by farmers as the only independent platform for farmers to provide real, honest product reviews for biologicals they have tried on their farms. Think of it as the “Yelp for biologicals.”

Get started discovering and evaluating new products today at AgList.com. If you’re a farmer and you sign-up this month, you are entered to win a “Farmer Mode” hat 🧢

If you're a biological company looking for better visibility, new customers, and building trust through farmers endorsements, list your products on AgList today! Use code TOPSOIL for one month free.

Try AgList for Free

Last month, we talked about commodity prices – prices are low and farmers are tightening the belt.

That means cutting back on expenses, including dollars spent on crop inputs like seed, fertilizer, and crop protection. However, even in lean years, corn and soybean farmers still spend around 25% to 40% of their budget on inputs.

It’s no surprise that this is big business for the few companies selling inputs – generating billions of dollars every single year. At the same time, forces are reshaping the status quo, like the need to reckon with downstream effects of inputs beyond the farm gate and good old innovation.

Today, we’ll cover the here and now of inputs: what they are, how they are sold, and how they fit together on the acre.

Let’s dig in!

What are “inputs”?

There’s a joke I’ve heard a few farmers make. If they only just purchased every product that was offered to them, each promising 10 bushels here, a handful of bushels there – then they would be growing 400 bushel corn. Easy!

Disappointingly, reality does not work that way (the average yield is closer to 200 bushels per acre).

There are indeed many different inputs offered to farmers, but you can think of them falling into three main categories: seed, crop protection, and fertilizer.

Seed

Seed selection is arguably the most important choice that a farmer makes when it comes to inputs. Advancements in seeds are responsible for about 70% of the yield gain in the last 100 years, which may be why seed brands command the highest loyalty:

Within each crop, farmers select seed varieties based on productivity, adaptability to a region, susceptibility to disease, and a whole host of other factors. For many commodity row crop farmers, the herbicide tolerance (HT) trait package is also an important choice – whether a particular variety can be sprayed with glyphosate, glufosinate, 2-4D, dicamba, or another herbicide to kill surrounding weeds without killing the crop. In this way, the seed decision heavily informs a farmer’s crop protection choices.

Crop Protection

“Crop Protection” is industry parlance for “the stuff that kills things before they kill your crop.” This category includes all the “-cides”: herbicides, insecticides, fungicides, and nematicides that kill or prevent the weeds, pests and diseases that can harm yield. Other products, like plant growth regulators and seed treatments fit in this category too.

Crop protection products are defined by their “active ingredient”, whether that is a chemical molecule, peptide, protein, or biological organism – the thing that makes the product work. Other ingredients, like adjuvants, are often added to make the product mix, stick, spread, and otherwise work better.

Crop protection can be applied in many different ways: on the plant leaves, in-furrow or in the planter box at planting, in a seed coating, or incorporated in the soil. Every product has a regulated label that spells out how the product can be used. It’s not like the label on your shampoo bottle where “lather, rinse, repeat” is a gentle suggestion – it is actually a federal offense to use crop protection without following the label.

Fertilizer

For every acre of land that produces 200 bushels of corn grain at harvest, 11,200 pounds of starch, protein, oil, fiber and water are whisked away to feed livestock and make ethanol. Corn plants are remarkable in being able to transform sunlight, water, and nutrients in the soil into that much output.

Nitrogen (N), phosphorus (P), potassium (K) are the main nutrients that a crop needs. Other nutrients, like lime and micronutrients also support plant health and yield. Most of the nitrogen used in production agriculture is manufactured from a mixture of natural gas and air. P and K are processed from minerals mined around the world. Livestock manure is also used to feed the crop.

There are many ways that farmers decide on their fertilizer strategy. Calculators, models, and mathematical formulas abound to take in soil sampling and yield data while considering the unique attributes of the field. The “4Rs” of Right Source, Right Rate, Right Time, and Right Place is a common framework to dial-in fertilizer applications.

For crops that are planted in the spring, nitrogen fertilizer can be applied in the previous fall (roughly a third of fields in an Illinois study) or in the spring either before planting or after planting in a “side-dress” application. Fertilizer can take the form of a gas that’s injected into the ground, liquid, or solid granules.

Other Inputs

Water, labor, equipment, and land are all also needed to produce a crop, but we’re going to focus today on crop inputs that are manufactured, purchased, and used up every year. It is also important to note that farmers rely on agronomic practices beyond purchasing inputs, like crop rotations, tillage or no-till, cover cropping, and more to drive yield and reduce crop stress.

Subscribe now

No “Amazon” for agriculture

Typically the farm owner, with input from their agronomist, makes the final call on which inputs to buy. These are, after all, million dollar decisions with big implications!

Farmers typically buy inputs from a retailer, or in some cases, from the manufacturer that has a dedicated sales team. Beyond having product when the farmer needs it, the retailer provides advice and offers services to apply the inputs for the farmer. Retailers have the infrastructure to handle, store and move bulky, large amounts of seeds and chemicals. Colloquially called “the channel,” any input company that wants to reach the farmer must plan very thoughtfully how to work with the retailers that sell and distribute to the farmer.

Many farmers rely on financing to afford inputs when they need them. Remember that cash flows in farming are lumpy (crops are harvested only once per year), so credit and operating loans are critical.

While there was an uptick in online purchases of crop inputs during the pandemic, online purchases represent about only 10% of the total. One-click shopping isn’t yet the reality in 2025 for crop inputs.

Beyond dollars and cents

With tightened purse strings, farmers are taking an even more critical eye to their input purchases. Like any shopper, farmers consider cost in dollars as well as the time and effort that an input takes to handle and apply.

Farmers also carefully consider how any given product will work for their farm – if the product will play nicely with their specific soil and environment, and existing practices and products that they already use. For that reason, it’s common practice to try out an input on a portion of a field, and then scale up to a few fields, before extending across the farm if appropriate. As you might imagine, this process takes years.

Like a GRWM video (“get ready with me” makeup tutorial videos for the uninitiated), you may be wondering – I have only one face, how can I possibly apply 27 different cosmetics? Farmers typically grow one, maybe two, crops per season – how do all these different inputs possibly fit in the same field?

Below is a example of a typical corn season progressing from left to right over time, and what the input applications might look like throughout the year:

You will notice the very busy left-hand side of the graphic in the earliest part of the season. In his insightful newsletter Upstream Ag Insights, Shane Thomas describes this as a battle for “real estate.” Many companies want to get their products applied earlier in the season to lock in sales before there is room for plans to change.

Better living through…chemistry?

Many of the advancements in crop inputs, like manufacturing ammonia efficiently, are borne out of pre-WWI technology repurposed for agriculture. These advancements have increased yield per acre to incredible highs.

But these gains are not without cost. Pollution of waterways and drinking water from overapplication of fertilizer, herbicide resistant weeds, toxicity to humans and wildlife, and the erosion of farmer profitability are just a few of the challenges. In a 2020 survey of Iowa farmers, nearly 60% agreed with the statement, “I feel overly dependent on purchased inputs."

The reigning paradigm of solving agronomic problems with chemistry-based inputs dominates today, but there is growing appetite from farmers and consumers for new paths forward. Especially as the rate of new product development in chemistry has slowed, there is need for innovation from other corners. Better living through chemistry, yes, but also through harnessing biology, hardware and software (precision agriculture), or changes in management practices.

We will be back next month to talk biologicals. Thank you for reading!

Topsoil is handcrafted just for you by Ariel Patton. Complete sources can be found here. All views expressed and any errors in this newsletter are my own.

If Topsoil has helped you understand the fascinating world of agriculture a little better, please like using the heart button below, subscribe, or share with an ag-curious friend!

Before we get into our topic today, I want to share a recent podcast appearance. I joined Tim and Tyler on the Modern Acre podcast to talk about math in agriculture (which I promise is a lot more fun than it sounds!). If you haven’t listened to the Modern Acre podcast yet, I recommend it. Interesting guests across the agriculture industry stop in and share their thoughts — I learn something new every episode!

I want to wish you a joyous holiday season and happy new year. Thank you for spending some of your valuable time reading Topsoil in 2024 – it means a great deal to me. More to come in 2025!

Subscribe now

Now onto today’s topic. You can’t read too many articles about agriculture right now without getting hit with a clear message: prices for agricultural commodities are low.

Today, we’re going to focus on prices for commodity crops – crops produced in massive volumes, to uniform standards, that are sold on global exchanges – like corn and soybeans.

So just how low are prices right now?

Both corn and soybeans are roughly 45% below their all time highs. Prices for many other crop commodities are also trending lower this year.

After weather, prices are the #2 thing that farmers check daily (if not more frequently) because of the impact on farm profitability. So why are prices low today and what actually moves this important number?

Let’s dig in!

Local grain to global markets

Farmers typically sell their grain to a local grain elevator. There may be a few elevators in the area that each quote a slightly different price. (Side note: technically soybeans are “oilseeds”, but I’m going to refer to “grains” generally so you don’t have to hear me say “grains and oilseeds” a million times).

The local cash price that a farmer receives is based on two parts:

Local Cash Price = Futures Price + Basis

You can think of the futures price as the global price for that commodity. Grain futures contracts are sold on the Chicago Board of Trade, similar to how a stock is traded on the New York Stock Exchange. Like stocks, futures prices change constantly due to a huge number of buyers and sellers around the world trading with every bit of new information.

Basis is the difference between the futures price and the local price at a specific elevator. It reflects storage and transportation costs (remember we’re talking about bulky, physical goods). Local supply and demand also impact basis, like if there is a nearby ethanol plant.

Basis can be negative or positive. Typically for commodity grains in regions where a lot is grown, basis is negative. This means that the local cash price is lower than the futures price you see online.

For example, as of today, the ADM Corn Processing facility in Cedar Rapids, Iowa will buy corn for $4.35 per bushel. The basis is -$0.11 and the futures price is $4.46.

Basis is important, but we can see that the futures price has a much bigger influence on the total dollars that a farmer receives. Let’s now take a look at the futures price.

Supply and Demand

To understand commodity crop pricing, we’re going to borrow one of the most popular frameworks from economics: supply and demand.

In previous editions, we covered supply, or how much crop is produced. We also covered demand, or how all the crops get used. Now, put the two together and where they meet 💥 – that’s price.

If everything stays the same while supply goes up, prices will go down. If demand goes up, prices will also go up.

Obviously, the real world is a little more complex than a freshman econ class. But considering where any given commodity comes from and where it goes is a helpful starting point.

Sources and uses: real life supply and demand

Let’s look at recent data for corn:

Starting on the left hand side, let’s focus on the yellow flows into “Supply.” We can see that corn in the US is from three sources: the stored corn from last year (beginning stocks), new corn grown this year (production), and a very small amount of imported corn.

The lion’s share is corn grown this season, which is shaped by:

• Weather. Most of the corn in the US is grown without irrigation (it is “rain-fed”), so precipitation at the right time of year is critical. Droughts, which are becoming more frequent, can lower supply. Beyond enough rain, there are many other kinds of weather that can harm a crop. Late freezes. Golf ball sized hail. Strong winds. Derechos. Conditions that foster disease and insects. The list goes on and on.

• Acreage planted. In 2024, there were over 90 million acres of corn planted in the US, producing about a third of the world’s corn. The total acreage is the sum of hundreds of thousands of farmers making individual decisions on how much to plant. Each of those decisions may be influenced by land prices, by competing uses for land, by agronomic decisions like crop rotations, and by projected commodity prices.

• Productivity. Over the past 80 years, corn yields per acre have increased over 500%. Improvements to plant breeding, management practices and new technologies have allowed each acre to produce more.

• Agricultural policy like crop insurance, price supports and even direct subsidies (like the $10B in direct payments to farmers passed this week) increase supply as the US government and taxpayers help cushion some of the downside risks of farming.

• Input availability. There are several inputs farmers need to produce a crop: seed, equipment, energy, land, fertilizer and crop protection to name a few. Supply chain issues and rising interest rates can make inputs more costly or difficult to get.

Share

Now let’s look at the right side of the chart to see where that corn goes. These are factors that shape demand, which will influence price:

• Biofuel Policy & Use: In the early 2000’s, ethanol was a negligible use for corn. After 2005 when the Renewable Fuel Standard was established, ethanol and other biofuels (like soy biodiesel) exploded in growth. The price of energy impacts not only farms’ supply as an input, but also demand. Today, there are several brewing headlines on biofuels: increasing interest in Sustainable Aviation Fuel; the 45Z Clean Fuel Production Credit which will likely further incentivize biofuels; and the year-round E15 exception to allow fuel blended with 15% ethanol to be sold year-round (today 10% ethanol is the standard with 15% being sold only in summer months).

• Livestock: A large portion of corn is used directly for animal feed. Dried distillers grains, a byproduct of ethanol production, is also used as feed. As a result, the number of livestock in the world influences the price of many commodities and vice versa. Demographic shifts like consumers’ preferences for meat and dairy and per capita income influence the number of livestock. In recent years, diseases have had a horrifying impact. From 2018-2019 one in every four pigs in the world died from African Swine Fever. Today, it is concerning that the H5N1 strain of avian flu has killed over 280 million birds since 2021. This strain of avian flu has now leaped across species to dairy cattle, hogs, and humans.

• Trade: Corn is less sensitive to trade than soybeans (below), but trade is still a big deal because of the share of the crop that goes into export markets. When trade is hindered, by tariffs, embargoes, or all out trade war, demand suffers. When new trade agreements are brokered and new markets open up, demand increases.

• Currency also impacts demand since commodities are priced in US dollars. When the dollar is stronger, commodities become more costly to foreign buyers, which can weaken demand.

• Global Production: The flow chart above covers US-grown corn. If the amount of grain grown in other parts of the world goes up (like a record Brazilian soybean crop), this can reduce price. On the flip side, if wars, geopolitical conflict, or disasters interfere with crop production, prices rise.

We can use the same approach to look at soybeans. Comparing the soybean chart to the corn chart, you can see that a greater portion of soybeans are exported, meaning that the price for soybeans will be more sensitive to disruptions in trade. Of particular note heading into 2025, at least 20% of US soybeans are exported to China.

Weather, tariffs near and far, billions in subsidies, and changes in renewable fuel policy – I guarantee that this framework also works as a conversation starter to spice up any holiday gathering this winter!

So what’s a farmer to do?

Given that prices are made up of decisions by hundreds of thousands of individuals buying and selling in a market, and that a single farmer can’t control price by themselves, what’s a farmer to do?

In years of low prices, like today, there are two main strategies:

1. “Tighten the belt.” Farmers cut costs or defer purchases to a later time.

2. “Bushel your way out of low prices.” The thing about growing a commodity is that revenue is a simple math equation: price multiplied by volume. If price is down, volume needs to go up to make up for lost revenue. This results in farmers aiming to “bushel their way out” or “yield their way out” of low prices – by producing more.

In the long run, farmers have, and will continue to, deploy other creative strategies. Things like getting bigger to increase purchasing power, or taking on an off-farm job or raising livestock to diversify revenue. One thing I will be watching with curiosity is if there is more crop diversification beyond the major commodity crops on the horizon.

On the flip side, when corn prices were getting close to all time highs in 2021, I heard a farmer grumbling that crop prices were getting too darn high.

“Too high?!” I asked, a little baffled. “How could that be a problem?”

His answer was that every company that sells to farmers sees the prices that farmers get for their crops. When the input companies see sky high crop prices, they in turn ratchet their input prices higher. And when grain prices eventually fall back to Earth, the input companies are loath to decrease the prices they charge the farmer. The farmer is then in a bind – less money is coming in and costs remaining stubbornly high.

Standing here as we close out 2024, that farmer was pretty accurate in his assessment of how things would play out.

Ultimately, whether crop prices are high or low, there are reverberations up and down the value chain. High crop prices drive high prices for land and inputs and a wave of new investment in the agriculture sector. Low crop prices – like we see today – trigger layoffs across the sector, companies quietly shutting their doors, and farmers sharpening their management skills.

In either case, if history is any indicator, prices are cyclical and what has been will come again.

Subscribe now

Topsoil is handcrafted just for you by Ariel Patton. Complete sources can be found here. All views expressed and any errors in this newsletter are my own.

How did you feel about this monthly edition of Topsoil? Click below to let me know!

Love it - Like it - Meh

Subscribe now

I can tell you one of the fastest ways to lose a sale. 

When giving a demonstration of a new tool, if you start giving examples with unrealistic numbers, get ready for your potential customer to immediately call a flag on the play. 

“That doesn’t sound right to me. That’s way too high.”

Walking it back with a “this is just for demonstration purposes” doesn’t always prevent the ensuing multi-minute detour or loss of credibility.

Whether in sales demos, marketing materials, or just good old fashioned back-of-the-envelope calculations, it is important to use realistic numbers and appropriate units of measurement. 

Today, I’ll share tips and a cheat sheet with commonly used units in agriculture. We’ll walk through an example together so your napkin math can shine. 

Let’s dig in!

What the heck is an acre anyway?

Agriculture has its fair share of specific terminology. A few of those special terms are units of measurement. It helps me to have a mental image of measurements so I can truly appreciate the scale of things. Here are a few of the basics:

An acre, originally the area that a pair of oxen could plow in a day, is roughly the size of an American football field (without the end zones). A hectare is about two-and-a-half times larger than an acre.

A bushel is a measure of volume – think of a large laundry basket. Grains like corn, soybeans, and wheat are measured by the bushel. 

Other specialty crops like fruits, vegetables, and nuts are measured in many different units, like cartons, boxes, lugs, sacks, flats, bales, tons, and crates.  

Typically a corn kernel is larger than a soybean is larger than a grain of wheat, which helps me remember relative seeding rates: corn is lower than soybeans is lower than wheat. 

The right units for the job

Agriculture is highly localized. You have to know where you are operating geographically and any nuances specific to that area, crop, or farm. Farm sizes have changed over time too, which we looked at earlier this year in the US with the deep dive on the Farm Census. 

Below are some helpful numbers – primarily for row crops in the US – for a production agriculture setting. If you work with farmers who grow other crops, are based in another country, or are using different practices, I encourage you to do research on the numbers that make sense for your context. As one example, many countries outside of the United States use the metric system.

Feel free to download this as a PDF using the link below.

Topsoil Common Ag Measures

1.25MB ∙ PDF file

Download

Download

These estimates are just that – estimates. This is certainly not agronomic advice. When the rubber meets the road in the real world, many other factors can influence each of these numbers. 

If you are a person whose day job in agriculture primarily revolves around typing stuff into your computer at a desk (🙋🏻‍♀️), hopefully this cheat sheet can save you from some of the worst experiences of throwing a number out there and being met by tight, close-mouthed smiles and barely suppressed eye rolls. 

What other calculations, measures, or rules of thumb do you rely on or find yourself googling? Let me know in the comments below.

Leave a comment

Putting it to practice 

Oftentimes, the only time a unit and conversion chart comes out to play is during a math test in school. Maybe you had a job interview where you were asked silly little brainteasers (like how many golf balls fit in a 747 jet, which you will need to know exactly zero times for anything you will actually encounter on the job). 

Since working in agriculture, however, I have been impressed by the number of times people around me whip out back-of-the-envelope calculations. Whether it is to calculate a tank mix, to gut check a new business idea, or to plan out a field trial, there are many times that quickly crunching numbers is critical. 

Let’s walk through an example to put our cheat sheet to practice. 

Imagine you’re at a conference. You walk into an elevator. The fellow next to you begins pitching his new company to you. How quickly can you evaluate if there’s any merit to this dude’s business idea?

“We created a robot that can precisely fertilize each plant in a field, increasing corn yield by 22 bushels per acre in trials. The robot can fertilize over 1,000 plants a day!”

If you were new to bushels, acres, and yield, you may be thinking:  “22 bushels – is that a lot? 1,000 plants certainly sounds like a lot!” 

But, if you recall from your handy cheat sheet, 22 bushels is a little over a 10% bump in yield (assuming an average 200 bushel/acre yield for corn). At the current price of $4/bushel, this is almost $90 of additional revenue per acre for a farmer. Not bad. With our ROI calculation, we know that the total cost of this robot (including the time and effort to implement) would need to be less than this $90/acre to be ROI positive for the farmer. 

However, we also know that in a typical acre of corn, roughly 32,000 seeds are planted. If a robot can fertilize 1,000 plants a day, it would take over a month to cover a single acre. This would mean that you would either need dozens of these robots running 24/7 (likely to cost much more than our $90/acre to be ROI positive), or this wouldn’t work for row crops with millions of plants on any given farm. 

You can politely let our elevator pitchman down, or at least direct him to other cropping systems where something like this might have a better chance to generate a positive ROI for the farmer.

A few final rules of thumb

Beware of false precision

When you run a calculation where all of the inputs are SWAGs, and the answer comes out to $847.76 on the dot – beware of false precision! It is often best to round the final answer so you (and anyone you show those numbers to) know that the real answer is going to likely be “around $850” or “between $800 and $900.”

Keep track of your assumptions

My 6th grade teacher liked to say “never assume because that makes an A-S-S out of U and ME” (and yes he would spell it out which had the whole class in titters). While that is probably good advice for many parts of life, in business, you often have to make assumptions first and ask questions later. 

The key is to keep track of those assumptions. And as you learn more, you can update those assumptions. This is the process of separating out the “knowns” and the “unknowns” and chasing down those “unknowns.”

Be prepared to be wrong

Finally, remember that napkin math can be embarrassingly, expensively wrong. If the decision you are making is important and not easy to undo, you might need to bring in some bigger guns. Perhaps dust off your excel sheet, get some experts to weigh in, and of course double check any assumptions. 

The beauty of agriculture is that it takes place in the messy, chaotic, 3D-real world. There is always some level of uncertainty, noise, and risk. Even the best napkin math won’t get it right all the time. It’s worth remembering a quote from Dwight Eisenhower, “Farming looks mighty easy when your plow is a pencil and you're a thousand miles from the corn field.”

Thank you for reading! I’d love to know what formulas, conversions, or reference tables you have printed out or screenshotted on your phone in the comments below.

Leave a comment

Topsoil is handcrafted just for you by Ariel Patton. Complete sources can be found here. All views expressed and any errors in this newsletter are my own. 

How did you feel about this monthly edition of Topsoil? Click below to let me know!

Love it - Like it - Meh

Farming is most often a family affair. In the US, 96% of farms are family-owned and operated. Anyone who has played a game of Monopoly with their siblings that ended in tears can understand that when family and business mix, there are complexities that go far beyond a regular desk job.

This month, we’re discussing one unique aspect of family farm businesses: succession planning.

Succession planning allows farmers to answer “what happens next” to their farm when they step down at the end of their career. In many cases, it means passing the farm from one generation to the next.

To guide this discussion, I had the opportunity to interview Lauren Riensche, who understands this topic from many angles. She grew up on her family’s six-generation corn, soy, and wheat farm in Iowa. She and her husband continue to farm in Iowa today. Lauren has also worked with thousands of farmers as she has led commercialization and marketing efforts for leading brands across the agricultural industry, including Farm Journal, Kent Nutrition Group, Case IH, Granular, Monsanto, Bayer Crop Science, and most recently, Indigo Ag. 

Today, we’ll cover what succession planning is, how it looks across many farms, and why it matters far beyond the farm gate. 

Let’s dig in!

Not your typical 9-to-5

Farming is much more than just a job. In a survey taken of US farmers, 78% said “non-financial goals” were more important than financial goals in running the farm. It follows then, that retirement from farming hits differently. 

Lauren shares, “When you have your identity intrinsically tied up in the farm, it's more than retiring from a job. You cannot think of retiring as you would a 9-to-5, there's no party. It's actually more often than not a morose event than a joyful one.” (Side note: any quotes are from Lauren unless otherwise noted)

There are many reasons why a farmer might ultimately step down. Oftentimes, poor health will force a retirement. Within every farm community, there are stories of a heart attack or stroke tragically ending a career and surviving family members scrambling to pick up the pieces.

In less drastic cases, a farmer may no longer feel the drive to keep up with the advancements and relentless demands of farming. Lauren shares, “If it's not in your bones anymore, it may be time to retire, if able.” 

In other cases, a farmer may notice that others, like their long-time seed dealer or mechanic, are winding down their careers. “If your peers of 30 years are turning in their company trucks for condos at the beach, that might take away some of the familiarity and joy for you.”

There are more logistical reasons a farmer may call it quits. Some farms “run out of monetary resources to continue to farm” when the financials no longer pencil out. For others, the “complexity comes to a point where the tech, the systems, the programs, the laws, the equipment may become so complicated that it is not within a farmer’s bandwidth to stay up to date.”

Whether it happens slowly or all at once, at some point – a farmer retires. So what happens to the farm then?

Lauren outlines five typical paths a farm may take:

In a 2012 survey of US farmers, 58% plan to give or sell the farm to a family member. This aligns with the ultimate goal for many farmers, which is to “uphold the value and legacy of the operation while giving the option to farm to future generations.”

Although it makes for a riveting plot in Bridgerton, “it’s not necessarily the case anymore that farms only pass from father to son or son-in-law.” Good news for anyone who’s not the eldest boy!

Farms may also pass to an indirect family member. Lauren explains, “Perhaps they don't have kids, or their kids aren't interested in farming, but they have a niece or nephew who is.”

Farming families often have deep ties with their employees and within their communities. In some cases, a farm will be sold to an employee of the farm, a friend, or a close acquaintance. Alternatively, other nearby farms are often on the lookout to pick up additional acres through private sale or at auction.

And in some cases, farmland will be developed for non-farming purposes, such as housing, business parks, strip malls or even wildlife refuges.

Subscribe now

More than just assets

To pass on a farm, farmers can’t simply write a will, file it away, and call it a day. Lauren shares, “there is a big cloud of activity and nuance surrounding farm succession planning that entails more than simply asset handoff.”

Assets, primarily farmland, get the majority of airtime when talking about succession planning. And for good reason — farmland accounts for 83% of the balance sheet of a typical farm in the US (the remaining ~17% being equipment, vehicles, machinery, and inventory of inputs and grain).  

However, there’s much more to a successful succession plan than just the physical assets. Below are other activities that a succession plan may also include:

• Financial management:  Developing tax and investment strategy, organizing financial records, and risk management

• Operational management:  Documenting processes and policies across the operation, creating agronomic plans and records, determining roles and responsibilities 

• Emotional management: Aligning on organizational values and long-term vision, strengthening relationships, and setting expectations

Of course, succession planning looks different for every farm, if it happens at all. Fewer than 20% of farms actually have their succession plans written down.

“It makes me think about the Rockefellers and the Vanderbilts,” Lauren tells me. “They were two of the wealthiest families in the country at one point. However, only the Rockefellers maintain their vast wealth to this day. The key difference is that the Rockefellers had a more comprehensive succession plan in place. They not only made use of irrevocable trusts to protect their assets and minimize estate taxes, but critically, they also created a family constitution in which family values and expectations were outlined. This is how the Rockefellers maintained their legacy for generations, as opposed to the Vanderbilts who squandered the opportunity.”

So how can farms get Rockefeller-like results in their succession planning?

At the highest level, farms must: 

1) have a plan;

2) communicate that plan; and

3) revisit the plan regularly to make sure the plan stays up-to-date.

Lauren acknowledges that “no one wants to talk about, ‘when I kick the bucket one day.’” However, developing a succession plan is a “moment in time where you can analyze your purpose and reason for being in business. It’s a pivotal moment to know if you’re still driving towards the same north star generationally.” 

Take a second to let that sink in. Farmers are not only thinking about next season or next year – through succession planning, they are making decisions that span generations.  

For anyone who thinks that farmers can simply split the farm in equal slices of pie and hand it over to the next generation, think again. Lauren walked me through the concept of “equal versus equitable.” 

Imagine the scenario below. A retiring farmer has a bundle of assets:  land, buildings, cash, equipment, and inventory. He has two adult children – one who wants to continue to farm, and one who does not:

Now let’s see what it would look like if the retiring farmer split up his assets equally:

Both kids have the exact same distribution. This signs them up for constant back-and-forth negotiating about rent, purchases, and decisions on managing the farm, even though only one kid wanted to be involved in farming in the first place. This is not a recipe for sibling harmony. Lauren summarizes: “When you think about dividing up assets, farms that split up assets equally are the least successful in transitioning generations.” 

In contrast, now let’s look at what an equitable distribution could look like.

The kid who wants to farm will control all of the assets she needs to manage the farm operation. She may have to rent some land from her sibling, but at least they will not need to negotiate equipment leases and other day-to-day management decisions. The non-farming kid may ultimately receive a smaller dollar amount, but will have more freedom to do as he pleases since assets like cash are more liquid. 

Subscribe now

There is no easy button when it comes to succession planning. As a result, a whole industry of specialists is popping up to help farmers through this process. Lauren notes that this mirrors the increasing professionalization of farms themselves. “I do not think my great-great-grandpa hired a human resources consultant,” but now, there are specialists who cover the spectrum from hardcore financial engineering to essentially “group therapy.”

Death and taxes 

Farms have been changing hands in families for at least 3,500 years. Rules of land inheritance were literally written in stone at the dawn of civilization.

So you may be wondering, “Why is this important now?”

As we head into 2025, succession planning is becoming front and center in many farmers' minds for a few reasons. 

First, nearly 40% of farmers are over 65 years of age. Even if they aren’t ready to retire quite yet, they are getting well into their “40 seasons” and can begin to consider their legacy.

The second reason, and one that makes this conversation urgent for some farming families, is quite simply: tax. Particularly, the potent combination of estate tax and all-time high land prices. 

In the US, when you die, Uncle Sam claims a share of your assets above a certain threshold. In 2024, that number is around $13 million. In 2026, that threshold will be cut in half, to around $7 million. 

Now I’m not a tax advisor, but let’s play this through with an example. Imagine you’ve got a 1,000 acre farm in Iowa. With the average land price around $10,000/acre, your land is worth about $10 million. Assuming your land makes up about 80% of the farm’s assets, that brings you up to an estate of $12.5 million. 

If you happen to croak in 2024, your heirs will not pay a dime in estate tax. However, in 2026, if you don’t take any action, your heirs would pay taxes on $5.5 million, with tax rates from 18% to 40%. Your tax bill would be over $2.1 million. 

This multi-million dollar difference is compelling many farmers to pull together succession plans and take steps to minimize their tax bill before 2026. 

Ripple effects beyond the farm gate

It is estimated that up to 40% of the farmland in the US (370 million acres) could change hands in the next two decades. What might that mean for agriculture more broadly?

Lauren summarizes, “the farms that are good at succession planning will consume the farms that are bad at it.” There will be fewer, larger farms. In a word: consolidation.

Farm consolidation will reshape the broader agriculture ecosystem. Within farms, each member of the farm team will be more highly specialized as the farm covers more acres. If there are fewer farms, it follows that there will be fewer sales people, dealerships, and other agriculture businesses needed. Those who remain to serve farmers will need to up their game to stay competitive as decision-makers on the farm change over. 

Additionally, there will likely be more landlords who are not farmers themselves. As of 2014, about one-third of US farmland is owned by “non-operator landlords” (those who own farmland but aren’t farmers). As Lauren points out above, not all those who inherit a farm actually want to become farmers. More than half of the non-operator landlords got their farmland through inheritance:

Of course, non-operator landlords are not all one and the same with identical goals and preferences. However, if more farmland is managed at a distance, there may be a broader diversity of requirements to lease certain parcels of land. Farmers may have to spend more time reporting out to absentee landlords.

As farmers represent about 1% of the US population, Lauren reflects on this moment in agriculture: “This is an opportunity that fewer and fewer people get to experience, so it's a gift to even be able to give the decision to continue to the next generation.”

Topsoil is handcrafted just for you by Ariel Patton. Immense gratitude to Lauren Riensche for sharing her wit, wisdom, and deep expertise. Complete sources can be found here. All views expressed and any errors in this newsletter are my own. 

How did you feel about this monthly edition of Topsoil? Click below to let me know!

Love it - Like it - Meh

This month, we are digging deep into one of the world’s agricultural powerhouses: Brazil. 

To ground this edition, I had the opportunity to interview Fernando Palhares, a Precision Tech Strategy Manager at CNH Industrial and native Brazilian. Fernando trained as an engineer in Brazil and started his career in management consulting. He began to focus on agriculture after earning his MBA and MS in Agroecology at the University of Michigan. Over the years, he’s seen many different sides of agriculture through strategy and product roles at Granular, Cargill, Mahindra Agri and Mountain Hazelnuts. 

Before we dig in, a no-brainer disclaimer: Brazilian agriculture is as big, beautiful, and diverse as Brazil itself – a country of 215 million people that spans four time zones. Brazil is actually larger in area than the Lower 48 of the United States. In short, this is a huge country. While we will be hitting the highlights, there’s much more that we won’t be able to cover. 

Today, we’ll focus on Brazil’s rise, headwinds on the horizon, and a few things to consider when serving farmers in a different geography. 

Let’s dig in!

Brazil: A 21st Century agricultural superpower 

Beyond exporting festive all-you-can-eat steakhouses and some of the most beautiful people in the world, Brazil also is the third largest agricultural exporting country. 

In 2013, Brazil became the world’s largest exporter of soybeans. A lot of this growth has been spurred by demand for livestock feed from around the world, particularly China.

In 2023, Brazil became the world’s largest exporter of corn. However, in 2024 the US is expected to take back that #1 spot based on current projections. 

Beyond corn and soybeans, Brazil produces and exports many other crops – both commodity row crops and tropical crops like coffee and cacao.

Beyond its role as a key player on the global ag scene, agriculture is important within Brazil, accounting for nearly a third of the Brazilian GDP. 

Subscribe now

While Brazil’s agriculture exports have been on a strong up-and-to-the-right trajectory, it hasn’t always been this way. As Fernando explains, “if you look back 30 years ago, we were barely feeding ourselves and now we are exporting food to much of the world.” 

Fernando attributes this glow up to two trends. 

First, professionalization of many farms. “In the last 20-30 years, there’s been more access to capital. You have more market openings — foreign firms starting to invest here.” In addition to foreign investment, the Brazilian government has made an effort to extend credit to farmers and fund R&D through Embrapa, the state owned agriculture research organization. Through these efforts, farms have increased per acre productivity. Corn and soybean per hectare yield has more than doubled since 1975.  

And second, is the expansion of farmed acres through farmland conversion. As a recent podcast observes, “Agricultural land does not exist until it’s made. We often look at land under cultivation today and go, ‘Wow! This is great farmland,’ forgetting the fact that at one point it wasn’t farmland. It only became farmland when people made it farmland.” 

Fernando describes how this process goes in Brazil. “Usually, farmers on the frontier take forestland, chop down the trees and then introduce cattle. After securing land titles (not always legally), they start planting soybeans and corn on that plot.”

It’s estimated that about 1.5 million hectares (equivalent to 3.7 million acres) in Brazil are made into farmland each year. 

Unfortunately, this has resulted in deforestation of the Amazon and the Cerrado. More than 19% of the Amazon in Brazil has been cleared since the 1970’s. The Cerrado, Brazil’s tropical savanna, has fared even worse with more than half cleared since the 1970’s. Beyond providing habitat for many unique species, these biomes provide many other ecosystem services like storing carbon dioxide and even moderating the weather.

There’s no easy solution. There are ample incentives for individuals to convert farmland, with few consequences for doing so. Strong global demand for cattle and grain around the world and weak traceability throughout the value chain make farmland conversion a rational, yet unfortunate, choice for many farmers.

As Fernando summarizes, “the tension between GDP, development and exports against conservation, biodiversity and environmentalism is the biggest moral dilemma Brazil faces in the near future.”

While the corn and soybeans produced in Brazil flow into the same global markets as commodities grown around the world, Brazilian agriculture has some unique qualities. Let’s take a closer look. 

Share

Welcome to the tropics 

Brazil is close to the equator. Beyond warm, tropical weather, this means a few things: 

There are multiple growing seasons per year in Brazil. Instead of harvesting one crop per calendar year like most of the other grain baskets of the world, farmers in Brazil can harvest two crops each year (and sometimes even three!).

Second, the tropics foster greater biodiversity. Brazil is one of the most biodiverse countries in the world, hosting over 15% of the world’s biodiversity and is home to over 4,000 plant species. 

Fernando explains how this extreme biodiversity impacts agriculture with one example. “When I worked on LandVisor [a digital product for precise herbicide application] in Texas we had four types of weeds we were targeting on grasslands. But if you take a typical pastureland in Brazil, you have over 150 species of weeds. Because we’re in the tropics, ecological biodiversity is so much greater.” The same approaches that work in other parts of the world don’t necessarily work in Brazil. 

The missing middle

Another striking characteristic of Brazilian agriculture is farm size. 

As Fernando explains, “If you look at the way that most farms work in Brazil today, there are two separate poles. One is very big agribusinesses – way more concentrated than in North America. Then you have subsistence family farming.”

Similar to the United States, there is a bit of an 80/20 rule when it comes to the distribution of farm size and number of farms. In Brazil, a small number of large farms produce the majority of the farm profits while targeting mostly export markets; many small farms barely break even and serve mostly local markets. Seventy percent of farms are smaller than 50 hectares (~125 acres), while fewer than 0.5% of farms account for over half of the farm revenue.

Brazil is known for some of the largest farms by acreage. When we say large, we mean these are *truly* massive. We’re talking well over 100,000 hectares (~250,000 acres). Nova Piratininga is one example. This farm covers 135,000 hectares or 333,000 acres farming corn, soybeans, and cattle. To get a sense of scale, all five boroughs of New York City could easily fit within its borders!  

These farms operate like billion dollar corporations, because many are. There are high levels of specialization among employees, with many operators and on-staff agronomists. Fernando mentioned how some large, vertically integrated farms even have their own software development teams to build custom solutions. Off-the-shelf software simply doesn’t cut it in many cases. 

No surprise, technology adoption among these large farms is high – whether seeds with cutting-edge genetics, biologicals, equipment, or digital tools. Most companies who develop agriculture technology and inputs for Brazil target the largest farms.

In contrast, many of the small, typically family-run subsistence farms do not have access to new technologies and are often overlooked as a target market. These small farms tend to be less mechanized and require more manual labor. Instead of sending their crops abroad, the majority of the diverse crops produced are sold within Brazil. As we’ll see later, smaller farms also struggle to get financing. 

Headwinds on the horizon

While growth has been strong, Fernando noted that farmers still face many challenges that don’t have easy solutions. 

Exports in Brazil have exploded, but infrastructure is still catching up. Many key growing areas are not connected to ports via railway. Moving grain throughout Brazil is mostly done via truck, often on bumpy, unpaved roads.

Grain storage is costly. Many farms do not have on-farm storage, so must sell their grain as it is harvested. This weakens their ability to market their grain for better prices. Since so many farmers deliver grain at the same time during harvest, ports often have days-long lines to unload.  

Beyond physical infrastructure, internet connectivity is sparse. As Fernando explains, “Most Brazilians have smartphones, but that doesn’t mean that telecom coverage on farms is like in the US. A lot of places won’t have even 3G, let alone 4G, 5G. Some bigger farms invest in their own WiFi networks to overcome that.” This explains why it was a big deal when John Deere recently announced the partnership with a satellite internet provider. 

As we covered in a previous edition, farming requires careful management of cash since the seasonal nature of farming means that cash flows are lumpy. Credit – the ability to borrow money – is a critical tool. 

Unfortunately in Brazil, Fernando shares that “less than half of farms have access to sufficient financing.” As you can probably guess, the biggest farms are first in line. Fernando adds, “This helps to explain farm size. If you’re a small farmer you can’t remain competitive because you just don’t have access to capital to buy your tractors and seeds.”

Demand for credit far outstrips the two typical sources: government credit and private credit. In addition, lenders struggle to assess the creditworthiness of small farmers, who are often left out. Fernando shared an example of a coffee farmer who owned a property worth $60M BRL. Even with that asset as collateral, this farmer was denied a credit line for $1.4M BRL. “The fact that big banks and credit co-ops are unable to structure credit for someone with so much collateral shows how behind the financial infrastructure is.”

Global trade is a double-edged sword. Brazil’s role as a major exporter has brought in new capital to spur development. On the flipside, farmers are impacted by things outside their borders. 

On the import side, Brazil is “heavily reliant” on other parts of the world that produce raw materials like fertilizer. Because of the multiple crops per year, Brazilian farmers apply over twice as much fertilizer per acre per year as farmers in the US. Eighty-five percent of the fertilizer in Brazil is imported. 

On the export side, Brazil is heavily dependent on China. Over the last five years, 73% of the exported soybeans were sent to China. As China begins to increase its own domestic production, this could spell trouble for Brazilian farmers. 

Like farmers in every other part of the world, Brazilian farmers are at the mercy of weather. And,  like many other parts of the world, the weather in Brazil has become more extreme with climate change. Deforestation locally also exacerbates swings in weather. To make matters more difficult, crop insurance is much less common in Brazil than in North America. 

As of this writing in April 2024, parts of Brazil are facing both droughts and floods, strongly influenced by the El Niño weather system. Oftentimes, extreme weather hits the small farmers hardest since their farms are more concentrated geographically. 

In short, Brazilian farmers have their hands full. 

Despite these challenges, Fernando described the concept of “jeitinho” – the ability of Brazilians, including Brazilian farmers, to overcome obstacles through creativity, resourcefulness, and cleverness. 

“We Brazilians always find a way.”

Subscribe now

Serving farmers the Brazilian Way

To support Brazilian farmers, many homegrown companies have emerged to tackle some of the challenges above. Since agriculture can often be a don’t-know-it-’til-you’ve-seen-it kind of business, local experience can be a game changer. 

Some companies are addressing the lacking infrastructure by improving grain logistics (Strada) or making it easier for commodity buyers and sellers to connect digitally (Grao Direto). Others, like Campo Capital, help small farmers access credit through peer-to-peer lending. 

For those beyond the borders, Brazil is often a “must-win” market. A steady stream of companies have entered Brazil by either buying Brazilian companies (like Syngenta acquiring the popular farm management software, Strider), partnering with Brazilian companies (Grao Direto has financial backing from nearly all of the global majors: Cargill, ADM, Louis Dreyfus, Bayer and BASF), or building their own solutions with a Brazilian flavor.

Fernando had some great advice for those who enter the Brazilian market, or are internationalizing their products for a new audience (casually called “i18n” in the biz):

1. Meet the customers where they are at. Product development and distribution will need to meet Brazilian customers’ unique needs. For example, new technologies like See & Spray that use computer vision to identify weeds will require massive amounts of local data to identify the much broader array of weeds. 

   As far as ways to reach the customer, independent retailers are critical (41% of inputs are sold through this channel). However, Fernando shares, “Brazil is where the US was 15 years ago on the retail side as we still have a very fragmented landscape. Rolling up and consolidation is playing out right now in Brazil.” Any sales approach will need to work with many distributors.

2. Avoid dumb mistakes. Fernando shared a story after speaking with a handful of Brazilian farmers. After importing tractors to use on their farms, they were upset: “Why do companies keep sending us tractors with snow covers?!” Spoiler alert:  snow is not a problem that Brazilian farmers face.

   There are other easy mistakes to avoid. Fernando shared, “don’t assume that people, especially operators, speak English.” Instead, any instructions or interfaces should be in Brazilian Portuguese. The units of measurement are hectares and the metric system is preferred. WhatsApp is the dominant communication channel. Simple product choices can go a long way to show respect for the customer.

3. Don’t be a tourist. There are many examples of companies making major fanfare as they launch a product to a new market, only to peter out a year or two later and retreat. While it’s important for businesses to cut losses when something isn’t working, it can leave farmers in the lurch who have invested their precious time and money to try something new. The decision to enter any new market should not be made lightly.

Topsoil is handcrafted just for you by Ariel Patton. A big shoutout to Fernando Palhares for sharing his experiences with me, wrangling data and editing. Complete sources can be found here. All views expressed and any errors in this newsletter are my own. 

How did you feel about this monthly edition of Topsoil? Click below to let me know!

Love it - Like it - Meh

In fact, the hottest thing to drop this month was the 2022 Farm Census from the US Department of Agriculture. This once-in-every-five-years report is chock full of data from America’s nearly 2 million farms. 

So what does this 757 page long beach read actually tell us?

Today we are going to look at key trends from the Census. While we’re at it, we’ll also challenge some of the age-old narratives about US farms. Let’s dig in!

America’s farmers are getting older

In 2022, the average age of the American farmer was a little over 58. 

Back in 2017, it was 57-and-a-half. 

See? A 0.6 year difference. *Dusts off hands* enough said about that!

Just kidding – of course we’re not stopping there! Let’s look at the number of farmers by age group to better understand what is going on here:

The total number of producers stayed relatively flat, around 3.4 million total producers in 2022. 

We see that the biggest drop-off was among the 45 to 54 year-olds. What the heck happened to them?

One hypothesis is that the 45 to 54 year-old cohort was discouraged from farming in the first place because of the 1980’s Farm Crisis. As a twenty-something looking for a job in the late 1980’s, farms were in significant distress and farming likely did not seem like a plausible career path. 

I’d love to hear from others (especially those who may have lived through this) as to what else might be the driver for this drop-off.

Leave a comment

Why does the average age of the American farmer even matter? As Sarah Nolet describes, oftentimes this statistic is trotted out to lazily imply that farmers won’t adopt technology, which is not necessarily true. 

Looking at the chart above, we see an increase in the farmers who are 65 and older. With farmers getting older and eventually retiring (yes – even those granddads still driving a tractor at 83!), one real consequence is that there will likely be many farms and farmland that change hands over the next decade.

This has many possible effects:  

• there is a greater need for succession planning on farms, 

• there are potentially new opportunities for younger farmers (and the need to ensure that they have the knowledge, skills, and abilities to succeed),

• we may see further acceleration of farmland consolidation into fewer hands.

The vast majority of farms are still family-owned

As we think about the potential of farms changing hands in the next decade, it’s important to understand who owns farms in the US today.

Read enough food packages or media headlines and you’ll see a common story that goes something like this: “There are two kinds of farms:

1. Giant evil corporate monoculture farms churning the soil into chalky dust to produce empty calories

2. Small wholesome family farms growing two heirloom zucchinis, three pigs, and a horse with a red barn”

The reality is, fortunately, much more nuanced. From the data, we know that the vast majority of farms in the US are family-owned.

The 95% of family farms can be small or large – some don’t break even, and many (over 9,000 farms to be exact) make more than $5M in annual sales. 

Some are owned by one person, and many are organized into complex legal structures so more family members can own part of the farm (legally a partnership or corporation). Regardless, at least 50% of the farm is owned by the producer or the producer’s family members. 

This is an important takeaway to remember, especially for those who sell to and serve farmers – family dynamics can, and often do, influence the farm business.

There are fewer smaller farms (and why that might not be the real problem)

One of the most popular panicky headlines that has been circulating from this Census is that “we’ve lost 7% of farms in only 5 years!!!”

However, there is one big reason that this is misleading. 

The Census defines a farm as “any place from which $1,000 or more of agricultural products were produced and sold.” This dollar threshold was chosen in 1974. It’s important to note that the Census is not adjusted for inflation. 

As we have all experienced in the past year, inflation can make a real difference. One thousand dollars in 1974 is actually over $6,000 in today’s dollars. Many of the farms that are considered farms today would not have met the bar to be defined as a farm when this most recent definition was created.

When we focus on the farms above that ~$10k threshold (in the brown box above), we see a different picture. Instead of a massive decline, the number of farms has remained relatively steady.

A note on US farms as one big happy market

When aspiring entrepreneurs hear that there are 2 million farms, they may lick their chops with anticipation. “What a nice, robust TAM (total addressable market)!” they may think. 

There are two quick reality checks that burst that bubble:

1. The TAM shrinks by ~50% when you look at farms above $5k in revenue. There are 1,055,468 farms in 2022 that sold more than $5k in farm goods – compared to the 1.9M of total farms. 

2. US farms are not one market. US farms are not one market that a company can simply treat all the same and hope to scrape the cream off the top; US farms are more like a bag of multi-colored confetti and finding the target market is carefully picking out the shiny pieces with tweezers. 

Finally, there is also an 80/20 rule when it comes to farm size and the amount that they produce: the largest 6% of farms by sales produce nearly 80% of all sales.

Subscribe now

Fewer producers live on the farm

When we use “decline of small farms” as shorthand for “declining rural populations with a connection to the land,” the percent of producers who live on the farm may actually be a more meaningful statistic. 

And when we look at the data, we find that there are fewer producers who live on the farms where they work. Twenty years ago, nearly 80% of producers lived on the farms where they worked. That number has decreased to about 70% today. 

, a farmer in Iowa, wrote a beautiful piece on how this feels from the perspective of one person.

Now, we don’t necessarily know why this trend is happening or all the downstream effects (are the farm houses still on the farm and just not occupied, or occupied by someone else? These are the things that the data can’t tell us). Some might even argue that the fertile farm ground that would be used for on-farm residences is more valuable as a field than a house.  

I don’t have the answer to whether this is a good or bad thing. What I do know is that the Farm Census is an invitation to discuss, debate and define – what do we care about and why do we care about those things? Is there something inherently valuable or good about small farms or the ability for people to live on the ground they farm?

It leads us to consider what kinds of policies, businesses, and innovations should be developed to create the agriculture ecosystem that we would like to see thrive.

Government payments reinforce the status quo

To that end, let’s take a look at government payments to farms by the size of the farm:

Overall in 2022, the Federal government paid out over $10 billion dollars to farmers through various subsidy programs, an increase of 17% from 2017. 

This is one of the shortcomings of the Census data being from self-reported surveys. When compared to USDA’s records of actual payments, these figures vastly undercount the amounts paid out to farmers by the Federal government. In 2022, the actual amount paid out was closer to $15.5 billion dollars (and $11.5 billion in 2017 – in reality an increase of 35% over the five year period!).  

One trend to take note of is that the largest farms are receiving a greater share of the Federal subsidy dollars. Recall that the farms with over $1 million in sales account for just 6% of the total number of farms in the US. These largest 6% of farms receive 40% of Federal subsidies.  

By this measure, it is clear that Federal policy strongly favors the largest farms.

The top crops are still the top crops

While the overall harvested acreage is down between 2017 and 2022, the same crops that were in the Top 10 by acreage in 2017 continued to reign supreme in 2022:

There’s another 80/20 rule when it comes to crops and share of total acres covered: the top 10 crops account for 93% of all of the harvested cropland in the US.

While this tells us about how cropland in the US is used, it doesn’t necessarily tell us which crops are most profitable for farmers (and recall that specialty crops are often much higher revenue per acre than row crops). 

There’s a lot more where that came from 

While this whirlwind tour hopefully gives you a sense of US farms at a high-level and why we shouldn’t always believe the simple sound bites, we barely scratched the surface of all that the Census covers. There are entire sections on farmer demographics, farm financials, livestock, how land is used including adoption of practices like no-till and cover cropping, and new for 2022 – precision agriculture. 

Speaking of precision agriculture, I had a great time chatting with Tim and Tyler Nuss recently on the Podcast about precision agriculture which you can check out here!

While the Census data is a helpful starting point, it’s important to remember that there is no such thing as an average farmer. Each farm is as unique as the people who run it, the choices that they make, the crops and livestock they grow, and the soil in their fields.

For folks who are interested in agriculture outside of the US, stay tuned! Next time, I’ll be back with more for you about another country that is an agricultural powerhouse. Thank you for reading!

Share

Topsoil is handcrafted just for you by Ariel Patton. Complete sources can be found here. All views expressed and any errors in this newsletter are my own. 

How did you feel about this monthly edition of Topsoil? Click below to let me know!

Love it - Like it - Meh

One of the most beautiful things about agriculture is that it is infinitely vast, spanning every culture and intersecting with every domain you can think of. Something I’ve grown to appreciate is that one person will never know the full breadth and depth of agriculture. 

As we kick off 2024, I am excited to share something new that I’ve been working on.

Through Topsoil, I love sharing what I know from my own experience and researching data. Now, I want to share with you all my secret weapon for learning – talking with folks across the industry with different perspectives and insights. 

Over the past month, I’ve been experimenting with turning expert conversations into simple Topsoil frameworks at just the right depth. I’m thrilled to share this first attempt with you today!

I had the opportunity to sit down with Greg Chiocco, a 20+ year veteran in agriculture equipment and agtech and current VP of Product at FarmWise. Greg is a mechanical engineer by training and spent the early 2000s at Trimble and Topcon, companies that shaped precision agriculture as we know it today. Prior to leading product at FarmWise, Greg held product leadership roles at the Climate Corporation, Zoox, Granular and Mineral, which has given him a front row seat in shaping how technology is applied in agriculture.

Managing field variability at scale

When I (Ariel) started working in agriculture, I heard the words “precision ag” applied to many seemingly different things. Variable rate fertilizer? Precision ag. Scouting using drones? Precision ag. Yield maps? Precision ag. 

I had the sense that it was loosely tied to machinery and farm data, but there wasn’t necessarily a clear-cut dictionary definition that resonated. It is one of those loosely defined, I-know-it-when-I-see-it kind of terms: agriculture, but make it precise.

Greg had a helpful way of defining precision agriculture:  “When you think of agriculture, it’s the tractor, the implement, the on-the-ground action that you’re taking. Precision agriculture is that additional layer of technology that goes on top of those machines.”

Because farming takes place outdoors in the real environment, every field is different. Within each field, there is also a huge amount of variability. For example, the soil type in one corner might be heavier clay than the center of the field. There may be drainage issues in certain patches. The field might be on a sloping hill. You get the idea.

Now, imagine a tractor rolling through the field. Without precision agriculture, the tractor will treat every part of the field the same. Planting at the same seeding density, no matter the quality of the soil. Applying fertilizer at the same rate, no matter if some areas are more nutrient-poor than others. Spraying herbicide from the same height, even if the ground is rolling. 

With precision agriculture, the equipment instead automatically adjusts to the variability within a field. Let’s look at planting corn as an example. Modern planters (a piece of equipment that can cost over $250k designed for – you guessed it – planting) combine many pieces of technology to make variable rate seeding possible. 

First, data is collected for each field using sensors:  yield maps from previous years, soil type, and topography to name a few. This data is loaded into software that divides the field geographically into “management zones,” with each zone being prescribed a different seeding rate. Typically, more productive areas of the field are planted more densely with corn. This rate can vary widely, from 20,000 seeds per acre to more than 40,000 seeds per acre. 

Spring rolls around, which it means it’s go time to get the corn seed planted in the ground. The variable rate seeding prescription generated by the software above is loaded into the computer monitor inside the planter. As the planter moves across the field, the GPS receiver lets the planter know exactly where it is in the field, within a meter (and in some cases down to the inch!). The planter meters more or less corn seed depending on its location in the field. Voilà! Instead of one average seeding rate across the entire field, each zone is planted with the optimal number of seeds to hit a farmer’s yield target.

Variable rate seeding is just one example of the incredible choreography of equipment, software, inputs, and people that make up precision agriculture. But, as Greg points out, it wasn’t always this way.

Precision agriculture can mean many, many things

It’s helpful to go back to the origins of what we think of as modern precision agriculture. 

Greg shares, in the 1990’s, if you mentioned the term “precision agriculture,” you’d likely be met with a blank stare. The precision agriculture that we would recognize today came on the scene as a result of a couple technologies that unlocked something new when combined: readily available and affordable high-precision GPS and sensors on a combine harvester (specifically impact plate sensors and moisture sensors). 

“Yield maps are where precision ag began.” (Side note: any quotes are from Greg unless otherwise noted) Farmers could suddenly see their yield within a field, as their combine moved across the field, for their entire farm operation. With this information, farmers had a scorecard of how different parts of a field performed to inform decisions for the next year. Precision agriculture was born. 

Now, precision agriculture has become an “all encompassing term for many, many things” and can influence farming at every step of each season. 

Subscribe now

Precision agriculture creates real value

There are some obvious benefits to more precise, targeted action: 

• Improving farmers’ bottom lines by increasing yields or reducing costs. “The value proposition of precision agriculture is crystal clear. You’re building a thing that gets used in the dirt, on the ground, in the soil everyday. And with farmers being as pragmatic as they are, if it didn’t bring them value, they wouldn’t use it. Farming isn’t a high margin profession, so it needs to be valuable.” How much can precision agriculture help financially? Of course this depends on the specific technology and what the farm was doing before, but studies in US Midwestern corn and soybean farmers show a perceived increase of almost $90/acre (which can quickly add up when farming across thousands of acres). 

• Reducing friction and saving time. Greg shared stories of other intangibles that farmers love about precision agriculture, like getting time back in their day or being able to outsource more: “Many farmers mention the ‘convenience factor.’ They could check their email and commodities prices while in the [tractor] cab instead of having to spend hours in the office. Before guidance [auto steer], it was rare that a farmer would put a hired person in the planter, because it was too easy to get wrong. With guidance, they could trust a hired person and spend a little more time on other things on the farm or with their family.”

• Doing more with less for better environmental sustainability. Precision agriculture delivers on the current industry rallying cry of “more with less” by reducing the amount of inputs that are needed for the same (or better) results. Even before AI-powered spot spray solutions, innovations like section control (being able to turn sections of a farming implement on and off) reduced overlaps and skips when planting or applying inputs (illustrated below).

• Addressing labor and humanitarian challenges. Farms often struggle to find and afford labor. Beyond simply ensuring there are folks to work in the field, Greg highlights another difficulty that precision agriculture can help address – the work itself can often be highly undesirable for employees: “I watched a crew of 40 people crawl on their hands and knees through a spinach field because that’s how you harvest spinach. It’s horrible, backbreaking work.”

• Making new things possible. One example is conducting field trials at scale. Any field has dozens of variables, like soil type, weather, variety of crop planted, specific inputs applied, and on and on. It is difficult to tease apart which make a difference to crop yield. With precision agriculture, more variables can be controlled and measured, and data can be gathered across more acres. Beyond research institutions, farmers themselves can run experiments to better understand what works for their own farm.

…But it’s no silver bullet

Despite his own dedicated career in precision agriculture and the benefits above, Greg warns “It’s not going to solve all of agriculture’s problems. I can’t stress enough that there’s no silver bullet in agriculture.” There are several nuances and limitations.

Not only is there variability within and across fields; every geography and crop is unique. This makes it tough to scale any given precision agriculture solution globally. Just because a tool works in one region for one crop does not mean that it will work everywhere.

Greg shared an example from working on equipment in Western Europe (EU). Farms and fields in the EU tend to be relatively small (the average farm size in the EU is 43 acres compared to 445 acres in the US). Farms in the EU also must comply with stricter regulation. As a result, many EU precision agriculture solutions emphasize easy recordkeeping and maneuverability in small, irregular shaped fields — which isn’t necessarily the same wishlist from farmers in the US, Latin America, or elsewhere. 

Spoken like a true engineer, Greg notes that “every additional layer of complexity is another potential point of failure." Many systems must work together for precision agriculture to deliver results. Like any technology that meets an unforgiving world of dust, weather, or patchy internet, this doesn’t happen seamlessly every time.

Finally, “even if the technology is exceptionally valuable, it still takes time for it to be adopted in an agricultural setting.” Even auto steer, the poster child of successful technology adoption in agriculture, is used by less than 80% of US Midwestern farms. And, it took 15 years to get to that level of popularity!

But, one exciting observation that Greg had is that this may be changing. 

“Back in the day, getting people to change their practices for the sake of technology was really hard. They wanted to jam precision ag into their current farming practices to make their life easier. Now, it seems that farmers are embracing technology to the point that they are willing to change their farming practices to adopt the technology because it makes their life easier. We’re seeing people change their watering schedules or field configurations to use a robotic weeder or autothinner or some other technology.”

Next wave of precision agriculture

Despite the funding winter we are in today, there are reasons to remain bullish on precision agriculture. 

For one, Greg shares that over his career, it has “gotten so much easier to apply these technologies. We are now doing a lot more system integration instead of building the systems from scratch. This makes it so we can build faster and it’s harder to screw things up.” 

As an example, imagine an equipment company that is creating an automated tractor. Instead of the engineers building a custom computer from the ground up with all the right processors to control the tractor, companies like NVIDIA now offer out-of-the box chips that can simply be integrated into the equipment. Agriculture companies can focus on what they do best and innovate faster.

This is similar to the way that Amazon Web Services provides the behind-the-scenes cloud computing and storage so companies don’t have to build their own on-premise servers. Each company can now focus on their own special sauce, and not on building baseline infrastructure every time they want to create a new product. 

Finally, precision agriculture is getting more and more precise. 

Remember how GPS and combine sensors were the underlying technologies that made precision agriculture possible? Since the 1990’s, there have been many new “enabling” technologies:  new types of sensors, better data storage, faster connectivity, and improvements in hardware to name a few.

Today, we are entering a new exciting era: “once you start to apply artificial intelligence (AI) and computer vision to precision ag, the possibilities are endless.” Among several other possibilities, AI and computer vision can help equipment get even more targeted in the field than with GPS alone. This brings us closer to a future of real-time, or even predictive, plant-by-plant management at scale.

Subscribe now

Thank you for reading today’s newsletter!

Beyond creating the Topsoil newsletter, another highlight from 2023 has been chatting with Tim and Tyler Nuss on The Modern Acre Podcast and learning more about their farm. Last month we talked all about the farm team, which you can listen to here!

Topsoil is handcrafted just for you by Ariel Patton. A sincere thank you to Greg Chiocco for sharing your knowledge with me and editing. Complete sources can be found here. All views expressed and any errors in this newsletter are my own. 

How did you feel about this monthly edition of Topsoil? Click below to let me know!

Love it - Like it - Meh

Thank you for your continued support in reading, subscribing and sharing Topsoil – a monthly newsletter with frameworks to help you make sense of agriculture, at just the right depth.

Subscribe now

It’s no secret that farmers wear many hats. 

Running a farm takes many different skills – working in the field, managing financials, fixing equipment, buying inputs, and selling the crop, planning for next year, among many other jobs. 

For some farms, one person can do all of those tasks. For many other farms, it takes a team. 

Today we’ll cover some of the roles on the farm, off the farm, and what these roles mean for businesses that work with farms. Let’s dig in!

Roles on the Farm

First, we start with the farm owner. This person is often called the “farmer” (or “grower” or “producer” – a heated terminology debate for another day!) who owns the farm business. 

Beyond the farm owner, there are several other roles on the farm. The farm owner may perform some, if not all, of these other roles. For example, it is common for the farm owner to be the operations manager.

In many other cases, especially as farms grow in acreage or revenue, not surprisingly, employees are hired or contracted to fill these other roles.

• Operations Manager:  This person makes sure stuff gets done across the farm. If that sounds broad, that is because it is. They are typically responsible for planning ahead that people and resources are in place to get field work done and troubleshooting when things break down in the field. This person manages the operators, directing who needs to go where and when to get work done.

• Operators: These are the people who are responsible for executing the fieldwork, depending on what the season calls for: planting, harvesting, tillage, spraying, picking, mowing, pruning – you name it. Many operators (or “farmhands”) are employed by the farm. In other cases, where labor needs fluctuate heavily throughout the season, operators will work on a contract basis or get brought on through middlemen farm labor contractors. Some operators have specialized expertise, for example, in equipment maintenance and repair. 

• Bookkeeper:  While much of the work on the farm happens in the field, office work goes on behind the scenes to keep the farm running. The bookkeeper keeps records straight and keeps tabs on the money going in and out of the farm. This means paying bills, invoicing for any custom work, reconciling bank accounts, entering data, and making sure employees get their paycheck. 

• Agronomist:  This person (sometimes called a “crop advisor”) is an expert in agronomic practices – particularly soil and plant health. The agronomist guides cropping decisions, makes fertility and seeding prescriptions, scouts the field for threats to crop health to recommend treatments, and takes soil samples. In many cases, the agronomist will manage agronomic data to inform recommendations for the next season.

In the US, 98% of farms are family owned and operated, so it’s not uncommon for family members to be involved. The family business dynamic makes agriculture unique and can create challenging situations, like succession planning or tactfully managing family-members-as-employees. Ideally, this entails less drama and mayhem than the Dutton or Roy families!

Every farm operates a little differently depending on where in the world it is located, the crops produced, and local labor availability. Not every farm will employ these roles, or may use slightly different titles. In many cases, it makes sense to outsource this work. That brings us to a broader supporting cast of characters.

Beyond the Farm Gate

While these additional roles may not be directly employed by the farm, they work closely with the farmer on a regular basis. Many of these are referred to as “Trusted Advisors.” 

Trusted Advisors (rarely just “Advisor”) is a common phrase in agriculture that always tickles me. It makes me wonder, is there anyone you take advice from whom you don’t trust? I’ve been workshopping similar phrases, but none have really stuck so far. Like, “I’m going to get tax advice from my Honest Accountant” or “I just had a root canal from my Competent Dentist”. They just don’t quite have the same ring as “Trusted Advisor.”

In any case, trusted advisors often provide a mix of products and services to the farm. Initially, many of these roles, like ag retailers or equipment dealers, were simply product salespeople. As products have become more commodified, many salespeople have begun to offer service and advice to differentiate themselves.

• Ag retailer:  As we covered in the Ag Value Chain, farmers often buy the inputs they need, like fertilizer, seed, and crop protection, from an ag retailer. Oftentimes, the ag retailer staffs salespeople, applicators, and even sales agronomists who provide service and advice to farmers. 

• Seed dealer:  Certain seed brands (like Pioneer) do not sell their products through ag retail, and instead sell their products directly to the farmer through a dedicated sales team. Similar to ag retailers, these seed dealers often strive to provide outstanding service to stand out from the competition.

• Equipment dealer:  Whether equipment is green, red, or something in between, the equipment dealer is a critical partner. They sell equipment, provide repair and maintenance services, and increasingly, offer advice on data collection and management. 

• Insurance agent:  Given the unpredictability of weather and geopolitical events that influence crop prices, crop insurance is a staple for many farms (especially since it is subsidized by governments like the US for certain commodities). An insurance agent (or “crop insurer”) sells insurance policies and coverage to farmers.

• Buyer:  Crops must be sold in order for farms to be profitable. This may look different depending on the crop grown. Typically for commodity row crops like corn or soybeans, farmers work with a grain buyer (or “originator”) to sell their grain, oftentimes under futures contracts. Specialty crops like fruits, nuts, and produce, also are sold under contracts or in “spot markets” for immediate delivery. Some farms will work with an independent marketing consultant to sell their crops. 

• Accountant:  While many farms conduct basic bookkeeping activities on the farm, when it comes to filing taxes (and suggesting ways to minimize taxes), or longer term financial planning, many farms work with an external accountant. 

• Ag Lender:  Since cash flows in farming can be inconsistent, it’s critical that farmers work with an ag lender (sometimes referred to as a “loan officer” or simply “banker”) to ensure they have operating credit for expenses throughout the year as well as the ability to get loans as needed for bigger purchases like land and equipment. 

• Landlord:  Over half of cropland in the US is rented. As a result, many farmers interact regularly with their landlord or landlords. As of 2014, two-thirds of landlords are individuals or partnerships, with the remaining one-third being corporations, trusts and other investors who own farmland.

The Farm Crew of the Future and How to Serve Them

If you are in the business of reaching farms with new products or services, there are a couple of takeaways:

1. There are several roads to the farm. In the “AgTech 1.0” era (think farm management software of the early 2010’s), agtech companies smiled and dialed across the countryside to sell directly to farm owners. This resulted in limited growth and adoption. In the “AgTech 2.0” era and beyond, companies like Bushel and AgVend have had greater success by serving grain elevators and ag retailers first, and then developing solutions to connect to the farm. Furthermore, Seana Day did an excellent analysis of agtech investment over the past decade and found that even in 2023, there has been little innovation in tools for ag service providers, who ultimately serve the farm (which smells like an opportunity to me!). 

2. The person writing the check and the person using the product might not be the same person. Imagine you are creating a new software tool for farm bookkeepers to keep better track of farm expenses. If you want product feedback, it will be important to actually talk to the person using the tool – the bookkeeper in this case. Your marketing and sales team will also need to talk to the farm owner, who may be the one writing the check. Two different roles with different needs that must both be considered for your product to be successful.

Finally, your gal loves nothing more than to speculate on the future of agriculture. So what will the farm crew of the 2030’s look like?

There are some things that we can count on to remain the same – like the importance of relationships in agriculture. “Ag is a relationship business” is a common belief that has staying power. The roles above address real needs that are not going away anytime soon.

While relationships will remain important in agriculture, there are a few growing trends that will shape the day-to-day activities of those roles and how they interact.

There is increasing consolidation of farms, meaning that farms are getting larger. In many cases, this means that the same crew is working across more acres. It also means that the roles beyond the farm gate will have fewer, larger farm customers. This will likely trigger consolidation among those service providers beyond the farm gate as well. 

As a result of farms becoming larger and having more access to information, farms are professionalizing. Kristjan Hebert, a Canadian grain farmer, is a great example of a farmer who runs his operation as an innovative business and strives to bring top talent to his team as his farm grows. 

This combination of fewer, larger, more professional farm customers puts pressure on ag retailers, equipment dealers, and other off-farm roles to step up their game. Shane Thomas and Sarah Nolet discuss in a fantastic conversation how ag retailers in particular must adapt to these changes. 

Finally, advances in technology are driving automation on the farm. The word “automation” might spark fears that robots are coming for your job. However, the number of farmworkers has remained relatively steady since 1990. In many cases, there is a labor shortage in agriculture. As Rhishi Pethe shares, robots and other technology can be “a way to augment human capabilities rather than to replace them completely.” 

As we think about the farm team of the future, and especially new technology like artificial intelligence, it is likely that the mix of tasks will change, but the need for people won’t change. Automation can fulfill repetitive or lower-skilled tasks, which will help humans use their time for higher-skilled tasks. 

As a result, the human farm team will require training to not only harness new technology, but also spend their newly freed time on other higher-value pursuits across the farm. A simple example today: as yield mapping software has improved over the past several decades, agronomists don’t have to spend huge amounts of time getting the yield maps to work and can instead spend their time turning those yield maps into valuable recommendations and services for their farmer customers. 

Now for the real heated question – who on the farm is the team MVP? Curious to hear your thoughts in the comments below!

Leave a comment

Topsoil is handcrafted just for you by Ariel Patton. Complete sources can be found here. All views expressed and any errors in this newsletter are my own. 

How did you feel about this monthly edition of Topsoil? Click below to let me know!

Love it - Like it - Meh

Before we get into the weeds today, I want to welcome new subscribers 👋 and share a podcast appearance from last month.  

I joined the ever-hilarious-and-insightful Nuss brothers on the Modern Acre Podcast to talk about Sustainability in Agriculture. Feel free to check out that episode, or take a listen to another fascinating deep dive they did recently on the Climate Corporation that I greatly enjoyed. 

Thank you for your continued support in reading, subscribing and sharing!

Subscribe now

In a tale as old as time, weeds are the villain of agriculture. 

Meanwhile, herbicides, one of the major ways of controlling weeds today, are also becoming vilified. 

Depending on which corner of the internet you’re scrolling, in this weeds vs. herbicides battle of the baddies, no one wins and our choice is to either starve or be poisoned. Is there a (less depressing) path forward?

I like to think the answer is a resounding yes. Not only that, weed control is the proving ground for some of the most exciting new approaches and technologies in agriculture. 

Let’s dig in!

Weeds:  A real problem

Weeds are simply plants growing where they are not wanted. And these unwanted plants have a real impact on farmers’ bottom lines.

Weeds harm crops in two main ways. First, weeds can rob the crop of water, sunlight and nutrients, leading to yield losses. If left untreated, these losses can be significant – up to a bushel or more per day of lost yield in studies of corn in the US Midwest. In today’s prices, that’s a little under $5/acre per day. With the profit margin for corn being around $70 for the whole year, this is a serious hit on the farm’s ability to be profitable. 

Second, plants take no prisoners when it comes to competing for resources. Some weeds are allelopathic, meaning they release chemicals that harm the crop. If you’ve ever strolled under walnut or eucalyptus trees and noticed that other plants struggle to grow underneath, you’ve seen allelopathy at work. There are 240 such documented weed species, including common weeds like redroot pigweed and lambsquarters. 

Finally, beyond the yield hit, the presence of weeds can make harvesting more difficult and can contaminate the harvested product (especially certain types of grain). Contaminated product means a lower quality grade means a smaller paycheck for farmers.

The solution today

So how do farmers address weeds today?

The table below shows some of the main categories of weed control available with a handful of specific examples:

Farmers will often use multiple methods together – called integrated weed management – to reduce overreliance on any one tool and improve overall weed control. The idea is to create conditions where the crop thrives and can outcompete other unwanted plants. As one organic vegetable farmer in California I spoke with recently told me, “None of these practices alone will do everything. But when you start adding them together, then you get a program that works.”

While farmers take action to control weeds in the current season, they also play the long game. Choices made in one year impact weed pressure in future years. 

Anytime a weed “goes to seed” or reproduces, more seeds are added to the “weed seed bank” (real term used to describe the weed seeds scattered throughout the soil of a field). 

A single weed, like the dreaded Palmer amaranth, can release well over 250,000 seeds, with some estimates closer to a million seeds per plant! Many weeds evolved seeds that work like ticking time bombs, patiently waiting years before sprouting. Other weed seeds germinate throughout the season so a few are likely to slip through the cracks. You can see how even a few escaped weeds can result in headaches for years to come. 

These activities cost farmers time and money. Depending on the crop and specific practices, farmers spend anywhere between 5% to 15% of their operating costs on weed management (and often much higher for crops that require extensive hand weeding).

Herbicides: cost effective and controversial

Herbicides, called “crop protection products” in industry-speak (along with fungicides, insecticides and other -cides), are arguably the most important tool in many farmers’ weed management programs. As US Secretary of Agriculture Tom Vilsack stated, "Weed control in major crops is almost entirely accomplished with herbicides today."

Over the past several decades the costs of labor and fuel have increased. Because herbicides save labor and are relatively cost effective, they have grown in popularity. There are some environmental benefits as well: farmers have substituted herbicides instead of heavy tillage that leads to erosion and release of carbon into the atmosphere.

For these reasons, by the early 1990’s, roughly 98% of corn and soybean acres in the US are treated with at least one herbicide:

And yet, herbicides have downsides. 

• Risks to human health: Certain herbicides may carry health risks for the people applying the herbicide, surrounding communities, and consumers through residues. There are studies that link exposure to herbicides with cancer, neurodegenerative and metabolic disease, developmental harm, respiratory disorders, and reproductive issues. Harm to human health is heavily dependent on level of exposure: how much someone is exposed to and for how long. 

• Environmental risks:  Certain herbicides can leach into groundwater, runoff into waterways, or volatilize into the air. In these cases, at a high enough concentration, this may cause unintended harm to wildlife or other crops, decrease biodiversity, and contaminate drinking water. 

• Herbicide resistance:  Active ingredients become less effective at controlling certain weeds over time. Some weeds might survive an herbicide application and reproduce. The next generations of weeds evolve to become more resistant to that herbicide over time. Currently, there are 269 recorded herbicide resistant weed species around the world. This has a few implications: farmers must apply more in order to get the same or worse results (“the pesticide treadmill”), different chemistries are needed, and some weeds must simply be controlled by other, non-chemical means. 

The bottom line:  herbicides are an important tool for farmers to control weeds, with risks that need to be managed. Similar to other activities like driving a car, getting Botox, using power tools, or drinking a beer (hopefully not all at the same time) – there are risks to ourselves and others just as there are benefits. 

In order to manage these risks today, there are a few main approaches: 

• Regulation:  In the US, the Environmental Protection Agency (EPA) is responsible for evaluating the risks to human health and the environment of every herbicide, and then approving the “registration” of that herbicide before it can be sold. The EPA must find a "reasonable certainty of no harm" before an herbicide can be used on food or animal feed. Some states have their own regulatory agencies with additional rules. Outside of the US, each country has its own laws governing herbicide use, with the European Union’s rules being some of the most strict. 

• Label instructions:  Each herbicide comes with a label that spells out how to use the product safely and effectively. Labels are serious business – most manufacturers’ warranties will not cover off-label use and it’s a federal offense to use an herbicide without following the label. 

• Trend towards reduced toxicity:  Over the past 25 years in the US, the toxicity of the chemicals used is on the decline, even as the total volumes used may be higher. This might sound contradictory. Basically, not all herbicides are created equal in terms of how toxic they are – some are more toxic and some are less toxic. Some of the more highly toxic pesticides have been discontinued and new, less toxic products are developed, all of which adds up to lower toxicity overall.

• Integrated weed management approaches:  As mentioned above, other non-chemical approaches are used to slow herbicide resistance and reduce dependency on herbicides alone.

These measures to minimize risks are important, but imperfect. For one, typically the company seeking registration provides the data to the EPA. You see where this is going – that can create an obvious conflict of interest, where industry-funded studies end up being more favorable to the company. 

For example, across studies of atrazine, the second most popular herbicide in corn applied on over 50 million acres in the US, the best predictor of whether the study found negative effects or not was funding source. 

Even once herbicides are registered with clear, serious-business labels, some estimate that up to 40% of herbicides are applied off-label (meaning the instructions designed to minimize risk are not followed).

Weeds: the once and future proving ground for new tech

The status quo of weed control today feels unsatisfactory. To greatly oversimplify – consumers are demanding affordable food with less pesticides used; communities would like more assurance that their water and environment aren’t contaminated; farmers must produce a profitable crop without taking a yield hit. As a result, innovators are jumping into the fray to find better solutions. 

Once before, weed control has been the proving ground for technology that reshaped the agriculture industry. In 1996, Monsanto began selling the first genetically modified soybean seed. This new seed offered something that had never been done before – the crop was tolerant to the herbicide glyphosate. Instead of multiple tillage passes or spraying several other selective herbicides, farmers could now spray their entire field once and wipe out all the weeds. It was an immediate blockbuster because it made weed control massively easier.

After this watershed event, chemical companies like Dupont, Dow, Monsanto and Syngenta went on a buying bonanza, gobbling up seed companies to form the modern-day agriculture input giants. 

Today, we might just be on the cusp of another shift.

Weed control makes sense as a starting point for new technologies in agriculture. Billions of dollars are on the table because weed management is a consistent, global problem ($20B globally each year, to be precise). Unlike harvesting, weed control does not require nearly the same amount of precision and accuracy to still be valuable. 

Given these conditions, weed control is a fantastic proving ground to see which technologies will have real promise over the next decade in making farming more sustainable and profitable. A few technologies that are under development:

• Targeting weeds with precision:  Computer vision using artificial intelligence, automation, and in some cases, drones, are coming together to help farmers precisely target the offending weed and leave everything else alone. Beyond the highly publicized See & Spray system from John Deere, there are dozens of other companies tackling this same challenge across many crops. 

• Diversifying types of weed control:  Last week at the FIRA agriculture robotics conference in Salinas, CA, a panelist summed this up nicely, “You can pull ‘em, zap ‘em, shoot ‘em. You can do anything to a weed these days!” Beyond some of the precision spraying solutions entering the market, he was referring to several other options that allow farmers to precisely till weeds between the crop or even incinerate weeds with a laser beam. 

• Emerging biologicals: Bio-based herbicides have active ingredients sourced from minerals, microbes, or biochemicals (sometimes based on allelopathy described above). Efficacy and ease of use are still major hurdles to overcome as Sarah Nolet explains, however, the biologicals market is anticipated to grow at nearly 14% each year for the next 5 years, with biopesticides being a part of that growth.

Before we ascend into frothy fantasies of hordes of unmanned robots sharpshooting weeds with benign biologicals, we have to keep in mind a simple fact. Any new technology in agriculture must actually deliver a real benefit (like cost savings, less risk, or greater efficiency) with a winning business model to become successfully adopted on the farm.

We’ve seen it happen once before in the past 30 years – perhaps the next industry shaping technology will again emerge from the weeds.

Share

Topsoil is handcrafted just for you by Ariel Patton. Complete sources can be found here. All views expressed and any errors in this newsletter are my own. 

How did you feel about this monthly edition of Topsoil? Click below to let me know!

Love it - Like it - Meh

While carbon sequestration is an exciting starting point, it captures one small slice of how agriculture interacts with the environment – the living, breathing, complex ecosystem made up of land, water, air, billions of organisms and human communities. 

For the past 12,000 years since humans started farming, agriculture has been one of the most significant ways that humans shape the environment. In the past 200 years alone, the human population has experienced exponential growth that any start-up would envy, growing from 1 billion people to 8 billion people. To enable this population rocket ship, the demands on agriculture have also had explosive growth.

Beyond simply feeding 8 billion people, we rely on agriculture for other products like fiber, and increasingly, for fuel too. 

So what does this look like by the numbers? 

• There are 41 million square miles of land on Earth that aren’t covered by rocks, ice, or sand. Nearly half of those habitable acres are used for agriculture. 

• Globally, 70% of all freshwater is used for agriculture. 

• In the US, agriculture accounts for 10% of the greenhouse gas emissions. Globally, agriculture contributes 26% of emissions. 

Using natural resources to take care of humans seems generally like a Good Thing to Do. However, all consumption has a cost. How we work to minimize those costs is where sustainability comes into play.

Cue sustainability in agriculture

Sustainability can be defined as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.”

Because of the deep connection between agriculture and the environment, there are many areas beyond carbon where agriculture plays a huge role for a more sustainable future:

Agriculture being at the center of the wheel above isn’t implying that agriculture is solely responsible for every slice of the pie – more that agriculture can also help to mitigate, adapt to, or even reverse every single one of those challenges. 

However, for agriculture to actually produce sustainable outcomes, there must be some actual honest-to-goodness, physical changes that happen on real farms. 

The good news is that sustainability isn’t a new concept in agriculture. There is a long-held view of farmers as “stewards of the land” as many have a multi-generational view of their operations. 

The challenging part is that farming is a low-margin business with pesky little details like seasonality and weather. For sustainable practices to come to fruition on the farm, there must be operational and agronomic support for farmers and financial incentive to make it feasible. 

A farmer I spoke with in Illinois neatly summarized the tension and obstacles to adopt sustainable farming practices more broadly: “The idea of increasing organic matter in the soil for the next generation sounds great. But at every point in time, I am under pressure to be profitable, otherwise there won’t be a farm to pass on to the next generation.”

Also, many of the practices that produce sustainable outcomes aren’t overnight successes. Another Illinois farmer I spoke with had been experimenting with cover cropping and reducing tillage for the past 4 years to increase organic matter in his soil. After 4 years, he hasn’t seen any changes in his soil tests. He admitted, “It’s discouraging, but I am going to stick it out for a few more years because I have heard it can take 7 years to start to see results.” Can you imagine trying anything, say a new workout routine, where you didn’t see results for 7 years?!

Financing sustainability in agriculture

This brings us to a conundrum with agriculture and sustainability – how can more sustainable practices be adopted to address urgent environmental challenges? We know that changes have to take place at the farm. We know that farmers struggle to finance and bear the risk of new practices. Knowing all that, we need to look at financing and risk-sharing across the ag value chain to accelerate adoption. 

There are a few ways that this is playing out today.

First, the government has increasingly been investing in sustainable agriculture. The US Federal government allocated $3B last year to launch the Partnerships for Climate-Smart Commodities, and recently announced another $300M as part of the Inflation Reduction Act, among other investments. There are many other examples at the state level and across the globe.

In other cases, some consumers opt to pay more for sustainably produced products. Whether through paying slightly more for organic produce or regeneratively farmed goods, premiums allow consumers to share some of the costs with farmers. 

Investors also fund some sustainable innovation and practices. Since 2020, there has been $23B invested by venture capital into 491 food and agriculture sustainability related companies. Beyond venture capital, there are other funds that focus on sustainable investments.

Corporations are also getting out their checkbooks to finance environmental sustainability in a couple of ways. Carbon marketplaces have sprung up to allow corporations to purchase certificates representing carbon that has been sequestered by farmers to offset the company’s emissions. 

While much has been said about the challenges and growing pains of carbon markets, corporations are also making investments directly to meet an increasing number of sustainability commitments. You may have seen some recent eye-popping headlines like PepsiCo and Walmart pledging $120M to accelerate regenerative practices on 2M acres as one example.

Let’s dig into these direct commitments to see how that might accelerate sustainability. 

Corporate approaches to environmental sustainability

Reading dozens of sustainability reports from top agriculture companies may sound like a jargon-filled snoozefest to you. It sounded like a nice little Saturday to me.

I wanted to understand a few things. What kinds of promises were being made and why? What opportunities are being created for the rest of the ag value chain? Most importantly, will these promises actually result in more sustainable outcomes, or is it mostly feel-good corpspeak?

I looked at the sustainability reports for the top 3 companies in each segment of the ag value chain (by US revenue). In total, I analyzed 32 companies and over 270 distinct environmental sustainability commitments (many reports also include commitments around people and community, which I excluded to keep it simple). You can check out the full list here as I’d love to hear any other takeaways you have. 

Below is a high-level summary that shows common themes of each segment (a primer on Scope 1, 2 & 3 emissions follows to understand those commitments better):

Subscribe now

First key takeaway: Sustainability commitments vary depending on what the business does, the company’s stakeholders, and where the company operates. 

Goals are, not surprisingly, often tied to each company’s core product lines. For example, many of the equipment manufacturers emphasize sustainable materials used in their equipment and increased efficiency in the manufacturing process. The ethanol processors have many commitments on innovation and lobbying for biofuels. 

A company’s stakeholders influence the types of goals set. For example, in the ag retail sector, beyond Nutrien and Simplot (who both have other business lines beyond ag retail), none of the top 7 companies which represent 50% of the ag retail market have any publicly stated sustainability goals. 

This could be because the ag retail stakeholders (customers, owners, etc.) do not perceive environmental sustainability as a priority, or ag retail is providing these services without stated commitments, or there simply isn’t incentive for retailers to make sustainability commitments. In any case, this seems like an important missing link in bringing more sustainable farming practices to life at the farm gate. Ag retailers are critical trusted advisors for many farms by providing agronomic support, which is necessary to drive towards sustainable practices.

Companies that do business across the globe, particularly in Europe, tend to have more robust environmental sustainability commitments. This is likely due to differences in regulations across geographies. 

Of course there were some consistent themes across many of the sustainability commitments. Several reference existing international frameworks like the UN Sustainable Development Goals. Limiting carbon emissions is front and center for many companies (with the gold-standard for emissions being the SBTi to reduce emissions to limit global warming by 1.5°C). As a refresher on Scope 1, 2, and 3, the diagram below shows what is included in each category (from the perspective of the company).

While there is huge variability in companies’ commitments to reduce Scope 3 greenhouse gas (GHG) emissions, there is another related concept that companies also seem to differ on. Some companies made commitments on only those things that fit within the four walls of their business – they are focusing on what is squarely under their direct control.

Other companies seek to influence beyond the boundaries of the company. For example, John Deere has several goals to “Enhance Ag Customer Outcomes by 2030” by increasing crop protection efficiency, nitrogen use efficiency, and reduce carbon emissions from farming. Similarly, Bayer has a commitment to reduce the GHGs of key agricultural crops. There are a handful of other ambitious goals that will likely be more challenging to execute, but promise to have a much larger impact.

Second key takeaway: the drive towards more environmentally sustainable agriculture will have ripple effects throughout the ag value chain within the next decade. 

Many of these commitments are time bound. Unlike that friend who promises that “we should get together…soon!” meaning never, many of these commitments have specific dates, 2030 being a popular deadline. By my best calculations, 2030 is less than seven years away. These deadlines are driving investments and actions today in many cases. 

New commitments are coming fast and furious. Over the past year, the number of food and agriculture companies with climate-focused SBTi commitments has nearly tripled. There’s tangible momentum here.

As 2030 approaches, these commitments will require: new investment, new technology, new (and more) talent, new and better connected data, new agronomic research, and new business models to pull all the pieces together. 

In short, it’s supply and demand baby! These commitments signal new demand for increased sustainability in agriculture, which will increase the supply of all the above to attempt to meet that demand. 

Third key takeaway:  Making environmental sustainability commitments is rational, savvy business strategy.

To my cynical friends and Milton Friedman fanboys out there. I see you. Why the heck are corporations even doing this? 

Understanding incentives help us understand behaviors. In this case, there are many logical incentives for corporations to take industry-shaking action beyond the lofty language of being a “good corporate citizen.” 

We’ve already talked about how sustainability commitments can attract investors.

These commitments can also attract talent. It may sound like the most clichéd statement of all time to say “people look for meaning at work, and Millennials and Gen Z really care about the environment.”  But this appears to be true! 

After talking with many new faces interested in agriculture, a common theme has been growing over the years – agriculture is a compelling industry to work in because it can combat climate change and drive environmental sustainability forward. Several studies, like this one, find that 37% of Gen Z and 33% of Millennials report that "addressing climate change is my top personal concern". Increasingly, sustainability will become a top reason that new employees are attracted to agriculture. 

Sustainability commitments may increase credibility for companies with products that have sustainability marketing claims. Bayer, a company leaning into products with a regenerative agriculture angle, said this most directly in their recent sustainability report: “This leads to new business opportunities for ourselves that benefit the environment at the same time.” 

Many of the companies I looked at have been around for nearly 100 years. That kind of longevity requires careful risk management. As we sit here in 2023, there are many kinds of risks that are being managed with sustainability commitments.

For one, particularly for companies that rely on sourcing agricultural goods for their supply chains, climate change and extreme weather events put pressure on supply of key inputs. Through these commitments, corporations, particularly further downstream like CPG, can ensure a more resilient supply chain and reduce this sourcing risk.  

Second, there is reputational risk by ignoring environmental challenges. In a Pew Research Center study, 69% of US adults say corporations are doing too little to reduce the effects of climate change. By voluntarily curbing emissions and making sustainability commitments, businesses can often preempt regulation. Businesses can earnestly throw up their hands and ask:  why do we need regulation when we are already solving the problem without government intervention? 

I share the above not to cheapen the commitments being made, but to make it clear that these commitments are here to stay – as long as the incentives of more talent, investment, differentiation, and risk management remain in place. 

Final takeaway:  These promises are a good first step, but more work needs to be done to ensure they actually result in more sustainable outcomes

I couldn’t get through an edition on environmental sustainability without mentioning the dreaded “g” word. Greenwashing. Greenwashing happens when companies misrepresent their environmental record –  painting a rosier picture than reality. Sometimes this is intentional, sometimes this happens through good intentions and poor execution. 

Beyond greenwashing, there are valid concerns that companies: 1) won’t actually meet their commitments even when trying their darndest, or 2) won’t actually create positive outcomes for the environment even if commitments are met. 

To me, accountability to protect against these outcomes is in need of investment, innovation, and rigor. MRV (measurement, reporting, verification) is often talked about in carbon emissions accounting, however the general concept can and should apply to many other measurable commitments – whether targets around biodiversity, ingredient sourcing, or freshwater consumption. While there is a rapidly evolving set of tools, practices, standards, and oversight to drive accountability, more is needed. And of course, in any of the commitments listed above, the devil is in the details of how the commitments are defined, such as “sustainably sourced” or “low carbon intensity.”

Measuring sustainability outcomes can be challenging. In many cases it’s easier to measure inputs instead of outcomes. For example, in many carbon markets, to generate a credit, farmers are paid on their practices (e.g., no-till or cover cropping) instead of on actual measurements of organic matter increasing in the soil. Many outcomes cannot be measured at scale, or require massive amounts of data to be collected, which is not always feasible. 

Since agriculture is massively complex and interacts with the environment in many ways, it can also be difficult to quantify tradeoffs. Is it better to avoid spraying synthetic herbicides, but instead increase tillage to manage weeds (or, in some cases, burn propane to eradicate weeds with fire)? This is one tradeoff among many which do not have clear answers. 

Beyond MRV, it is also unclear who will hold companies accountable if they miss their targets. In some cases it may be activist investors, or concerned employees, or disgruntled customers. In many jurisdictions, government enforcement for greenwashing is nonexistent. Enforcement mechanisms are likely to evolve over time, but in 2023, it’s still murky. 

Corporations are only one piece of the puzzle. For species-level challenges like climate change, it’s going to take much more than just corporate action. As exciting as it is to see the increasing momentum, it is estimated that we still need 7x the current levels of investment to mitigate and adapt to climate change. In an industry as consolidated as agriculture, corporations providing funding are one necessary lever for agriculture to be, as cheesy as it sounds, part of the solution.

Thank you for reading, sharing and subscribing to Topsoil - a monthly newsletter with frameworks to help you make sense of agriculture, at just the right depth. 

Last month I joined Tim and Tyler Nuss on The Modern Acre podcast as we got into the nitty-gritty of data in agriculture. Take a listen here!

I appreciate your patience as July got busy! I’ll be back on my regular 1x/month schedule (and do my best to get an extra edition in before we close out 2023 😉).

Topsoil is handcrafted just for you by Ariel Patton. Complete sources can be found here. Thank you to Katie S., Anjali M., and Lauren R. for generously filling my blind spots. All views expressed and any errors in this newsletter are my own. 

How did you feel about this monthly edition of Topsoil? Click below to let me know!

Love it - Like it - Meh

“Ugh, this topic is so 2015” you might be thinking. “Just give me some GenAI buzzwords to kick around at my next water cooler chat!” 

Well, I’m here to deliver some news. We can’t get to Generative AI or automation or precision agriculture or all the other 2023 hotness without boring, high quality data. So data is where we will begin. 

We’re talking about farm data, and more specifically data from the field:  where it comes from, how farmers use it today and what the future of data may look like. 

Let’s dig in!

Current state of digitization in agriculture

Several years ago when I worked at a farm management software company, I drove out one morning to a Denny’s off I-5 to help a new customer get started with the mobile app. Manny sat down and apologized – he had just been out spreading manure and hadn’t had time to change before our meeting. After the 2 hour drive, I was just grateful he made the time to meet with me. 

We got to talking and getting him set up. First, download the app. Did he have his Apple password? I asked. He couldn’t remember it, but he was sure his son would be able to. We called his son, who like any good Millennial kid was his parent’s unofficial IT guy. After 30 minutes on the phone guessing different variations, we finally got the password and the app downloaded. 

Another 30 minutes of training, Manny was all set up to collect data on any spraying or spreading activities on his fields. Now, the hard part:  Manny would need to remember to open the app and enter data every single time he went out to the field to get a job done.

This is the current state of digitization of agriculture data. It is so rarely the case that digital tools are plug-it-in-and-it-works. It is not seamless. It requires consistent effort and human support.

It doesn’t take long to find stories from farmers of hours spent in the sun dealing with different tools to collect data – tinkering, trial and error, and in many cases throwing up hands in frustration and a “I just need to finish planting. I don’t have time for this!” This friction is one reason that agriculture is among the least digitized industries today. 

There are many surveys to understand how much data is being collected by farms today. Across a couple of surveys in the US, the percentage of farmers who collect at least some form of digital data ranges between 80% and 93%, which is relatively high.

The level of digitization – turning data into a format that computers can interpret – is highly variable around the globe. The amount of data collected depends on internet connectivity, level of mechanization, access to data-generating equipment, and the relative value of collecting data. 

Digitization requires change. As we will walk through below, as much as digitization unlocks new possibilities, it requires the adoption of technology to collect the data in the first place. Most important to remember, digitization is not the end goal; being able to do new things – or old things in better new ways – is. 

Data in → Data Out

While digitization in agriculture is still no walk in the park, there has been a proliferation of digital tools over the past decade to make it easier to collect and use data. To make sense of this landscape, and categorize new technologies and business models, I use a dead simple framework:

Whenever I read a story about a different kind of sensor or new thing farmers can do with data, it’s helpful to think through the data-in, analysis, and data-out that is being used. 

Subscribe now

Data In:  Where does field data come from? 

From the very beginning of agriculture, farmers have been observing what happens in their fields. Data are simply these observations at scale, recorded in a digital format. 

There are many sources of data from the field today, with new sensors and types of data being introduced every year:

Beyond these sources of data, there are other types of data that apply to the whole farm, like financial statements, market prices, crop storage data (from grain bins or coolers), or inventory data. While we won’t be talking about this farm-level data today, it’s important to keep in mind that the farm may be collecting data in many different formats for various purposes.

Years ago, one of my business school professors opened class with a hot take: “I hate interesting information.” He was the CEO of a Chicago deep dish pizza restaurant chain, and from his years of running this successful business, he came to the conclusion that if he couldn’t take action with the information he was given, he’d prefer not to know. 

Many farmers operate their farm businesses with a similar approach, focusing their data collection in areas where they can take action. I recently spoke with a berry farmer who had just invested in a custom tool to track the individual harvest efficiency of each employee as he explained, “my top three costs are labor, labor, and labor.” As you can imagine, the emphasis of data collection will vary based on the type of crop and geography, among other factors. 

Beyond selecting the type of data to collect, spatial and temporal resolution are important factors. A simple non-ag example: if I was signing up for a yoga class, it would be pretty unhelpful if it was advertised as “class takes place in the US” (spatial resolution is not specific enough). If the class was advertised as taking place as “once a year” that might not be satisfactory to reach my yogi goals (temporal resolution is insufficient to be useful).

The key here is that the type of data, the spatial resolution, and temporal resolution have to be right for the planned use of the data. Greater resolution does not always mean more benefit to the farmer – in many cases, greater resolution is more expensive and requires more effort, so farmers must receive incremental value in that additional resolution to justify their investment.

For example, many farmers who practice variable rate seeding or fertility will invest in soil mapping with EC sensors because the publicly available soil maps from SSURGO do not have the level of spatial resolution (or accuracy) to create actionable zones. 

There are a handful of common challenges in collecting, storing and using data that get in the way of farmers realizing value from their data:

• Connectivity:  In many rural agricultural areas, internet connectivity may be spotty at best, which can make it a challenge to upload or download data or run software that requires internet. In a study of farmers in the US, 63% said data network connectivity was a barrier to sharing data.

• Interoperability:  As my friend Rhishi Pethe (who writes an excellent newsletter Software is Feeding the World) explains, interoperability is “the ability of different agricultural systems and software to exchange, understand, and use data with each other.” Unlike other industries where there is a common data standard, there are several competing data formats in agriculture. When systems don’t talk to each other, it makes it harder to bring together different data sources or to share data. 

• Quality:  There are several dimensions of data quality, but a few that play a large role in agriculture are accuracy (is the data correct?), completeness (are there many missing values?), and consistency (are the values the same between sources?). Farms may be sitting on mountains of data, however, that data may be of low quality because it falls short one or more of these dimensions. This is where we get the phrase, “garbage in, garbage out” – if the quality of the data going in isn’t good, then it makes it much harder for any of the data coming out to be useful.

• Trust and Privacy: Farmers must have confidence in how their data is being collected, stored and shared. This means transparency from anyone who touches agriculture data and safeguards to ensure that the data is not used in a way that could harm the farmer. Trust is still a huge barrier for farmers to collect and share their data.

• Incentives: In some cases, the person who is responsible for collecting the data is not necessarily the same person that gets value from the data being collected. As an example, an operator who is employed to harvest a crop must make sure the yield monitor is calibrated for accurate data collection. While this creates an extra step for the employee during a busy time, it is the farm owner who will benefit most from the resulting accuracy of the yield maps.

Data Out:  How is data used?

From the early 2010’s, farmers have heard that their “data is the new oil.” They were encouraged to tap into this rich new resource and promised that once the data was piped into a software tool, the crude inputs would transform into outputs that would power the future of their farm and the industry as a whole. 

But over the past decade, a more apt analogy for agriculture is that data is a new byproduct. Data are the hides, entrails and bits of bone leftover after the more valuable chuck and ribeye are parceled out. It certainly can be valuable, but oftentimes, it often is collected as an afterthought to an activity that needs to get done whether data is being recorded or not. It takes planning, effort and creativity to turn these byproducts (data) into other value streams.

One astute observation from is that, “in an industry that is really good at creating value from its byproducts, I can't even name one example where a byproduct of a commodity became more valuable than the primary commodity itself.” Data is not inherently valuable on its own, and it is certainly not more valuable than the actual crop being produced. 

So, how are farmers getting value from their data today?

Decision-making: Like many other industries, farm data is used to improve decision-making. When farmers were asked in two different studies the benefit they experienced from their data, “increased yield” was the number one response. In one of these studies, surveying 800 US Midwestern corn and soybean growers, nutrient management decisions were the most heavily influenced by data (54% stating that these decisions were “influenced by data a lot”).

Beyond decisions to manage nutrients, nearly every other decision throughout the season could potentially be influenced by data. This might mean taking action in-season (for example, scouting a field with satellite imagery and fixing a broken irrigation pivot nozzle) or taking action next season (collecting yield monitor data and analyzing which seed varieties were top performers and selecting those winners to plant the next spring). 

Enabling other technologies: Data from the field is used to enable other technologies like precision agriculture and more recently, automation.  

Sharing with advisors: In a survey of US farmers, 74% share their data with outside service providers, like their agronomist (58%) or ag input supplier (44%), primarily for agronomic recommendations. Farmers may also share their data with a landowner or banker for access to improved lease and loan terms. 

Compliance: In some cases, farmers may share their data with the government for regulatory compliance, or to receive tax incentives, access payment programs, or subsidized insurance. 

At the end of the day, farmers go through the effort of collecting, analyzing, and using their data to drive profitability, increase efficiency, improve sustainability, or manage risk. 

Where does data go from here?

While data has made an impact in agriculture in some areas, we are still in the early innings in what many consider the “fourth agricultural revolution.” 

Based on how the past 30 years have gone, it will continue to get easier and cheaper for data to be collected, stored, securely shared, analyzed, and put to use. We are beginning to see exciting, completely new sources of data (like using plants themselves as sensors). As spatial and temporal resolution improves for sensors and equipment, precision agriculture will manage at a more and more precise granularity – from a field-level to a zone-level (where we are at today) to a plant-level.

Hopefully, these technologies can become more accessible beyond the farmers in the most advanced agriculture economies and be appropriately adapted for unique agricultural systems around the world. 

We will likely see the uses for data above improve and expand. As fintech and AgTech collide, farms of the future will get preferential access to resources (or if you’re the glass half-empty type – lose access to resources) like financing, insurance coverage, and land leases based on their data. As there are more and more absentee landowners (at least in the US), you can imagine that some landowners would prefer tenants with strong data practices that can share more information about how the land is used.

Having a strong data strategy may allow farms of the future to access new streams of income. With a more connected ag value chain, premiums that grocery shoppers, like you and I, pay for certain quality factors or growing practices can be allocated back to the farms that have the data to back up their claims. Organic premiums are an example of this that works today, and you can imagine more differentiated categories with greater transparency. 

Today, data from the field allows some early adopter farmers to participate in carbon markets to get paid for sequestering carbon in their soils. With an increasing emphasis on environmental sustainability, there will be additional sources of income for farmers who can prove that they are providing other ecosystem services, like supporting biodiversity.

When we peer deeper into the crystal ball many years into the future, other possibilities arise, including improvements in predictions themselves. As modeling becomes more advanced and more data becomes available, the holy grail of predicting the impact of the environment, management techniques, and plant genotype on yield and other outcomes farmers care about becomes more plausible.

But what about AI?

A lot of AI applied to agriculture today (like FBN’s Norm) is focused on the analysis and output of data. In addition to that neat use case (and several other fascinating possibilities that outlines), I think making it easier to collect data is where AI will have the most immediate impact. 

So much farm data exists in unstructured notes: paper and pen, a note taking app, back-and-forth texts between the farmer and their crew, phone calls, WhatsApp voice messages, or directions passed through walkie-talkies to name a few. 

One of the incredible things that AI (large language models like ChatGPT in particular) is good at is making meaning from unstructured data like rambly notes and transforming it to a format that could be understood and usable elsewhere. Especially in places where we are years or decades away from every piece of equipment automatically recording every application with precision, making data collection easier through AI could be a gamechanger.

Thank you for reading, sharing and subscribing to Topsoil - a monthly newsletter with frameworks to help you make sense of agriculture, at just the right depth. 

I sat down with Tim and Tyler from the Modern Acre earlier this month for my favorite conversation together yet, on creating markets in agriculture and how this looks at Nuss Farms. You can check out that podcast episode here!  

Subscribe now

Topsoil is handcrafted just for you by Ariel Patton. Complete sources can be found here. Thank you to Lauren M. and Andrew M. for generously filling my blind spots. All views expressed and any errors in this newsletter are my own. 

How did you feel about this monthly edition of Topsoil? Click below to let me know!

Love it - Like it - Meh

I had a great time chatting yield with Tim and Tyler from the Modern Acre podcast earlier this month - feel free to check it out!

Now, let’s dig in!

I often hear questions that go something like this:  

“Why doesn’t every farmer go organic?” or

“Why do so many farmers only grow corn and soybeans?”

While answers may range from agronomic realities to operational choices, one underrated reason is quite simply: demand. Farmers must be able to sell the crops they grow, ideally for more than the cost to grow the crop, to keep the farm running.

Markets are where buyers and sellers meet and supply and demand intersect. Last time, we dug deep into the supply side of the equation with yield — how much is produced.  

Today, we turn to the demand side of the equation. Where do all of the crops go? We’ll answer that question, explore who shapes demand and how, and look into some of the implications for agriculture more broadly.

Proximity matters for markets

There are many ways that a farmer can sell their crops, depending on what crops they grow and where their farms are located.  

Most crop products are bulky, physical goods that are expensive to move through the three-dimensional world. Because of this, a farm’s proximity to points of sale, whether that is a local market, major rivers used to transport goods, or processing facilities can be a huge advantage and deciding factor on how the crops are marketed. 

Case in point, Illinois is the number one state in producing pumpkins. It’s not because Illinoians have a penchant for pumpkin pie or have more Halloween spirit than the rest of the country. It’s because the company Libby is responsible for producing 80% of the world’s canned pumpkin. Libby’s canning facility is located in — you guessed it — Morton, Illinois. Farmers around Morton respond to the markets available to them by growing pumpkins. 

The country in which a farm is located can also make an impact on what markets are available, since exports and trade are carefully negotiated between nations. While many of the market examples we’ll walk through below are from the US, the same principles may apply to markets in other countries too.

Growing demand takes a team

Farmers are often described as “price takers.” Individual farmers typically do not have large enough market share to influence the overall price of the crop. They take the price as given. At the same time, farmers have produced more over time. We know from Econ 101 that as supply goes up, price typically comes down. 

To address these uncertainties around price, farmers work to grow existing markets and create new markets. Increasing demand allows farmers to sell their crops – ideally at a higher price. 

The good news is that farmers are not on their own when it comes to expanding markets and increasing demand. There are several other stakeholders such as cooperatives, commodity groups, and the government that work together to achieve these goals. 

A cooperative or “co-op” is a business structure that is member-owned (instead of shareholder-owned like a corporation). In the case of agricultural cooperatives, farmers are the member-owners who band together for a stronger negotiating position to buy inputs, manage infrastructure, and market their crops. 

If you are familiar with “Got Milk?” or “Beef. It’s What’s For Dinner,” then you’ve experienced the fine work of commodity groups. As the name suggests, commodity groups (I’m lumping together Marketing Orders and Checkoff Programs here) like the National Peanut Board or the United Soybean Board are established to drive demand for individual commodities. 

Farmers and processors can petition the USDA to create a commodity group. Once established, the USDA ensures that all farmers and processors of that commodity pay into the group each year based on how much crop they sell. This pool of funds often totals to millions of dollars per commodity group each year. Now, instead of each farmer being on the hook to single-handedly spark global demand for popcorn or pecans, commodity programs invest in research and promotion to benefit all farmers and processors of that commodity. 

Beyond overseeing Checkoff Programs and Marketing Orders, the government also drives demand for agricultural products by purchasing commodities directly, funding consumers through nutrition programs, and brokering trade policy with other countries. 

So how do these players – farmers, cooperatives, commodity groups, and the government – actually grow demand?

Accessing markets

When you hear farmers talk about marketing, particularly grain marketing, it’s not the Don-Draper-sitting-in-a-conference-room-spitballing-catchy-slogans kind of marketing. It is much more literally finding a buyer for their crops. 

At an individual farm level, there are many actions a farmer may take to access markets. They can sell directly to consumers (a very small percentage do this, <5% in the US); shop around and form contracts with intermediaries like processors, distributors, or cooperatives; or trade into commodity futures markets.

By definition, commodities must be interchangeable – a bushel of soybeans is a bushel of soybeans, regardless of if you are in Missouri or Mato Grosso. Standards for each commodity are established so that buyers can rest assured that they know what they are getting. 

One way that farmers can access markets is by meeting these standards or specifications. A non-cropping example: 98% of New Zealand lamb is exported. In order to ensure that the lamb can reach as broad a market as possible, all lamb in New Zealand is certified halal.

Growing existing markets

As we are about 12,000 years into this whole agricultural endeavor, there are many markets that already exist. To increase demand for their crops, farmers and other stakeholders work to expand these existing markets. 

Good old advertising and promotion (like “Got Milk?”) is a tactic used by farmers, cooperatives, and commodity groups to increase demand for crop products, especially those products that consumers purchase, like dairy, pistachios or peanuts.

One of the roles of government is to develop trade policy to create a robust export market. This is especially critical for countries that are heavy agricultural exporters, like the US, the Netherlands and Brazil. In the US, where exports account for about 20% of agriculture sales, the USDA funds the Foreign Agricultural Service agency to develop markets and negotiate trade. 

As global tensions have risen in recent years, countries are increasingly wielding tactics like tariffs and quotas to achieve other national interests. This unfortunately creates winners and losers, leaving the agricultural sector in some countries exposed while creating market opportunities for agriculture in other countries.

Beyond trade, the government increases demand through direct purchases and nutritional programs. The USDA purchases commodities directly each year to distribute to food banks, schools and other nutrition programs. 

About 74% of the USDA’s budget is allocated towards nutrition programs, such as Supplemental Nutrition Assistance Program (SNAP) or WIC for Women, Infants, and Children. This funding grows the demand for farm products, or at least allows demand to be realized. For example, in 2021, the WIC program expanded funding for fruits and vegetables. This expansion has resulted in an additional $75 million of fruit and vegetable purchases across the US every month.   

Creating new markets

One way to increase demand for a crop is to invent new products that use that crop as a key ingredient. When faced with high production levels and low demand, farmers exemplify the industriousness and creativity of the human spirit. I’m never not amazed at how humans can make lemonade (and shoe shine, and air freshener, and salad dressing, and and) from the proverbial lemons.

Take for example the thousands of new foods, beverages, cosmetics and other products that now use almonds as an ingredient. The Almond Board of California, the Marketing Order responsible for almonds, has invested significantly in research and development to successfully support the creation of new almond products like almond butters, almond milks and my favorite, new kinds of chocolate covered almonds.

Beyond turning crops into other food products, biofuels are a hugely important example of demand creation. While biofuels have been in use since the late 1800’s, biofuels didn’t take off until the Renewable Fuel Standard in the US passed in 2005. The RFS mandated that a percentage of ethanol be blended into gasoline, creating massive demand for corn as the key ingredient. There is a lot of fascinating history here that Sarah Mock and the team at aei.ag explores in the Corn Saves America podcast if you are curious to dig deeper. 

As carbon emissions from air travel are now in the spotlight (responsible for 7% of total transportation emissions) we may be on the verge of another big increase in demand for biofuels and the crops that are used to create them. As the technology to create Sustainable Aviation Fuel has matured over the past couple of years, new processing facilities are under construction as we speak. 

Last but not least, there is a lot of innovation exploring how to use crop byproducts. For example, one of the outputs from the corn ethanol distilling process, dried distillers grain, is widely used as cattle feed. Almond hulls, the inedible-to-human exterior of almonds, also can be used as cattle bedding and feed.

Not just for human consumption

While there are many different ways that farmers can market their crops and have support to do so, how does this all look in practice? 

Let’s take a look at the top two crops by acreage in the US, corn and soybeans. Collectively, corn and soy represent about 180 million planted acres (~45% of total cropland in US).

From this chart, we can see that corn is a wildly versatile plant and that many, many markets have been created to consume the vast supplies of US corn. As a result, corn is inextricably tied to the demand for animal protein, the broader energy market, and geopolitics. Which is, uh, kind of a big deal.

Now let’s take a look at soybeans:

You can imagine that every single crop commodity in each country has its own unique flow chart like this based on the types of markets available and the downstream uses for that crop. 

Subscribe now

Consumer demand as a lever for change?

There is an assumption underlying the questions about why farmers grow what they grow. The assumption is that consumers can shape agriculture if they simply “vote with their forks” to create demand.

There are plenty of good reasons for individuals to be intentional about their food choices, from personal nutrition to the desire to keep dollars in their community. And very true, that when aggregated across enough individuals, markets respond to meet demand (just look at the number of new products that are marketed as “regenerative”!). 

However, there’s a bit of a paradox here. 

Because what we see from above is that for a large portion of the farmed land in the US and world, individual food choices are one small piece of a much bigger, mind-bogglingly complex puzzle. Hog herds in China and gas prices at the pump influence overall demand much more than whether you have corn flakes or avocado toast for breakfast. 

Today, there are more demands than ever being placed on agriculture: to feed a growing population, to provide a more sustainable source of fuel, and to mitigate climate change among others. How have you seen demand evolve in your corner of agriculture?

Leave a comment

Topsoil is handcrafted just for you by Ariel Patton. All views expressed in this newsletter are my own. Complete sources can be found here.

How did you feel about this monthly edition of Topsoil? Click below to let me know!

Love it - Like it - Meh

Before we dig into yield today, I wanted to share a couple podcast appearances over the past month: 

• I joined The Modern Acre for a second time to dive deeper on the Business of Farming.  If you haven’t tuned into Tim and Tyler’s podcast, I highly recommend it as I always learn something new from their other guests. I’m already looking forward to chatting yield with Tim and Tyler next month!

• Rachel and Ciara from the Luminexus podcast and I chatted about agriculture, and why it is the coolest industry for STEM students to be considering. We had a blast talking about both the status quo today and what the future of ag may hold. 

Thank you for your continued support in reading, subscribing and sharing!

Subscribe now

Last time, we talked farm-level profitability. However, we barely dipped our baby toe into the income side of the equation: “Revenue from crop products is a function of yield multiplied by price.” Simple, right?

Today, we are going to unpack the metric that often rules everything around it:  yield. We’ll cover what it is, what drives it, how far we’ve come, and what our ever-higher-yielding future might look like. 

Yield is a measure of how much crop is produced across an area of land. For example, corn yield in the US is measured in bushels per acre, as in “this is 200 bushel corn” where you say the “per acre” part silently in casual conversation. 

Depending on where you are in the world, or what crop you are talking about, the units may vary. Instead of bushels, some countries may measure in kilograms or tons, and hectares instead of acres. Some crops are more commonly measured in pounds or by unit.

So if yield is how productive the crop is, what drives yield?

Unlike a factory, where inputs are mechanically churned into a reliable number of widgets, crop yield is a function of countless, interdependent factors. Agriculture takes place in a dynamic, living, breathing system.

The Genotype-by-Environment-by-Management framework (GEM for short) can help make sense of these factors and how they interact to influence yield.

G is for Genotype

You, me, each individual corn plant, and every other living organism on Earth has a unique sequence of DNA, called a genotype. The genotype has a big impact on yield because it provides the “blueprint” for the plant – it determines all of the features that an individual plant can possibly have. Once the plant is growing in a real environment, those features that you actually observe in the field are called the plant’s phenotype.

Using a non-plant example, both Great Danes and teacup poodles are dogs. The genotype of a Great Dane means it has a high likelihood of weighing well over 130 pounds (59kg). Teacup poodles, on the other hand, possess a genotype that sets the potential size likely under 10 pounds (5kg). The phenotype of the Great Dane or teacup poodle is how much each individual dog actually weighs. 

Similarly, every major crop like corn, rice, or apples has vast potential genetic diversity within each species. They can be tall or short; have more or fewer leaves; larger or smaller fruit – you get the idea. 

It is up to plant breeders to develop new varieties with features, or traits, that we as humans find appealing. Things like: resistance to disease, sweeter flavors, bigger kernels, faster ripening, and on and on. 

Looking at the last 100 years of improvements to yield (which we’ll dig into deeper below), genotype is responsible for a whopping 70% of the increases. 

While seed breeding is critical, it is wildly expensive. It often takes over 10 years and $5M to develop a single new seed variety for any of the major commodity row crops. 

And, like a teacup poodle that ends up weighing 15 pounds instead of the expected 10 because of a treat-rich lifestyle, the genotype “blueprint” interacts with the environment and management to form the what-we-actually-see phenotype.

E is for Environment

The environment is simple in concept – it is the crop’s surroundings, like soil, water, sunlight, air quality, temperature and weather. Plants need many of these ingredients in just the right amounts to produce a harvestable crop. 

However, “just the right amount” doesn’t always happen. Sometimes there’s too much water or too little, it’s too hot or too cold – all of which can limit yield. We call these yield-limiting factors “stressors”. Biologists lump environmental stressors into two buckets:

• Biotic stressors: These are living things that can harm yield, such as weeds, non-beneficial insects, fungal or bacterial diseases, and other pathogens. 

• Abiotic stressors: These are non-living things that can harm yield, such as flooding, temperature extremes, salinity, or drought.

Of course, the environment varies based on where you are in the world. The combination of soil, rain and sunlight in Iowa, US or Mato Grosso, Brazil contributes to a much higher soybean yield than, for example, the Sahara Desert.

With climate change, the environment has been shifting over time, in many cases creating conditions that are less favorable for crop production. While there is some research that indicates we haven’t seen total yield drop due to climate change yet, climate change is expected to reduce yield, with certain regions being hit particularly hard. 

Finally, like Miley Cyrus circa 2010, the environment can’t be tamed. Farmers can only do their best to manage the environment, which brings us to our last piece of the GEM framework.

M is for Management

So what’s a farmer to do?

In the GEM framework, Management refers to all of the choices and actions that a farmer takes to influence yield.

This includes:  selecting the right seeds or genetics, controlling biotic stressors like weeds, pests and disease, mitigating harms from abiotic stressors by fertilizing and irrigating, and making hundreds of other decisions on crop rotation, planting and harvesting. 

As we covered with the crop spectrum, each crop requires slightly different management techniques. For example, in almond orchards, management decisions (like irrigation set-up) made in the first year impact yield for years or even decades. 

To make things more complicated, when it comes to management, 1+1 does not always equal 2 and it is often unclear how much each decision or practice contributes to the total yield. Each decision interacts with every other decision or practice, making it tough to untangle cause and effect. 

In recent years, there is optimism that we can better tease apart this messy web. Advances in machine learning and more powerful statistical modeling are helping researchers understand and predict how each decision contributes to yield. As for now in 2023, we are still in the early days – there is no crystal ball or all-knowing AI-bot yet.

A historical view on yield

We love a chart that goes up and to the right, especially when it showcases progress for us as a human species. 📈

Take a look at crop yields for a few major crops over time:

From the 73 years between the end of the US Civil War in 1866 when the USDA began keeping record, to the beginning of WWII in 1939, corn yield remained flat. 

With that track record, imagine telling someone in 1940 who had experienced yield hovering at the same level for 3 generations, “over the next 80 years, corn yield will increase by over 500%.” 

You would be right and no one would believe you. 

Looking closely at the chart above, there have been two big watershed breakthroughs that have catapulted yield to the highs that we enjoy today. 

First, in the late 1930’s, US farmers began to rapidly adopt hybrid corn. Instead of the open-pollinated varieties that were previously the status quo, hybrid corn was an intentional cross (and sometimes double-cross) of two different varieties of corn. Hybrid corn plants were hardier and produced more grain – resulting in about 0.8 bushels/acre more each year from this improvement in genetics. 

Next, in the mid-1950’s, along with the continued improvement in genetics, farmers began to adopt other management techniques that further drove up corn yield by 1.9 bushels/acre/year. WWII ushered in broadscale production of nitrogen fertilizer, originally ammonium nitrate for ammunition. Additionally, pesticides and mechanization for the war effort were re-routed to farming after the war ended.

The yield increase over time is not a phenomenon unique to commodity row crops. When we look at a specialty crop like apples over the past 100 years, we see a similar gentle up-and-to-the-right curve of progress:

While corn, wheat, soybean, and apple yields have all shown improvement, corn takes the cake for most improved. This got me wondering, what makes corn so special?

Surprisingly, it doesn’t seem to be the sheer number of acres covered, as corn and soybeans have roughly the same acreage (at least in the US).

Instead, recall that genotype is responsible for 70% of the yield improvements over the past 100 years. Most of the corn exceptionalism can be explained by simple biology and R&D budgets.

A friend (thanks Dan!) pointed out something obvious once you see it, but subtle if you are not in the business of plant breeding. Apples, soybeans, and wheat have male and female reproductive parts right next to each other – each flower or floret contains anthers (male) and an ovary (female). 

If you are a plant breeder trying to cross two different varieties, you have to carefully (we’re talking literal tweezers here, folks) make one plant “female” by removing every single anther of each flower, so only the ovary remains. Then, you have to carefully dust pollen from your “male” plant on each flower that had its anthers removed. Voilà! That flower will produce seeds for a new hybrid or cross. 

Corn is different. Each corn plant still has both female and male parts, but those parts are in completely separate structures. The pollen-producing tassels are at the top of the plant while the female part (the ear) is further down the stalk. This biological happenstance has made a world of difference for plant breeders over the past 80 years. They can simply remove the top part of the corn plant to make it “female” for breeding purposes. Imagine how many more crosses you can make when you don’t have to get out the tweezers every time!

Perhaps as a result of the biology above, there is simply more R&D for corn than for other crops. A lot more. When looking at applications to the USDA for field testing (a proxy for R&D efforts) over a 15 year period, corn accounted for 43% of the applications. The next closest crop was soybeans with only 8% of the applications.

Mind the yield gap

Tom Brady. Serena Williams. Tiger Woods. 

You could say that David Hula occupies a similar echelon when it comes to corn yield. He holds the record for growing the highest yielding corn, clocking in at 616 bushels/acre. 

To hit such astonishingly high yields, David Hula does everything he can within the GEM framework on his farm in Virginia. He selects high yielding seed genetics, masterfully pulls all the management levers that are available, and happens to farm in an environment with abundant sunlight. 

The year that David Hula hit the 616 bushel/acre record, the US average was 171 bushels/acre. While this 445 bushel difference can be attributed to many factors and not every environment or genotype can even dream of producing 616 bushel corn, there is a very similar concept that drives a large swath of innovation in agriculture: the yield gap.  

Researchers measure the yield gap by first calculating the yield potential of each different environment. Then, they observe the actual yield harvested in each of those environments. The yield gap is equal to potential yield minus actual yield. 

While more of an academic exercise instead of something that farmers do in their day-to-day operation, the yield gap represents opportunities for improvements in genotype or management. With each improvement, the yield gap decreases.

This closing-of-the-gap is a critical unlock for the future of agriculture. By farming more efficiently on farmland that already exists, we can support a growing and wealthier population that often demands more animal protein. Importantly, we can do so without converting natural environments to farmland (like by razing rainforests or plowing up prairies). 

To illustrate this point, the graphic below shows the decreasing amount of land it takes to produce 10 bushels of corn over time:

As with everything in agriculture, closing the yield gap is complex. Shane Thomas from had an extremely thoughtful take on this point and the graphic above. Shane walks through the evolution of key management practices, such as the reduction of crop protection used per acre, while acknowledging lingering challenges like fertilizer runoff in waterways. 

Yield for the future

I just talked for 2,000 words about how the abundant rivers of grain coming off fields is a wonder of human achievement. Critical for us to feed billions around the globe while protecting the environment. That this is the paradigm driving agricultural progress for nearly a century.

And yet, what if we are thinking about yield in a very one-dimensional way?

Today, we think of yield as volume from one crop in one growing season. This is what farmers are paid for and what makes the agricultural world go round. 

However, new technology, consumer demands, and policy may shape how we think about yield in the future:

• Not just volume: Instead of being paid based purely on volume, it is possible that players throughout the value chain could pay for other features of a crop instead, such as nutritional density or for specific macro- or micronutrient content. 

• Not just one crop: Precision agriculture is rapidly advancing, making it plausible that farmers of the future will be able to manage their crops at a plant-level at scale (instead of a field or zone level today). With that shift, might we see yield measurements also advance to take into account intercropping or even integrated crop-livestock systems on each acre?

• Not just outputs: As the prices of inputs have increased, many farmers already carefully consider not only the output of yield, but the inputs used and total profitability. Along these same lines, perhaps in the future, other measures such as nitrogen use efficiency or carbon intensity are more heavily weighted.

• Not just production: While the sheer volume produced is a critical piece of the equation to improve food security around the world, it is certainly not the whole picture. The distribution of what is produced matters a lot – both in terms of where grain is moved around the world, as well as what it is used for (directly feeding humans, feeding livestock, fueling vehicles as ethanol, etc.). This may be more of a stretch, but perhaps the way we measure yield in the future takes into account the end use. 

As the saying goes, “we didn’t come this far to only come this far.” We didn’t produce this much only to produce this much. I’d love to hear your thoughts on other ways yield might evolve in the future!

Leave a comment

Topsoil is handcrafted just for you by Ariel Patton. All views expressed in this newsletter are my own. Complete sources can be found here.

How did you feel about this monthly edition of Topsoil? Click below to let me know!

Love it - Like it - Meh