Sunday Reflections (Corteva, FBN & Cargill)

Does the Future of Ag & Tech Belong to Market Controlling Platforms or Marketplace Building Aggregators?

Dear Friends 👋 ,

Greetings from Hyderabad! My name is Venky. I write Agribusiness Matters every week to help us make sense of vexing questions of food, agribusiness, and digital transformation in an era of Climate change. Feel free to dig around the archives, if you are new here.

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I write Sunday Reflections in pursuit of one question - In doing what I am doing, what am I really doing? Last week, I published my subscriber-only post, 4. Vegrow, Aggregation Theory, and Future of Agriculture.

Coincidentally, few days back, I gave a talk on “Future of Agriculture” to a leading global Ag firm. Among the other rabbit holes that followed the talk, the discussions made me reflect on the central question I’ve been trying to grapple with in my recent essays.

Does the Future of Agtech belong to market-controlling platforms (who are anxious about aggregators) or marketplace building aggregators (who have aspirations to make the platforms redundant)?

Before we grapple with this zero-or-one question and its tentacles stretching up to the next few decades of agricultural transformation, let’s get done with definitions.

What is the difference between platforms and aggregators?

What’s the difference between markets and marketplaces?

As I explored in greater depth in my earlier subscriber-only piece: Zomato, Markets 🍕 and Farm-to-Fork 🍴Marketplace

Marketplaces learn, Markets remembers.  Marketplaces proposes, Markets disposes.  Marketplaces are discontinuous, Markets are continuous.  Markets control marketplaces by constraint and constancy. Marketplaces get all our attention, markets has all the power.

After studying the latest annual report of Corteva and Cargill [which I covered in the last week’s piece], it became clear to me that platforms are a useful mental model to think about Big 4 (Bayer, Corteva, Syngenta, BASF) agri-input manufacturers and agricultural output processors like Cargill.

While it may be easier to perceive Cargill as a platform(Please meditate on Page 11. Thank me later), it may not be so in the case of Corteva.

Here’s why I think platforms are a useful mental model to think about Corteva and their immediate future:

When you connect the dots between Corteva’s strategic advantage, “Path to Trait Independence” and their goal of ~50% of patented products by 2023, you realize the platform powers at their disposal to bundle distribution and out-licensing of traits, germplasms, and patents.

Some of you might be thinking along so far in frustration:

Venky, for heavens’ sake, why does it always have to be “Either Or” in your playbook? Why can’t you see the Future of ag and tech as Platforms AND Aggregators?

Fair Question. Shall we talk about FBN?

FBN Aggregator has made no bones about whom they are pitting their strategic battle against Platformian Ag Input Players

Sample this comment from Amol, CEO, FBN

“Let me be blunt…The ag industry is worse than the tech industry when it comes to anti-competitive practices…. Persistently high seed and chem prices, limited channels and places to market grain, and the lack of any transparency on pricing and decisions is simply a means to transfer wealth to major ag businesses directly from family farms. “

When I spelt the difference between markets and marketplaces, I deliberately excluded one key line:

Markets set the prices. Marketplaces help you get the best prices.

And at some point, when marketplaces gain their market power in getting the best prices, they can challenge the supremacy of markets

It is at that exact moment we set the dramatic stage for a battle of David and Goliath.

How would this battle play out in the case of Indian Agritech? And how does it all add up in the larger Future of Agriculture when Climate Change pushes Europe and China to move towards sustainable agriculture at all costs. ?

We’ll talk about this next week. Enjoy your Sunday

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