Category Archives: Market Sectors

Consolidation, Specialization, and Sustainability: Three key trends creating investment opportunity in agriculture

Currently, Context is focused on three key trends emerging in agribusiness – trends that have the potential to have significant influence on the way business is conducted.

In the near-term, we see a trend toward consolidation as firms reposition in a difficult market environment. At the same time, they are preparing for medium-term increased specialization, as consumers demand clear provenance for what they eat. Finally, in the long run, firms must support sustainable efficiency as a growing populations of increasingly prosperous people gobble up the slack in today’s agriculture.

Firms and investors who participate in these trends will, we believe, be rewarded.

Paul Graphic

1) Near-term Consolidation:

Five of the “Big Six” agriculture input companies are actively pursuing potential combinations: DuPont and Dow will merge, ChemChina plans to acquire Syngenta, and Bayer’s is pursuing Monsanto.

Large-scale consolidation creates an opportunity for emerging businesses to redefine their strategic focus and divest non-strategic assets. This results in investment opportunities as consolidating firms rationalize and refocus agribusiness assets into redefined platforms. Context helped clients navigate the last significant periods of consolidation in the seed and agrochemical industries, which occurred in the mid/late-90’s and early/mid 2000’s.

Concurrently, continued acquisition activity by the large equipment companies and other firms building technology platforms suggests investors in Agtech and Precisions Ag companies can still expect to exit through buyouts. Recent deals to note include: CNH’s 2014 acquisition of European spraying equipment manufacturer Miller-St. Nazianz, and Deere’s acquisition of high-clearance sprayer manufacturer Hagie Manufacturing. Deere continues to bundle technology with its equipment, as illustrated by its 2015 agreement to purchase Precision Planting from The Climate Corporation, and its 2016 purchase of Monosem, the European market leader in precision planters.

2) Mid-term Increased Specialization:

Consumer demand for organic, nut-free, “natural”, non-GMO, and sustainably-sourced products will promote increased specialization of the food products. Meanwhile, information technology progress allows tracking and separation of products on a scale never before plausible in the food value chain. We expect these trends to profoundly alter the food value chain over the next decade.

Strategic shifts among intermediaries, ADM, Bunge, Cargill and Dreyfus highlight the trend. ADM’s 2014 purchase of Wild Flavors and Cargill’s June 2016 acquisition of Five Star Custom Foods moved both firms toward specialty ingredients.

Beyond these headline deals, food companies are developing more robust direct sourcing models through emerging ag tech. Some are working with new specialty intermediaries to source organic, non-GMO, specialty grains, and crops with special attributes such as higher oil content. These changes to the agriculture and food supply chain create opportunities to invest in the development and growth of new products and business models. Context also recognizes how this trend converges with the need to identify strategies and pragmatic metrics geared toward measurable sustainability outcomes.

paul 8-29-163) Long-term Sustainable Efficiency:

In the long run, growing populations and increased prosperity will drive the need for more food produced more sustainably and efficiently. In what we expect to be a continuing trend, Context clients from both private sector companies and non-governmental organizations (NGOs) are increasingly seeking our help to understand the potential impact of agriculture investments on metrics such as small-holder farmer income, carbon footprint, and other conservation based outcomes.

The focus on African development is increasing. Much of the two billion population increase anticipated by 2050 will be in sub-Saharan Africa and Southeast Asia, where opportunities to advance agriculture are extraordinary. Intermediaries are working to formalize markets and improved connectivity in Africa and Asia between farmers and consumers, underscoring long-term opportunities. With development needs for by so multi-faceted, public-private partnerships prevail as a preferred approach to create both successful financial returns and lasting positive social impact.

Agribusiness presents attractive investment opportunities for investors who understand and capitalize on underlying trends. Over the next three years, the consolidation of agriculture input companies is likely to create attractive opportunities. Over the next ten years, we believe companies, products and technologies supporting the increased specialization of the food value chain, driven by changing consumer demand, are well positioned. Investments in technologies and public/private partnerships which address key resource constraints, social impact, etc., provide investment opportunities aligned with powerful long-term demographic trends.

Over the next ten years, we believe companies, products, and technologies supporting the increased specialization of the food value chain, driven by changing consumer demand, are well positioned. Investments in technologies and public/private partnerships which address key resource constraints, social impact, etc., provide investment opportunities aligned with powerful long-term demographic trends.

Global perspective and intimate understanding of the key drivers influencing agriculture businesses is at our core. For additional support in advancing your company’s goals, partnering with those who can advise effectively can make the world of difference, Context’s proven track record of optimizing opportunities speaks volumes. Contact us today to help anticipate, develop and deploy confident actions to advance your company’s future.

Contact Paul Watson:

Understanding Culture: Examining Dairy Operations’ Culture

This article is adapted from the first in a series of articles published in Progressive Dairyman magazine, (see below for link to full article). Context Senior Associate Monty Miller explores the importance of culture and the role it plays in helping us get work done effectively within our organizations and in this case, the dairy industry.

Miller explores an initiative called AgCulture, research and programs with producers supported by Arm & Hammer Animal Nutrition. In subsequent articles, Miller shares data and insights collected from 37 dairies, including more than 600 participants. A tool called Organizational Culture Inventory helps evaluate culture within an organization, and teaches how to create more constructive cultures while reducing defensive behaviors.

People live and work in cultures. In fact, you’ve spent your whole life in various cultures, whether you realize it or not. For instance, agriculture – the practices passed down through the ages to care for livestock, produce forages and grains, preserve natural resources and be sustainable – is, as the name implies, a culture. In its simplest form, culture is how you get things done.

Culture is a set of practices and behaviors woven together to create procedures for accomplishing the needed work in your dairy. It also includes employees’ perceptions of their work environment. Culture is how you know what to do and how you get it done. But how well do you understand this concept and its potential impact on your dairy?

When you visit a neighbor’s dairy or a dairy in another part of the country or world, after a few minutes, you probably say to yourself, “they do things differently around here.” That’s the difference between your dairy’s culture and their dairy’s culture.

Before you can influence and change your dairy’s culture, it will be helpful to understand a little more about culture. Understanding culture, where it comes from and how it is measured, allows an operation the opportunity to improve.

Where does culture come from?

Culture comes from what is learned from prior generations as well as what individuals learn from their own experience and then pass to others. The vast majority of dairy farms are multi-generational, meaning significant practices have been passed down from previous generations.

By assessing where we learned to do what we do, we have an opportunity to understand where our culture comes from. Who taught you how to care for cows, calves and heifers; how to feed your animals; how to milk a cow; and more? It was most likely a parent, a grandparent, an aunt or uncle, some family member – or maybe an employee you were teamed up with on your first dairy job. People do a lot of learning by watching others, doing it themselves and discussing. Plus, people obtain an emotional high when they do it themselves and get it right, which reinforces culture – the way you get things done.

A more formal, academic definition of culture offers addititional insight. Author Edger Schein defines culture as, “a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration that has worked well enough to be considered valid. Therefore, (these basic assumptions are) to be taught to new members as the correct way to perceive, think and feel in relation to those problems.”

Changing culture – challenge or opportunity?

Note the phrase in the definition above, “taught to new members as the correct way to perceive, think and feel.” This is the challenge or opportunity to create, enhance, modify or destroy culture in your own dairy.

Many factors influence your dairy’s culture. Climate and weather dictate facilities, housing and cow comfort. These conditions create traditions like the idealized red dairy barn. Environment and weather also influence your protocols and behaviors. Hence, they impact the behaviors of employees, managers and owners. Your decisions to raise forages and other crops also have a bearing on your culture.

All dairies have unique characteristics that support or detract from the operation’s productivity, efficiency and effectiveness. The key is to understand and then guide your dairy’s culture so the work gets done while personal team member growth is fostered and encouraged.

It is one thing to know what culture is and quite another to assess and measure culture on individual operations. Although culture is an abstract concept, it can be measured with the right tools.

An objective assessment tool is available to delve into the behaviors and attitudes that impact a dairy’s culture to help understand it. Only once this data has been obtained can a dairy really begin to evaluate the impact of its culture and determine where improvements can or should be made.

The steps taken to tackle the situation and the resulting outcome will be shared in future articles in this series. Miller will present the Organizational Culture Inventory (OCI) model, a culture assessment tool. OCI evaluates the 12 styles representing three types, of cultures.

Look for more on organizational culture in the next issue of Thinking in Context or find the original article at the link below.

For more information, contact

Value and Values: Managing Through Market Cycles in the Ag Equipment Business

Value: The regard that something is held to deserve; the importance, worth, or usefulness of something.

Values: Things that you believe are important in the way you live and work; determine your priorities.

The current agricultural equipment market cycle has created many challenges for very successful, well managed companies. As farmers place greater scrutiny on their capital investments, companies are being challenged to more deeply understand and better communicate value and values.

New market conditions emerge as a market progresses through a market cycle. How well companies respond to the new market conditions presents an opportunity to reshape how they are positioned with their customers, and how they are perceived by their employees — their value and values. Furthermore, responsiveness expectations are increasing in today’s increasingly digital economy. While price comparison always matters, social media developments in user-generated content (UGC) are further informing how sentiments inform value perceptions. Reviews and ratings are becoming increasingly influential within the value equation. How well is your company plugged in to your value sentiments?

Value consciousness is a consumer’s expressed tendency to buy products perceived to be good values for the money. Since periods of market adjustment heighten value consciousness, companies must have a deep understanding of how the value they add for their customers is perceived, and how expectations are shifting. That requires knowing where and how they add the most value, and just as importantly, where and how they add the least amount of value.

Customers’ value realization is evolving and changing, forcing companies to change as well, or be left behind.

Effectively executing strategies that emphasize where the most value is added will help shape your company’s focus and customers’ value sentiments. It is important to avoid broad adjustments spread evenly over all operations, and instead, to focus on opportunities to grow areas representing the most opportunity for value extraction while de-emphasizing areas with fewer value added opportunities. This is the inflection point of a company’s value and values.

Remaining focused on who you are as a company, what your brand represents, and what you stand for in the minds of customers will deepen the perceptions of value consciousness beyond price to a broader set of customer value sentiments. Market cycles present an opportunity for thoughtfully executing strategies that allow for value and values to be grown and leveraged.

Context Network has many years of expertise in helping companies execute strategies in market cycles, both in upturns and downturns. Context has developed tools and techniques that assist companies in establishing strategies that best position them at any point in the business cycle.

Context’s unique War Gaming techniques allow companies to better predict the competitive environment they will be facing. Context has also developed unique strategy development tools such as Relative Competitive Product Analysis (RCPA) to provide focused competitive assessment and action plan that goes far beyond the normal SWOT analysis.

The impact of these tools becomes more actionable because they are deployed by Context’s deep ag equipment business knowledge, and backed by years of executive level experience. The Context team has firsthand experience and has realized the opportunities through market cycles from both large ag equipment manufacturers and precision ag companies

For more information, contact Doug Griffin at

The Context Network Establishes Context Global Development™

Growth – it’s at the core of everything we do in agriculture. Context is no exception, and we continue to grow in the services that we offer as we work to advance agriculture; making it more productive, more efficient and more sustainable around the globe.CGD logo

Recently, The Context Network announced the formation of Context Global Development™ (CGD), a non-profit organization to support program implementation needs of agricultural and social impact development donors worldwide. CGD’s core goal is to maximize the value of agricultural resources in developing countries by harnessing Context’s commercial and development expertise. In doing so, we will catalyze public-private partnerships that result in meaningful and lasting change.

Evolving Services to Meet the Need
Context has worked in recent years to identify and prioritize strategies for catalyzing development in agriculture value chains to improve the lives of smallholder farmers in developing countries. In the course of assisting major donors with grant-making strategies and program design initiatives, Context identified a vital need in the agricultural development sector. In response, CGD was founded to support donor organizations with economically sustainable, market orientated initiatives by leading engagements with private-sector stakeholders.

In-field Commercialization Globally
Working closely with donors, CGD teams seamlessly to embed as avisors, trainers or managers into the core operations of public-private partnerships in commercialization support and business analytics capacities. CGD’s sole focus on agriculture includes:

  • Bringing better data to agriculture
  • Seeding sustainable systems to value chains
  • Incubating product development and promotion in-field
  • Piloting to markets the commercialization of technology
  • Aggregating markets and advocating institutional changes

CGD already has been selected for and has begun work on two significant multi-year grants.

As the lead grantee for one initiative, CGD will focus on sorghum and millet in West Africa’s Sahel region. In another, CGD is a sub-grantee, and will focus on developing a seed system for cassava in Nigeria.

  • “Realizing Sorghum and Millet Agricultural Productivity Gains in the Sahel” is a two-year program based on a $4 million USD grant from the Bill & Melinda Gates Foundation. The initiative aims to realize agricultural productivity gains for smallholder farmers (SHF) growing sorghum and pearl millet in the Sahelian zones of Burkina Faso, Mali, and Nigeria.
  • “Building an Economically Sustainable, Integrated Seed System for Cassava in Nigeria” is funded with $11.6 million USD from the Bill and Melinda Gates Foundation. The 4 year project aims to sustainably improve farmers’ access to high quality and affordable cassava planting materials through the development and promotion of commercial models for seed provision.

Both grants have the potential to directly improve the lives of thousands of men, women, and children in key developing regions of Africa.

This represents just the beginning of what we feel will be many more opportunities to drive transformative change for agricultural communities around the world. We’re grateful to be entrusted as an implementation partner to improve the livelihoods of smallholder farmers.

For more information contact Mark Nelson  |  607-592-4947  |

Global Commodity Outlook: Thriving on the Commodity Tightrope

The recent pain of depressed commodity prices across grain and oilseed markets has left many asking questions like, “What’s the root cause of the falling prices?” and “Will this pain continue or will prices rebound?”.

A simple scan of various news sites for information that could impact commodity markets yields headlines that might be obvious in their market impact and others that are more subtle, but may nonetheless have a large impact on commodity markets overall (Figure 1). As agribusinesses search for insights to try and make sense of commodity markets and where they might be heading, it is important to understand the history/current state of the market as well as identifying possible future trends.

Figure 1: Recent News Headlines
holland article image 2

Over the last ten years, volatility has been rampant across key crops like corn, soybeans and wheat. For example, record prices were seen in 2012 (largely due to the impact of drought conditions) with soybeans reaching $17.90/bu in July and corn reaching a price of $8.49/bu in August. This drought was followed by record crops in 2014 & 2015, depressing prices by almost half to current levels (Figure 2).

Figure 2: Historical US Production and Average Yearly Price Received
holland article graphic 1

Pulling back the curtain to understand the reasons for recent commodity volatility reveals both obvious and subtle drivers, including:

  • U.S. ethanol mandates, which stoked corn demand and prices for the last 10 years, have not been increased, leading to ethanol-related demand plateauing at around 5B bushels.
  • Weather volatility has led to some years of low production due to drought and therefore record prices, as well as years of record yields (national corn yield of 171/bpa in 2014 and national soybean yield of 48/bpa in 2015) and substantially suppressed prices.
  • The recent strength of the U.S. dollar relative to currencies of many of our trade partners has in some cases cancelled out much of the buying benefit of lower commodity prices, causing exports to stall.
  • Substantial production increases in South America and the Black Sea region continue to erode the U.S. share of world trade. (See Figure 3)
  • China’s economy has had an increasing impact on agriculture commodities, spurring demand for more protein. However, complications due to commodity price protection for domestic production of Chinese crops also skewed international trade and built up Chinese commodity stocks.

Figure 3: 5-Year Regional Exports by Commodity (Million MT)

Corn graphic Global articleSoybean graphic global grain article

While many factors have gotten us to where we are today, key questions still linger: “where will these headwinds take us?” and “are we in a new steady state of lower prices or will there be future volatility creating further swings?”. Long-term baseline projections from the USDA indicate that the current state of farm-level prices for corn, wheat, and soybeans is likely to trend pretty consistently over the next ten years. In addition to the USDA projections, The Food & Agricultural Policy Research Institute (FAPRI) also projects corn prices to remain at or below the $4.00/bu mark through 2020. Even with projections that depict a pretty consistent future state, there are inherent uncertainties impacting the markets. Given the future uncertainties, it is more crucial than ever that agribusinesses dealing directly and indirectly with commodities not only deftly manage pricing risk, but also have the foresight to maximize future opportunities- both domestic and international.

Savvy agribusiness leaders should be asking themselves, “What are potential factors that could impact commodity prices even further?” While no one can predict the future, possible scenarios resulting in a positive impact on prices could include an increased demand for protein by many developing countries turning the corner (i.e., SE Asia and LATAM) or new biofuel mandates domestic or abroad. On the other hand, a global macroeconomic recession or substantial yield boosting technologies without matching demand could cause prices to remain static or even decline. Successful companies should have a well-defined risk management plan with the ability to navigate the impact of different commodity price scenarios.

While navigating periods with headwinds can be turbulent, The Context Network has decades of experience along with in-country expertise throughout the world to identify key trends and factors that could impact our global industry. Context is well positioned to help organizations across the agribusiness value chain to synthesize and understand the myriad of factors, both obvious and subtle, that impact the overall industry and their specific bottom lines. For more than 20 years, Context has helped agribusinesses navigate the price effects of commodity supply and demand, serving as a partner to clients in developing strategic frameworks to capitalize on market opportunities. With our recent acquisition of expertise in commercial and specialty commodity systems and risk management, we are able to uniquely tailor our consulting services to our clients’ specific needs.

For more details about how Context can assist your organization in this space please contact:

Des Moines Register
Financial Times
The Ethanol Mandate & Corn Price Volatility
Trading Economics
USDA Foreign Agricultural Service
USDA Grain & Oilseeds Outlook
USDA Agricultural Outlook Forum:
USDA – ‘Slowing Economy: Effect on China’s Agricultural Imports’
US Grains Council – ‘China’s Potential Future Imports of Feedgrains & Oilseeds’
Farm Service Agency – ‘2016 Grains and Oilseeds Outlook’
USDA Agricultural Projections to 2025
FAPRI US Baseline Briefing Book – Projections for Agricultural & Biofuel Markets
Bloomberg Argentinian Peso Article Headline
US News & World Report El Nino Article Headline
USDA Foreign Agricultural Service

Revolutionizing Grain Storage and Logistics

Bagged grain technology has revolutionized grain logistics and storage in Argentina, as well as in other producing countries of the world for the last decade. Since the beginning of agriculture, grain has been stored in oxygen. In a radical change from the past, grain storage in a silo bag is an airtight storage. The grains, associated microorganisms and insects breathe, ingesting O2 and producing CO2, creating a modified atmosphere within the sealed bag. This modified atmosphere creates certain advantages for the conservation of grains.


There have been several attempts to store grain in a modified atmosphere to improve grain conservation. However, storing silage in airtight bags has provided the first successful results both commercially and on a large scale. In Argentina last year, the adoption scale of bag-stored grain was so large that out of ~100 million tons of grain produced, 55-60 million tons went through silo bags. The many benefits that this technology provides the entire chain easily explain its rapid adoption. Harvest can be accomplished in record time. A bagger can easily store what has been threshed by 4 modern combine harvesters. Silo bags have also allowed grain producers to keep grain at the production site, and thus encourage new businesses that previously were not available.

Finally, silo bags allow the producer to plan logistics in a much more efficient way. Collection companies have expanded their storage capacity, and thus reduced the fixed costs of their facilities. Using silo bags, the lack of capacity silos is no longer a barrier to shipping grain to port at the time of harvest.  

For exporters, silo bags allow them to participate in a much more aggressive grain acquisition policy as very low costs entice grain deposits in places where they had no presence before. In many cases, this has allowed them to double the volume stockpiled. They also manage to have strategic stocks with their crushing plants to stabilize the supply of raw material.

Bagged grain technology preserves grains for long periods of time with no downsides. The use of an excellent quality bag is essential. The cost of a bag is less than 1% of the value of the stored goods, thus an economical approach.

IpesaSilo™, Ipesa-Rio Chico’s trademark, is the leading bag in the Argentine market. IpesaSilo exports to more than 50 countries worldwide. Five years ago, the company created IpesaUSA as a distributor company working with farmers, dealers, and end-users such as co-ops and elevators countrywide. The cost of storage per bushel in silo bags in the U.S. is only $0.07 per bushel compared to traditional storage methods costing ~$1 per bushel.

The company has also expanded into Canada where grains are experiencing strong freight competition from mining, and have found that silo bags allow them to store grains in the field at low cost. In the case of South Africa, the company introduced grain bagging with Louis Dreyfus, and today 10% of the South African grain production is stored in silo bags.

Other countries where IpesaSilo has begun significant developments in the use of silo bags include Russia, Ukraine, Australia, India and China. Sales in Brazil reached the milestone of 45,000 bags and about 9 million tons of grain is stored annually. Brazil’s potential for the product is huge due to the lack of storage infrastructure and long distances between production areas and ports.

Grain bagging has provided the entire agricultural chain with a powerful storage and logistics tool, enabling the steady growth of grain production minus the inevitable bottlenecks typically experienced in traditional storage. Today, we know that agricultural expansion has no limits, and that storage is determined by the revolution of bagged grain.


More Grain in Silo Bags, Better Quality

Silo bag grain storage is a common alternative for producers, middle-men and the grain processing industry in Argentina. During the last 5 years, roughly 40% of grain production in this country was stored in silo bags, highlighting the importance of this technology in Argentina. Moreover, silo bag technology is being exported to various countries across the five continents.

Silo bags are made of a three to five layers of plastic material (white on the outside and black on the inside) shaped as a 235 microns thick tube. The most typical bags are 60 m (200ft) long and 2.74 m (9ft) in diameter, can hold approximately 200 t (8000 bushels) of grain each. With equipment currently available, handling (loading and unloading) is very simple to perform. The bags can be assembled on the same production lot, or in an especially equipped area in the vicinity of the storage or processing plant.

The effect on grain quality of wheat, corn, soybean, sunflower and barley, on humidity and period of storage, was analyzed by Bartosik et al. (2012). Cardoso et al. (2009) studied the changes in the concentration of phosphine during fumigation of grain in silo bags, and Cardoso et al. (2012) implemented a pressure test to determine the airtightness level of silo bags and their evolution after being stored for four months in the field.

Cost calculation of storage in silo bags requires certain considerations. The equipment needed includes: bagger, extractor, self-unloading hopper car and two tractors enough to carry the hopper car and provide movement to the threads (one for the hopper car and one for the bagger and extractor). In addition to the costs of having ownership of equipment (depreciation, maintenance and interest), other expenses related to labor and fuel are required to be able to operate. The bag is not reusable, so whenever bagging is done it is essential to buy a new bag.

A typical Argentine grain storage operation using silo bags was analyzed. It includes the following sub-steps: 1) transport from harvester in the field to bagger, 2) bagging, and 3) extraction of grain. The subsequent transport of grain to collection, processing industry or port was not considered in the analysis, as this should be done regardless of the period of grain storage in silo bags.

The equipment required for bagging includes a bagger, an extractor, a self-unloading hopper car and two tractors. One of the tractors is also used for grain extraction. The bagger has a capacity of 400 t / h and requires power of at least 60 HP. The extractor has a capacity of 80-110 t / h (depending on the type and condition of grain), and requires power of 90 HP. The self-unloading hopper car has a capacity of 14 t and is equipped with a thread of 360 t / h capacity. To meet the power needs of this equipment two 90 HP tractor were considered, which can be used interchangeably for the bagger, extractor or hopper car.

This is a typical equipment configuration for a contractor that provides the bagging service to producers or middle-men in Argentina.

Table 1. Equipment Configuration for Silo Bag Contractor


Equipment and supply prices were taken from magazines (Agromercado), and in consultation with suppliers. The equipment was granted a life span of 10 years, except the tractors which were allocated a life span of 20 years. The residual value of the equipment was considered 25% of its value, while the annual maintenance cost was set at 3% of its value (Table 1).


The Strategy of Licensing

Companies often struggle when contemplating licensing deals.  This is especially true of small companies with new technology.  The decision to license, when to license, and the overall licensing approach are crucial factors when considering how to generate new income from newly developed or even existing products.  – Context Partner, James Mann

Although not typically done, any licensing approach should be accompanied by a broader strategy that outlines the trade-offs between the company’s need for near term income/cross license, and the risks of approaching a deal too early. Our suggestion for optimizing a licensing strategy is to approach each deal systematically through a series of internal steps:

  1. Determine the fit of the licensing strategy within the overall strategic direction of the company. Ensuring a clear fit with the company’s overall strategy will safeguard a product or concept that could create a tactical advantage in the future from being sacrificed for short-term income.
  2. Evaluate the multiple license options that exist for products today. Much like the Pharmaceutical industry, licensing is no longer a one-size-fits-all proposal. Multiple options now exist that can combine tactics from the past with new tactics learned and honed from other industries.
  3. Size your opportunities. Determining the size of the licensing opportunity is just as important as determining the size of the market for a business plan. However, this tends to be the most overlooked portion of the licensing planning process. By understanding the market dynamic and the size of the opportunity, the appropriate resources can be applied not only to market the product, but also to creatively explore multiple licensing options and maximize value capture.
  4. Empathetically understand your potential licensees. Multiple internal term sheets should be developed as you begin the licensing process. These should include term sheets developed not only from the licensor’s lens, but also from the lens of the licensee. This will ensure that the company can predict and plan to mitigate any major objections before they occur.


All of these process steps should be wrapped by a scenario planning session where role-playing can be used to validate and adjust the company’s licensing strategy. Following these steps can ensure the company’s top opportunities are monetized through the licensing process.

For more information, contact James Mann at:

Equipment Manufacturers Feel the Pain of “Doing the Splits”

Over the past 25 years, the majority of land farmed in the Corn Belt has flipped from operations with less than 500 acres to those with over 1000 acres. The implication of this trend towards the larger farm operation managing a greater portion of production area is simultaneously being matched by the signification of smaller operations, which still account for > 80% of the farming operations. Nearly 50% of the farms less than 500 acres are smaller than 50 acres, and are frequently categorized as lifestyle farmers. The effects of this increasingly polarized customer base is having a dramatic impact on equipment providers this year. It is a key factor in why big tractor and harvester sales can be down by as much as 40% and small tractor sales are still realizing year over year growth!


The challenge for equipment providers is to best serve and market to the differing needs for each of these divergent customer segments. The larger farmer is looking for performance out of their equipment to cover maximum acres in a targeted farming window with minimized cost and increased precision.

Meanwhile, those in the lifestyle farmer segment want a basic range of functionality in a comfortable environment at minimized cost.

The larger farmer is looking for service and support characteristics of where he buys, while the lifestyle farmer is looking for more of a retail experience similar to how they make most other purchases. Providers with a footprint in both markets are feeling the pain of “doing the splits”! Appropriately scaled product and marketing strategies are needed now more than ever to effectively serve the large and small farm operation segments.

Both large and small customer segments present opportunities for growth for equipment providers. The cyclical nature of farming forces manufacturers and dealers to look for the segments of customers with the most opportunity in the current stage of the cycle, and to find ways to connect and stay connected with those customers.


Context’s proficiencies and knowledge in the equipment industry range from deep technical know-how on equipment functionality and precision technology integration, to strategic marketing and management training experience, to operational excellence in supply chain and channel distribution. The Context arsenal includes industry leaders and innovators who have served globally as vice-presidents, directors, and field employees of major equipment companies. We have the experience and expertise to credibly provide pragmatic, actionable solutions that are especially needed during times like these to focus equipment providers on their diverging customer base and best position for growth through the next turn in the commodity cycle.

Provided by Context Partner, Mark Nelson; Context Senior Associate, Doug Griffin; and Context Senior Associate, Kevin Monk. For further information contact

Context on Continued Investment in Ag Tech

Throughout 2014 and the first quarter of 2015, the agriculture sector continued to see significant interest from institutional investors with increases in activity from both growth and venture capital providers.  One of the most active areas for investment was in the agriculture technology (AgTech) segment, which, according to AgFunder, saw $2.36 billion in investments across 264 transactions during 2014.1 The spread of transactions represents a focus on early stage companies and a pivot from past mega-deals, with many investors now placing multiple bets across the industry.  Context believes several important trends can be discerned from the activity in 2014 that will continue to impact the market in 2015:

  • Strong Big Data Interest: Investors have allocated capital across the big data spectrum, with software and hardware providers both generating significant interest from investors during 2014.  Combined, the Decision Support Technology, Smart Equipment and Hardware, and Drones and Robotics subsectors received $370+ million of funding across 75 deals during 2014, or approximately 15% of total AgTech funding.2
  • Muted Impact of Weak Commodity Cycle: the pricing pressure experienced across agricultural commodities in 2014 did not dissuade investors from pursuing transactions and may have actually created a buying opportunity in the market for many institutions.  This trend may seem counterintuitive in the agriculture sector, but reflects past behavior from institutional investors.  Weaker commodity markets allow for more investment due to more moderate valuation expectations.
  • Interest and Investment Across Value Chain: While data has been a key theme in agriculture, there are still many uncertainties. Where will data processing and ownership rest?  Which participants, both in the sector and potential new entrants, will be most successful at creating and capturing value? What will be the structure of the next iteration of data based solutions?  These uncertainties have caused investors to allocate capital across the value chain in an effort to retain exposure to all sectors with high potential, even those outside of the “data” vertical.  According to AgFunder, during 2014 ten subsectors of the AgTech market received at least 5% of the invested capital, led by Bioenergy at 16%, Food Ecommerce at 16%, and Soil and Crop Tech at 13%.3

A few trends suggest investor interest will continue through at least the end of 2015.

  • The recent increase in macro demand evidenced by increasing allocations to the agriculture sector by institutional investors shows no signs of immediate slowing.  
  • Micro interest themes continue as well with a specific focus from strategic and institutional investors on improving yields.  
  • Lastly, increasing technological leverage or the scalability of technology being applied to the agriculture sector promotes additional investment.

Provided by Context Senior Consultant, Dan Creagh.


1 AgFunder, AgTech Investing Report – Year in Review 2014, March 3, 2015

2 Ibid

3 AgFunder, AgTech Investing Report – Year in Review 2014, March 3, 2015

Understanding the Produce Value Chain

Think back several decades and walk into your favorite grocery store. What did you see? Was produce the first department you entered? Did you see a vast array of fruits and vegetables including fresh cut, a dozen or more different types of apples and tomatoes, and fresh berries every day? (Hint: the market for small tomatoes has tripled in just the last decade to now well over $1B). Leap forward to today, and if you don’t see a well-stocked, well merchandised impressive display of fresh produce then you’re probably shopping in a store that won’t be around for long.


Grocery retailers know that it is the ‘fresh perimeter’ of their store that sets them apart from competition, with produce being the number one point of differentiation. The aromas, colors and vibrancy of so much fresh and wholesome food are a powerful way to greet their customer. It also is a powerful way to grow profitability.

According to the United Fresh Produce Association, fresh produce accounted for 13 percent of store sales in 2013, up from just under 11 percent in 2011. The average produce department in 2013 generated $47,209 in revenue every week, up 4.8 percent from 2012 with most of this gain coming from pricing. Innovation in convenience, variety and flavor helps drive these price gains. Newly popular items like clementines and kale, snack-sized tomatoes and peppers, fresh cut salad and fruit are just examples of categories that have exploded due to innovation.

However, not all innovation is successful. In fact 70-80 percent of new grocery items fail. It is not enough to know only what the consumer wants, or know only how well a product yields on the farm. One also needs to understand cost of production, handling, packaging, distribution logistics, shelf life and challenges faced by the grocery retailer. Bringing forth a new produce item is risky business and is not for the faint of heart.

Context has extensive experience all along the produce value chain, from seed and inputs, through packing/shipping to grocery retail and foodservice. A critical factor in launching any product innovation is to make sure the value chain is lined up beforehand. Growers can’t take the risk to produce a new item unless they know who is buying, and for how much. A packer/shipper may be willing to take some risk, but they need to understand seasonal impacts on supply and product quality, best practices to preserve flavor and shelf life, have some idea as to consumer willingness to purchase the item and retailers willing to carry and promote the product.


For retailers, shelf space is precious and adding items requires work and often worker training. Retailers need to be comfortable that the product they receive will be consistent in delivering the promised value, dependable in supply, and unique enough to catch the attention of their customers –and of course, grow profits. Regardless of where you are along the chain, Context can link the chain together helping ensure product and financial success.

Provided by Jennifer Garrett, Senior Associate; David Stark, Senior Associate; and Jim Zarndt, Senior Associate.