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The Context Network Celebrates 25-Year Anniversary

This year marks the 25th anniversary of The Context Network®. Founded in 1992, Context has steadfastly focused on advancing food and agribusiness industries across an ever-changing global value chain. The firm, which now brings together a team of hundreds of full time and contract experts, has expanded from a single office in Iowa to a global operation that is considered the premier agribusiness consulting firm. Context draws upon proven processes and its extensive network to create customized solutions that deliver remarkable results.

During a recent gathering, Context leaders shared their observations on the firm’s rich history, which mirrors the dynamic, technology-fueled changes in agriculture and food industries themselves.

“In the beginning, we talked about technology in a much different sense,” said Context Founding Principal, Tray Thomas. “We were seeing changes in farming that were the result of a flattening global landscape, where scale and innovation were being redefined in nearly every sector.”

That transformative evolution in technology continues to ramp. With the global imperative to produce more food using fewer inputs, the industry is teeming with new practices, products, and technologies. Today, Context collaborates with our clients on initiatives spurred by data-driven scientific and engineering advancements such as precision farming, plant genome discoveries, and advanced supply chain analytics as well as continuous improvements and accountability throughout responsible food chains.

“Our first calls came from business managers with regional or U.S. input companies seeking a path to compete in an increasingly global marketplace,” said Thomas. “Today, those clients are global leaders in seeds, chemicals, fertilizers and meat, milk and eggs. They took risks, innovated never-before-imagined technologies, and implemented strategies that revolutionized the business of farming.”

Beyond the monumental advances in seed and crop protection sectors, Context’s more recent history has paralleled the broader marketplace in which a wide array of environmental and socioeconomic issues – such as food security, global sustainability, climate resilience, crop diversity, soil health, demand for responsibly grown foods, and agroecology – have garnered industry and consumer attention. Accordingly, Context now serves nine distinct market sectors (see graphic) to meet clients’ evolving needs.

context-grid

Context’s evolution as a firm has uniquely intersected with rising interest in global agricultural development in emerging countries, as leading firms and organizations began recognizing opportunities to improve lives and solve local scarcities across the globe. Context principal Mark Nelson said, “We began engaging in dialogue about parts of the world where modern agriculture infrastructure didn’t exist even 15 years ago. We were able to partner with leading non-governmental organizations to help solve critical global issues at a local level, not just from a business perspective, but from a societal one.” In 2016, Context formed a non-profit organization, Context Global Development® (CGD), to support program implementation needs of agricultural and social impact development donors worldwide

Despite the seismic changes in the agribusiness industry over the last 25 years, a few things haven’t changed at Context one bit, according to Matt Sutton-Vermeulen, a Context principal who joined the firm in late 2016. “Passion, persistence and professionalism.” He added: “These fundamentals resonate across the network in an amazing way and allow us to deliver exceptional work for our clients. It’s what motivates our business, and it’s why I wanted to be part of this organization and its future.”

Leveraging the diverse talents of the more than 200 professionals across all teams and throughout the network will enable us to expand the value we deliver to clients in meat, milk and eggs as well as downstream brands focused on continuous improvements in their responsible food chains.

To learn more about The Context Network, please contact Mark Nelson at mark.nelson@contextnet.com.

Private Equity and Venture Capital Investment in Ag Tech Grow Despite Headwinds

Despite economic headwinds, private equity and venture capital investors are showing a continued interest in agricultural technology opportunities, particularly in biotechnology.

The number of ag tech deals looks promising this year after increasing once again in 2016. CrunchBase statistics show that more than three times as much money went into ag tech investments in early 2017 as in the same period in 2016.[1] AgFunder and CrunchBase logged 422 ag tech deals in 2016, compared with 373 in 2015 and 230 in 2014.

agtech

Although the absolute dollar value of deals dropped from 2015 to 2016, this was linked to a decrease in the “other” category dominated by irrigation – not in ag biotechnology, innovative food, farm management software, robotics and mechanization, novel farming systems, or supply chain technologies.

Two significant headwinds

Investment is increasing despite two significant economic headwinds.

The first headwind arises from trends in agricultural commodity prices over the last five years. Corn prices, in the $8 per bushel range in 2012, have been sliced in half.[2] Farmers look back wistfully at “beans in the teens” as soybean prices have failed to hold at $10 per bushel.[3]

The effect on net farm income has been significant; 2017 is expected to tally a fourth consecutive year of decline from the record high reached in 2013. Farm income last year neared levels last seen in 2009, during the depth of the Great Recession. If reality matches forecasts, 2017 net farm income as adjusted for inflation will drop even further, to levels not seen in 15 years.[4] The resulting reduction in agricultural purchasing power is generally expected to cause farmers to take fewer risks – including pursuit of new technologies. That, of course, directly affects companies developing those technologies.

The second headwind stems from pending mergers and acquisitions among the world’s six biggest agribusiness companies, which are the logical purchasers of innovative agricultural technology. As work continues on several major ag input industry deals, it is reasonable to expect the market for venture and early stage exits to remain slower paced in the near term. “Most of the large agribusinesses were conspicuously absent from the list of acquirers,” AgFunder noted in its survey of 2016 ag tech investments.[5] Yet Monsanto’s recent purchase of HydroBio and MGV’s role as co-lead of NewLeaf Symbiotics $24M series C along side Otter Capital serve to illustrate the natural buyers of ag tech companies are not completely on the sidelines.

In this environment, continuing investor interest in the promise of ag tech solutions might at first seem counterintuitive. However, if the ag industry is able to develop and coalesce around common operating systems, then the promise of ag tech can unlock significant efficiency gains.

“Ag tech solutions that are focused on data analytics that enhance farmers’ strong intuition and decision-making skills are well-positioned,” says Context Network principal Paul Watson. Ag tech solutions leveraging multiple unique data layers can provide farmers better information about farm conditions more quickly than traditional methods such as scouting. These new solutions are also positioned to generate more accurate forecasts than traditional crop models.

According to Watson: “Farmers’ intuition and experience are often underestimated. Ag tech solutions that simply validate what a farmer already knows are of little value to farmers. Farmers are savvy business people who will pay for solutions that put actionable information in their hands more ‘real time’ than they can get it today.”

Two significant tailwinds

The ag tech investment field is expected to mature in the next few years, driven by two market realities:

  • Conditions seem ripe for the consolidation of several promising but struggling technologies into a platform with the scale to drive standardization and profitability. Key influencers in the agriculture industry are moving beyond what some call “the trough of disillusionment” within ag tech – when the wide-ranging potential was found to be difficult to achieve and not universally profitable. As technology providers and their investors seek to convert whiz-bang ag tech solutions into actual value capture, it is likely the industry will seek to combine ag tech solutions and information from multiple unique data layers to deliver greater efficiency in agriculture, which is the elusive promise of ag tech.
  • Many ag tech tools represent tangible methods to improve the use of resources – at a time when the definition of “sustainability” in agriculture seems to be maturing. In the past, the term was associated with doing well by doing good, often at the expense of return on investment. Today many in the industry view sustainable solutions as inherently more cost-effective, as the demand for food continues to grow while available resources do not. Alex Hittle, senior associate at Context Network and a business school lecturer at University of Hawaii, points out, “Sustainability is being folded into long-term profitability and no longer means accepting lower returns in exchange for positive externalities for the planet.”

The biotechnology renaissance

After a period during which drones, satellites, and in-field sensing equipment were in vogue, interest in ag biotechnology seems to be experiencing a renaissance.

ag-biotech

Ag biotech-related companies drew $720 million in investments in 2016, more than double the dollars invested in 2015. Compared with 2014, it represented a compound annual growth rate of greater than 20 percent.

In addition, several biotechnology companies are among those reaping investment dollars already this year, according to CrunchBase. Among the biotech companies that have garnered investments in 2017 are Benson Hill Biosystems, Inocucor Technologies, and TL Biolabs.

“As consumer focus on nutrition and sustainability continues to grow, investors are rewarding companies that can leverage the combined power of advanced data analytics and a deep understanding of plant biology to capture new market opportunities, from tools that improve the genetics of nutrient-dense crops to soil microbes that replace the use of chemicals,” notes Natalie DiNicola, Ph.D., senior associate at Context Network focused on sustainability in agriculture and the food value chain.

The Context Network has years of experience in helping innovators of agricultural technology develop go-to-market strategies that create value for farmers and other stakeholders across the ag-food value chain, while enabling technology providers to capture value from their investments. Context also helps investors interested in ag tech identify well-positioned technologies and companies.

For more information, contact Paul Watson at paul.watson@contextnet.com.


[1] https://techcrunch.com/2017/05/13/vcs-see-fertile-ground-in-agtech/

[2] http://www.macrotrends.net/2532/corn-prices-historical-chart-data

[3] http://www.macrotrends.net/2531/soybean-prices-historical-chart-data

[4] https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/highlights-from-the-farm-income-forecast/

[5] https://agfunder.com/research/agtech-investing-report-2016

Changing Buying Patterns in Ag Equipment

With net farm income expected to fall 8.7% in 2017[i] marking the fourth straight year of decline, producers have significantly changed their equipment buying habits. In the past, it was common for large tractors and combines to be traded in after one or two years old, which worked well in an up market because first buyers enjoyed the latest equipment and there was strong demand for used equipment, ensuring high trade-in and resale values. However, following the decline in commodity prices starting in 2013, demand for used equipment has dampened and pricing has moved in tandem.

shutterstock_131703860-copy

This pattern is compounded by the trends of farm consolidation and increasingly advanced technology. With larger farms and tighter margins, producers are putting more emphasis on controlling costs and improving efficiencies of operations through scale and technology. The result is fewer and larger farms using bigger, more expensive and more technologically advanced equipment, which in turn limits the pool of viable secondary buyers, as small to medium-sized farms simply can’t justify the size or cost. Furthermore, with emission regulations varying significantly from country to country, it’s difficult to move equipment around the world. Therefore, initial buyers of large, high-tech equipment in North America are forced by simple economics to keep and maintain equipment for a longer period stretching up to five or six years. Luke Smith, who grows corn and soybean in northern Indiana, describes the dilemma. “We want to stay in the latest technologies, but when the used market dried up, it stopped making sense to trade in every tractor each year.”

Not surprisingly, lease activity has ramped up during the last three to four years, as producers have eyed ways to keep their balance sheets healthy and free up capital needed for things such as land. As a result, original equipment manufacturers (OEM) and dealers are finding themselves left with more used equipment when leases expire. An April poll by “Farm Equipment” found 9 of 10 dealers concerned about the impact of the high number of lease returns on inventories and prices.[ii] Last year, Deere restructured its leases to reflect the lower residual value of used equipment.[iii] An executive in the equipment industry says, “There’s no doubt, the whole environment has changed, and it’s probably the new normal. Residuals on used equipment reached unsustainable levels during the boom.”

editorial-for-summer-17-shutterstock_338203847Beyond Leasing

Beyond leasing solutions, forward-looking OEMs and dealers are beginning to explore other ways to meet the needs of customers keeping their equipment for longer. Servicing these customers and their older equipment will require a different mindset and different packages, such as extended service contracts or a guaranteed total cost of ownership agreements. Our industry might be wise to look to other sectors for ideas on making long-term ownership a viable alternative to leasing. Interestingly, some manufacturers in the construction equipment industry have already adapted their model to satisfy buyers who are keeping their equipment for longer periods and want assurance around cost management. Caterpillar’s Total Maintenance and Repair agreements, for example, allow equipment owners to pay a flat fee to cover all service, maintenance and repair costs during a period of time. The similar complexity and high-tech nature of large agricultural equipment lends itself to this model as well. Luke Smith of Smith Family Farms says, “Knowing your costs is such a big factor in farming because there are so many variables. A three-year service deal on equipment—where we can predict the exact cost—would make a huge difference.” Equipment industry executives confirm producers’ growing interest in extended warranties, maintenance contracts, and complete refurbishment to extend the life of their equipment assets. Some manufacturers are moving toward common architecture in their equipment to make it easier to offer seamless technology upgrades.

Another potential solution could include product-as-a-service or pay-as-you-go models. Avionics engine manufacturer Rolls-Royce first dubbed its performance-based contract as “power by the hour,” reflecting that compensation was tethered to actual product usage.[iv] Under this scenario in the ag equipment industry, producers would only pay for the time they used a tractor, combine or sprayer. In other words, could there be a role for an Uber of farm equipment? It’s already a reality in India, where Mahindra and Mahindra’s agricultural equipment division launched Trringo in 2016, a tractor-by-the-hour service, complete with surge pricing for peak periods, such as harvest time.[v] The construction equipment industry again offers a parallel. Recently, Caterpillar announced the acquisition of Yard Club, a service platform that allows contractors to easily rent machinery to one another for weeks at a time. The rentals in turn allow businesses to boost revenue in between jobs. An executive in the ag equipment industry notes that he’s watching this development closely. “Machinery Link has been trying to do same as Yard Club,” he says, “but farmers are resistant so far. Planting and harvest windows are so narrow, and farmers are tradition bound.”

Much of today’s ag equipment is large, expensive, and burdensome to transport, which has limited the success of equipment-sharing business models in the ag industry. However, as autonomous and semi-autonomous technology becomes market-ready, we are likely to see equipment size shrink, with smaller pieces of equipment working in tandem. An equipment industry executive says, “Instead of one large tractor, you might see ‘swarms’ of small planters that could be easily deployed in different combinations and different regions, depending on the planting window.” This scenario would improve the economics of equipment sharing over larger geographies with different non-overlapping working windows. Smaller equipment will be easier, cheaper, and faster to move from location to location.

Right-Fitting a Solution

Given the current business environment, manufacturers and dealers alike are wise get in front of the impacts by asking critical questions, such as:

  • How are we adapting our selling or leasing process to meet this new and changing market, where customers will keep their equipment longer and will want assurances to lock in owning and operating costs?
  • How will the change in types of ownership (i.e., more leases and rentals) impact our capital requirements?
  • How is our technology replacement cycle synched up with customers’ lengthening equipment replacement cycle?
  • How will our business model change as the used market shrinks and the new market demands larger and more technologically advanced equipment?
  • Are we thinking out of the box to find unique solutions to customers’ needs? Are we ready to lead the way or are we at risk of being Ubered?

The Context Network has many years of experience in helping organizations in the equipment industry identify and execute go-to-market strategies that address customer needs in changing economic environments. Through our deep business knowledge and broad network of growers, dealers, and experts, we can glean current market information to gain an understanding of what expectations exist in the particular market cycle. For more information, contact Doug Griffin at doug.griffin@contextnet.com.


USDA Economic Research Service https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/highlights-from-the-farm-income-forecast

[ii] Farm Equipment www.farm-equipment.com/blogs/6/post/13910-to-the-point-whos-going-to-own-the-lease-problem

[iii] Farm Equipment www.farm-equipment.com/articles/12888-john-deere-to-tighten-its-leasing-terms

[iv] Knowledge@Wharton http://knowledge.wharton.upenn.edu/article/power-by-the-hour-can-paying-only-for-performance-redefine-how-products-are-sold-and-serviced

[v] The Telegraph http://www.telegraph.co.uk/technology/2016/10/18/uber-for-farmers-trringo-tractor-hailing-app-launched-in-india/

 

Competing in the Indian Seed Market: Key considerations for success in a challenging business and regulatory environment

In just six years, India is expected to officially surpass China as the world’s most populous country. Combined with rising incomes, food demand is set to skyrocket. Experts estimate that India’s food production must double by 2050 to meet demand. Unlike some other developing countries, India does not currently allow the cultivation of genetically modified food crops and has not approved a single biotech seed technology for commercial release in ten years. How can firms help Indian growers meet demand while navigating the challenging regulatory environment?

Cotton has Proven the Value for Traits

In March 2002, the first biotech Bt cotton seed technology was approved for commercial cultivation in India. Prior to its approval, the country’s production yields were among the lowest in the world. The cost of pesticides to manage an especially damaging pest – bollworm – accounted for a grower’s single largest expense, and yet, crops continued to be severely damaged by infestations, reducing yields and profits by as much as 40-70 percent. In fact, nearly 50 percent of all insecticides sprayed in India were unsuccessfully used for cotton pest control at the time.

The introduction of Bt cotton seed technology enabled resistance to key bollworm attacks. Indian growers could reduce the need and expense for insecticides, and produce high-yielding cotton crops bringing newfound prosperity to Indian households and communities. Grower adoption of the new technology was swift (see graph). India’s seed industry saw enormous growth welcoming many new entrants and investments, and the country quickly evolved its position from a net importer of cotton to the world’s top producer and second largest exporter of cotton.

ashachartEncouraged by this agricultural transformation, local and global companies alike invested heavily in research activities and grower support infrastructure in hopes of continuing the evolution across a broader selection of crops important to India.

The Regulatory Environment is Still Unclear

While cotton production has grown significantly since the introduction of Bt cotton, major crops in the country have seen only modest improvements (see graph). The Indian government has not approved any biotech seed technology for commercial release in ten years and has only recently allowed field testing to restart in some states after a lengthy moratorium. Government intervention around seed technology pricing and a recent proposal that would force technology sharing, raising serious concerns around intellectual property protection, have created additional market complexity.

ashachart2Consequently, the uncertain business and regulatory environment over a prolonged time has not only deterred investment into the sector but has made it difficult for those with existing investments or infrastructure to operate as profitably. The potential for biotech seed technology advancements are enormous, but firms recognize the considerable risk of developing products without a clear path to regulatory approval and profitability.

Market Development Without Traits

Context believes that the increasing demand for food and agricultural efficiency will eventually lead to the approval of additional traits in the country, but this is not imminent. In the interim, there are important activities that Indian seed companies can take to improve their competitive position and profitability. Without traits, differentiation relies solely on quality germplasm, highly efficient operations and impactful go-to-market strategies, including strong distributor and grower relationships. Companies who discerningly invest in these markets and continue their pipeline development will be well positioned as the population, income, and food-demand continue to rise and regulation eventually relaxes.

ashachart3Now is the time to systematically reevaluate your seed business strategy in the context of both current and anticipated future market dynamics:

  • What are the key micro- and macro- level trends that will impact customer demand and market opportunities?
  • What is the strength of your germplasm portfolio relative to competitors?
  • Where are the performance weaknesses and/or geographic gaps?
  • Which hybrids or varieties should you more fully leverage?
  • Is your existing infrastructure optimized?
  • Are your distributors and salesforce organized, incented and trained to deliver all they can for you?
  • Are your products priced, positioned and supported for maximum success in the marketplace?
  • Which assets, capabilities, crops or products should you divest, acquire or discontinue?
  • Who are the ideal buyers or acquisition targets?

Context has enabled clients by identifying and evaluating global and regional trends to inform assumptions around market demand and customer need; benchmarking research, production, and/or commercial capabilities relative to the competition; and by identifying both risks and opportunities to successfully compete in their space.

Although it is unfortunate that a country that could so meaningfully benefit from investments in seed technology is facing such disincentive for continued investment today, there is huge opportunity for those firms that can successfully and profitably navigate the near-term challenges. Moreover, while the regulatory and acceptance environment remains challenging for new technologies, it will continue to place a disincentive on both national and multi-national investment in other new technologies such as gene editing or advanced biological control approaches. As India continues advancing its agricultural industry, our team is poised to help your firm maximize success while minimizing risk in an uncertain marketplace.

For more information contact Asha Lundal

Optimizing a Portfolio: In Integration, or When Others are Integrating

Optimizing a portfolio, particularly amidst downsizing distractions, is one of those things that is incredibly easy “not to do”. Inertia would have you leave it alone. Your sales team likes every product they sell, and likes having the ability to offer those products. But there comes a point where overloaded, cumbersome portfolios are actually limiting total revenues and holding companies back. Significant gains, where profits will outpace revenues, can result when a strategic portfolio optimization is carefully executed.

Like any “good to do” strategic move, optimizing a portfolio is not necessarily easy, especially given a sales organization’s passion for doing their job and selling your products. And, it’s often not a popular move across the organization while you’re in the midst of it. Strategy, focus and perseverance are all required to get the job done effectively.

borelWith many large organizations at various stages of mergers or consolidations, portfolio optimization affords opportunities for companies who are reducing product offerings, and simultaneously, for those who are looking to build their portfolios.

A great portfolio is a beautiful thing. It is beautiful because demand is easily created, the competition is outclassed, retailers and farmers are delighted and profits are strong. And while beauty is in the eye of the beholder, there are some consistent characteristics of the products in a “beautiful portfolio”:

  • Strong relative competitive positions that are sustainable
  • Clear, sound value propositions
  • Profitable, or with a clear path to above average profitability
  • Brand equity

borel2Whether you are consolidating/integrating or if others in your competitive space are, this is a particularly appropriate time to make optimizing your portfolio a priority. In addition to the characteristics of products in a “Beautiful Portfolio”, other key factors must be considered in the process:

  • Sales Rep presence, specialization, and capacity
  • Sales Cycle
  • Level of support & loyalty from the distribution channel
  • Realistic capacity of Sales & Key Account reps (it is NOT unlimited)
  • Synergy (or potential synergy) with other products in your portfolio for one or more markets
  • Cost to Market relative to Profit from Product
  • Competitive offerings
  • Market trends (growing, stable, declining; consolidations occurring; etc.)

 Most large agribusiness companies have “too many” products

borel3Most large agribusiness competitors in CP have too many products in their portfolio. Through the work that Context has led in portfolio optimization, we often find products which are more of a “distraction” than they are contributors. Each time we’ve identified and removed these products, our clients have experienced higher overall sales and associated margins in the very next season! But back to the earlier caveat – that optimization is not always “popular” In full disclosure, be aware that there likely will be internal concern and push back, particularly from the Sales organization, about any removal of products. This makes it critical to have A) a strong internal champion for the project, and B) the fortitude to stay the course until the next seasons results can be compared. The outcome will be a lasting positive legacy for your leadership, courage and impact – building a reputation for delivering remarkable results through making tough decisions!

Many medium-size or specialty agribusiness companies have “too few” products

Many specialty ag input companies are at a point where they will benefit from strategic product portfolio additions. We are at a unique point in time where both large and specialty companies are motivated to make strategic moves that can enhance the value of both of their bottom lines.

Managing the Shift Toward Real Advantage

borel4All ag input companies have gaps that would be advantageous to fill, or weak spots that would be advantageous to replace. It is very important to know what products would be valuable to add or replace, and to track the potential sources. When consolidation is occurring, there is an increased need for product or sector divestitures, often driven by regulators. This represents a particular opportunity for product acquisition.

Now, here’s the point where real advantage is realized. Most companies will agree that it makes sense to focus on the product portfolio to win. However, it’s the “how to focus” that differentiates the real winners. Those who increase the emphasis on critical issues including product level, use patterns, time/investment prioritization position themselves to make significant and long-term advantages.

Whether you have more in your portfolio than your sales people can represent well, or your portfolio would benefit from additions, it is important to KNOW your gaps and weaknesses.

Context can help you identify strategic gaps, quantify the synergy and value, and design a proactive process for making it happen. Context helps companies identify products that are more of a distraction and design a proactive process for moving them out.

In the Context Portfolio Optimization Process (CPOP), we start with careful evaluation of what fits, contributes and has synergy in the portfolio – and what does not. Through a series of detailed analyses, we evaluate products, bundles, use patterns, sales and marketing time/investment analysis, and other drivers influencing the porfolio. When product removals are determined to be appropriate, companies have options to sell, license, donate, or drop. Our expert teams then create clear and actionable recommendations for making the needed changes, that add high value in the next season and beyond!

Context has the depth and breadth of experience and capability for this subject. With our global network of experienced industry executives, and our deep expertise across nine distinct practice areas, we are helping companies become more productive, more efficient and more sustainable. For support in evaluating your opportunities in portfolio optimization, contact us. We can provide the strategic management insights you need to make the hard choices that drive your profitability effectively. I would welcome your call, 925-937-4180, or email, mike.borel@contextnet.com to discuss further.

Partnering to Unlock the Potential of Nigeria’s Cassava Value Chain

Context Global Development™ partners with Nigeria’s largest HQCF processor to establish an on-farm, commercial cassava seed multiplication system

casavaContext Global Development™ (CGD) formed a partnership with Nigeria’s largest High Quality Cassava Flour (HQCF) processor, Flour Mills of Nigeria, to establish an innovative and commercially viable cassava stem business model that will serve high quality cassava value chains, including small-holder farmers (SHF).

Cassava is the most important food crop for Nigeria, where it has high poverty-reduction potential because of its low production cost, widespread cultivation, and job creation capacity – especially for women and rural youth. However, its income raising potential is stifled by the absence of an economically sustainable, integrated cassava seed system that would enable farmers to access affordable, high performing cassava seed varieties.

Building an Economically Sustainable, Integrated Seed System for Cassava in Nigeria (BASICS) is a four-year program aimed at sustainably improving farmers’ access to high quality and affordable cassava planting materials through the development and promotion of commercial models for seed provision. Our Processor-Led Model (PLM) component is anchored on a high-quality cassava flour processor, which possesses the incentive, means, and market power to spur farmer adoption of high quality cassava planting materials. Processors and farmers both stand to benefit from the former’s engagement in seed selection, multiplication, and commercialization.cgd-fall-04

 

PROCESSOR-LED MODEL OVERVIEW

cgd-fall-02The goal of the PLM is to develop a sustainable commercial model for cassava seed systems in Nigeria that enables smallholder farmers to access clean, improved planting material of farmer and industry preferred varieties. PLM aims to increase farm-level returns by vertically integrating high quality cassava processors into cassava seed multiplication. These processors then drive varietal improvement and anchor a local seed distribution network.

The BASICS program is run by the CGIAR Research Program on Roots, Tubers and Bananas, and implemented by IITA, NRCRI, CGD, CRS, FERA, NASC and Sahel. The program will build the capacity of Nigerian institutions and other stakeholders, including both men and women cassava farmers, processors and commercial seed producers to develop and put in to place a testing, field inspection and certification system for cassava seed.

cgd-fall-01This will, in turn, help fast-track improved breeders’ cassava varieties to farmers and ensure that good quality, disease-free planting materials are in use throughout the industry to improve productivity and incomes for farmers and their families.

Initially, the PLM will seek to test and prove the establishment of an economically sustainable planting material multiplication system. This includes the first-ever use of Argentinian lab-based macro propagation techniques, combined with on-farm nursery and demonstration plots. Once the business case has been established in Year 1, the program will then be scaled-up to include more Nigerian cassava processors in years 2-4. To support the upscaling of PLM, the program is developing a set of resources and tools, called BAQSTOPs, that processors can leverage to implement similar processor-led models quickly, provide personnel with the tools to monitor them efficiently, and instill operational excellence.

At Context Global Development, we believe in growing a world that is more productive, sustainable and efficient. We do that by helping partners like you achieve remarkable results. Our passion for agriculture is what drives us and is one of the main reasons why we have become the premier global and agribusiness consulting firm in advancing agriculture. Recently, Context has channeled that perspective by forming Context Global Development to put its experience of implementing agricultural advancement initiatives into practice.
cgd-fall2016-03With engagements, ongoing around the globe, wherever food is grown – we are there. Our organization is represented by an extensive team of dynamic engagement managers and analysts and complemented by a global network of hundreds of industry and subject area experts on-site worldwide. Providing access to this dynamic global network has proven to be invaluable to our partners.

Because we have boots on the ground, we can scale up quickly. No matter what the challenge, you can count on us to hit the ground running and efficiently help you realize greater impact.

Many of us grew up in agriculture – and we all know how to work both hard and smart. We offer a broad spectrum of agricultural expertise that you can depend on to seamlessly integrate as business advisors within public-private partnerships.

For more information contact Context Global Development’s Will Rogers and Mark Nelson

Managing the Shift to a Values-based Food Supply

I grew up on a dairy farm on the Kentucky-Tennessee border. We loved our cows, and everything we did on that farm was for the sake of the cows. Each day after the morning milking, a stainless-steel tanker truck backed up to our barn, loaded our milk and hauled it to the processing plant. At that time, we didn’t give much thought to what happened to the milk after that. We believed that consumers trusted us to do what was right on our farm, and that they would continue to buy milk and enjoy it.

I am passionate about consumer trust: from the beginning to the end of our complex food system. I have learned a lot about our food system and about consumers over the last 25 years. My career has allowed me to contribute as a farmer, a scientist, an academic, a teacher, a marketer, and an advocate across our complex food value chain.fall-newsletter-2
Trust is something that we can’t always see, but we can feel. Trust is an intuitive belief in something (or someone) that is honest, safe and reliable. In building consumer trust regarding food, the research consistently shows that shared values are 3-5 times more important than competence. In other words, “People don’t care how much you know until they know how much you care.”

 

FEAR

There is no doubt that fear sells. F.E.A.R. can be translated to mean False Evidence Appearing Real. More often than not, fears are unwarranted. But False Evidence can appear just as real as Validated Evidence taken out of context.

To many, evidence means anything that ‘sounds like’ or ‘looks like’ a fact. So, if I go to a retail grocery or convenience store to buy a carton of milk, I will have a lot of choices. One of those cartons may be labeled ‘antibiotic-free’. But that implies that some milk brands contain antibiotics and some brands don’t. Fluid milk sold in the U.S. does not contain antibiotics, regardless of the brand. There are many stop-gaps on the farm and at the plant to ensure that no milk containing antibiotics reaches the food supply. The milk is the same.

When it comes to evidence – the consumer may say, “But wait, I’ve read the ‘facts’ that farmers give antibiotics to their cows, so it must be true.” In fact, dairy farmers do not feed antibiotics to their lactating animals in any amount, and the only time an animal might receive an antibiotic injection is if she has a fever and infection. Her milk is then discarded according to the labeled withdrawal period.fall-newsletter-1

Evidence on the packaging and marketing of our food may appear truthful, but it can be incomplete or taken out of context. Like the previous example, the milk inside the cartons is the same nutritious product, but the description of the milk differs. The intent of that antibiotic-free label was to differentiate that carton of milk to appeal to consumer’s perceptions.

Values and Transparency

The traditional purchase drivers of food are taste, price and convenience. Yet 51-percent of those surveyed in the 2016 annual FMI/GMA survey also bring a new set of factors into their purchase decisions. (http://www.gmaonline.org/news-events/newsroom/gma-fmi-deloitte-research-uncovers-consumer-values-influencing-food-decisio/) These factors were referred to as “evolving value drivers”. They include health and wellness, safety, social impact, experience, and the over-arching driver, transparency.

So, when consumers push corporations to eliminate chemicals, preservatives, anything artificial or unpronounceable because their fears tell them that they are unsafe, the values-based food supply chain will respond. Eventually company A announces the change across a category. Then, like dominoes, the other companies follow.

With this shift in purchasing drivers, we now have a shift towards a values-based Food Supply Chain. Those players in the supply chain — from the seed supplier to the grocery retailer — that can genuinely demonstrate shared values to consumers will leap ahead of the rest. Transparently demonstrating sustained action toward environmental, social and economic sustainability clearly differentiates the leaders from the followers from the beginning to the end of the food supply chain.

Keeping it in Context

This shift towards a values-based food supply chain has created new sets of problems to solve for food manufacturers of all sizes. And, many of the solutions involve a good understanding of agricultural systems around the world.

Most retail and foodservice specifications for their suppliers is no longer “get me the cheapest at the best quality”. Instead, it is get me the cheapest and the quality I want, along with documentation of the people, places, practices and purpose behind the production of those foods and ingredients.

These new requirements aren’t going away, and they call for advancing agriculture through practical solutions that work on the ground, not just on paper. At Context, that is what we do. We know how to creatively solve problems, so that, in the end, foodservice and retailers can delight their values-driven consumers. And, we care; the kind of care that I experienced on my family’s dairy farm. It is intuitive for us.

For more information, contact Jennifer.garrett@contextnet.com.

The Context Network® extends expertise, reach in the food production value chain – announces merger with The Prasino Group

WEST DES MOINES, IOWA – (October 20, 2016) The Context Network®, has announced their merger with The Prasino Group, a Des Moines, Iowa-based consulting firm providing management consulting services across the animal agriculture industry. As part of the merger, Context welcomes two new Principals to the premier, global agribusiness consulting firm’s leadership team. Dr. Garth Boyd and Matt Sutton-Vermeulen will provide leadership and expertise in Context’s agricultural production service sector. The new Principals will lead initiatives focused on sustainable food production throughout the value chain. Context Principal, Mark Holland said the addition of The Prasino Group is an important step in Context’s continued growth, and their commitment to respond to clients’ needs. “We are very pleased to welcome Prasino’s clients to Context. Under the leadership of Boyd and Sutton-Vermeulen, we amplify our ability to serve customers in this growing market segment. The expertise and experience Garth and Matt bring allows us to provide vital services to a broader range of clients throughout the food production value chain. They have extensive, successful experience across a robust business base in the meat, milk and egg sectors which is highly complementary to the clients Context currently serves.”

 

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Context Principals, Dr. Garth Boyd and Matt Sutton-Vermeulen

Boyd said, “We’re really excited about joining Context because it’s going to increase our impact. We have a deep network of relationships and expertise primarily in animal production agriculture. Considering the environmental footprint of meat, milk and eggs, roughly 70-percent of that comes from crops and crop inputs. Combined with Context’s strong tradition and leading, worldwide reputation in crop production technology, the synergies we are creating will accelerate our ability to help clients achieve remarkable results.”

Sutton-Vermeulen said, “We’re excited to advance the services offered to Context’s clients. It’s all about a triple bottom line approach to food production, one that is economically viable, social responsible and environmentally sustainable.” We support the whole food value chain working together in a responsible manner that communicates, measures, manages, monitors and reports the continuous improvements being made in critical areas.” Context is committed to growing a world that is more productive, sustainable and efficient. Holland added, “Our passion for agriculture is what drives us and is one of the main reasons why we have become the premier global and agribusiness consulting firm in advancing agriculture. With the addition of Boyd and Sutton-Vermeulen, we amplify our abilities to effectively advance agricultural initiatives in the food production sector.” The Context Network is the world’s premier business management and strategy consulting firm providing services to agriculture, biotechnology, and food companies, and to government entities and NGOs. We help each client achieve remarkable results and advance agriculture via customized business solutions. Major areas of expertise include: strategy development, opportunity analysis, R&D assessments, merger and acquisition support, product/portfolio management, regulatory compliance, industry benchmarking, competitive intelligence, and marketing intelligence/ research. Context is comprised of a core of professional executive consultants and is complemented by a global network of hundreds of industry and subject matter experts on-site worldwide.

The Context Network Names Doug Griffin Principal in the Firm

WEST DES MOINES, IOWA – (September 12, 2016) The Context Network, a premier, global agribusiness consulting firm has named Doug Griffin as a new Principal with the firm. Griffin joins nine Context Principals as a shareholder of the growing company.
For nearly 25 years, Context has provided proven strategic management insights to the agriculture industry via its extensive network of agriculture and agribusiness industry professionals. Context Principal Mark Nelson said, “Our ability to innovate and collaborate with our clients has allowed us to create customized business solutions across the global value chain. With the addition of Doug to our leadership team of Principals, we are delivering on our commitment to broaden our impact on agriculture.”

Griffin joined Context in 2015. Nelson said, “Within a year’s time as a Senior Associate, Doug has had a significant impact on our ability to support a broad array of clients throughout the ag machinery, ag dealership and precision agriculture space.

He has leveraged the power of our network and his vast experience within the agricultural equipment sector. With Doug’s leadership, we are confident we will see continued growth, strength, and synergies develop within our firm and for the benefit of our clients.”

Griffin said, “I look forward to advancing our business within this important sector as we further leverage Context’s commitment to advancing agriculture while further developing our network of experts. We will continue to deploy best practices from other agricultural sectors we serve, and leverage those to best benefit our clients across ag machinery, ag dealerships and precision agriculture.”

He added, “I see this as an important step forward for Context and for the industry. Agricultural equipment is an essential driver in agricultural production. By expanding our relationships and our services, we will bring more clients creative, innovative, and timely solutions while fortifying food, fuel, and fiber production around the globe.”

Prior to joining Context, Griffin worked for nearly thirty years in executive leadership and marketing roles with AGCO and Caterpillar. He serves on the National Board of Directors for Alpha Gamma Rho, and the Dean’s Advisory Council for the College of Agriculture and Environmental Sciences for the University of Georgia. He resides in Ball Ground, Georgia with his family, and remains active with his family farm in east central Indiana. Griffin holds an agricultural engineering degree from Purdue University, and an executive business degree from Emory University.

The Context Network is the world’s premier business management and strategy consulting firm providing services to agriculture, biotechnology, and food companies, and to government entities and NGOs. We help each client achieve remarkable results and advance agriculture via customized business solutions. Major areas of expertise include: strategy development, opportunity analysis, R&D assessments, merger and acquisition support, product/portfolio management, regulatory compliance, industry benchmarking, competitive intelligence, and marketing intelligence/ research. Context is comprised of a core of professional executive consultants and is complemented by a global network of hundreds of industry and subject matter experts on-site worldwide.

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: paul.watson@contextnet.com.