CropLife Retail Week: Ag Retail Merger, AI in Ag, and Ag Lender Profits

Eric Sfiligoj and Lara Sowinski discuss another ag retail merger, the role artificial intelligence (AI) will play in the industry, and a bankers survey of ag lenders.

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*Below is a partial and edited transcript:

Eric Sfiligoj: Hello. Welcome to another edition of CropLife Retail Week. I’m Eric Sfiligoj, here again with Lara Sowinski. Lara, how are you doing today?

Lara Sowinski: Fine. Thank you. How are you?

ES: I am doing I am doing well. It is another nice warm day here in Northeast Ohio, and. But, the weather’s supposed to change this evening. I know we’re calling for some snow by the end of tonight and into tomorrow, so get our first taste of snow for this season.

But again, it’s the holidays, so what the heck?

LS: Yeah. I don’t miss those crazy wild swings in weather. Wear your shorts in the afternoon, and then you’re sitting by the fire roasting marshmallows in the evening. Yeah, yeah. Although, if you know, I’m. I know a lot of people live in Nevada and Las Vegas and Arizona, and I know I’ve when I’ve been in those parts of the world on trips, I know I, you know, wearing short sleeved shirts in the afternoon and then I’m pulling out the winter coat at night.

ES: So just it’s the desert thing. I think so, but anyhow, it’s Ohio. And in the holidays, as I said. So hey, some news to share. I know this is that time of year where, again, we’re getting ready to release the 2024 CropLife 100 list, so that should be up online here in about another week, week and a half.

And the issue should be out in early December. So look for that. But have some news that involves two CropLife 100 companies to share. For years, a company called West Central Ag Services out of Minnesota has been a member of the CropLife 100. I know they ranked in 2023 at number 31 on the list.

Pretty good, decent sales. But they’ve actually had themselves in play and they were had two competing offers for the company. But now the board of the company, November 19th, has recommended the company accept an offer of acquisition from CHS. Our friends in Inver Grove Heights, Minnesota, for $225 million. So again, now this recommendation goes to the members of West Central Ag Services.

And they’ll be voting on this on November 26th coming up here very quickly. So if they approve that merger deal, then, the West Central Ag folks will be part of the CHS system, probably starting in the beginning of 2025. So, again, that’s a trend we’ve seen a lot this year, Lara, you know, these fairly large sized ag retailers deciding that, hey, you know, there’s strength in numbers and we’re strong and these guys are strong.

So if we get together, we’ll be doubly strong. So, like I said, that’s a trend we’ve seen a lot. Yeah, yeah. So, November 26th, that’s the day that they’re going to vote. So that’s when the members will be voting on this. So yeah. And again, assuming that the vote is positive, then, I’m sure they’ll spend the month of December besides celebrating some holiday time, you know, getting all the formal paperwork signed and, and then come, come next year, the folks in Minnesota, these two big retailers will be joining for interesting.

Yeah. And all right. So, hey, I guess you have some news to share with our viewers. So I will kick this over to you before I you come back to me.

LS: Thank you. So, you know, start with saying, you know, in the last year or so talking about ChatGPT and, where does it play particularly I think about it and, you know, in my own role as a journalist, editor, and certainly thus far as I’ve played around with it, good way to organize things together.

I mean, there’s definitely, you know, as they say, kind of like an assistant, if you will. And I certainly have found, places in my, my work life that it fits. But when it comes down to specific stuff, you know, it’s it doesn’t have, you know, I, I can’t say, well, you know, what do you know about something very specific or, but, there was a, couple announcements this week.

A Wall Street Journal article that came out on November 13th and, with some additional coverage, from Shane Thomas in his newsletter from November 18th on. This is me, an announcement that Microsoft made on November 13th, concerning their and, a small large language model, called expert learning and you so Eli is the acronym.

And, I would have to say this is really a compelling development in terms of something specific subject matter, expert specific to agronomy and, ag and, it’s really an exciting thing. So let me read you a couple excerpts here from the Wall Street Journal article. Again, this is, from November 13th. The title, it’s a legacy agriculture company and your newest AI vendor.

So again, on November 13th, Microsoft made this announcement, that it was working with Bayer and a couple other companies, actually, outside of the ag space on specialized AI models fine tuned to industry specific data. The companies can now list and monetize those models on Microsoft’s online model catalog. So for bear, that means an AI model fine tuned with its data designed to provide answers on agronomy and crop protection, is available to be licensed by its distributors, new ad tech companies, and even potentially competitors.

The model can answer questions about ingredients in an insecticide or whether a product could be applied to cotton. For example, Sashi design, was quoted here. Actually, well, it’s nice to see his name on there. He was on our Tech Hub LIVE program a couple of years ago, but anyway, so she said a lot of folks had the same pain points that we have.

There’s a lot of ways to not only amortize our own costs by allowing others to collaborate off the same platforms or build on it, but also to uplevel the outcomes for our customers. Rockwell, Rockwell Automation and know another company, a handful of these that are doing something similar with my Microsoft offer, as well as, International Data Corp, and an executive with International Data Corp said when it comes to enterprise adoption of AI, industry specific and domain specific models are going to be the game changer.

When with these, more focused models, enterprises can spend less time doing their all fine tuning and get more value out of AI sooner. This is going to become a lot more prevalent, she said. So I think that’s a really exciting development and kind of been following you know, the evolution of generative AI, like with AI agents and so forth.

But this development, particularly with an ag company, they’re in this case, it’s really, really exciting. I mean, talk about, upping the value of generative AI. As well.

ES: And that’s interesting too, because I don’t I think you might remember and viewers might remember to a couple weeks ago when I, after I had visited with our friends at Nutrien up in Canada, I had the video clip by their digital person talking about the roles for AI that they foresaw in AG going forward, and one of them was that, you know, you know, the, users could ask the AI, hey, is this product in spec?

What what can you use this for, etcetera. And it’s nice to see that you know, this is getting utilized. And and again, you mentioned Rockwell International. I know back in the 90s when yield monitors were just coming into the marketplace, Rockwell was a big player for a short time in AG making those yield numbers. So it’s nice to see them making another foray back into agriculture again after all these years.

LS: Yeah. Again, this is really something exciting, like, you know, really upping the value of generative AI and finding a place for it. Again, Shane Thomas in his November 18th, Upstream AG Insights newsletter. He says that, well, in March, Bayer announced, large language model pilot this recent announcement, with Microsoft.

He had some good questions, though. At the end of his, analysis of the news, one that he posed was agronomy goes far beyond seed and crop protection to fertilizer and irrigation. For example, can you get enough data to know how from bear to adequately make this model high utility beyond traditional seed and crop protection?

Good question. But, certainly this Eli expert learned learning a new quite a development. I think I think, something that we’ll see. Yeah, I remember when that. So pretty cool news. Yeah. All right. Well, hey, I guess we’ll kick it back to me and, you know, I know you’ve shared some positive news and I’ve shared some interesting news.

ES: I guess it’s my turn to be the Debbie Downer. So anyhow, this is an item that came from the American Bankers Association. I guess they’re had your annual meeting in Milwaukee recently, and they were talking about their poll of ag lenders, and they said that in 2024, they’re anticipating that only 58% of the borrowers in agriculture will remain profitable, which is a 20% decline of 78% profitability in 2023.

The, the American Bankers Association blamed the combination of lower export demand for U.S. air goods and the rebound of global inventories. That has put significant downward pressure on global commodity prices for the declines. So, yeah. Yeah, it’s I mean, again, we’ve been talking that farm, Kim is going to be down and now profitability also.

So yeah, I saw that news item two. And for once I decided to skip over something that you’ll see. You you. Yeah. I had to bring this back down. I’m so, so sorry. So. Well, let’s see if we can pump this back up with our end segment.