Today on FARMCON Conversations, Kevin and I are joined by longtime FARMCON partner David Elser of UPL. David has a unique view across crop inputs, distribution, innovation and producer economics, and our conversation quickly moved beyond products into the bigger question of how agricultural businesses have to change when their customer’s economics change. We get into financial pressure across the farm economy, what separates companies that are still improving profitability, where consolidation could accelerate, how innovation has to earn the producer’s next dollar, and whether what we are experiencing is simply another cycle or something more structural.
DAVID ELSER + UPL
46:45 — The producer is changing. What changes for everyone selling to him? – David discusses how tighter farm economics are changing purchasing behavior and why companies have to understand what producers are prioritizing differently rather than assuming yesterday’s value proposition will continue working.
50:00 — Where is the financial pressure really showing up? – We ask David what UPL is seeing across the customer base and where financial stress begins changing decisions on products, timing, purchasing and risk.
54:00 — How do you improve profitability when your customer is under pressure? – David explains the challenge of protecting margins and improving the business in a difficult agricultural environment rather than relying on stronger farm economics to lift everyone.
58:50 — Is another wave of agricultural consolidation coming? – We discuss whether tighter margins, higher capital costs and changing economics create another round of consolidation—and where David believes the pressure may show up first.
62:15 — Innovation now has a much higher hurdle to clear – The conversation turns to what producers increasingly expect from new technology. It is no longer enough for something to be interesting or innovative; companies have to demonstrate a measurable economic return that matters to the operation.
65:10 — The changing economics of agricultural distribution – David discusses the pressure sitting between manufacturers and producers, including inventory, working capital and the increasingly difficult economics of moving products through the traditional channel.
68:20 — Where are we still putting capital where the economics no longer justify it? – We get into crop-production spending and whether some investments in yield, technology and operating efficiency are still being made based on assumptions that deserve to be challenged.
71:55 — Is this another agricultural cycle—or are we watching something structural change? – We close by asking David which pressures eventually reverse with better farm economics and which changes may permanently alter how producers, suppliers and the broader crop-input industry operate.
KEVIN + TODD
20:00 — Having conviction doesn’t mean making the biggest bet – Kevin explains why being bullish on an idea and deciding how much capital to put behind it are two different decisions. Position sizing still has to leave room for the possibility that your thesis is wrong.
25:45 — When should you admit the investment thesis changed? – We discuss the danger of becoming emotionally attached to why you originally bought something and the importance of recognizing when the facts underneath the investment have changed.
31:30 — Customers before scale – Kevin and I get into one of the biggest mistakes we continue to see in young businesses: spending heavily to build the company before proving that enough customers actually want what is being built.
37:10 — Growth can create its own financial problem – More customers, more employees, more inventory and more infrastructure can look like success while consuming enormous amounts of cash. Kevin explains why growth and a stronger business are not automatically the same thing.
41:45 — AI should eliminate work, not simply create another layer of it – We discuss where AI becomes genuinely valuable inside a business: removing friction, reducing repetitive work and increasing the output of good people rather than simply adding another technology expense.
QUICK MARKET CHECK
2:15 — Corn – Kevin looks at what the physical market is telling him, where producer selling fits into the current setup and what would have to change before he becomes materially more bullish.
8:45 — Soybeans – We discuss the supportive demand story, why Kevin remains constructive longer term and how he thinks about adding exposure without getting too aggressive too quickly.
13:30 — Wheat – Kevin revisits the Black Sea situation and why a bullish fundamental story still has to eventually translate into actual demand and price confirmation before he is willing to press the trade.
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