Monsanto’s “Data + Analytics” Frontier
The Future of Farming with Digitization
In 2017, Bayer and Monsanto are joining forces to create global powerhouse in agriculture (subject to regulatory approvals). Let’s look at how Monsanto has assembled differentiated capabilities through digital technologies.
In May 2012, Monsanto paid $210 million (plus $40 million in incentives) to acquire Precision Planting to get into the emerging field of precision farming or precision agriculture. In simple terms, precision agriculture refers “to the use of information and communication technology (including global positioning systems) to help farmers increase efficiency from seeds, fertilizer and chemicals.”
According to WSJ: “Precision Planting, an 18-year-old company started by an Illinois farming family, uses a national database of soil conditions to tailor planting, and it records harvest data, helping farmers understand which strategies work best in different portions of their field. Farmers purchase Precision Planting’s computer displays and other electronic systems from seed or tractor dealers, retrofitting it to their tractors.”
On October 2, 2013 Monsanto Corporation acquired The Climate Corporation for a cash purchase price of $930 million. The Climate Corporation was founded in 2006 by a team of software engineers from Google and data scientists from other Silicon Valley high tech companies. In a short span of seven years, the company had built up “advanced technology platform combining hyper-local weather monitoring, agronomic data modeling, and high-resolution weather simulations to deliver a complete suite of full-season monitoring, analytics and risk-management products.” Climate Corporation’s expertise in hyper-local weather prediction and big data analytics could help Monsanto become a full-fledged solutions company to the farmers.
Monsanto bet its future on ‘data + analytics’ through these two acquisitions. Bloomberg Businessweek called Monsanto’s move as “billion-dollar bet brings big data to farm.”
It is clear that with these two acquisitions, Monsanto has clearly focused on creating and delivering the ‘total system’ for yield — starting with the seed (the centerpiece that establishes the yield potential of the whole system), bag (adding new technologies like seed treatments to enhance the seed itself) and in the field (in-field protection such as crop protection treatment and in-field maxmization through precision agriculture).
On November 3, 2015 John Deere entered into an agreement to buy Precision Planting from Monsanto’s Climate Corporation. The two companies…
“have signed definitive agreements for Deere to acquire the Precision Planting LLC equipment business and to enable exclusive near real-time data connectivity between certain John Deere farm equipment and the Climate FieldView™ platform. The agreements represent the industry’s first and only near real-time in-cab wireless connection to John Deere equipment by a third party.
“To maximize the value of digital agriculture, farmers need solutions for simple and seamless collection of in-field agronomic data,” said Mike Stern, president and chief operating officer for The Climate Corporation. “As a result of these milestone agreements, farmers will experience the fastest, most frequent and highest resolution third-party connectivity between John Deere’s equipment and the Climate FieldView platform.”
John May, president, agricultural solutions and chief information officer at Deere, said, “The agreements we are announcing allow John Deere to extend the range of retrofit options available from Precision Planting to many more products and into new geographies.
John Deere strengthens its position as the most open platform in the industry both in our equipment and the cloud-based data management solution known as the John Deere Operations Center.”
Under the terms of the agreements, Deere will purchase Precision Planting while Climate will retain the digital agriculture portfolio that has been integrated into the Climate FieldView platform. The acquisition is subject to customary closing conditions, including the approval of the relevant antitrust authorities to the extent required.
Stern said, “Our agreements enable farmers to combine the industry-leading technology of John Deere equipment with Climate FieldView, the platform that offers farmers the broadest equipment connectivity in the industry backed by data science. This connectivity allows farmers to collect and directly share data to the Climate cloud, enables data visualization in the cab and supports the development of customized data science-driven insights.”
“This strategic acquisition expands the John Deere precision agriculture business and accelerates our momentum as a market leader,” May said. “Strategic use of information is an important factor in successful agriculture. Today’s actions demonstrate John Deere’s ongoing investments to enhance the product and service solutions we offer our customers.”
The companies said customers will have the option to share their current and historical agronomic data between the John Deere Operations Center and the Climate FieldView platform and seamlessly execute agronomic prescriptions with John Deere equipment.
Sam Eathington, The Chief Scientist of The Climate Corporation wrote on March 1, 2017: “One of my favorite things about the digital transformation of agriculture is that it’s never been done before. Everywhere you look, farmers, agronomists, engineers and researchers are forging new ground and discovering new ways to make farming operations more predictable, more manageable and more efficient.”
The two claims are particularly important.
The same blogpost continued to highlight the role of data + analytics:
“At Climate, you may have heard us talk about “feeling the pulse of the land in the palm of your hand.” It’s the experience we seek for our customers when using the platform for their farming operations. We take this metaphor all the way back to where our technology is first dreamed up, discovered and tested on our research farms. While the farms may look ordinary at any given point in the growing season, we’re collecting more than 250 layers of high-definition data to feed our algorithms and to build new digital capabilities for farmers.
Think about that for a moment . . . 250 different data layers generating billions of data points for every acre across every field. It’s a gigantic data set that we blend with partner data to build new and enhanced capabilities for farmers.”
Bayer + Monsanto: Leading the Digital Transformation of Farming & Life Sciences?
In December 2016, Monsanto shareholders approved the sale of Monsanto to Bayer for about $66 billion (subject to regulatory approvals).
It is clear that Climate Corporation is an important part of the future of the combined entity.
Discussion Questions:
- What’s the role of digitization in agriculture and farming?
- How important is data, algorithms and analytics in the future of farming?
- What new skills and capabilities are required for Bayer + Monsanto to win in the digital world?
- What new partnerships and alliances are needed to further enhance the first mover advantage?
- What are the likely threats?
