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Big data, big deal: Which unified platform will take root at U.S. farms?

by John Carroll, CEO of Carroll Farm Management Company

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Farmers have collected yield data from their farms for the past 20 years. They’ve collected high-resolution data on seeding rates, varieties, fertilizer application, soil fertility and type, pesticide use, and even tractor speeds at different spots in the field. Most recently, farmers have been recording field-specific climate information as well. And that’s just the start. The amount of data being collected from farms is staggering, but the farmer’s inability to do anything useful with the analytics is even more astounding.

Each equipment manufacturer has its own data collection system that is factory-installed in its tractors and combine harvesters. It’s not uncommon to see a Case IH tractor pull a John Deere planter with an aftermarket Monsanto Precision Planting monitoring system. In this scenario, like many other cases, data collected from the systems are often in different formats, and each manufacturer sells its own software to farmers to view their data. The result? Fragmented insights.

If farmers can simply prove strong enough correlations, it can warrant a change in agronomic practices and input purchases.

 

The dream is to have a single platform that can receive information wirelessly, and in real-time, from all different systems. The platform should be cloud-based, easily accessed, and (since the average U.S. farmer is over age 60) intuitive to use. Farmers are anxious to collect reliable data in the most efficient way. They want to view data, interpret it, and finally take action based on interpretation. Combined together, the analytics can be powerful. The big-data revolution has taught us that if we get billions of data points, we don’t have to understand cause and effect; if farmers can simply prove strong enough correlations, it can warrant a change in agronomic practices and input purchases. The information can immediately reveal insights and show what products and practices do and don’t work on farms.

But thus far, no one supplier has been able to offer the full package.

Companies like Deere, Case, and Agco have a strong foot in the door. As manufacturers, their data collection hardware comes factory-installed on new equipment, streamlining the input of data into their data platforms. But, agrochemical companies are more agronomically inclined than many machinery manufacturers. Deere is a leader simply because their data collection hardware is installed in most of its new machinery, but they have struggled for 10 years to develop an easily used platform.

Dupont, Monsanto, Agrium / Crop Production Services (CPS), and other agrochemical brands are better at interpreting correlations between agronomic practices and yield results but jumping into the market can present a conflict of interest. Companies like CPS are large purchasers of Deere equipment as well as sellers of Monsanto products, making them both competitors and clients. Yet another group of platform suppliers includes software solutions like Trimble and Granular. These companies don’t have a history of agronomic expertise, but are better at building software and pulling in financial information than the other groups.

The race is on to see which company will grab up market share first, and offer the whole package, for this new revenue stream in agriculture.

 

What’s the perfect business model?

Another primary challenge to the unified database is determining the revenue source. Three years ago it was assumed that the revenue would come from farmers subscribing to a service. Today, it appears there may be providers willing to give the service away for free in exchange for the ability to access, use, and sell data to chemical, fertilizer, seed, and machinery companies. A host of companies realize that access to this kind of detailed information on tens of millions of acres across the U.S. is incredibly valuable, not only to the farmers but to themselves.

For instance, CPS and its Echelon platform is being offered free of charge, and the company has been willing to help farmers view, interpret, and take action on their collected data.

The race is on to see which company will grab up market share first, and offer the whole package, for this new revenue stream in agriculture. Will it be a manufacturer, supplier, or software company? Will the winner have a model that doesn’t charge the farmer for use of its platform in exchange for data, or will farmers have to pay in order to keep their data private? How much will a chemical manufacturer pay for data that shows that its product is undervalued? How much will a manufacturer pay to own data that proves that its product is worthless? Time will only tell.

But ag data management platforms will prove as important as tractors, fertilizer, and GMOs have been to production agriculture. Venture capitalist Mark Andreessen said it best: “Software eats the world.” And in agriculture, it will revolutionize how quickly best practices are identified and adopted.

Please note: This article contains the sole views and opinions of John Carroll and does not reflect the views or opinions of Guidepoint Global, LLC (“Guidepoint”). Guidepoint is not a registered investment adviser and cannot transact business as an investment adviser or give investment advice. The information provided in this article is not intended to constitute investment advice, nor is it intended as an offer or solicitation of an offer or a recommendation to buy, hold or sell any security.

To read the print version, click to download a PDF.

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