By Jacob Bunge
Farmers and entrepreneurs are starting to compete with
agribusiness giants over the newest commodity being harvested on
U.S. farms--one measured in bytes, not bushels.
Startups including Farmobile LLC, Granular Inc. and Grower
Information Services Cooperative are developing computer systems
that will enable farmers to capture data streaming from their
tractors and combines, store it in digital silos and market it to
agriculture companies or futures traders. Such platforms could
allow farmers to reap larger profits from a technology revolution
sweeping the U.S. Farm Belt and give them more control over the
information generated on their fields.
The efforts in some cases would challenge a wave of
data-analysis tools from big agricultural companies such as
Monsanto Co., DuPont Co., Deere & Co. and Cargill Inc. Those
systems harness modern planters, combines and other machinery
outfitted with sensors to track planting, spraying and harvesting,
then crunch that data to provide farm-management guidance that
these firms say can help farmers curb costs and grow larger crops.
The companies say farmers own their data, and it won't be sold to
third parties.
Some farmers and entrepreneurs say crop producers can get the
most from their data by compiling and analyzing it themselves--for
instance, to determine the best time to apply fertilizer to their
soil and how much. Then, farmers could profit further by selling
data to seed, pesticide and equipment makers seeking a glimpse into
how and when farmers use machinery and crop supplies.
The new ventures come as farmers weigh the potential benefits of
sharing their data with large agricultural firms against privacy
concerns and fears that agribusinesses could leverage farm-level
information to charge higher rates for seeds, pesticides and other
supplies.
"We need to get farmers involved in this because it's their
information, " said Dewey Hukill, board president of Grower
Information Services Cooperative, or GISC, a farmer-owned
cooperative that is building a platform to collect its members'
data. The cooperative has signed up about 1,500 members across 37
states.
Members of the Lubbock, Texas-based co-op eventually will be
able to choose to have their data scrubbed of identifying details,
combined with other farmers' information and sold to prospective
buyers. Farmers who participate would share in the proceeds. "If
there is any monetary value, we think it needs to go back to the
grower," Mr. Hukill said.
Advancements in wireless technology, inexpensive sensors to
monitor seeding rates and data-crunching techniques honed in
Silicon Valley have helped agricultural companies build systems to
help farmers examine which seeds to use in different soils or
whether they're underutilizing farm equipment.
Monsanto, the world's largest seed maker by sales, has spent
more than $1 billion on acquisitions over the past three years on
farming hardware and data analysis capabilities. DuPont, which has
teamed up with Deere and other groups as it develops its own
service, anticipates generating as much as $500 million a year in
revenue from computerized farming services.
The Climate Pro service from Monsanto's Climate Corp. division
costs $3 per acre a year. DuPont charges $150 a month for its
Encirca premium suite of farm-management tools, with an initial
$450 setup fee. Both offer basic versions free of charge.
Startups like Farmobile and Granular say farmers should have
greater control over how their information is used.
Farmobile's transmitters, about the size of a paperback book,
download information from the diagnostic systems of tractors and
other machinery and beam it to a remote server, allowing farm
managers to monitor operations and make quick adjustments.
Farmobile charges farmers $1,250 a year for its data transmitter
and mobile application, which allows farmers to track their
tractors and combines in real-time, monitoring performance and
chemical use.
Next year Farmobile, which is based in a suburb of Kansas City,
Mo., plans to open an electronic marketplace where pesticide
companies, tractor makers or commodity traders could search for
data on farmers' harvests and quote prices to individual farmers to
see detailed information. If a farmer sells, proceeds would be
split evenly between the farmer and Farmobile.
"We're monetizing something [farmers] hadn't monetized before,"
said Jason Tatge, co-founder and chief executive of Farmobile,
which is funded by its founders and has about 140 farmers using its
transmitters this year.
Granular, which sells farm-management software, also envisions a
platform that would allow farmers to store and potentially market
their data, said CEO Sid Gorham, who previously ran the mobile
division of market-research firm Nielsen NV. Granular has raised
$25 million in venture capital from firms including Google Ventures
and Andreessen Horowitz.
The San Francisco company is working to aggregate data from
large-scale farms to allow its farmer users to compare prices and
performance of farm supplies like seeds to see if they are getting
the best deal. Allowing farmers to market their data could become
possible late next year, Mr. Gorham said. "We'd give our farmers
the first crack [at using the data] before selling it."
Granular charges about $3 per acre a year for its farm
management platform, which automates some budgeting and inventory
functions and projects profits.
Companies developing markets for farm data say it's not their
intention to displace big seed and machinery suppliers but to give
farmers a platform that would enable them to manage their own
information. Storing and selling their own data wouldn't
necessarily bar a farmer from sharing information with a seed
company to get a planting recommendation, they say.
Meanwhile, companies developing the data silos expect it will
take several years to set up comprehensive databases spanning
significant swaths of big crop-producing states. Farmers, many of
whom struggle with the idea of big companies or traders gaining an
intimate view of their farms, will also have to be won over to make
the concept work.
Some farmers, however, see the potential for a new revenue
stream from their crop information. "At this point, I'm pretty
comfortable with allowing my data to be aggregated into other [data
sets]," said Zachary Hunnicutt, a Nebraska farmer who has been
testing Farmobile's system. "It's [potentially] another income flow
and a way to help people make better decisions around
agriculture."
Field-level information on crops, collected in near real-time,
would find ready purchasers among traders of agricultural futures
such as corn and wheat, said Jon Marcus, principal of Chicago-based
brokerage firm Lakefront Futures & Options LLC. "It's
invaluable if it's done correctly, " he said.
Big grain companies, too, could be buyers. "It'll be a source of
input that we would eventually put a price on," said Soren
Schroder, chief executive of Bunge Ltd., among the world's biggest
purchasers of agricultural commodities.
FMC Corp., a major supplier of crop chemicals, would be
interested in purchasing "more grower-level agronomic data" to help
the company develop new products, though it would depend on the
quality of the data and the price, according to a spokesman.
Write to Jacob Bunge at jacob.bunge@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 31, 2015 14:13 ET (18:13 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
Deere (NYSE:DE)
Historical Stock Chart
From Aug 2024 to Sep 2024
Deere (NYSE:DE)
Historical Stock Chart
From Sep 2023 to Sep 2024