Brian Watkins has never been able to view his whole farm with the naked eye. In the heart of Ohio, it is so expansive that he can never be certain what the weather is like over all of his fields at any given time. “It doesn’t help me to look out the window,” says Mr. Watkins.
This is a problem, because too much or too little rain has a huge influence on his corn and soy harvests. Market prices for his crops have fallen dramatically in the past years, so every last bushel counts during harvest season. “We’re under a lot of pressure,” says the 55-year-old.
To increase the size of his harvest, Mr. Watkins is using FieldView, a new digital agriculture platform. Developed by Climate Corp, a subsidiary of the US seed producer Monsanto, the software gathers and analyses pictures and data about weather and soil conditions. This information is then used to calculate the optimal application of fertilizers, seeds, pesticides and herbicides – all without waste and with better yields, promises Climate Corp. “This is the future, no question,” says Mr. Watkins.
The opportunities in this growing industry are particularly attractive to German chemicals giant Bayer, which is in the midst of a $66 billion (€62 billion) takeover of Monsanto. Whoever is first to gather all this data and place it on one platform “will order the land and reap the harvest in digital agriculture,” according to a study on digital farming by business consultancy A.T. Kearney.
The new business could be revolutionary. But a lot is still just fantasy. Jonas Oxgard, investment researcher Sanford Bernstein
The race boils down to speed and size: “The main players in the industry will position themselves as first movers, and these will be followed by startups,” says agricultural expert Carsten Gephardt, partner at A.T. Kearney.
Monsanto has already claimed the mantle of data integrator. “We want to become the Apple of agriculture,” says Climate Corp head Mike Stern. The expectations are great: Climate Corp’s pole position is one reason why Bayer moved to acquire Monsanto.
After the buyout, the German firm wants to unite forces in digital farming technology and settle in Silicon Valley. This move would greatly expand Bayer’s business model: It would no longer simply be a provider of seeds, herbicides and pesticides but would become the IT partner of farmers.
More than 100,000 farmers in the US, Canada and Brazil are using Climate Corp’s FieldView on a total of 40 million hectares of agricultural land. And now Monsanto has its sights set on the European market. In the coming weeks, Climate Corp will begin tests in Germany, France and Ukraine. “We want to be present in every country. Agriculture in Europe is really significant,” says Mr. Stern.
The market launch is set for the fall of this year. For European farmers, complying with regulatory requirements has been one of the biggest pressure points. What fertilizers and fungicides can be used, and when and how they can be applied, has up to now been a matter of paperwork. In the future, this data will be included in Climate Corp’s software.
The Monsanto subsidiary sees itself as the vanguard of a development that will catapult global agriculture into a new age. In past centuries, machines like tractors and combine harvesters revolutionized a farmer’s work. In the coming decades, the agricultural revolution will be sparked by data integration and analysis. “The digitalization of agriculture will radically challenge the current social model,” writes A.T. Kearney.
The farmer, who once toiled in the fields, should now become a kind of data cultivator. Instead of swinging a scythe or towing a plow, he or she can now sit in front of the computer and, with the use of modern software, get the maximum yields from his or her acreage. Technological developments are fast turning farms into data centers: satellites deliver pictures that allow farmers to monitor every individual plant, drones fly over fields to send even more precise images related to soil quality, sensors embedded in the soil relay data about soil composition, and autonomously driven tractors create digital maps plotting crop yield and plant health.
The new digital technology should help solve one of agriculture’s central problems: the world’s population and its food requirements are increasing rapidly while the amount of arable land remains stagnant. In other words, global harvests must become more productive. According to A.T. Kearney’s study, the digitalization of the entire life cycle of a crop from sowing to harvest could boost yields by 20 to 30 percent.
Monsanto is far from the only company to recognize the potential of digital farming. Investment bank Goldman Sachs, for example, thinks digital farming has a total market potential of $240 billion. The sector goes well beyond software platforms: tractor makers like AGCO and John Deere are building data-guided machines for spraying pesticides and sowing seeds, and irrigation specialists like US-based Lindsay Corporation are developing new ground sensors for digitally guided irrigation. Additionally, numerous startups are getting in on the action, and competition is becoming intense.
The digitalization of the farm has yet to pay off for Monsanto. The company hasn’t published sales numbers but has stated that FieldView’s base of paying customers is growing. For now, success is measured in hectares, not dollars. Analysts remain cautiously optimistic. “The new business could be revolutionary,” says Jonas Oxgard of Sanford Bernstein, an investment researcher. “But a lot is still just fantasy.”
Monsanto and its soon-to-be parent Bayer are betting this fantasy will become a reality. Over the long term, Bayer hopes its foray into Silicon Valley will bear a tremendous amount of fruit.
Thomas Jahn is Handelsblatt's New York bureau chief. Bert-Friedrich Fröndhoff leads a team of reporters which covers the chemicals, health care and services industries at Handelsblatt. To contact the authors: [email protected], [email protected]