If there is one thing the agtech sector is not suffering from, it is a shortage of hyperbole. With every new start-up branding its products as “leading”, “advanced” or “state-of-the-art”, farmers sometimes struggle to sort the productivity-boosting stuff from the short-lived gadget.
Don Bierman and Ben Craker, board members of the Agricultural Data Coalition, a non-profit aimed at helping farmers better manage their electronic data, reckon it is a serious problem.
“Farmers don’t know what half these tools do and if they’re worth investing in,” says Bierman, chief executive of ag technology and services company Crop IMS, one of ADC’s founding members.
“A lot of these tools are coming out of Silicon Valley, which is in California, where many start-ups have focused on providing tools for nearby farmers growing high-value crops like fruits, vegetables and nuts – which is quite a bit different from the Midwest, where farmers grow commodities like corn or soybean, or more traditional row-crop types,” adds Craker, who is product manager at agricultural equipment manufacturer AGCO, another ADC founding member.
“It’s maybe one of those things where you’re going to have to fund 20 of these companies before you find one that’s going to be a long-term play in the marketplace,” Craker comments. “But I think there’s capital out there to take those odds.”
While the ag tech industry is not limited to data and analytics – it also includes fields such as biotechnology, seed genetics, hydroponics and robotics – data is an integral part of many agtech products and platforms.
Technology that fosters data-enabled agriculture was cited as the top investment priority by 75 percent of executives surveyed by the Boston Consulting Group for its 2017 Agribusiness Value Creators Report. “Building big data and analytics capabilities is the key focus for these executives,” BCG said.
But investment activity in data-centered agtech comes under two distinct schools of thought, according to the two ADC executives. On one hand, there are companies looking to create a product or application that is useful to farmers and provided free of charge.
“These companies are trying to come up with some loss-leader feature to get a farmer hooked on it and then collect all this data about their operation that they can then use for their own purposes,” Craker remarks.
On the other hand, “there are people out there who see value in big datasets” in so far as these can help create value for the sector at large, Bierman adds.
Putting a price on data
That creates a conundrum. “Everybody is interested in getting the data off the farms and they tell the farmer it’s valuable, but not everybody is willing to pay the farmer for it,” Craker states.
A company he believes is taking a different approach is Farmobile, an ag data company based in Kansas that manufactures in-cab devices that are installed on farm machinery, collecting data in real time. Farmobile differs from its Silicon Valley peers in a couple of ways. First, it focuses on building systems around corn and soybean growers, rather than the likes of fruit and nuts. Second, it is not trying to get the data for its own purposes on a freemium model; rather, its offer is to enable farmers to take control of their data and derive value directly from it.
Farmobile’s approach aligns with one of ADC’s main goals, which is to put farmers in control of their data by moving the data storage aspect of precision ag to a “pre-competitive” space. “This would enable start-ups to have one place to go to for data access,” Craker, whose company has a development partnership with Farmobile, explains.
“A farmer could permission access to any company they want without the fear of their data getting tied up in a system they can’t get it back from. This not only helps the farmer control their data but also gives these new tech companies – and universities and other researchers – the ability to quickly and easily access real farm data, but only with the farmers’ permission,” he continues, referring to the other institutions that are founding members of ADC.
“Farmobile is clearly the one entity that sort of takes the farmers’ part in all this, acknowledging that farmers invest a lot to create this information that others would like to acquire for nothing,” Bierman remarks.
Farmers would be able to monetize their data by selling it to vetted third-parties through Farmobile’s Data Store, which Craker describes as a “stock market for data.”
No free lunch
However, the challenge for Farmobile is that it has to convince farmers to pay for the product, in contrast to companies employing the freemium model – providing their product for free but also retaining ownership of the data.
“One of the most limiting things that some of these start-ups are running into is they need data to feed into their system to train and refine their algorithms,” Craker notes. “But, it’s really a pretty big struggle for these little companies to go and get a significant enough user base.”
According to Farmobile chief executive Jason Tatge, the company has amassed 4,200 electronic field records to date that comprise planting and harvest data sets. “Farmobile plans to have more than 20,000 EFRs available in the Data Store in 2018,” he told Agri Investor.
Large companies already active in the agricultural sector, such as Monsanto, DuPont, John Deere and others might be better positioned in accessing the data needed to in turn build a significant user base, Bierman says. “They have reasons for investing in other technologies anyway for their own corporate or commercial purposes, such as creating knowledge and market awareness.”
“But the thing that a lot of these technologies leave out – and this is something we often talk about – is that farmers still want to do business with a person,” he continues. “A piece of software or a gadget isn’t enough. There still needs to be a human component – and that is the expensive part. It’ll be interesting to see how these things evolve together.”