Global pesticide, seed and fertilizer companies may be forced to re-engineer their business models as growers adopt specialist technology that helps maximize harvests while reducing the use of crop chemicals.
New businesses are springing up that promise to tell farmers how and when to till, sow, spray, fertilize or pick crops based on algorithms using data from their own fields.
Their emphasis on reducing the use of chemicals and minerals is a further challenge for an industry already struggling with weak agricultural markets worldwide.
“If our only goal is to sell as many inputs as possible by the liters of chemicals, I think we would have a real problem going forward,” said Liam Condon, head of crop science at Bayer, the world’s second-largest pesticide supplier.
Bayer bought proPlant, a developer of software for plant health diagnostics, earlier this year. Rivals are also investing in digital farming with the aim of generating service revenues that could offset any future drop in chemical volumes.
“If you only spray half of the field, that’s much fewer inputs,” Condon said. “The knowledge to get to the fact that you only [need to] spray that part of the field—that, you can sell.”
After an aborted takeover move for Syngenta, American seed giant Monsanto says data science and services are the “glue that holds the pieces together” of its strategy for future growth.
Monsanto’s $1 billion purchase in 2013 of the Climate Corporation, which analyzes weather conditions, was the digital farming sector’s biggest deal to date.
DuPont is investing in digital farm management services under its Encirca brand, which it said in March had customers representing more than 1 million acres of farmland.
Monsanto’s failed swoop on Syngenta triggered a bout of M&A activity that has left the global seed and pesticide industry in turmoil. The sector has annual sales of more than $100 billion, while fertilizers are worth around $175 billion.
Dow Chemical and DuPont are set to merge in the second half of this year while state-owned ChemChina agreed a takeover of Syngenta in February.
Source: Reuters