From Schumpeter at The Economist:
Managers in the most traditional of industries distrust a promising new technology
INNOVATION is a word that brings to mind small, nimble startups doing clever things with cutting-edge technology. But it is also vital in large, long-established industries—and they do not come much larger or older than agriculture. Farmers can be among the most hidebound of managers, so it is no surprise that they are nervous about a new idea called prescriptive planting, which is set to disrupt their business. In essence, it is a system that tells them with great precision which seeds to plant and how to cultivate them in each patch of land. It could be the biggest change to agriculture in rich countries since genetically modified crops. And it is proving nearly as controversial, since it raises profound questions about who owns the information on which the service is based. It also plunges stick-in-the-mud farmers into an unfamiliar world of “big data” and privacy battles.HT: Marginal Revolution
Monsanto’s prescriptive-planting system, FieldScripts, had its first trials last year and is now on sale in four American states. Its story begins in 2006 with a Silicon Valley startup, the Climate Corporation. Set up by two former Google employees, it used remote sensing and other cartographic techniques to map every field in America (all 25m of them) and superimpose on that all the climate information that it could find. By 2010 its database contained 150 billion soil observations and 10 trillion weather-simulation points.
The Climate Corporation planned to use these data to sell crop insurance. But last October Monsanto bought the company for about $1 billion—one of the biggest takeovers of a data firm yet seen. Monsanto, the world’s largest hybrid-seed producer, has a library of hundreds of thousands of seeds, and terabytes of data on their yields. By adding these to the Climate Corporation’s soil- and-weather database, it produced a map of America which says which seed grows best in which field, under what conditions.
FieldScripts uses all these data to run machines made by Precision Planting, a company Monsanto bought in 2012, which makes seed drills and other devices pulled along behind tractors. Planters have changed radically since they were simple boxes that pushed seeds into the soil at fixed intervals. Some now steer themselves using GPS. Monsanto’s, loaded with data, can plant a field with different varieties at different depths and spacings, varying all this according to the weather. It is as if a farmer can know each of his plants by name.
Prescriptive planting is catching on fast. Last November another seed producer, Du Pont Pioneer, linked up with a farm-machinery maker, John Deere, to beam advice on seeds and fertilisers to farmers in the field. A farm-supply co-operative, Land O’Lakes, bought Geosys, a satellite-imaging company, in December 2013, to boost its farm-data business.
The benefits are clear. Farmers who have tried Monsanto’s system say it has pushed up yields by roughly 5% over two years, a feat no other single intervention could match. The seed companies think providing more data to farmers could increase America’s maize yield from 160 bushels an acre (10 tonnes a hectare) to 200 bushels—giving a terrific boost to growers’ meagre margins.
But the story of prescriptive planting is also a cautionary tale about the conflicts that arise when data entrepreneurs meet old-fashioned businessfolk. Farmers might be expected to have mixed feelings about the technology anyway: although it boosts yields, it reduces the role of discretion and skill in farming—their core competence. However, the bigger problem is that farmers distrust the companies peddling this new method. They fear that the stream of detailed data they are providing on their harvests might be misused.
Their commercial secrets could be sold, or leak to rival farmers; the prescriptive-planting firms might even use the data to buy underperforming farms and run them in competition with the farmers; or the companies could use the highly sensitive data on harvests to trade on the commodity markets, to the detriment of farmers who sell into those markets....MORE
Previously:
Ha! Monsanto Buys Crop Insurer/Data Co. for $930 Mil. (MON)
Oh this takes ya back. We first posted on The Climate Corporation under its original name, WeatherBill and then in 2011's "Google Ventures' next big bet: Weather insurance (GOOG)" noted:Google Ventures' next big bet: Weather insurance (GOOG)
"We had a few mentions of WeatherBill early in this blog's life but I couldn't figure out how to make money off their output, it looks like a product made for selling, not for buying. Links below."I purloined the "product made for selling, not for buying" bit from an insurance man who evaluated every insurance product on the basis of whether he would use it to insure his own business or if he would underwrite it for his agents to sell. A very handy mental map....
The funniest thing about the acquisition and announcement is that while the purchase is being couched in Big Data terms it is the weather insurance where the company makes its money. Ha!...
Weather Investing (Hedging, Insuring)
"Geek Farmers Gamble on Global Warming" (GOOG)
Knowledge@Wharton: Weather Inc.
