Data analytics, benchmarking, and agriculture

The ability to collect, aggregate and produce meaningful business intelligence from data may well prove to be one of the defining trends over the next decade that will transform how business is done. One area where this application is taking place, but which may seem very far from IT, is the farm.

As we approach a global population of 9 billion people by 2050 combined with increasing weather volatility, there is significant thought being given to how we are going to grow food efficiently for all of those people. In fact, insuring farmers against crop failure and maximizing risk management products was one of the drivers of Monsanto’s much discussed $930 million acquisition of The Climate Corporation last fall.

People often associate cleantech with solar panels and batteries, but equally important are various efforts to use IT to improve environmental outcomes. Nowhere is more critical than agriculture. The industry, for example, is highly dependent on petroleum as a feedstock for fertilizer. A 40 pound bag of petroleum based fertilizer contains 2.5 gallons of gasoline.

Stepping into the fray are a number of startups attempting to do a range of things for farmers. Those new services include adding software based automation to their management tools, deploying in field sensors geared towards productivity gains via avoiding pests or optimizing soil, and improving risk management/insurance tools. (For a full analysis of big data and big agriculture, see my report, “Big Data and Big Agriculture.”)

But one potentially overlooked area in the big data-big ag play relates to benchmarking. Often farmers have no idea how their yields compare to neighboring farmer’s or even across different areas of a large scale farm. Knowing that a specific part of a farm is only performing at the 35th percentile relative to a benchmark of say soybean yields lets a farmer know that a portion of their farm needs adjusting. It also creates an impetus to find out why neighboring farms might be outperforming it in terms of yield. This data can guide everything from seed selection to fertilizer choice.

Farmlink, which raised a healthy $40 million over the summer, is precisely focused on benchmarking agricultural fields down to a micro level of 150 square feet. Farmers then have access online to a breakdown of their farm’s yields. Farmlink doesn’t actually then suggest solutions but rather expects farmers to work with outside agronomists and consultants to improve yields. Rather, Farmlink provides visibility.

There is a history of mistrust of corporations in farming and one of the things Farmlink believes it has in its favor is that it doesn’t try to sell farmers anything beyond the core benchmarking service.

“There’s a business model issue here. We want to remain completely independent. By not being aligned with anyone advising them [farmers] on what they should do or selling them new seed, fertilizer spray, what have you….it keeps us completely objective and independent,” Farmlink CEO Ron LeMay noted to me.

When it comes to trust and farmers, big data has become a much scrutinized issue. A February Wall Street Journal article highlighted how farmers are worried that their data could wind up in the hands of competing farmers or give corporations like Monsanto and DuPont more leverage over them.

In my conversation with Farmlink, the company made special emphasis of its privacy policies and noted that not aligning with other companies helped protect farmers. Because the core issue in farming is how to get access to good quality data and to do so often requires the cooperation of farmers.

Farmlink gets its data on yields by IP connecting massive combines, which do large scale harvesting and cost close to half a million dollars. Farmers, which require the heavy duty machinery to harverst, rent the combines from Farmlink and then the combines are able to collect accurate data on yield.

In that regard, Farmlink is in the driver’s seat and able to effectively calibrate its sensors to optimize data value. Interestingly, Farmlink is an IoT startup that combines both software analytics with hardware/fleet management. Many VCs right now would much prefer capital light investments where analytics are used to mine available data. But Farmlink is able to monetize its capital investments because it generates revenue from combines that are rented to farmers.

As the agriculture industry innovates and data analytics are brought to bear on crops, there will be hurdles ranging from building trust to actually proving that the latest technology makes a meaningful improvement in yields. But in the end, farmers are likely to engage with technology if for the most basic reason that they want greater yields. Which means greater profits.