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2016 Commodity Classic: Big Data Within Agriculture
With tens of thousands of acres planted last year, building a system to handle their data makes sense for the McClendons. However, it simply isn’t feasible for the small- to medium-size grower. Yet, to be competitive, they can’t go it alone.
“The majority of these growers cannot afford to do it on their own,” says Doug Hackney. “They are going to have to partner with someone. Because so few companies control ag globally, they are basically going to have to pick a big logo and put their trust in that big logo. It’s really their only choice, because they do not have the indigenous organic capabilities.”
Even the big logos have struggled with how to monetize all of the data they have on their customers.
“Everybody has this sense of urgency, because this looks like it is going to be the next hot thing,” he notes, “but nobody has a handle on big data and where to go from here.”
Yet, there are a few companies attempting to come up with solutions.
For example, Monsanto’s ability to capitalize on trends has undoubtedly revolutionized agriculture. With the recent acquisitions of Precision Planting and Climate Corporation (who, in turn, purchased Solum and 640 Labs), Monsanto is positioning itself to be a big player in big data.
“You have one of the major brands that controls ag globally in one of the most severe brand identity crises in the history of a business,” relates Hackney. “It needs to take the attention off of what it does around genetics and put it on something else. Monsanto is really smart, and it traditionally reinvents its company every decade or so. Reinventing it on top of data makes sense.”
From the big iron side, John Deere has become a leader in the industry. The company is also savvy enough to know that ag is cyclical. As commodity prices tumble, so do equipment sales.
A recent AEM report revealed that year over year, as of October 2014, sales in four-wheel-drive tractors had dropped 20%, while self-propelled combine sales had dipped 21%.
“You have other companies, like John Deere, also looking to reinvent themselves and grow revenue in a recurring form,” explains Hackney. “Instead of selling a tractor one time and getting some parts and service revenue out of it, they’re going after a larger recurring revenue stream like data.”
There is a lot more at stake than recurring revenue, however.