The announced purchase of a minority interest in Farmers Business Network by ADM is a sign of big changes coming for Ag Technology.
This comes after Bushel acquired Grain Bridge from ADM & Cargill almost immediately after Bushel announced the acquisition of Farm Logs.
Prior to that, we watched CHS and Growmark team up to announce a $50 million VC fund to invest in “breakthrough” Ag Tech. And then, earlier this year, Bayer and Microsoft joined forces to develop digital ag data infrastructure.
All that signals that Ag Technology is FINALLY showing some REAL energy and momentum.
The rate of productivity increases in Agriculture slowed in the mid 2000’s to at or below 1% annually. Most of that growth was attributed to capital used to enhance scale in the form of bigger and faster farm equipment, trucks, bins and farms themselves.
Why? Because it’s easier to buy the bigger, faster piece of equipment or lease more land. Both are tangible and can be seen. You can touch them.
In spite of the bigger, faster equipment and more land, the rate of productivity growth has significantly slowed over the past decade (as measured by the USDA).
Adopting and using systems, data and data science has been a much harder transition for Agriculture.
Ten years ago with very expensive farm implements being built loaded with software, a very small (sub 20%) of the users were actually using the software tools – to the consternation of the manufacturers.
The area where the next wave of growth can come from – in fact, should come from – is the Software as a Service (SAAS) area – data, systems, and analytics.
More precisely, the use and application of the technology that leverages data that all segments of Agriculture already generate and own. But that has been a very difficult transition for Ag to make.
The recent activity in Ag Tech acquisitions and investment suggests that this industry is ready to see adoption at a faster rate in Data, Data Science and SAAS – certainly faster than Ag has been comfortable with historically.
It’s where I predict the biggest areas for acceleration of productivity in agriculture await today.
And, I for one, can’t wait to see the harvest.
