|October 08, 2013|
Why Monsanto just spent $1 billion to buy a climate data company.
|The Climate Corporation is a San Francisco startup founded to supply farmers with better weather and agricultural predictions in a world where the climate is changing and increasingly unpredictable. Monsanto is a Missouri-based agriculture biotechnology behemoth that is loathed by many environmentalists for its emphasis on pesticides and genetically modified crops. These are unlikely partners. But last week, Monsanto announced that it is purchasing the Climate Corporation for nearly $1 billion--a move that will see the vast information reserves of the two companies merged into an incredibly powerful big-data repository.|
Monsanto isn't blind to a future wracked by climate change. "As we look at the world adding another couple billion people in the next 25 to 30 years ... farmers around the world will have to meet production challenges with some constraints," says Kerry Preete, Monsanto's executive vice president of strategy. "With the challenges of weather becoming more erratic and more volatile, we see an opportunity to start incorporating more information into farmers' decisions."
Climate Corporation has plenty of data to share. Since its launch in 2006, the company has worked on building a predictive platform that combines hyperlocal weather data with agronomic yield data down to the field level, all undergirded by weather simulations. Factors like historic rainfall and soil quality all factor into crop yield predictions. The company offers insurance to farmers in addition to an online tool that predicts how climate affects crop yield (that insurance will still be available post-Monsanto acquisition).
While Monsanto is known for selling GMO seeds to farmers--and for its controversial herbicides that are specially tailored to work with those seeds--the company has also started to recognize the necessity of data for farmers, and the potential profitability of being able to sell it in a usable form (the company reported a larger-than-expected fourth-quarter loss last week).
"We develop products that help farmers to be more productive on land," says Preete. "When you think about the 40 or so decisions a farmer makes every year, we would estimate that at least 30 of those decisions are going to be influenced by weather. Things like early onset of disease in a crop are highly correlated to what the recent weather has been." Monsanto has data tools today to help farmers with decision-making, but they're based on average weather models. With increasingly volatile weather, that's not enough.
The Climate Corporation never expected to team up with Monsanto. But COO Greg Smirin, says that combining Monsanto's data with his company's weather and ground data will "be able to provide even more high-resolution decision support for farmers." That in, turn, will allow farmers to squeeze the most value from their resources.
Monsanto and Climate Corp. intend to focus on building mobile applications to help farmers harness data while actually in the field. They'll build on Monsanto's existing fieldscripts.aspx" target=_blank>FieldScripts precision planting platform. "We speak internally about bringing services that have a Mint.com ease of use to mobile devices, to farmers," says Smirin. And no, farmers won't have to buy Monsanto's seed and pesticide products to use these services.