Oliver Lofink, digital agriculture expert at PA Consulting Group, comments in CEDO Magazine following the distribution of PA’s report Transforming agriculture with data-driven insights. The article discusses how the bigger players in agritech drive digitalisation and that cooperation with start-ups and smaller technology firms is key to survival.
Agriculture, to many people, still resonates as old-fashioned technology: cosy tractors, antiquated machines and tools – and a lot of manual work. And indeed: “Especially where small fields have to be managed, cliché often still reflects reality today,” Oliver Lofink says. But he also knows that where fields are large or "high value crops" are cultivated with above-average yield, larger investments in technology are also worthwhile. Digitalisation in agriculture has existed for a number of years – driven also by crop protection and agricultural technology companies such as Bayer, Monsanto, BASF and John Deere. And for some time now, more and more start-ups.
In a study, PA examined how the agricultural technology industry is developing and which partnerships, cooperations and platforms play a role. A central finding of this research was that established players and start-ups are working ever more frequently and more closely together. "The technology and crop protection companies that are not taking part in this development will be left behind," Oliver says.
This is mainly because in agriculture the data are becoming increasingly important. "They are the new oil in this industry," Oliver says. "Raw data is losing value, the difficulty and thus the value lies more in the processing and use of the data." When cooperating with or acquiring start-ups, established companies do not necessarily have to offer a profitable product as quickly as possible. It is important to them to have access to the data science competence that the young companies bring to bear.
"There are many focused and specialised start-ups in the agricultural sector," Oliver continues. Many are interesting investment targets for the big players – and would sometimes be taken over for a lot of money. "In the end, however, only two to four platforms will remain," Oliver adds. Oliver explains the promise that such platforms offer to companies using the ‘Climate Fieldview’ project of Monsanto and its subsidiary The Climate Corporation. This platform already has more than 100,000 users and covers more than 48.6 million hectares – and is therefore attractive to providers who could reach a large number of customers via the platform. That could lead to a self-reinforcing process, according to Oliver: "Bringing most users together brings most vendors onto their platform – making them even more appealing to new users."
Digitalisation also plays a major role in the acquisition of Monsanto by Bayer. The EU Commission has given the green light to the takeover, but under some conditions – also in the digital area. "Apparently, Bayer has to give a competitor access to its current offerings and its pipeline in the field of digital agriculture," Oliver comments. It is probably most likely to benefit BASF. Monsanto, on the other hand, hardly has to meet any requirements.