Farming the Data
What was once the most labor-intensive industry may now be one of the most data-intensive…
Betting the Farm
While technological advancements, such as heavy-duty farm equipment and fertilizer, have been largely responsible for past productivity gains in the agricultural industry, a growing number of farmers are now looking to enterprise-grade software tools to boost yields on higher-quality crops. But beyond improving the profitability of a single plot of land, these software tools can equip farmers with the necessary information and functionality to compete against the growing threat of climate change.
Trimble (Nasdaq: TRMB), which is a $2.3B revenue and $6.4B market cap company, is one such software provider with the opportunity to combat the following climate trends that are endangering global agricultural productivity[i]:
- Average temperatures in the U.S. increased 1.3 to 1.9 degrees Fahrenheit between 1895 and 2012.[ii] During roughly the same time-period, the average annual precipitation level in the U.S. increased by 5%, varying by region.[iii] These unforeseen fluctuations in both temperature and precipitation can impair crop yields.
- In 2014, scientists projected sea levels would rise another 1 to 4 feet by 2100.[iv] These rising sea levels are expected to impact agricultural production through a decrease in the availability of freshwater, land loss and saltwater intrusion.[v]
- Scientists recorded an increase in the number and severity of extreme weather events from 1960 and 2012, including droughts, heat waves and flooding.[vi]
Exhibit 1: Climate change will depress agricultural yields in most countries in 2050 (Source: World Bank).
From Manual Labor to Data-Driven Decision-making
By way of background, Trimble provides a broad range of “workflow” enterprise solutions (software, hardware and services) in over 100 countries across several industries, including agriculture, engineering, construction, natural resources, transportation and utilities. More specifically, the company’s agricultural business unit recently launched the “Connected Farm” platform, which bundles together a number of different products. Rather than using a handful of different point solutions from different providers, the “Connected Farm” is capable of systematically collecting data on one integrated end-to-end platform. The full solution includes sensors, GPS devices and satellite imagery. If fully implemented, farmers can make more informed crop management decisions. Underlying modules include the following[vii]:
- Information management solutions, which can centralize and dashboard all data collected from the field (e.g., plantings, temperatures, precipitation rates, soil moisture readings, frost incidences, etc.).
- Guidance and positioning systems, which can provide manual and automated navigation guidance for tractors and other farm equipment used in spraying, planting, cultivating and harvesting.
- Variety of other applications, such as irrigation and drainage system modeling tools to better manage water flow.
Trimble has also moved up and down the farming value chain to further address market needs. As an example, the company recently acquired AGRI-TREND, which operates a network of over 200 independent agricultural consultants in North America. The acquisition will enable Trimble to provide agronomists and other crop advisors with a set of tools to advise growers on how to better manage their operations.[viii] Trimble also offers food traceability and quality inspection solutions, which enable food producers, distributors and retailers to meet food safety requirements, secure their supply chain and optimize product freshness and quality.[ix]
Steering More Toward Sustainability
Trimble’s portfolio of products fundamentally enhances crop management, which can combat the mounting pressures of climate change. That said, the company has an opportunity to further capitalize on these capabilities and serve as an agent of change.
Though the company sells into the agriculture, marine and forestry markets, among others, Trimble does not actually appear to have any formal stance on climate change, sustainability or environmental stewardship. At the very least, the company is foregoing positive press surrounding an advocacy campaign. But more importantly, the company has access to mountains of valuable historical crop and weather-related data that could be shared and studied on an aggregated and anonymized basis with public and non-profit organizations, as just one example. The company could also take on the role of a thought leader and publish research-driven insights or best practices for public consumption. This content could be particularly helpful to small family-owned farms, as well as developing markets. Finally, the company could proactively engage with the broader agricultural community through a variety of outreach programs or partnerships, such as with the G8’s New Alliance on Food Security and Nutrition or the World Economic Forum’s New Vision for Agriculture.
Trimble is uniquely positioned to facilitate the world’s response to climate change, and it would be in everyone’s best interest if they rolled up their sleeves and got their hands a little dirty. [758 words]
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Endnotes
[i] “Trimble Inc.,” S&P CapitalIQ, November 2016.
[ii] National Climate Assessment, U.S. Global Change Research Program, 2014, http://nca2014.globalchange.gov/highlights/report-findings/agriculture#statement-16364, accessed September 2016.
[iii] J.D. Walsh, et al., “Chapter 2: Our Changing Climate,” Climate Change Impacts in the United States, The Third National Climate Assessment, Eds. J. M. Melillo et al., http”//s3.amazonnews.com/nca2014/low/NCA3_Full_Report_02_Our_Changing_Climate_LowRes.pdf?download=1, accessed September 2016.
[iv] “Future Climate,” National Climate Assessment, U.S. Global Change Research Program, 2014, http://nca2014.globalchange.gov/highlights/report-findings/future-climate, accessed September 2016.
[v] “Regions: Southeast,” National Climate Assessment, U.S. Global Change Research Program, 2014, http://nca2014.globalchange.gov/report/regions/southeast, accessed September 2016.
[vi] “Extreme Weather,” National Climate Assessment, U.S. Global Change Research Program, 2014, http://nca2014.globalchange.gov/highlights/report-findings/extreme-weather, accessed September 2016.
[vii] Trimble Inc. (2016). Form 10-K 2016. Retrieved from S&P CapitalIQ.
[viii] Trimble Inc. Trimble to Acquire AGRI-TREND to Provide Stronger Toolset for Crop Advisors. N.p., 10 Nov. 2015. Web. 4 Nov. 2016. <https://www.trimble.com/news/release.aspx?id=111015a>.
[ix] Trimble Inc. TRIMBLE ACQUIRES HARVESTMARK TO PROVIDE FOOD TRACEABILITY AND QUALITY CONTROL. N.p., 22 Apr. 2015. Web. 4 Nov. 2016. <http://investor.trimble.com/releasedetail.cfm?releaseid=907841>.
Hey Matt – What an interesting application of big data. I had never considered farming as a use case. Immediately after reading this post I wondered – what is the price tag? This seems like an amazing tool, but potentially out of reach for most small American farms (which we read in class represent the majority of farms in the US). I see an opportunity here potentially for the USDA to possibly subsidize the cost of this to family farmers.
Thinking more broadly about the food supply chain in the US, I wonder if supermarkets might be able to leverage a tool like this. Perhaps it would help them think more sustainably about their product sourcing, in addition to delivery truck deployment, etc.
What a fascinating topic. A few weeks ago in Cambridge there was a TEDx speaker who hit on the evolution of the farming industry and how the world today consumes more food than we ever have, but has less farmers than ever before. The result is farmers that are forced to be more efficient, and have embraced technology to this point in order to increase their yields. Although I have never given much thought to farmers embracing Big Data, I see it as a natural progression in their journey to be more efficient, and to provide the growing demand of food on the planet using less resources and more technology. Awesome topic!!
Cool post, Matt. I wouldn’t have expected a solution like this to already exist. Another thought for your “Steering More Toward Sustainability” comments – can they develop the capability in their software to collect and report data on water consumption and/or soil degradation? It would be interesting to learn if Trimble can continue to develop products that help farmers not just maximize their production, but minimize their impacts on the environment. I do see some water management tools, so perhaps this is already incorporated to some degree.
Really interesting post, Matt. There’s no single solution, but optimizing yields with big data is a great first step. Has there been any data released on how yields have improved for farms that have worked with Trimble?
To add onto Caroline’s point, I wonder how useful Trimble’s current product offering is to small farms. Do small farmers have the capability to optimize it’s practices as much as industrial farms?
All that said, I completely agree with you that Trimble could be doing so much more with it’s data. With huge changes in global agriculture on the horizon, Trimble has the unique opportunity to stay at the forefront of the industry for many years to come, simply by digging deeper into the data it already has.
Very interesting topic! As I grew up on my family farm, I totally agree that farmers are the most labor-intensive. Yet it totally makes sense that agricultural practice can be improved by fully utilizing the data so that they can keep their practices consistent. This is also nice as younger generation can start farming if they could more easily reach the data without having special skills developed through many years of experiences. In terms of collecting data, there are some companies which use drones to scan the status of crops and soils. The technologies related to agriculture are now rapidly developed and I feel those are hot now.
Thanks for sharing Matt, thought this was fascinating! I wonder how much work Trimble does with government entities such as the Department of Agriculture? I would imagine with widespread data on farming practices and yields, Trimble could provide the government with great insights. As an example, this data could provide realistic data about yield expectations for different crops based on what farmers using Trimble are growing. Therefore, if the government was to notice a shortage in one crop it could work with Trimble to incentive farmers to grow more of it. Just a thought, perhaps they are already doing this! Would love to learn more.
Super cool article – thanks Matt! It’s fascinating how what we consider a low-tech industry is actually one of the fastest to embrace technology innovation. I think they may even have the highest penetration of drones.
Interestingly a lot of farming innovations come from Israel – probably given that they already have to deal with a pretty harsh climate! One of their most effective, yet very low-tech, innovations has been the use of drip-irrigation. Now considered a no-brainer, drip irrigation really changed the way that farmers consumed water. Though the ultimate water use is much lower, the plants actually end up with more water because of the control and timing of the watering.
It’s interesting to read how company’s like Trimble can help farmer’s make smarter management decisions. While technology like the Field-IQ System lead to more efficient planting, spraying and fertilizing, I’m not sure if these marginal improvements do much to offset carbon emissions created by farmers. That said, your idea for Trimble to provide anonymized data to the scientific community for analysis is a really great one. One concern I have is around the issue of who ultimately owns the data. I tried to discern that from reviewing the company’s 10K, but it’s a bit ambiguous whether or not Trimble could license or share the data collected with their Connected Farm platform. Based on their acquisition of Harvestmark, it seems like they have wide latitude to share data across a wide variety of partners. However, that may still be ultimately at the discretion of individual farmers.
Very interesting post, Matt. Thought that having data from farms not only helps improve farm yield at a micro level for individual farms, but also helps understand and visualize the longer term implications of climate change on farming at the macro level for the industry is quite powerful. I do wonder how the increased visibility around climate change trends will impact farming and the way farmers end up using the data provided by Trimble and other such providers.
Great post, Matt. What do you think is the end game for a company like Trimble? To what size can Trimble grow? Given recent M&A activity in the sector (especially Bayer trying to acquire Monsanto) I am wondering if this will be a likely target for a larger corporate soon.
Matt thanks so much for this. One of the things I was thinking about is the balance between technological innovation in combating climate change (like this software you mention) and just the pure trade-off of people being out of a job. I think in agriculture this has already started (as you mentioned, more tractors, automated planting, etc.). But I suppose my question is how will these software programs gain support / commercialization where now there won’t even be anyone driving the tractor because there is auto navigation. US ag is 5.7% of our GDP (http://www.ers.usda.gov/data-products/chart-gallery/gallery/chart-detail/?chartId=58270). So I just think its critical we remember the political ramifications (job security, employment, etc.) of over automating an industry and removing low to medium skill jobs in our economy.