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A new business model for precision ag data packages

Farmers Edge CEO Wade Barnes hopes to profit by bringing a bigger data 
package to more customers with a new full service, low price model

Farmers Edge has cut its per-acre pricing by more than 50 per cent for the 2015 growing season. Last year, farmers paid $8.95 per acre for a full-service package. This year, the price has fallen to $3.95 per acre, and that was lowered by a further 12 per cent for farmers who signed up before the end of September.

“We wanted to do something disruptive in the marketplace,” says Farmers Edge CEO Wade Barnes. “I thought that the market needed to be shaken up.”

Farmers Edge recently received funds from Silicon Valley-based venture capital firm Kleiner Perkins Caufield & Byers. “They did our market research for us,” Barnes says. Kleiner Perkins interviewed 20 Farmers Edge customers during their pre-investment investigation of the company and the industry. They found that, while current Farmers Edge customers were satisfied, they hadn’t signed up their entire farm. Kleiner Perkins pointed out that by lowering prices, Farmers Edge could entice current customers to sign up all of their acres, as well as attracting new clients. “In order to get mass adoption, the price point has to be where it becomes a no-brainer,” says Barnes.

For $3.95 an acre, Canadian Prairie farmers will have access to the full suite of Farmers Edge products: variable rate fertilizer programs, telematics packages to manage fleets of machinery, updated satellite images every seven to 10 days during the growing season and localized weather information. “We’re combining everything to give farmers a total solution,” says Barnes.

With the new influx of investment money, Barnes says, “we’re going to focus on developing a new strategy, focused around field information.”

“We’re agnostic”

When Barnes says Farmers Edge’s technology is “agnostic,” he means that the telematics data services provided by Farmers Edge will work with machinery from any line.

Typically, farmers use the telematics system that comes with the machine. “This is a bit of a strategy from the big equipment companies,” Barnes says. Once a farmers’ data is tied to a certain telematics system and software, it can be “very difficult for him to switch from green to red or red to green.”

In August, Farmers Edge announced a joint venture with FarmCommand. FarmCommand had developed standardized communication between farm implements. This development could be useful for farmers who are interested in telematics data, but who don’t run a full line of equipment produced by the same manufacturer.

A plug in the tractor, the combine, the truck, (“anything with an engine” Barnes says), can log all of the diagnostics and field information in real time, and send that data to a manager in another location. “If you don’t collect all the data on every acre,” Barnes says, “how do you benchmark and measure and know what’s going on?”

For example, Barnes says, “They might be running two green combines and a yellow one.” A farmer with a data package that works with all systems would be able to use one software program to measure which machines give you the best fuel consumption.

This is possible, Barnes says, because “All the equipment companies have created their systems around the CAN Bus,” a standardized interface.

While it works with most equipment, “on anything that’s older than 10 to 12 years,” Barnes says, “it starts to get difficult.”

Soil agronomy

“We’ve also developed some technology in the lab,” Barnes says. While there are soil maps for areas across the Prairies, in some areas, Barnes says, they aren’t detailed enough.

Now, Farmers Edge is able to combine data sets to create management zones, similar to soil maps. “For every field, every zone, we’ll know essentially what the water holding capcity is, and the textural analysis,” says Barnes. “That gives us more data throughout the growing season.”

This is combined with a localized weather station. When all this information is brought together, farmers will be have early-season yield estimates, more data to determine the best dates for seeding or spraying and information about when there might be higher potential for insect outbreaks.

Barnes says he believes historical cropping models are actually quite accurate. However, he says, “the data that feeds into them hasn’t been.” By adding this new level of precise data to traditional models, he says, Farmers Edge is, “taking the old stuff off the shelf, dusting if off, and making it usable again.”

The data

Particularly in the United States but also here at home, farmers are becoming more interested in knowing which companies have access to and can profit from their agronomic and financial data.

For Farmers Edge, the economic question is clear cut. “We’ve been very focused on that. This data belongs to the farmers.” Farmers Edge signs contracts, agreeing not to sell the data, and Barnes says the company will never make profit from selling its clients’ data directly. “When we sign a customer contract, we lay out that the information is protected.

“Our growers,” Barnes says, “made it pretty apparent that they care.”

However, Farmers Edge does retain the right to aggregate client data and use it for its own purposes.

The Future

“We think that the results are good today. We think they’ll be excellent going forward,” Barnes says. The company has acquired a software development company and a research and development centre, both based in Southern Alberta. “We’ll be able to create better tools in the future,” Barnes says.

“We’re bringing a lot more tech to the day-to-day decision making,” he says. As farms get bigger, this information will enable better decision making that might also save money on input costs. For example, with more information, farmers might be confident in saving money by not spraying every acre with fungicide. “It’s way more cost effective to the grower, and probably a lot more sustainable,” Barnes says.

As commodity prices fall, farmers will be taking a close at every expense to reduce per acre costs. Barnes doesn’t believe this new reality will be a hardship for Farmers Edge. “It’s going to be a little harder to make money,” Barnes says. “Farmers will saying, ‘I have to make better decisions.’ For under $4 an acre, to have this type of support, even just the ability of creating those soils maps, is probably worth it.”

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