Farmers Warily Eye DuPont Purchase of Farm Software Leader ​

Posted Leah Douglas Leah Douglas, Mergers & Acquisitions, Newsletter

Photo from usdagov on Flickr. 

Amidst farmer concerns about data collection by agricultural technology companies, agrochemical and seed giant DuPont on August 9th agreed to buy software company Granular Inc. for $300 million. With the deal, DuPont greatly increases its ability to collect detailed data on the operations of individual farms.

Granular and other farm data companies collect information on farming activities, which they then aggregate and analyze. Farmers, in theory, could benefit from such aggregation by receiving reports that help them increase their yields and to decide when is the best time to harvest.

But Terry Griffin, an assistant professor at Kansas State University whose research focuses on agricultural technology and big data, says that data companies stand to benefit far more than the farmers themselves, and sometimes at the expense of the farmers.

The data companies, he says, could use the information they gather to market more products to farmers, or to speculate on commodity markets. Longer term, Griffin says, the rise of these new data companies could threaten the traditional role the Department of Agriculture has played in providing “accurate and timely information on commodity yield forecasts,” available to all farmers for free.

Data companies, Griffin says, could also “replace” at least a large portion of what the USDA’s National Agricultural Statistics Service does.

Many farmers worry that big technology companies will sell their data to competitors, or use it to offer them different prices for seeds than their neighbors. Others are generally alarmed at the idea of giving away their trade secrets, and concerned about the opacity surrounding who has access to the data collected on their farms.

To address these security concerns, the National Farmers Union, the American Farm Bureau Federation and several commodity groups, including the National Corn Growers Association and the American Soybean Association, in 2014 wrote the Privacy and Security Principles for Farm Data. Signatories to the principles are expected to collect data only when farmers explicitly approve, can’t sell farmers’ data without permission, and should make contracts clear and understandable to farmers. As of April 2016, companies such as Dow, DuPont, Granular, and John Deere had signed on to the principles.

That same coalition of farm and commodity groups also worked to establish the Ag Data Transparency Evaluator, a tool that allows farmers to better understand ag data companies’ practices. Today, nine companies have been certified “Ag Data Transparent,” including Granular. Granular’s farm management software is used on roughly 250 farms in the U.S.

But a May 2016 survey of about 400 farmers by the Farm Bureau found that 77 percent of farmers were still concerned about who could access their farm data, and almost 60 percent didn’t know whether data collected from their farms was being used by manufacturers to market products back to them.

Zack Clark, the director of government relations for the National Farmers Union, says that as the Big Data sector continues to grow, farmers have to have more of a say in how their data is used. “It’s [the farmers’] data, and we want them to have control over it,” he says. “If people are extracting value out of this data, farmers should benefit from it.” But the Privacy and Security Principles remain voluntary and are difficult to enforce.

Monsanto led the way into Big Data 2013 with its $900 million acquisitionof The Climate Corporation, a data analytics firm. Also that year, DuPont Pioneer and John Deere launched a partnership that linked John Deere’s tractors with Pioneer’s data services. In 2015, Syngenta purchased Ag Connections, a data analytics firm whose software integrates with John Deere and other manufacturers.

DuPont will merge later this month with Dow Chemical in a $130 billion deal. The merger is one of three mega-deals in the agrochemical space, joining Bayer’s acquisition of Monsanto and ChemChina’s acquisition of Syngenta. The latter deals were both approved by the Department of Justice and Federal Trade Commission this spring.

What We’re Reading

  • The Federal Trade Commission approved Amazon’s $13.7 billion acquisition of Whole Foods. Whole Foods operates over 460 stores in the U.S. Read Open Markets’ statement on the approval here.

  • B&G Foods will buy SnackWell’s and Back to Nature in a $162.5 million deal. Both companies produce healthier snack alternatives that B&G says will give them more leverage with retailers like Whole Foods. The two brands generate $80 million in sales each year.

  • European antitrust regulators are taking a close look at Bayer’s pending acquisition of Monsanto. Regulators have received thousands of letters and emails from residents concerned about the deal’s possible effects on competition and prices. They have until January 8thto reach a decision on whether the deal can move ahead.

  • New Belgium announced it will buy San Francisco’s Magnolia Brewing for $2.7 million. The Colorado brewery is the fourth largest craft brewer in the country by sales volume, according to the Brewers Association.

  • Constellation Brands, the largest beer import company in the U.S., will buy Florida’s Funky Buddha Brewery. The terms of the deal were not disclosed. In 2015, Constellation bought Ballast Point brewery for $1 billion.

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