Monsanto’s Giant Leap Into the Future Has Nothing to do With GMOs

Image courtesy of The Climate Corporation

Chances are you have already heard about Monsanto's (NYSE: MON  ) latest quest with big data. That isn't the name of the next controversial seed that Monsanto wants to plant in farms. Big data is exactly what the name suggests -- huge amounts of information that go into the making of what's known as data science.

Having finalized its deal to acquire The Climate Corporation, Monsanto is set to rock the world of data science, the field where valuable agricultural data can be transformed into applications or systems that enable farmers to make informed decisions about crop and farm management, and improve yields.

That may have confused you, as it did when I first read about the matter. What kind of data am I talking about here, and how can data ever boost yields? More importantly, what exactly does Climate Corp do, and what can Monsanto investors get out of the deal? Here are the answers, sans jargon.

What is Monsanto really getting into?
Monsanto will buy Climate Corp in an all-cash deal worth $930 million within the next few months. Climate Corp's forte lies in its web and mobile service, climate.com. Through the application, farmers can access data that encompasses almost everything important to their work -- field-specific soil conditions and yield forecasts, crop growth projections, acreage and production reports, and even hourly reports on individual field conditions.

Best of all, farmers can get real-time weather monitoring and updates. With unpredictable weather disruptions emerging as the biggest risk in agriculture in recent times, one can imagine how useful such information can be for farmers. What's more, Climate Corp also provides U.S. federal crop insurance policies and sells weather insurance that covers the profits farmers may lose out on because of weather-affected low yields.

Sounds darn good! And all this will soon belong to Monsanto.

Others in the race, but with limits
Although not the first to incorporate technology into agriculture, Monsanto's deal to acquire Climate Corp is among the biggest in the upcoming field of precision agriculture. Farm-equipment makers like Deere (NYSE: DE  ) and AGCO; and Monsanto's closest competitor, DuPont (NYSE: DD  ) , have pumped in good amounts of money in agricultural technologies in recent years, but in small doses.

For instance, DuPont's recently launched Pioneer Field360 services, rendered through its sales professionals, guide farmers with seed selection, and support water, fertility, and overall crop management. DuPont also launched a field-level weather service last year.

Comparatively, Deere is among the front-runners in bringing technology to farms. From self-propelled sprayers to GPS-based automated steering systems, from mobile weather applications to the newly launched wireless data transfer that can send data wirelessly from farmers' machines to their personal logins on the Deere portal, the tractor leader has revolutionized a farmer's life.

The real proof
Probably the best evidence of how agricultural technology has caught the market's eye is Trimble Navigation's (NASDAQ: TRMB  ) amazing growth in recent years. Trimble designs advanced automated devices, including GPS and wireless applications, as well as data collectors. From just about $1.1 billion in 2009, Trimble's revenue shot up to $2 billion last year. Its operating income more than doubled during the period.

While these examples highlight the increasing popularity of using tech on farms, you may really want to know now, especially as a Monsanto investor, about the growth potential of precision farming moving forward. I think I can give you an idea of that as well.

A multibillion-dollar opportunity awaits Monsanto
Recent industry research reports predict a near boom in precision agriculture in the years to come. For instance, a September report by marketsandmarkets.com pegs the market for precision farming to grow at a nearly 13.4% clip over the next five years, hitting $3.72 billion by 2018.

The report further projects the Asia-Pacific region to lead with a compounded growth rate of 25% over the five-year period. A little more than 6% of Monsanto's revenue last year came from the region. Though not much, the fact that Monsanto is already present in the area should make it easier for the company to tap the opportunities in the future.

Foolish takeaway
With the world's population projected to increase 34% by 2050, food production is required to grow a whopping 70% to feed the greater numbers of mouths. Given the limited natural resources at our disposal, increasing yields from every inch planted will be the only way out. While increased use of hybrid seeds, crop protection, and fertilizers should help tremendously, technology will play an equally important role in helping farmers get the best out of their fields.

Having already cornered the seed market, getting a deeper foothold in precision farming is thus a very logical step for Monsanto, especially since the company already has a solid customer base across the globe. With the Climate Corp deal, Monsanto is taking a big leap into the future, and investors should be happy with that.

Like Monsanto, this company also has its leg into the future
Monsanto already has a step into the future, and so does one home run investing opportunity that has even been slipping under Wall Street's radar for months. This one stands to profit immensely from the expected shift toward natural gas as a transport fuel, and forward-thinking energy players like GE and Ford have already plowed sizable amounts of research capital into this little-known stock. Well, they know it holds the key to the explosive profit power of the coming "no choice fuel revolution." Luckily, there's still time for you to get on board. All the details are inside an exclusive report from The Motley Fool. Click here for the full story, and act quickly!


Read/Post Comments (11) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 07, 2013, at 11:02 AM, 18RC wrote:

    Monsanto never "poisoning your plates". Motley Fool must be a division of the National Enquirer.

  • Report this Comment On October 07, 2013, at 11:54 AM, Ori0nsCat wrote:

    It isn't. Monsanto is well known for its predatory business practices in concert with the government.

  • Report this Comment On October 07, 2013, at 12:04 PM, Ori0nsCat wrote:

    Actually, the author needs to do their research more effectively - or at least keep within their lane. This is a bad, if not misinformative, statement: "With the world's population projected to increase 34% by 2050, food production is required to grow a whopping 70% to feed the greater numbers of mouths. Given the limited natural resources at our disposal, increasing yields from every inch planted will be the only way out. While increased use of hybrid seeds, crop protection, and fertilizers should help tremendously, technology will play an equally important role in helping farmers get the best out of their fields." We already under-produce significantly, and economic mismanagement is responsible for most food shortages. Enter in a predatory company that destroys local food production and land ownership worldwide, and you will have even more poverty. Indian farmers are already throwing out Monsanto seeds because not do they not work, they are actually maladaptive and cause more problems than solve (don't believe me? Look up Indian farms, suicide, and GMOs). The genes of GMOs are also subject to patents, so inherently, if everyone switches to GMOs, our food supply will be reliant on a few companies. If the only context you have for understanding GMOs is economics, you have already failed.

  • Report this Comment On October 07, 2013, at 12:18 PM, terrjm wrote:

    This is more monsanto lies. Hey monsanto answer this: If your products are so good then WHY ARE YOU AFRAID to label GMOs for all to see??? WHY? Because all the garbage you are preaching is nothing but lies.

  • Report this Comment On October 07, 2013, at 12:22 PM, terrjm wrote:

    They had another lie based sympathy oiece for monsanto onhere yesterday with trolls trying to justify everything and say monsanto is good. NO ONE believed their lies and when we all started firing back with the truth the troll for monsanto left the thread. Monsanto sucks! It IS poison and no one wants it. Don't believe the lies monsanto tells look it up for yourself. There is a reason most countries in the world are banning this poison.

  • Report this Comment On October 07, 2013, at 1:00 PM, funfundvierzig wrote:

    This major technology acquisition will help fortify Monsanto's pronounced reign as the global leader in seed innovation and production and marketing. No amount of screaming by the anti-Monsanto mob and masked DuPont operatives can alter that commercial reality. ...funfun..

  • Report this Comment On October 07, 2013, at 1:03 PM, u4iadestiny wrote:

    Nothing Monsanto does is of benefit to anyone other than Monsanto and its industrial ag pyramid scheme.

  • Report this Comment On October 07, 2013, at 1:06 PM, u4iadestiny wrote:

    The commercial reality, funfun, is that Monsanto seed sales are down and dropping. People are waking up to the economic and health dangers of industrialized agriculture. Yes, and we WILL make sure this garbage gets labeled.

  • Report this Comment On October 07, 2013, at 2:11 PM, nosno wrote:

    All those who rant against scientific progress are so ideologically entrenched in their "beliefs" that it is pointless to post any rebuttal which contains facts, or reinforces the facts put forth in the article. It may be easier just to open a tinfoil, pitchfork, and torch concession, and establish a college fund for the upcoming generations..... education is the key to alleviating the delusions.

  • Report this Comment On October 08, 2013, at 7:53 AM, Gary603 wrote:

    What a blessing it is for future generations that there are so many people that are not swayed by the lies of these killer companies.

    The effort to educate without the premise of propaganda and lies is not an easy task. Whatever the outcome of the conversation it is vitally important that we stick to the simple plain truthfull facts.

    Fortunatelly there are a trmendous amount of resources available to us.

    Also to note, the Fool is a mega supporter of Monsanto as their past articles would provide a large amount of support in their investment strategy. It is obvious that the Fool stands to look um, Foolish, if they don't promote or attempt to justify to their advice.

    BTW, this article is about the leader of the Franken Industry. Let us not not forget the top four in order, Monsanto, DuPont/Pioneer, Syngenta, and Dow AgroSciences.

    There are others and soon they will be in the spotlight.

  • Report this Comment On October 08, 2013, at 3:09 PM, jenagles wrote:

    Monsanto wants to buy data science - not very different from the industry funded science that Monsanto promotes now. I imagine Monsanto will next get involved with fracking and tar sands and then report to us that climate change is just a figment of our imagination . . . Monsanto is a bad investment because I and people like me are working at taking them down.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2669261, ~/Articles/ArticleHandler.aspx, 10/25/2014 3:01:35 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement