Chances are, right now, drones are buzzing over the cornfields of Iowa. A farmer in Minnesota is checking her smartphone to observe rainfall totals across her land, acre by acre. This September, when corn and soybean season begins in Brazil, farmers will merge with the digital realm to determine the density of seeds to distribute across their soil.

The explosion of digital agriculture tools, which marry predictive analytics with data science to make farmers more resilient to the whims of Mother Nature, has been delivered by companies across the agricultural value chain. Seed and chemical companies such as DowDuPont (DD 3.02%) and Bayer (BAYR.Y 0.77%) have plowed billions into the agtech markets. The world's largest fertilizer company, Nutrien (NTR 1.03%), has even joined the fray. There are more start-ups than can be counted.

It may not be on the radar of most investors today, but digital agriculture holds enormous potential for the future of farming and food production. Here are three of the top platforms in the space that are available to individual investors.

A drone hovering over a field.

Image source: Getty Images.

What is digital agriculture?

As the old saying goes, "if you can't measure it, you can't manage it." That's especially true in farming. Digital agriculture aims to put powerful data analytics tools into the hands of thrifty farmers to (hopefully) boost profitability and reduce waste with data-informed decision making.

The software tools typically integrate farm-level data -- information spanning weather, satellite imagery, historical yield totals, disease management, soil analysis, row-by-row seed scripting, and more -- into one cloud-based platform. Farmers can even launch aerial drones from their digital dashboards to collect real-time data.

Considering there are more than 171 million acres of soybeans and corn planted in the United States each year -- and millions more in South America -- the potential market is huge. That hasn't gone unnoticed by the world's top agricultural technology companies, but three are doing more to build out their software and hardware capabilities than the rest.

The pioneer

The Climate Corporation, now part of Bayer by way of Monsanto, has built the leading software platform in the industry. It provides a clear insight into how the industry is structured and how products are priced.

Climate FieldView espouses a freemium model with three tiers available for farmers: prime (free), plus (annual subscription), and pro (annual subscription plus per-acre fee). The plus offering provides capabilities such as yield analysis and field health imagery but requires a $999-per-year subscription (currently waived for new users, a subtle hint at the current economic struggles of American farmers). The pro offering requires the plus subscription but provides powerful seed scripting and nitrogen management tools -- for $3 per acre individually or $4 per acre bundled. Farmers can also purchase Climate FieldView Drive, essentially a tablet that can be mounted in a combine, to take the digital tools with them into the field. Literally. Each mount costs $249.

The all-in-one offering has catapulted Bayer's ClimateView into the top spot globally. It boasts in excess of 100,000 users and covers more than 120 million acres. Well, sort of on that last metric. That's because if a single 100-acre farm uses two of the company's software tools, then it gets counted as 200 acres covered. While that's helpful for investors to know when tallying the market opportunity, it doesn't change the fact that the platform is the largest on the planet. Others are on its heels, though.

A farmer piloting a drone on his farm.

Image source: Getty Images.

Setting up its spinoff for success

After seeing Monsanto acquire The Climate Corporation in 2013, DowDuPont developed the Encirca software platform to try to keep pace with the fledgling opportunity. It also acquired digital ag start-up MapShots in 2015 and made an even bigger splash with Granular in 2017. At the time of the acquisition, Granular's AcreValue and Farm Management Software products covered 2 million acres in the United States, Canada, and Australia. 

Of course, in the second quarter of 2019, DowDuPont will spin off its agricultural products into a separate company called Corteva Agriscience. Thanks to a huge effort from the conglomerate, it should start life as a separate publicly traded company as a leader in digital agriculture, which figures to be the largest growth opportunity.

That could be an important detail for investors. Corteva Agriscience is expected to boast annual sales of $14 billion and an operating margin of 15% -- expected to be the lowest among the three DowDuPont spinoffs. With crop prices and farm incomes at multiyear lows, the company's near-term success may hinge on the ability of digital ag tools to create value.

Diversifying with digital ag

While it's not difficult to see why Bayer and DowDuPont -- the two largest agricultural technology companies on the planet -- are investing in digital agriculture tools, investors might be surprised to learn that the growth opportunity is also being eyed by Nutrien. After slogging through a multiyear rut in the global fertilizer markets, the fertilizer producer has been keen to diversify its revenue base by boosting its retail segment -- and digital agriculture is a critical ingredient.

In 2018, Nutrien expects that its retail business will generate about as much adjusted EBITDA as its potash segment. That might only be temporary, as fertilizer selling prices are still well off their historical averages, but the company sees the retail segment as its best long-term growth opportunity. It's not wasting any time proving that.

Nutrien announced two digital ag acquisitions in July alone that will bolster its budding portfolio in the important growth industry: software start-up Agrible -- and its 11-million-acre network -- and soil science lab Waypoint. With the fertilizer producer's financial momentum building, it's possible investors haven't seen the last digital ag acquisitions of 2018.

An agronomist using a tablet in the field.

Image source: Getty Images.

A big opportunity to put on your radar

Digital agriculture promises to increase farm profits by putting powerful software tools and data analytics in the hands of some of the most thrifty people in the economy: farmers. The growth opportunity is still in the earliest days of unfolding, but billions of dollars of invested capital from the leading agricultural technology companies shows no business wants to be left behind. Some estimates peg the market opportunity at $13.5 billion by 2023. 

While it's certainly an area for investors to watch, it'll be important to keep an eye on whether the digital tools live up to their potential. That's an especially noteworthy risk considering the division of American farms (most are small and unprofitable) and tumbling farm incomes in recent years -- and something out of the control of these companies. That's why it may be best to wait to see the field develop and for a more pure-play digital agriculture stock to emerge, perhaps as soon as Corteva Agriscience separates from DowDuPont, although other parts of its business could weigh it down.