AgriBusiness Global recently sat down with Mike Stern, Chief Executive of The Climate Corporation, following the Monsanto subsidary’s acquisition of farm software management company VitalFields, based in Tallinn, Estonia.
Why this company, VitalFields? How different is it from what The Climate Corp. offers?
First of all, VitalFields has developed a software application for farmers in Eastern and Western Europe to help manage their information regarding compliance for government regulation. In Europe a large percentage of the subsidies that are provided back to growers are linked to compliance and the submission of information regarding activities in the field. So for instance, what I planted, how much fertilizer did I put it down and when did I put it down, what kind of crop protection chemicals did I spray and how much – those types of things. Growers need to keep track of all this, and what VitalFields has developed is a very nice digital tool that allows keep all this information together digitally and then generate reports that can be easily submitted to the various regulatory agencies. These vary from country to country across Europe. That’s essentially their core product. These subsidies account for tens of billions of dollars of farm income, so it’s a big deal for farmers. That’s why they focused on this particular area.
For us, we see this is as very complementary to what we do at Climate Corp. and as an entrée for us to get into Europe. We would look at the VitalFields tool as another vertical for us around our digital ag platform. What we’re trying to do at Climate is bring simplicity to digital tools to growers that allow them to go ahead and manage their entire operation, drive yield and productivity, help them manage risk, and be more sustainable. Of course, in Europe, this compliance piece is very important, so we look at VitalFields as another vertical that would go along with our Climate FieldView Plus and Drive, which is all about aggregating data, and Pro, which is our agronomic advisors.
There are two other elements of the deal that are strategically important. First, most of the smaller digital ag companies struggle with access to get in front of growers. In the U.S., Brazil, and Canada, we’re leveraging Monsanto’s sales team and distribution relationships in order to go ahead and bring these tools to growers so they can choose if they’d like to participate in what we’re offering. We’re going to be able to do the same thing in Europe. By working closely across Monsanto with our distribution, we’re going to be able to get these VitalFields tools in front of growers at a much more rapid pace and scale than they’ve been able to do themselves.
The second piece is linking to ClimateView Plus and Drive, which we will be beta testing in Europe this spring. That automates the activities of growers in the fields: planting, spraying, fertility, harvest. We can now use FieldView Plus and bring that together with the VitalFields tool where data entry – this whole keeping track of what is going on the fields – can be completely digitized and automated between the two apps. That is the strategy behind the deal.
The ClimateView product has no parallel, then, to the data entry tool in the U.S.?
Correct. ClimateView does not have a vertical that is specifically designed around compliance. This is a very unique thing right now to Europe. But, we see that this tool could be expanded to other geographies as regulations change. It wouldn’t surprise me to see this tool be valuable for American farmers sometime in the future.
Is Europe ahead in precision ag?
Around the presence of digital agriculture, I would say that there is probably more investment and start-up in the U.S. than in Europe.
It’s early days in Europe, just like it’s early days in the U.S. and other geographies. There are lots and lots of offerings – the market is very fragmented. What we’re trying to do is bring everything into one place to make it simple for the grower, to capture what’s going on their farm digitally, allowing them to visualize, do analytics on that information, and for us to be able to work with them to help them make proactive decisions to drive yield and productivity. We want to bring it all together. That’s really our focus at Climate.
One complaint we’ve heard is that growers often will get this technology but then not quite know how to use it, and the retailer won’t either. What will retailer support be like both here and with the addition of this new tool?
There is no doubt, these are new tools. I think about digital ag in particular what we’re doing at Climate with this next wave of innovation in agriculture. These are software tools. This is not the next hybrid, the next variety, or the next new crop chemical, of which there is a lot of intuition, knowledge and history in agriculture around these types of products. We’ve definitely seen that training is very important, and we’ve made a significant investment in that. How do you help both retailers as well as growers get up to speed on the technology? It takes a little bit of time. So I think that’s probably a fair statement: It’s one thing to have the tool; it’s another thing to begin to understand how to use it. That’s a key focus at Climate and a big area of investment for us.
Can you expand on what kinds of things you’ll be doing to support the retailers in the coming year?
We have invested in a whole group of folks that we’re bringing on board that are 100-percent focused on training. They will be entering the process of doing this right now – having dealer meetings, having farmer meetings, working with distribution to have their sellers and agronomists come in to get trained on tool, as well as farmer meetings to do the same thing. We’ve invested in feet on ground for these training specialists across the U.S. This is really kind of, ‘Hey, how do you get out and get the right people in the room?’ It’s retailer-by-retailer and grower meeting-by-grower meeting right now.
Will training be the same for VitalFields?
I think this is a challenge that as we move into this world of digital agriculture where these digital tools are showing up directly on the farm. I think it’s going to be a common theme irrespective of geography or product. We have launched Climate now in Brazil, we will be launching in Canada this spring, and with the purchase of VitalFields will be in both East and West Europe. We’ve learned that training and educating distribution, sellers, agronomists, and our customers is critical. I would anticipate that as we try to rapidly expand VitalFields’ presence and footprint in Europe, we will also need to invest in training and facilitating that knowledge transfer to distribution and to growers.
Can you describe your plans for international expansion and how you will go about it?
Sure. We have a limited launch right now in Brazil of ClimateView Plus and Drive that is going very, very well. We are working in the northern part of Brazil in Mato Grosso with about 120 or so key farmers there. We’re going through planting right now, and technology is deployed and being used by growers. As I mentioned we will be launching ClimateView Plus and Drive in Canada as well. Our focus is really right now North America, South America, and Europe. Our game plan is very similar to how we launched in U.S., which is to go ahead and work closely with our sales organization and distribution to get FieldView out in front of growers. It’s been very successful in the U.S. Last year we finished up over 90 million acres on our platform – around 15 million paid acres. Our target this year is to be on 25 million (paid acres). That strategy is working. How do you go ahead and get these tools in front of growers through our retail, distribution, and sales teams? We’re doing that in Brazil, and we will be looking to expand into Argentina. Of course, the game plan is the same with the purchase of VitalFields and expanding that offering and beginning to bring Climate FieldView Plus to Europe as well.
Do you foresee staying within those regions for the next 10 years or do you plan to expand to Asia and Africa?
Certainly we will be looking for geographic expansion. I don’t think it will just be these regions. In fact, we already have a program in Asia called FarmRise, which is a smallholder platform, which is using cellphone technology to transfer information directly to smallholder farmers. There are about three million growers in India on that platform today. Clearly, I see the impact of digital tools globally over a couple of billion potential acres of agriculture. But our near-term plan is North America, South America, and Europe.