July 27, 2017

Global agricultural equipment company AGCO announced it has agreed to acquire Precision Planting LLC from Monsanto subsidiary The Climate Corporation for an undisclosed amount.

Founded in 1993 in Tremont, Illinois, Precision Planting develops agtech products that deliver precision spacing and depth control for crop production. The company’s line of products and services include mechanical equipment, monitoring and cloud solutions, and control systems that it markets through an extensive network of dealers.

“Precision Planting is a strong business that plays an essential role in the growth and adoption of innovative precision ag practices that help farmers enhance their productivity,” said Mike Stern, chief executive officer for The Climate Corporation. “As a leading global equipment manufacturer, AGCO is uniquely positioned to enable broader distribution of Precision Planting technology and will continue the development of innovative products that improve the efficiency and productivity for farmers around the world.”

As the global agricultural production machine that once was revolutionized by advances in farming equipment races forward into a future where it will depend more and more upon big data to meet the growing global demand for food, it is becoming increasingly apparent that the two segments – big data and equipment – will become highly interdependent. Players within both industries will be maneuvering to form connections across the divide in order to be able to best profit from this evolution.

“The acquisition of Precision Planting will solidify AGCO as one of the global leaders in planting technology and strengthen our position as a full line partner for professional farmers across the globe,” said Martin Richenhagen, AGCO’s chairman, president and chief executive officer.

Second Sale

This deal with AGCO is the second deal The Climate Corporation has struck to sell Precision Planting. In 2015, the company signed an agreement in the fourth quarter of 2015 for John Deere to acquire the subsidiary for an undisclosed amount.

Under the terms of the deal, John Deere would have acquired the Precision Planting brand along with factories and the bulk of the unit’s line of products including all of its hardware, sensors, actuators, and display systems, and Deere dealerships would have been offered the option to become Precision Planting dealers.

Through the integration, John Deere customers would have had the option to share their historic and current agronomic data between the John Deere Operations Center and The Climate Corporation FieldView platform to gain real-time insights that can be carried out with John Deere equipment.

After multiple seasons of falling commodity prices, falling farm incomes, and an oversupply of used farm equipment on the market, the farm machinery and precision ag industries have been facing challenging headwinds, leading both companies to hope that a successful deal could result in farmers wanting to update their machinery and agtech capabilities. However, it was not to be.

The following year, in September 2016, the U.S. Department of Justice (DOJ) filed a civil antitrust suit in an Illinois court to block John Deere from moving forward on the transaction, claiming that allowing the deal to progress would impede competition in the precision planting space, given that the two companies vastly dominate the industry, together accounting for 86 percent of U.S. sales.

“Precision Planting has been a key innovator in high-speed precision planting and Deere’s only significant competitor in developing and selling these technologies,” said the DOJ in a statement announcing its decision. “If this deal were allowed to proceed, Deere would dominate the market for high-speed precision planting systems and be able to raise prices and slow innovation at the expense of American farmers who rely on these systems.”

And although Deere originally vowed to dispute the DOJ claim, the deal for Precision Planting never came to be.

Now a deal between AGCO and The Climate Corporation for Precision Planting would make AGCO a formidable foe, as The Climate Corporation’s Climate FieldView™ digital platform will remain in connection with Precision Planting’s 20/20 SeedSense monitor.

AGCO also has previously strengthened its position in the drone technology space, forming a strategic partnership with Boulder-based Agribotix LLC in 2015 to launch an integrated, drone-driven agricultural intelligence and data solutions system.

Under the terms of the agreement, Agribotix would provide its FarmLens cloud-based platform, while AGCO provides its SOLO AGCO quadcopter drone, to be used together to provide farmers with an efficient, reliable method of collecting and analyzing field data that can be applied to production and efficiency improvements.

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.