- Deere agrees to collaborate with Monsanto’s Climate Corp.
- Seed, fertilizer prescriptions can be delivered to tractors
Deere & Co., the world’s largest maker of agricultural machinery, agreed to purchase Monsanto Co.’s Precision Planting LLC equipment unit as it accelerates a strategy to boost farmer efficiency and productivity with technology.
Moline, Illinois-based Deere will acquire assets including factories, the Precision Planting brand and most of the unit’s product range, the manufacturer said Tuesday in a statement. Terms weren’t disclosed.
The acquisition is the third precision agriculture accord Deere has announced in five weeks. This included Monday’s agreement to acquire Monosem, the European leader in precision planters. For Monsanto, the deal expands the sales opportunity for its FieldView app, which provides farmers with real-time planting data, to owners of Deere’s equipment including tractors, said John Raines, a senior vice president at Monsanto’s Climate Corp. unit.
"By this collaboration, we have expanded greatly the number of cabs that have the potential to connect to the Climate platform," Raines said by phone Tuesday. "We’re doubling down on our focus on the digital ag space."
Deere is working to make machines more technologically advanced and overall food production more efficient. On Oct. 8, the company agreed to form SageInsights, a joint venture to further develop a cloud software platform called MyAgCentral developed by data and software firm DN2K for agricultural retailers and other consultants.
“Agriculture is changing significantly,” Deere Chief Information Officer John May said by phone. “Deere wants to seamlessly connect people with equipment, technology and insights to give them a greater advantage with that entire production cycle.”
Precision Planting, founded in 1993, was acquired by St. Louis-based Monsanto in 2012 for $210 million. Its main plant is in Illinois, and it has some operations in South America. Precision Planting components can be used to augment new seeding equipment or to retrofit older equipment for precision applications. For example, they can be used to apply the right pressure to sow seeds in the best depth and spacing for maximum yields.
Climate Corp. will retain the digital agriculture portfolio that has been integrated into its FieldView platform. Deere has agreed to allow Climate Corp. to use its software connection to allow customers to send agronomic prescriptions from FieldView through the John Deere Operations Center to their equipment, according to the statement.
Monsanto now has deals to integrate FieldView with the three largest farm equipment makers, following prior agreements with CNH Industrial NV and Agco Corp., Raines said.
"By signing a deal with Deere, they are now collaborating with arguably their biggest competitor in this emerging area," Paul A. Massoud, a Washington-based analyst at Stifel Nicolaus & Co. who recommends buying Monsanto shares, said in a note Tuesday. "Should precision ag adoption continue to grow, Monsanto now has an even better market position."
Deere’s purchase is expected to close in 60 to 90 days, after which Precision Planting will operate independently as a wholly owned subsidiary of Deere, according to the company.
Deere is facing a third straight year of falling revenue and earnings per share in the fiscal year that started this month as sales of farm equipment such as combines and tractors continue to drop around the globe because of lower crop prices. Farm equipment sales will likely be “dismal” in 2016 as weak markets and an inventory glut weigh on the industry, said Bloomberg Intelligence analysts Christopher Ciolino & Karen Ubelhart in a report on Oct. 13.