Deere, Climate Corporation Strike Deal

4 Nov 2015

By Jim Patrico
Progressive Farmer Senior Editor

OMAHA (DTN) -- John Deere has been busy. On Tuesday, it announced it had acquired Precision Planting LLC from the Climate Corporation, which is a division of Monsanto. At the same time, it also reached a multiyear “digital ag collaboration agreement” with Climate Corp.

As if that wasn’t enough, earlier this week, Deere acquired Monosem, a French planter technology company with operations in both Europe and North America. Also, in early October, Deere and Colorado-based software company DN2K, formed a joint venture to develop a cloud-based service to allow ag retailers and others to better share machine-to-machine data.

In this flurry of activity, the Deere/Climate Corp. transactions are by far the biggest news. Although they will not be final until they have passed regulatory review, they have the potential to have a major impact on planting technologies and on farmers’ ability to wirelessly share data. Spokespersons for both companies said they did not foresee any regulatory difficulties and hope the deals will be final early in 2016.

Details of the transactions -- including the price tag -- will emerge over time. But as Deere and Climate Corporation officials spoke on Tuesday, here is what we know:

DEERE TO OWN PRECISION PLANTING’S TECHNOLOGIES

Deere will now own Precision Planting’s technologies, “including all of its hardware, sensors, actuators and display systems,” said Deere spokesman Barry Nelson. The Precision Planting leadership and the majority of employees will stay onboard, and relationships with dealers and OEM customers will remain intact.

“This is a strategic acquisition to expand John Deere’s precision agriculture business,” Nelson said.

Just as important for Deere, it acquired in Precision Planting, “an incredible innovation engine,” said Cory Reed, senior vice president for the John Deere Intelligent Solutions Group.

While Deere and Precision Planting have some competing products -- including their new fast planter systems based on seed conveyor belts rather than seed tubes -- many of their products also are complementary. In practice, many of Precision Planting’s products are retrofits that wind up on Deere equipment. This deal does not change that.

In fact, it creates another layer of both buyers and sellers for Precision Planting equipment. Current Precision Planting dealers will remain active, and John Deere dealers now will have the opportunity to become Precision Planting dealers, Reed said.

In so doing, both sets of dealers will be able to sell Precision Planting products to owners of both Deere and non-Deere equipment.

From Climate Corps.’ perspective, shedding the hardware-heavy Precision Planting, “is all about focus,” said Mike Stern, president and chief operating officer. “[Precision Planting] is not core to the business going forward. It is core for Deere.”

Precision Planting was founded in 1993 and acquired by Climate Corp. in 2012.

ENHANCED IN-CAB CONNECTION FOR FIELDVIEW CUSTOMERS

Deere will now “provide an enhanced in-cab connection for Climate Corp.’s FieldView customers,” Nelson said. Climate Corp. will use a Deere software connection so customers can send agronomic prescriptions wirelessly from FieldView to the field. The prescriptions will transmit via Deere’s Operations Center website.

The agreement marks the first time Deere has allowed a third party to tap into the data collection stream in its equipment. Climate Corp. got exclusivity from Deere for the (unreleased) term of the agreement, Stern said. But Climate Corp. is free to continue to sell its services to customers with non-Deere equipment.

For Climate Corp., the agreement opens up Deere’s “significantly broader customer base” as potential buyers of its data, Stern said.

For Deere, which is already a dominant player in the ag equipment field, the attraction in the agreement is a bit subtler. Deere is wagering that FieldView customers will move to John Deere -- or remain loyal to it -- based on Climate Corp.’s data-driven agronomic services. “We partner with who the customer chooses. That’s the value proposition [for Deere and its customers],” Reed said.

The move also allows John Deere to trumpet the fact that it offers an open platform. Competitors and critics have long claimed Deere is not open to outside technologies.

Currently, a farmer who uses both Deere and Climate Corp. data-sharing technologies has great difficulty integrating the two. The transfer often has to be made by hand, with the farmer/manager cutting and pasting information from one protocol to the next. The new system will make that transition seamless, Stern said.

Asked about data security issues under the agreement, John Raines, Climate Corp. senior vice president, agronomic services, said: “Our guiding principles have not changed at all in this transaction.” Any data generated by farmers is owned by farmers. They can choose to share it with Climate Corp., but “This does not move data from Climate Corp. into Monsanto.”

Deere’s Reed concurred: “This is the farmer’s production data to secure and manage.”

MONOSEM ACQUISITION

The Monosem news seemed big when it was announced Monday. But it recedes with Tuesday’s blockbusters. Still, said Deere’s Nelson, “Our definitive agreement to acquire Monosem will help accelerate John Deere’s market reach in precision planting equipment and add engineering expertise to further develop planting technology.”

From Monosem’s French base, it has a different perspective on technologies for agriculture. In the past, that has translated into fresh ideas for American farmers.

Monosem, which is a family-owned business founded in 1948, will remain independent, with its own brand and trademark.

DN2K, DEERE JOINT VENTURE

DN2K and Deere’s joint venture is named SageInsights. The platform around which it is built -- MyAgCentral -- is designed “to help agriculture advisers collect, organize, and analyze machine-to-machine information and use it along with insights from other resources to help improve decision-making,” according to Deere.

Taken together, these deals make John Deere even more formidable to competitors and, Deere would say, even more valuable to its customers. What’s unclear is how this consolidation of companies and services will affect overall competition and innovation in the world of ag technology.

Deere’s Reed said there is no reason for concern: “What we are trying to do is to unleash the innovation of Precision Planting, and to offer it to every OEM in the industry.”

Insights from Precision Planting and John Deere, he said, “will have a multiplier effect.”

Jim Patrico can be reached at jim.patrico@dtn.com

Follow Jim Patrico on Twitter @jimpatrico

(AG)