With its shares trading at three-year-lows since it abandoned a $46 billion bid to buy Syngenta AG (SYNN.VX) last month, Monsanto Co plans to offer its shareholders a new corporate vision: a future in big data.
Monsanto (MON.N) executives are seeking to reposition the company as a business built on data science and services, as well as its traditional chemicals, seeds and genetic traits operations, Chief Technology Officer Robert T. Fraley told Reuters in an interview.
“We transformed from industrial chemical company to a biotech company, then to a seeds company,” Fraley said. “Now, we’re transforming again.”
Top executives are sketching out plans now, and briefing major shareholders ahead of a wider presentation to investors in November at the company’s St. Louis headquarters, he said.
Fraley and others have met with around 200 technology start-ups in recent months and identified five as potential acquisition targets, pending Monsanto’s testing of products they make, company sources said. They declined to identify any possible targets.
Monsanto is seeking to provide services, software and hardware tools that use data to help farmers boost their crop yields by understanding what is happening with their fields – including catching shifts in soil chemistry, being more precise with their seed choices and knowing how they should apply pesticides in various conditions.
But the agricultural-data field is crowded, Monsanto’s initial moves into the sector have had spotty results and the shifting narrative is a sharp departure from the vision Monsanto described just weeks ago, as it bid for Syngenta. That vision was of a future based on agricultural chemicals and high-tech seeds.
The latest pivot comes as longtime profit stalwarts — the weed killer Roundup and the company’s portfolio of genetically modified seeds — both are showing signs of strain. Roundup's longevity as a farmer mainstay has become vulnerable as weed resistance to its active ingredient glyphosate has grown.
The company has also been facing increasing regulatory and consumer scrutiny over the safety and environmental impact of Roundup and Monsanto’s genetically engineered crops that are sprayed with glyphosate.
RELUCTANT TO PAY
Company officials declined to say how big a part of the firm it expects the data science and services arm to become, or to project sales and profits.
It already owns Climate Corp, a weather forecasting firm it acquired in 2013, and Precision Planting, which it bought for $250 million in 2012. The latter makes computer hardware and software tools that seek to help farmers plant seeds in ways that will be most productive for boosting yields.
Still, farmers and agribusiness customers so far have been reluctant to pay for data services, particularly with farm income down by half since its 2013 high.
Sam Miller, head of agriculture banking at BMO Harris Bank, said farmers, especially large producers, are looking for data services. But the competitive landscape is fierce with Monsanto and rivals Syngenta (SYNN.VX), Dupont Pioneer, WinField Solutions and others all fighting to sell data services.
The companies “are all talking to these producers about their data services,” Miller said.
(Reuters)
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