Monsanto's Climate Corp seen profitable by 2020: CTO Fraley
- Top 10 News for 12/2: Crude Rips on OPEC Cut; Starbucks' Schultz Steps Down; Nonfarm Payrolls Flat in Nov.
- Unemployment Rate Drops to 4.6%
- Bond yields slip on U.S. jobs data, euro steady before Italy vote
- Alibaba (BABA) Founder Jack Ma Discuss Plans to Retire; 'I Don't Want to Die at the Office'
- Starbucks Coffee (SBUX) CEO Howard Schultz to Step Down, Appointed Executive Chairman; Kevin Johnson New CEO
A Monsanto logo is pictured in the company headquarters in Morges, Switzerland, May 25, 2016. REUTERS/Denis Balibouse
Get inside Wall Street with StreetInsider Premium. Claim your 2-week free trial here.
By Karl Plume
BOONE, Iowa (Reuters) - Monsanto Co's digital agriculture platform should begin generating revenue for the seed and chemical company by 2020 as paid subscriptions for data-driven farm management and planting advice services expand, a top executive told Reuters.
Revenues from the Climate Corporation business, acquired in 2013 for nearly $1 billion, are expected to be in the hundreds of millions of dollars by then, Robb Fraley, Monsanto's chief technology officer said in an interview at the Farm Progress industry show.
"By the turn of the decade it will be a clear cash generator for the business," Fraley said, noting it will still be a fraction of Monsanto's total sales.
Monsanto's high-stakes push into digital agriculture hit a hurdle on Wednesday, when the U.S. Justice Department filed a lawsuit aimed at stopping Deere & Co from buying Monsanto's Precision Planting farm equipment business. The agency said in its lawsuit the deal could make it more expensive for farmers to use precise planting technology.
Mike Stern, chief executive of Climate Corporation, told Reuters on Wednesday the sale would benefit farmers. Stern also said Climate and Deere are moving forward with plans to allow nearly real-time data connections between certain John Deere farm equipment and Climate's farming software programs, Climate FieldView.
Monsanto's Climate acquisition, and the high price it paid for the San Francisco-based weather data analytics firm, ignited intense industry interest in agriculture technology businesses. Numerous competitors and non-farm investors jumped into the space, aimed at helping farmers grow bigger crops more efficiently using data analytics, drones and other high tech tools.
But a steep downturn in farm incomes has cooled agrarian demand for the unproven technologies.
It is also taking Monsanto longer to turn a profit: At the time of the Climate acquisition, officials told Reuters they expected it to boost Monsanto's earnings within two years.
Monsanto's business model for Climate, too, has shifted since the acquisition and transformed the seed company to some degree, Fraley said.
"We're utilizing the Climate tools in our (internal) breeding program, in our manufacturing programs for seed production and in the customer interface. Truly, the digital tools are changing the way the company does its research and develops its products," Fraley said.
Climate's Field View platform is being used on nearly 100 million U.S. farm acres today, with about 15 million acres in its premium paid services. Monsanto projects paid acres will reach up to 400 million by 2025.
(Editing by P.J. Huffstutter and Alan Crosby)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Sonoco (SON) Affirms FY16 Outlook; Guides FY17 EPS Below Views
- Jefferies Cuts Price Target on Dollar General (DG) Following 3Q
- Drexel Hamilton Raises Price Target on Workday (WDAY) Following 3Q Beat
Create E-mail Alert Related CategoriesReuters
Related EntitiesEarnings, Definitive Agreement
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!