Until recently, I’d never lived close enough to a Wal-Mart to warrant making regular trips to the consumer giant. There were always enough other local outlets where I could piece together commercial needs or wants.
But I can appreciate the appeal of an economical one-stop-shop to buy everything from diapers and steaks to tires and televisions. While some “big box” chains have been feeling a financial pinch in recent years as shoppers shift their purchasing power online, there’s still something to be said for the physical convenience of a brick and mortar store.
The same is true in the precision farming business, as dealers have traditionally been the go-to source for hardware, service and support for their farm customers. However, as companies like Google and yes, Wal-Mart, invest resources into new farm technology and data management, what type of influence will these non-ag brands have on the traditional business model?
In his latest blog, ag attorney Todd Janzen aptly points out one misstep venture capital firms seeking to plant seeds of innovation in precision farming can make — assuming farms are like any other business. “Farmers are not consumers,” Janzen notes. “New companies entering the ag market should treat their potential farm customers as sophisticated business owners, not relatively uneducated consumers who make split second purchasing decisions.”
To this point, precision farming dealers are well-positioned to be technology filters for their customers, educating them on the legitimacy and value of new products and services. As one precision ag manager from a multi-store farm equipment dealership says, “We’re seeing much more of a corporate sales attitude creep into precision business vs. an ag sales attitude. As dealers, we have a responsibility to stay ahead of this trend and keep customers informed about the quality of products and services in the market.”
With seemingly endless cashflows being pumped into tech start-ups by corporate investors, it’s inevitable that more will emerge in precision farming. As reported by AgFunder earlier this year, a record $4.6 billion was invested in the ag technologies sector in 2015, nearly double the amount in 2014. And nearly 500 companies raised financing across 526 deals, a 90% increase in deals over the 264 recorded in 2014.
Google and Wal-Mart didn’t become successful by accident, so there is certainly a track record of success. But whether that same consumer business model will translate to agriculture and precision farming remains to be seen.