23 Mar 2018
Democratizing Data to Favor Farmers
Farmers Business Network is arming American farms with analyticsby Sasha IssenbergTopics:
illustration by Jon Krause
In 2006, Palo Alto native Charles Baron (MBA 2013) decided to join a future brother-in-law on his central Nebraska farm for the duration of the year’s corn harvest. It was what farmers would call a mixed operation: corn, soybeans, wheat, and sorghum, along with some cattle ranching. To learn the value of his crop, a farmer could turn on the radio for regular market updates from commodity exchanges. But prices of the seeds and chemical fertilizer used to grow those crops were not listed anywhere; a farmer had to ask the agent responsible for selling them. “Farmers struggled to determine if they were getting good deals,” Baron says. “They had to take their dealer’s word for it.”
Years later, after spells at Google and HBS, Baron is now using modern tools—from cloud computing to machine-learning—to force transparency on an agrarian sector long structured around that kind of one-sided knowledge. The Farmers Business Network (FBN), cofounded by Baron, agriculture investor and entrepreneur Amol Deshpande, and several farmers, has emerged in a period of particular crisis for the American farmer. They are being squeezed on both ends, losing any leverage as the sector has been dominated by big players. A few buyers like Cargill and Archer Daniels Midland dominate global commodity trades, while a cluster of conglomerates like Monsanto and DuPont control vital farm inputs like seeds and chemicals, many patent-protected. Hundreds of thousands of farms were fragmented and on their own. “I cannot think of another industry as large or as fundamental as agriculture that is structured that way,” says Baron. “It’s as if every oil well was owned by a different family, while the industry is controlled by a handful of companies.”
Baron and Deshpande started in 2014 with a handful of farmers in Illinois, Nebraska, North Dakota, and Iowa. A few of the farms had been working to share harvest data with one another to help find the best performing seeds—which represented their largest variable expense. The idea quickly evolved into developing a completely independent, farmer-driven information source identifying top seeds, benchmarking farm performance, and performing aggregated agronomic data analysis, breaking the information monopoly long held by the industry. To do so, FBN began compiling data spread across 65 different versions of so-called precision agriculture software and “democratizing” the insights by sharing it back with the farms.
Seed costs had risen along with grain prices during the commodities boom at the start of the decade. But when grain prices collapsed—the price of corn has fallen in half since 2012—seed and input prices were not restored downward. Now those inputs eat a disproportionately large share of whatever small margins that farms earn. “Farm incomes are under enormous pressure, making it critical that farmers find ways to save money,” Baron says. “They all knew they had something to learn by sharing.” After pooling their data, Baron saw that some farmers were paying more than three times as much as others for the same chemicals and twice as much for the same seeds.
That knowledge would help farmers haggle with dealers, but the real insight would come from analytics that go beyond consolidating seed prices to measuring a seed variety’s potential success. The most important output to grain farmers is yield, Baron says, and FBN’s data analytics model the ways that different variables interact: the number of seeds planted per acre, the amount of nitrogen added to the soil, the crop rotation, and rainfall and tillage practices, among others. With a large enough data set, farmers could then determine not only which are the highest-performing seeds on the market, but also which would likely fare best under their specific growing conditions.
The Farmers Business Network now includes over 5,500 farms stretching over 40 states and Canada, tracking activity across 19 million acres of land that produce both broad commodities and specialty crops like lentils, yellow peas, and garbanzo beans. The network has created the first semi-public repository of what Baron calls “real-world performance” data on inputs like seeds and chemicals. It functions as an information co-op: Individual farmers can earn access to the intelligence by contributing their data to the network.
Funded by $193 million in venture capital funds—$110 million of that coming in a Series D round in December—the company has 225 employees, split between a Silicon Valley analytics team and a Sioux Falls operations office. Staff roam the Midwest and Canada, recruiting farmers to join the network and then modernizing their technology to facilitate the flow of data. There are still holdouts who are wedded to pen-and-paper, Baron says. But don’t discount the farmer’s appetite for innovation. “To survive this long, they’ve had to change constantly.”
Class of MBA 2013, Section B