Global pesticides, seeds and fertiliser companies may be forced to re-engineer their business models as farmers adopt specialist technology that helps maximise harvests while reducing the use of crop chemicals.
New businesses are springing up that promise to tell farmers how and when to till, sow, spray, fertilise or pick crops based on algorithms using data from their own fields.
Their emphasis on reducing the use of chemicals and minerals known as farming inputs is a further challenge for an industry already struggling with weak agricultural markets worldwide."If our only goal is to sell as much inputs as possible by the litres of chemicals, I think we would have a real problem going forward,"
said Liam Condon, head of Crop Science at Bayer , the world's second-largest pesticides supplier.
Bayer bought proPlant, a developer of software for plant health diagnostics, earlier this year. Rivals are also investing in digital farming with the aim of generating service revenues that could offset any future drop in chemicals volumes.
"If you only spray half of the field that's much less inputs," Condon added. "The knowledge to get to the fact that you only spray that part of the field -- that, you can sell."
After an aborted takeover move for Syngenta, U.S. seeds giant Monsanto says data science and services are the "glue that holds the pieces together" of its strategy for future growth.
Monsanto's $1 billion purchase in 2013 of the Climate Corporation, which analyses weather conditions, was the digital farming sector's biggest deal to date.
DuPont is investing in digital farm management services under its Encirca brand, which it said in March had customers representing more than 1 million acres of farmland.
At the 970-hectare farm in Bavaria where Juergen Schwarzensteiner rotates corn, potatoes and grains, satellite maps and software supplied three years ago by a unit of farming goods distributor BayWa have prompted many changes.
These include reducing the overuse of nitrogen fertiliser
-- a risk to drinking water quality and the environment -- and cutting down on other fertilisers.
As well as BayWa's FarmFacts, farm management software startups include Iowa-based Farmers Business Network Inc, backed by Alphabet Inc and investor Kleiner Perkins, and Missouri-based FarmLink LLC.
All aim to provide farmers with individualised prescriptions on how to work each field down to a fraction of an acre, using data they have collected on soil and weather conditions, the use of crop chemicals and crop yields. Feedback from the farmers they have advised in turn allows the companies to fine-tune their computer models of plant growth.
According to market research firm AgFunder, venture capital investments in food and agriculture technology nearly doubled to $4.6 billion last year, with "precision agriculture" startups raising $661 million in 2015, up 140 percent from 2014.
Syngenta bought seven agricultural technology firms last year alone, AgFunder said.
For now, the main aim of these companies is to help farmers using their drones, field robots, decision support software and smart irrigation systems to boost yields, said Carsten Gerhardt, a chemicals industry specialist at advisors A.T. Kearney.
"But in the mid- to longer-term, I also expect there to be a reduction in the use of input factors by about 30 to 40 percent," he added.
"There's a risk for established players if digital services providers can convince farmers that they can settle for the second-best herbicide and show what really counts is a more precise way of using it."http://www.reuters.com/article/farming-digital-idUSL5N1743WQ