A good example from the Schumpeter Blog in the Economist, May 14th <http://www.economist.com/news/business/21602757-managers-most-traditional-industries-distrust-promising-new-technology-digital>-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-
Digital disruption on the farm
Managers in the most traditional of industries distrust a promising new technology
May 24th 2014 | From the print edition
INNOVATION is a word that brings to mind small, nimble startups doing clever things with cutting-edge technology. But it is also vital in large, long-established industries—and they do not come much larger or older than agriculture. Farmers can be among the most hidebound of managers, so it is no surprise that they are nervous about a new idea called prescriptive planting, which is set to disrupt their business. In essence, it is a system that tells them with great precision which seeds to plant and how to cultivate them in each patch of land. It could be the biggest change to agriculture in rich countries since genetically modified crops. And it is proving nearly as controversial, since it raises profound questions about who owns the information on which the service is based. It also plunges stick-in-the-mud farmers into an unfamiliar world of “big data” and privacy battles.
Monsanto’s prescriptive-planting system, FieldScripts, had its first trials last year and is now on sale in four American states. Its story begins in 2006 with a Silicon Valley startup, the Climate Corporation. Set up by two former Google employees, it used remote sensing and other cartographic techniques to map every field in America (all 25m of them) and superimpose on that all the climate information that it could find. By 2010 its database contained 150 billion soil observations and 10 trillion weather-simulation points.
FieldScripts uses all these data to run machines made by Precision Planting, a company Monsanto bought in 2012, which makes seed drills and other devices pulled along behind tractors. Planters have changed radically since they were simple boxes that pushed seeds into the soil at fixed intervals. Some now steer themselves using GPS. Monsanto’s, loaded with data, can plant a field with different varieties at different depths and spacings, varying all this according to the weather. It is as if a farmer can know each of his plants by name.The Climate Corporation planned to use these data to sell crop insurance. But last October Monsanto bought the company for about $1 billion—one of the biggest takeovers of a data firm yet seen. Monsanto, the world’s largest hybrid-seed producer, has a library of hundreds of thousands of seeds, and terabytes of data on their yields. By adding these to the Climate Corporation’s soil- and-weather database, it produced a map of America which says which seed grows best in which field, under what conditions.
Prescriptive planting is catching on fast. Last November another seed producer, Du Pont Pioneer, linked up with a farm-machinery maker, John Deere, to beam advice on seeds and fertilisers to farmers in the field. A farm-supply co-operative, Land O’Lakes, bought Geosys, a satellite-imaging company, in December 2013, to boost its farm-data business.
The benefits are clear. Farmers who have tried Monsanto’s system say it has pushed up yields by roughly 5% over two years, a feat no other single intervention could match. The seed companies think providing more data to farmers could increase America’s maize yield from 160 bushels an acre (10 tonnes a hectare) to 200 bushels—giving a terrific boost to growers’ meagre margins.
But the story of prescriptive planting is also a cautionary tale about the conflicts that arise when data entrepreneurs meet old-fashioned businessfolk. Farmers might be expected to have mixed feelings about the technology anyway: although it boosts yields, it reduces the role of discretion and skill in farming—their core competence. However, the bigger problem is that farmers distrust the companies peddling this new method. They fear that the stream of detailed data they are providing on their harvests might be misused. Their commercial secrets could be sold, or leak to rival farmers; the prescriptive-planting firms might even use the data to buy underperforming farms and run them in competition with the farmers; or the companies could use the highly sensitive data on harvests to trade on the commodity markets, to the detriment of farmers who sell into those markets.
Looking a gift horse in the mouth
In response to such worries, the American Farm Bureau, the country’s largest organisation of farmers and ranchers, is drawing up a code of conduct, saying that farmers own and control their data; that companies may not use the information except for the purpose for which it was given; and that they must not sell or give it to third parties. The companies agree with those principles, though so far their contracts with farmers do not always embody them. Also, once data have been sent and anonymised, farmers might be said no longer to own them, so it is not clear what rights to them they still have. For this reason and others, some Texan farmers have banded together to form the Grower Information Services Co-operative, to negotiate with the data providers.
Another worry is that, since the companies have not yet made the data fully “portable”, farmers may become locked into doing business with a single provider. To assuage all these concerns, the Climate Corporation has set up a free data-storage service for farmers, which others cannot access without the farmers’ permission. New niche data-management firms are entering the market, which should help make it more competitive.
For the time being, though, the biggest companies will dominate prescriptive planting. They collect the most comprehensive data and make better use of them than anyone else. And that raises a problem which affects big data in all its forms. Prescriptive planting could boost yields everywhere, just as mass, anonymised patient records could improve health care. But its success depends on service providers persuading users (farmers or patients) to trust them. If the users think they are taking a disproportionate share of the risks while firms are getting an excessive chunk of the benefits, trust will remain in short supply.