Monsanto-Precision Planting Deal: Things To Watch

I was enjoying a bowl of Total Raisin Bran on Wednesday morning at the Hampton Inn in Mitchell, SD when my email pinged with the news: Precision Planting had accepted an offer to be purchased by Monsanto for $210 million, with performance incentives that could take it up to a quarter million. The deal is expected to be completed this summer.

For the two of you who missed it, here's a link to the official Monsanto release, which also links to the presentation that Robb Fraley gave to investors.

I quickly called our home office to do the "post and tweet" even as the news quickly became moldy (I was reminded of that smartphone commercial, "that was so 17 seconds ago"), then I tweeted out to a few industry buddies to get some feedback. My first reaction was that it's not a surprise at all from Monsanto's point of view. They have been making overtures about how serious they consider the agronomic part of "doubling yield by 2030" for some time, estimating its impact at 5% to 7% of that goal. They have no hat in the ring on the equipment side, and Precision Planting offers an established, ready made technology for controlling the seed variables Monsanto wants to control.

But the devil will be in the details and the questions that must be answered in the weeks ahead. Here are some of them, from my own thinking along with some input from other smart folks:

How does this affect existing Precision Partners dealers? Precision Partners has grown by establishing a fiercely loyal and dedicated dealer base with equally dedicated customers. Monsanto will have to use care as it integrates this sales force into the family. Someone pointed out to me too that there are some Precision Partners dealers that also sell Pioneer seed, which would appear to create some delicate situations on the ground.

How does this effect existing Monsanto precision relationships? Monsanto has been working with precision companies Raven and SST Software as well as John Deere as it has developed its Integrated Farming System vision. I have not had a chance to catch up with anyone for comment from these companies, but it will be interesting to look at how this deal ends up impacting these relationships.

How will growers and precision/equipment companies react to Monsanto's entree into precision ag? To me, it's perfectly understandable that Monsanto would want to get deep into the agronomics game when it comes to seed recommendations. Why would you put billions of dollars into research bringing the seed to market, only to leave the agronomic component to chance by having no input on factors such as planting depth, spacing, population, etc.? It has pledged to collaborate with agriculture equipment companies as it moves forward with IFS ... we'll be watching Monsanto's progress on this front very carefully.

It has given itself a reasonable timeline for implementation of its IFS program, with two years of pilot testing before rolling out its first generation launch in 2014. It's quite a stake in the ground for Monsanto, and should make for an interesting summer.