Buried in the Dept. of Justice’s (DOJ) lawsuit to block John Deere’s acquisition of The Climate Corporation’s Precision Planting division is one paragraph that got my attention:

…On Nov. 3, 2015, Deere announced that it had agreed with The Climate Corp. to acquire Precision Planting for $190 million, subject to a carve-out of some assets and adjustments. Concurrently, Deere announced that it and The Climate Corp. had entered into an exclusive data-sharing agreement that provides The Climate Corp. near real-time access to data collected from Deere equipment. The data-sharing agreement offers Monsanto considerable value in addition to the $190 million that it will receive from Deere…

This “data-sharing” paragraph is not mentioned anywhere else in the lawsuit. The other 48 paragraphs in the DOJ’s complaint are centered around high-speed planting technology, Deere’s Exact Emerge and Precision Planting’s Speed Tubes. The DOJ’s only concern is that allowing Deere to own and control both Exact Emerge and Speed Tube technologies will lead to decreased competition and lessen farmer choice in corn planters.

But the data-sharing paragraph is something the we should pay attention to as well. Not all the details are known, but the data sharing arrangement between Deere and Monsanto allows Monsanto to obtain planting data from Deere planters and Deere to obtain planting data from Precision Planting equipment installed on any planter, regardless of color. Farmers buying equipment from Deere may not realize their ag data could be transmitted to Monsanto, and vice versa.

The fine print in the companies’ data use agreements likely explains this, but how many farmers take the time to read those? There is nothing wrong with ag data sharing, in fact, I think that is where the real value of ag data collection will be returned to farmers.

Collaboration between Deere and Monsanto could benefit farmers. Let’s just make sure farmers know what they are getting into when signing up for data platforms. By focusing only on hardware, I think the DOJ missed one main point of the Precision Planting acquisition. The acquisition is not just a hardware technology acquisition, but a data sharing arrangement.

Agricultural equipment is no longer just iron. Farm machinery is now an electronic device composed of hardware and software. Elon Musk, founder of Tesla Motors, was one of the first people to proclaim that Tesla’s cars are now a “very sophisticated computer on wheels.” (L.A. Times, March 19, 2016). Moreover, Musk went one step further and declared Tesla “is a software company as much as it is a hardware company.”

Deere’s data sharing agreement with Monsanto is a sign that Deere too views the planter as a sophisticated computer. Does that make Deere more of a software company than a hardware company? Not yet, but one can see where this is headed.

Why should farm equipment dealers care? Although ag equipment is sold by a dealer, software is licensed from the manufacturer. My father had no direct contract with John Deere when purchasing a new Deere 4230 in the 1970s.

The modern farmer, however, buys a tractor from the dealer and licenses the software to run it from Deere. As the value of the software goes up, the relative value of the iron goes down.

Unless dealers become software support firms, their role with the farmer will decrease as this value shift from hardware to software occurs. Dealers should prepare for this, because the DOJ’s lawsuit, regardless of the outcome, does little to stop this trend.

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