On Nov. 1, agriculture giant Monsanto
boughta 7-year-old firm called Climate Corporation for about $US1 billion.
Founded by two former Google employees, Climate Corporation might be described as the expression of the “big data” movement in the farming sector.
It combines decades of weather data from the USDA and National Weather Service, as well as its own proprietary live monitoring systems and radars, to better help farmers predict what yields will look like. It also sells them weather insurance.
Coincidentally, the New Yorker published Michael Specter’s in-depth profile of the company a week after the purchase was announced.
The whole piece is worth reading, but one line stuck out to us. You’ll recall that last year the U.S. saw one of the worst droughts on record. Although scientists have actually yet to find direct evidence that last year’s epic drought resulted from climate change, the fact that in the span of two years America’s breadbasket saw one of the worst-ever harvests immediately followed by one of the best-ever has hurt farmers’ bottom lines. (Of course, it also likely helped boost Climate Corporation’s value.)
Here is what Climate Corporation founder Dave Friedberg said about how most farmers view climate change (emphasis ours):
“You don’t need to talk about climate change per se … Statistically, you are looking at a series of numbers. If it were a roulette wheel, you could say, ‘It’s coming up black more and more frequently.’ Can I attribute that to black being overweighted by the croupier? Or to the pit boss, or the machine being broken? It doesn’t matter. Some people will argue that ice ages have waxed and waned for tens of millennia and that this is part of a natural cycle. That doesn’t change the fact that black is coming up more frequently and you will get less out of an acre of corn than you used to. The price for that land simply cannot be justified by the income it can generate.”
In other words, it doesn’t matter what’s causing it, but something’s definitely not right, and investing in protection from that uncertainty now seems a must.
Climate Corporation now markets itself to ag sectors around the world, and Friedberg added that his data suggests some regions’ farming industry will see damage that will dwarf the losses from the U.S. housing sector crash.