Sanjiv Rana (SR): Could we begin with Syngenta’s geographical footprint in digital agriculture? What is your strategy for digital agriculture?
Greg Meyers (GM): We are the only company that has leading farm management platforms in the top four agricultural markets – North America, Latin America, eastern Europe and China. We operate in close to 30 countries. So, we are pretty diversified and understand that the needs of farmers are very different in those markets.
The initial tendency for most companies is to target larger farmers where you're trying to sell software. That was kind of the first iteration of all this – can I make money selling farmers software? It's our view that that's not a really lucrative market over the long run. Our view at Syngenta is that digital products are effectively accompanying our core products in crop protection and seeds. Over the long term, probably every variety of seed and every crop protection product that we sell will have some accompanying algorithm that will optimise how, where and in which point it's used. So, when you look at a path like that where you really are trying to improve farm output as opposed to maybe trying to get as much farmer data as possible or trying to sell them software to build inside of a captive platform – the commercial models are different.
SR: Could you tell me about some specific services being offered to farmers in various regions where you operate?
GM: The services vary depending on the country. Let's take Europe. For farmers in Europe, the number one problem they face is regulatory pressure and just keeping the chemical technology they've been using for a long time on the market. We are seeing the registrations and the real challenges from consumer sentiment that are driving regulators to make decisions that are creating quite a difficult time for farmers in places like Germany and France.
So, one of the digital products that we are working on right now with a couple of customers, which is kind of in more of the R&D stage, is being able to take information from a label of, let’s say, a herbicide. One product can have a 55-page instruction manual – there are so many different rules around where to use it, what to do if you’re near a waterway, what's the pressure, and the rate and the speed with which you can drive the sprayer. So, there's a lot of room for human interpretation and how to apply that safely. We plan on shipping algorithms along with the product that allow a farmer just to scan the bottle and all that information is stored in a database. That data can actually be shared directly with the sprayer, John Deere sprayer or whichever partner we work with, and that sprayer can receive a closed loop prescription that can enforce waterway boundaries, rate and flow and speed, and all these things. At the end of the spray, that farmer can register that spray as a “certified spray”, which actually helps the sustainability story – it helps farmers demonstrate that they are using the product responsibly. So, obviously the things that you need to collect to do that are information about what's getting sprayed and the implement used to spray it. But we don't need them to be on our platform. We’re happy to send that prescription, for example to an app like MyJohnDeere, and allow that to be deployed on a John Deere sprayer.
SR: Are you ultimately moving towards an outcome-based pricing model?
GM: So far as outcome-based models are concerned, I think it's too early to tell. If you look at worldwide penetration of digital farming, it's probably in the low single digits right now. There's nowhere near enough adoption to really alter the way inputs are purchased today. But, at the end of the day, customers decide how they want to buy products, not the suppliers, and we just have to see how that plays itself out.
SR: Syngenta has previously claimed that it has 40 million ha globally being managed by a Syngenta tool. Could you expand on that?
GM: I think the 40 million ha probably include everything that we touch on some level. I think if you look purely at what you consider a platform play, that number is probably closer to 27-28 million ha. It's important to understand that we're not in a race for acres and I want to make that distinction clear. Our focus is on making sure that customers of Syngenta who use our products get the maximum possible benefit out of it. We're not asking the channel to distribute our tool, we’re not trying to charge for the tool. At the end of the day, if you're buying our seeds and our crop protection products, you deserve to have access to not only the best chemistry and the best genetics, but you also have the rights to the best possible advice on how to use it.
SR: Syngenta has made quite a few acquisitions and deals in the last couple of years (acquired The Cropio Group
in eastern Europe and Brazilian digital agriculture management firm, Strider
). Are there more acquisitions on the cards or is the intention to consolidate and expand organically?
GM: We will always be interested in a combination of building or buying, and if we see something that is attractive, we will take a look at it. We also have a thriving ventures arm, which is a really nice way for us to learn about some really interesting start-up companies without the commitment of an acquisition. We've got several venture stakes in about 8-10 different agtech companies that range from imaging, remote imaging, all the way through different service models and e-commerce direct models in places like India. So, we actually use our venture arm as well to really keep a close eye on the market. But we are going to follow what our customers tell us.
SR: How do you see agriculture developing in the digital world?
GM: One thing I often say that in the last 10,000 years of farming, there have been two major waves of technological change – the mechanisation of farming, which occurred in the early 20th century, and breakthroughs in natural science – biology and chemistry which we saw in the middle of the 20th century. Those two technological breakthroughs gave us 150% improvement in food production with only 12% more land than we had in the 1960s. So, we really believe that computer and data science are the next plateau of being able to modernise and create big technological breakthroughs in farming. The focus for us at Syngenta is to find ways to improve the productivity and profitability of farmers, while also looking at sustainability. We feel strongly about the challenges the world has today particularly with climate change and the amount of greenhouse gases that come from agriculture. The world needs the most modern agricultural practices to ensure that we can still feed a growing population but do it in a sustainable way. So, a lot of the R&D that we're putting against our digital technology is really around helping those farmers become more profitable more productive and more sustainable.