DuPont’s Encirca Farm Services To Bolster Agricultural Revenues

by Trefis Team
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DuPont (NYSE:DD) recently announced the launch of its Encirca whole-farm services that will help farmers make more informed crop planting decisions to improve their yields. This could be seen as a move by the company to increase its presence in the fast-growing precision farming market, while adding profitable revenues to its agricultural business. [1]

DuPont generates revenues by supplying high-performance materials and chemicals, electronic materials, high-performance coatings and agricultural products to industries and consumers worldwide. Most products manufactured by DuPont are used as raw materials by other industries, making it a predominantly B2B (business-to-business) based company with the exception of the agriculture and nutrition divisions.

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The precision farming market has been growing strongly over the past few years on increasing demand for sophisticated data analysis tools to boost farm yields. Companies operating in the market provide growers with information and analysis on key farm input parameters including but not limited to seeds, weather, soil, crop condition, and the application of pesticides. The market is expected to be worth $3.7 billion by 2018.

Monsanto (NYSE:MON), the world’s biggest seed company and DuPont’s key competitor, acquired Precision Planting Inc. in May 2012 to reinforce its prescription offering. [2] Other companies operating in the precision farming market include Deere & Company (NYSE:DE), Trimble Navigation Ltd. (NASDAQ: TRMB), Raven Industries (NASDAQ:RAVN), and AgJunction Inc. [3]

DuPont launched its whole-farm services product as a mobile device application named, Encirca View. It can be can be thought of as an information platform, in which the basic free service would allow growers as well as Pioneer (DuPont’s seed company) agents to record and share crop observations. Not only this, growers can also directly reach out to DuPont experts for any advise on crop management through this platform.

The premium package also includes market news and analysis, grain-trading capabilities, and field-specific weather forecasts. The company plans to charge a monthly subscription fee of about $150 per month for the premium package. By the third quarter of this year, DuPont also plans to launch another fee-based service called Encirca Yield that will help growers assess specific decisions on planting seeds, application of pesticides and water usage. It expects to charge growers around $10-20 per acre for these services. [1]

Because information technology and data analytics are not DuPont’s key areas of expertise, it has collaborated with several other companies to provide reliable services on its Encirca platform. Last year, the company collaborated with John Deere for wireless data transfer, and last month it also entered into a partnership with DTN/The Progressive Farmer to serve growers with instant weather and market information. It also entered into a three-year collaboration with the U.S. Department of Agriculture (USDA) and the University of Missouri for the collection of soil, topography and watershed data. [1]

DuPont sees huge potential in the farm data services market. Although, we believe that growth in the short to medium term would mostly come from the U.S., where farmers are financially strong to afford these services and adoption rates are high. The company expects to generate more than $500 million in incremental annual revenues from these services in the long run, which is around 4% of its 2013 agricultural products sales revenue. [1]

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Notes:
  1. DuPont at Bank of America Merrill Lynch Global Agriculture Conference, dupont.com [] [] [] []
  2. Monsanto Company To Purchase Planting Technology Developer Precision Planting, monsanto.com []
  3. Precision Farming Market By Technology, marketsandmarkets.com []
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