Sometimes it seems as if the ag world is changing so fast that we can barely keep up with it all. I just finished reading an article that opined on how the Monsanto-Bayer merger would lead to the end of western civilization as we know it. Given my strong contrarian streak, I view this merger as an example less of strength than of impending weakness. The world is changing dramatically as technology evolves and agriculture is simply changing along with it. Monsanto’s incredible run in the past 30 years is largely attributable to their near single-handed ability to reduce complexity in row crop agriculture. But complexity is striking back, and neither Monsanto nor the industry will ever be the same again.
I’ve always believed the adage that companies are never as brilliant as believed at their apex, nor as stupid as billed at their nadir. Sometimes they are simply in the right place at the right time (i.e., lucky), and a very few actually shape the times in which they live. Love ‘em or hate ‘em, Monsanto is one of those companies.
I started with Monsanto as a freshly minted PhD in 1982, and spent an amazing dozen years there back in the days when they were a chemical, not a seed (or precision ag) company. To me the story of Monsanto is the story of complexity in agriculture, and a new (very disruptive) chapter is only now being written.
Modern History of Complexity in U.S. Agriculture
Complexity in agriculture steadily marched higher after the introduction of hybrid corn in the 1940s and the chemical pesticide industry growth starting in the 1950s (see Table 1). The seed corn market was highly fragmented and companies competed based on superior agronomic (yield) performance. Most herbicides were selective to certain weeds, and there were several timings of application based on tillage practices and crop tolerance in the days before no-till. This complexity required significant expertise from trusted advisors, so input suppliers, ag retailers, and crop consultants played a critical role in agronomic program design. U.S. row crop agriculture reached its peak of complexity in the mid-1980s (at least to that point).
By the early 1990s, two major developments dramatically reduced complexity in row crop agriculture. First, Roundup’s steady growth had resulted in both agronomic (lower rates) and economic (lower prices) progress in morphing to an annual weed control product, in contrast to the high-priced perennial weed control product was it when launched (I sprayed a lot of field bindweed and Johnsongrass in those early years).
Secondly, this occurred at the same time that GMO traits, particularly corn rootworm (Bt) and Roundup tolerant corn varieties were introduced. This also coincided with the huge ethanol boom (bubble) that raised corn prices dramatically. Huge consolidation occurred in the seed, chemical, and ag retail sectors, and growers simply bought into a simple platform program of seed and chemicals.
There was a lot more talk about precision ag than meaningful action, so this period, peaking in perhaps 2005, resulted in the withering away of a great deal of the agronomic expertise in the industry. You didn’t need to be a rocket scientist to simply plant RR corn and apply 24 oz. of Roundup. Clean fields. High yields. Done. Easy peasy.
In the last 10 years, three primary changes began to cause complexity to rise again. First, Mother Nature resists a monoculture, and by 2010 resistance to the first-generation GMO crops (weeds and bugs) began to dent the ‘clean fields” image and we had to start looking around for some old agronomists who knew how to do tank mixes.
Secondly, consumers (particularly millennials) began to embrace a natural/organic/non-GMO mindset and demand significant volumes of crops grown within this paradigm.
Third, precision agriculture slowly began to move from a dream to a set of real tools (although we still have a LONG way to go). When combined, these three factors likely will result in a dramatically more complex system by 2025.
Monsanto and the Decline in Complexity
In 1982, Monsanto was just another company trying to sell chemicals in the depths of the farm economy depression (Figure 1). By 1987 or so, production complexity peaked and Monsanto’s position was not significantly stronger than 8-10 other chemical companies, although Roundup was clearly a star product. By 2003, complexity had dropped dramatically and Monsanto had become the dominant player in this new paradigm. The company nearly single-handedly created this decline in the complexity of row crop agriculture. Although Monsanto has plenty of detractors, this accomplishment was amazing and will always be remembered as legendary in the development of the ag industry.
Rising Complexity and Mediation Mechanisms
As complexity continues to rise, the way in which we deal with it is evolving. In 1987, we mediated production complexity through HI (Human Intelligence). Smart seedsmen, agronomists, and crop consultants would think through all the options and advise farmers on the best way to proceed.
If I look out 20 years, it’s possible that AI (Artificial Intelligence) will play the primary role in mediating ag complexity. But the likely fatal conceit of many precision ag startups today is that we have reached that point today, and if they are great at programming an algorithm (“I got a guy”) we are home free. A far more likely scenario is that the next 20 years will require an ongoing combination of HI and AI if we are going to deal with all the complexity and come up with sustainable, practical, precision ag solutions.
Although Monsanto’s purchase of Climate Corporation clearly shows their desire to lead in this next phase of the industry, the slow economic development of the precision ag sector and the need for this close HI/AI integration certainly raises the question of whether Monsanto will maintain their “king of the hill” position in this next phase. In my view, the proposed Bayer merger is a recognition that Monsanto management may wonder the same thing. Either way, the Monsanto/Roundup/GMO dominance of the industry is slowly fading, and it seems likely that a new name and organization will emerge to fight for eminence in this exciting next phase of the industry.