Monsanto Now in the Weather Business | KCET
Monsanto Now in the Weather Business
In 2006, a couple of former Google employees looked at the state of weather insurance for farmers -- that is, insuring farmers in the event they're unable to grow crops because of drought, an overly-rainy season, or other unforeseeable weather-related phenomenons; an enterprise generally conducted exclusively by the federal government -- and thought, as most everyone does while looking at how the federal government conducts business, "We could do a whole lot better."
They were right. The Climate Corporation was born.
The duo (more accurately, the programmers working for them) devised a piece of algorithmic software that combines weather forecasts, 30 years of past data from the National Weather Service, geological surveys, and all sorts of other bits of data, and spits out predictions. (Think: Nate Silver licking his finger and sticking it in the wind.) The information was then used in two primary ways: (1) assisting farmers in their attempts to grow better crops than their neighbors down the block who only had their dog-eared copies of the annual "Farmer's Almanac" to look to for guidance; and (2) sell those same farmers insurance based on what the program predicted the weather was going to be that coming year.
As the company's website put it:
This mission statement proved to be a huge success, not least of which happened because the Climate Corporation paid out their insurance claims out a whole lot faster than the feds, giving the farmers a chance to utilize their money for that growing season rather than wasting a year. The farmers bought in. Then, the investors bought in, to the tune of $107 million over the past six-plus years. And now, finally, Monsanto has bought in.
By buying up the whole company.
In a shock to the agribusiness world, the GM giant purchased the Climate Corporation for $930 million. (For the financial sticklers out there, please note that number's what Monsanto announced in their press release; folks on the inside are saying the final purchase price was over $1 billion.) Monsanto is officially now in the weather insurance business. Which is leaving everyone with one vastly important question: Why?
Monsanto, themselves, are selling the move as a way to continue assisting farmers they're already helping. "[T]he majority of farmers have an untapped yield opportunity of up to 30 bushels to 50 bushels in their corn fields," they claimed in their statement. The ability to implement advanced weather prediction technology -- no doubt, somehow in concert with their best-selling Roundup line of herbicide and Roundup-Ready line of herbicide-resistant seeds -- will lower that number and keep farmers from leaving food and money on the table.
That, at least, is their story. But the main theory from most everyone else is that the company's doing a bit of classic portfolio diversification:
If you're a glass-half-full-of-genetically-engineered-material-that-should-not-be-drunk kind of person, this news can certainly be seen as positive.
Maybe Monsanto doesn't entirely trust what the future of GMO technology holds. Maybe their quitting of the European market was a precursor to shifting their business entirely. Maybe the ongoing lawsuits against GMO-incorporated food producers have given them cold feet when it comes to putting their eggs in one basket. Maybe the larger-than-expected financial loss in the fourth quarter gave their corporate higher-ups the message that they must adapt or die.
Maybe, Monsanto is planning for a day when GMOs won't be around anymore.
Then again, maybe this move just turns Monsanto into a GMO tech/insurance monster of a company the likes of which has never been seen, one that will eventually own all of the world's farming infrastructure in a monopoly that'd have Rockefeller spinning in his grave with envy. Since we're dealing with who we're dealing with here, that future is certainly a possibility as well.
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