By Meredith Davis
(Reuters) – Farming equipment manufacturer AGCO Corp. does not have immediate plans to buy a stake in 365FarmNet, a farm management company and software platform that is a subsidiary of Germany-based Claas, AGCO’s chief executive said on Tuesday.
“We are not buying a stake, but we are looking into how to cooperate,” AGCO chief Martin Richenhagen said in an interview.
“We still would be interested if it would become an industry-owned solution. So far, we still talk, but it seems to be difficult for Claas to consider sharing the ownership with other players.”
Farmers can use software from 365FarmNet to document costs, crop yields and inventories.
Global agriculture-related companies are developing partnerships or purchasing companies to develop new software and hardware products that assist farmers in getting the best yields from their farms using processes known as “precision agriculture.”
AGCO, the manufacturer of Challenger, Fendt, Valtra and Massey Ferguson machinery, was initially interested in buying a stake in 365FarmNet to create an alliance as a shareholder.
But Richenhagen said AGCO’s customers would not like using a software platform owned by a competitor.
“Our farmers don’t want to be forced into depending on one brand of farm equipment, or seeds, fertilizer, or pesticides just through software,” Richenhagen said.
AGCO’s own software application, called Fuse, is on an open platform, so the company’s combines and tractors can connect to not only 365FarmNet but other agricultural management systems, such as Deere & Co’s JDLink, Richenhagen said.
365FarmNet is currently only available in Europe and is not available in North American markets, according to a Claas of America spokesperson.
AGCO has a strong position in Europe, and claims nearly a 50 percent market share in farming machinery in the Europe, Middle East and Africa region.
AGCO plans to invest about $295 million in 2016 on technology and new products, up from $122 million in 2005.
Precision agriculture has become a top priority in the agriculture sector as commodity prices have fallen off their highs of 2012-2013.
AGCO expects 2016 net sales of $7 billion, down from about $7.5 billion in 2015. The company posted net sales of $9.7 billion and $10.8 billion in 2014 and 2013 respectively.
Due to slowed sales, AGCO reduced production in 2015. Richenhagen said if demand languishes further, the company is prepared to adjust output again.
