The Leading Edge
Wade Barnes, co-founder of digital ag company Farmers Edge, has an interesting story about what it’s like going from a farm kid in western Manitoba to being the focus of some of the world’s most powerful people.
In 2015, one of the prospective investors in Farmers Edge was none other than Winnipeg Jets co-owner David Thomson and his investment company, Osmington Inc. Thomson is one of the richest people in Canada—he’s an extremely sharp businessman not known for money-losing investments. For example, his Thomson Corp., started by his grandfather as a radio and newspaper company in the 1930s, foresaw the internet’s impact and sold off its newspaper empire (except for the Globe and Mail) by 2000, including its ownership of the Winnipeg Free Press.
Osmington was on the verge of completing its investment in Farmers Edge when an executive asked Barnes if he would like to attend that night’s Winnipeg Jets hockey game. Would he ever! It wasn’t just any game. It was the first ever Jets playoff game since they’d returned to Winnipeg. It was April 20, 2015, and the “whiteout” would be in full force on the streets and inside the arena. The seats were the best in the house, right behind the penalty box.
But a short time later after some vigorous fist-pumping and maybe even a few heel-clicks, Barnes got a phone call. Prime Minister Stephen Harper’s people had contacted True North. The Prime Minister was in town and wanted to go to the game but didn’t want to sit in the owners’ box. Like all politicians, especially with an election approaching in fall that he would ultimately lose, Harper didn’t want to just see the game but wanted to be seen at the game, seated with the masses. There were no other seats available. Well, Barnes wasn’t about to argue with the prime minister. But the Osmington executive said he should still come to the game. He was told to arrive early, announce he was at the gate and he’d be looked after. Barnes was with two officials from Japanese trading house, Mitsui & Co., in town to invest in Farmers Edge, who had never attended a hockey game before, so they went together.
They arrived at the Bell MTS Place and were ushered into the True North private box. They mingled with True North brass for a while before Thomson arrived, walked straight over to Barnes and said, “You must be Wade.”
It was a night Barnes will never forget. Before the biggest game in franchise history, the Jets co-owner engaged him and the Mitsui reps in an hour-long discussion about Farmers Edge, agriculture and whatever else masters of the universe talk about. Then Barnes sat with Thomson and watched the hockey game. The Jets lost 5-4 in overtime to the Anaheim Ducks.
And why not? Barnes, 46, and co-owner Curtis MacKinnon, 45, are revolutionizing global agriculture. Farmers Edge is the new breed of digital agriculture company specializing in variable rate technology and data management. It basically turns your farm into a pile of numbers that let you see where to put your money, and how much, to optimize profit.
In an interview, Barnes compared their service to analytics in hockey. A decade ago, few people had even heard of analytics, the statistical breakdown of a hockey player’s performance beyond just goals, assists and plus-minus. NHL teams initially ignored analytics, preferring the “eye test” to make decisions. Then a few teams started to use it, people saw them being successful, and now every team has at least one analytics expert on staff to either confirm what their eyes are seeing or tell them what their eyes aren’t seeing.
As more farms use data and become more precise with applying inputs to improve productivity, other farms will have to choose whether to follow suit. The adoption of digital ag seems almost inevitable as the new generation that grew up with digital technology takes over farming.
“What’s happening in agriculture is this digital transformation, like you’re seeing in all other sectors, of how do you use information to make better decisions? That’s just hitting agriculture right now,” said Barnes.
But digital companies deal in business models that look crazy to the rest of us. Farmers Edge, with 500 employees globally, has lost $360 million so far. It currently services 23 million acres but has to reach 40 million acres to start making a profit. That may seem quite extraordinary to everyone else in the world but that’s the way it is with digital companies, say market analysts.
The investment community agrees. Farmers Edge completed an initial public offering (IPO) in March 2021. An IPO is when a private company makes some or all of its ownership publicly traded, with shares bought and sold by investors. The IPO was massively oversubscribed, meaning more people wanted to buy shares at a top range of $17 per share than were available. It raised $125 million in a matter of months. Barnes described it as giving Farmers Edge “a clean balance sheet and dry powder” to go out and sign up the rest of the farmers it needs.[i]
Barnes grew up on a mixed farm, mostly cattle, near Birtle in western Manitoba. He attended Assiniboine Community College in Brandon in the mid-1990s and graduated from the two-year Agribusiness course. He still keeps a hand in the family farm but it’s operated mostly by a brother and his dad.
After graduation, he was hired by the Twin Valley Co-op in Birtle to be its agronomist. The co-op had the first sprayer in the area and Barnes ran the spraying crew. There wasn’t much a neophyte like him could tell farmers in the area such as Ron Bell, Garth Butcher and George Wady, all guys who moved the needle as progressive farmers. Butcher, for example, was one of the pioneers of the zero till movement. “They took me under their wing,” said Barnes.
Another local from Birtle, Art Dalton, had started a company called Prairie Geomatics that specialized in precision farming and global positioning. Barnes went to hear Dalton give a spiel on precision farming and became intrigued. Dalton’s talk convinced some farmers in the area to buy yield monitor sensors. “They bought yield monitor sensors. I’m pretty certain they were the first yield monitor sensors purchased in western Canada. They literally went out and cut holes in their combines” to install the sensors, said Barnes. The farmers also asked the co-op manager to build a GPS tower, and he did. They would monitor the yield from their combines and, together with GPS, record precise yield data over their fields.
Everyone thought this was going to change agriculture but the costs were too great at that time. Meanwhile, Barnes was offered a job at the bigger co-op in Swan River, and then was recruited to work for United Grain Growers (UGG) out of Roblin. UGG then moved him to Grandview-Gilbert Plains and he had barely unpacked when UGG asked him to move to Shoal Lake. All the relocating was within a few years. It was nice to be wanted, said Barnes, but he felt like he was living out of a suitcase. Then Double Diamond Farm Supply recruited him to manage its operation in Pilot Mound, and he jumped at the opportunity to be a manager. The first year his office was a little building where farmers went to get their anhydrous ammonia, visible from Highway 3 when you followed the curve around the town.
While employed by Double Diamond, he attended a meeting in Grand Forks where satellite imaging was discussed “and I had an Aha! moment.” He and Curtis MacKinnon in Pilot Mound started trying to figure out out how to use satellite imaging to tell the good parts from the bad on a field, take soil samples and build prescription maps for variable fertilizer application. “Curtis is a genius and a MacGyver rolled into one, and he was able to develop the technology so we could rig it up,” said Barnes. They used an old Loral fertilizer spreader and partnered with a few farmers who had yield monitors and applied their new service to about 1,200 acres.
“That fall, we saw a really cool thing. We actually cut the rate of fertilizer down on average and saw yields go up, and so everyone got really excited. We progressed again the next year and the interesting thing is farmers stopped asking about the price of fertilizer. They wanted the service.” This is the “variable rate technology” that launched the company.
Barnes and MacKinnon launched Farmers Edge out of a basement in Pilot Mound. They started out servicing 20,000 acres for about a dozen farmers.
DEREK TIBBATTS, a grain farmer near Foxwarren, has been with Farmers Edge from the beginning. There have been some bumps along the way like with any company trying to become established, especially one introducing new technology. There were some complaints along the way about prices and glitches with the service and some farmers dropped out, but Farmers Edge has made the necessary adjustments. “If you kept with them, the service got better, the prices got lower. In 15 years, they’ve come a long way,” said Tibbatts.
He’s a big fan of the variable fertilizer feature. You will have six or seven zones in a field determined by factors like soil type and elevation. Farmers Edge then tells you where to put down more nitrogen and phosphorus in a field, and where to put less. “In bad spots, like around sloughs where there’s alkaline and it doesn’t produce very much, you put less nitrogen there,” he said. Tibbatts also appreciates moisture probes. That tells whether to fertilizer a little more or maybe not at all if it looks like it will be too dry to produce.
Tibbatts said it’s been money well spent for his operation. He was getting 40-bushel-an-acre wheat crops when he started. Today, he’s hitting 75 – 80 bushels on spring wheat “and we think we can go higher.” Plant genetics have made a difference but not that much. “In the long run, you’re getting a better yield,” he said.
If a field has an infestation, satellites will relay information on where those insects are feeding, and a producer may only have to spray 25 per cent of the crop rather than the entire crop. Farmers Edge also boasts predictive modeling. With all its data and a machine-learning algorithm, it can predict yield on a field six to eight weeks in advance with reasonable accuracy, said Barnes.
Tibbatts uses a variable rate fungicide application for mold diseases like sclerotinia. For that, Farmers Edge gives him a map that downloads into his sprayer. It sees where the plant growth is greatest and sprays more there, and sprays less where the plant growth is less. Farmers Edge also places a weather station for every 2,500 acres on a farm. The weather stations look like little hammerhead robots on tripods. Much information can be gleaned from the stations like moisture, temperature, winds, etc.
With help of their weather stations, farmers know when conditions are right for spraying and can avoid drift. Five years ago, Tibbatts was accused of letting spray drift onto another farmer’s field. He called up the data from his weather stations from that day and it showed a south wind whereas the drift would have needed a north wind to damage his neighbour’s field. There was no disputing it. He had a record of the weather conditions right on that field that day and at that time.
Farmers Edge technology is said to record spray drift and any damage, and even measure the damaged area. The weather station sensors will also indicate when there’s a difference between temperatures at ground level and above, which results in inversion and causes drift. That’s definitely when you don’t want to spray. The weather stations also offer hail detection. You don’t even have to inspect your field. You just phone your crop insurance and you have the proof recorded in your data system.
“It helps big-time,” said Tibbatts. “You want to spend time with your family, too, right? It can’t just be all farming.”
Barnes said its service will allow farmers to obtain carbon offsets that they can sell to carbon emitters. For example, over-applying nitrogen increases denitrification, releasing nitrous gases into the atmosphere that are 300 times more harmful than regular carbon dioxide. Controlling nitrous gas release is very much on the federal government’s radar. As well, a farmer using zero till that sequesters carbon in the soil also will warrant carbon offsets because they aren’t releasing carbon into the air by tilling, nor are they burning fossil fuels to power their equipment. However, you have to be able to verify your farm practices to obtain offsets, and that’s where Farmers Edge comes in again. It records all your farm practices.
Sales of carbon offsets already exist in Alberta, said Barnes, where the carbon tax is $40 a tonne. An industrial emitter producing 100,000 tonnes of carbon can buy 100,000 tonnes of carbon offsets from someone, and one of the easiest purchases is from farmers. Saskatchewan is preparing something similar and Barnes expects Manitoba will follow. In the U.S., the Biden administration has said it will reduce crop insurance costs to those farms that follow similar sustainable practices, and those farms will be able to sell the offsets to the U.S. Department of Agriculture.
Another new service at Farmers Edge is the launch of crop insurance in partnership with reinsurer Munich Re. Barnes maintained its insurance can give greater protection more confidently using digital data (Munich Re works entirely remotely—they don’t require field inspectors and don’t have staff in Canada), and that can result in a farmer obtaining a better operating loan.
RON LYSENG HAS reported on farm machinery and inputs at The Western Producer for 23 years. His first involvement in farm machinery was with Manitoba Agriculture in 1973. He’s also worked as a mechanic, raced sports cars in his youth, and more recently designed a car and built it from scratch in his garage.
He was the first reporter to interview Farmers Edge when it started. “Everyone else thought they were a little crazy. Nobody understood what they were doing,” recalled Lyseng.
What impressed him was there was a lot of talk about satellite imaging around that time but no one as far as he was aware was adopting it for crop production. “My feeling was finally someone is taking these satellite images and connecting them to the soil,” he said. “These guys were finally bringing it home to the farm.”
Farmers could always tell which parts of a field were good or bad but Farmers Edge began to use satellite imagery with remote sensing to clearly delineate those areas, soil test them, understand what the problem was and prescribe a remedy.
Then in 2013, Monsanto purchased a company called Climate Corp. for $1 billion. Climate Corp. was founded by two former Google employees in 2006 as a digital agriculture company that inputs “weather, soil and field data to help farmers determine potential yield-limiting factors in their fields,” according to Wikipedia.
Most people might have considered getting out of the digital ag business at that point, rather than go up against a company like Monsanto. People thought Farmers Edge would be crazy to even try. How could a little ag company started in Pilot Mound compete against that? “That’s pretty much what everyone said to me. ‘Monsanto is going to crush you like a cockroach,'” recalled Barnes.
But for Barnes and MacKinnon, it was another epiphany in seeing Farmers Edge’s potential. “I realized we were sitting on this wealth of information, like sitting on oil in the ground but not thinking about how to drill it out.” So they raised their first capital of $3.5 million from Avrio Ventures to help get that oil from the ground. From there, they needed to be connected to people from Silicon Valley and drew the interest of Kleiner Perkins, one of the most famous venture capital firms in Silicon Valley. Its track record includes investing in companies such as Google, Amazon, Twitter, Spotify and Uber. Support from Kleiner Perkins was a turning point that resulted in restructuring operations but also departures from the company.
In 2015, Farmers Edge expanded into the U.S., the same year Mitsui and Osmington invested in the company. Mitsui is one of the oldest and most respected trading houses in Japan, and some of the sectors it’s invested in include oil, gas, mining, health care, media, shipbuilding, financial services and broadcasting.
In 2016, Farmers Edge expanded into Australia, Brazil and Russia, and has deepened its penetration into all those markets since and expanded across South America. In 2019, Winnipeg Free Press business writer Martin Cash said Farmers Edge “may now be the most globally influential company in Winnipeg.”
Lyseng said there is little doubt precision agriculture is changing farming. There are parts of the world way ahead of Canada too, like European Union companies and Russia and Ukraine, Lyseng said. But the technology can still be difficult for a lot of farmers, he said. That will be the challenge for Farmers Edge to get up to 40 million acres. The transition is being made somewhat easier by new equipment that’s set up with the circuitry to handle digital data.
In an email, Farmers Edge chief operating officer David Patrick explained the company had to accumulate massive debt to develop into an SAAS company (Software as a Service, meaning a company capable of making its service available over the internet) with leading-edge platforms. “This is consistent with many tech companies,” Patrick said. Farmers Edge also acquired Crop Ventures Inc. in 2014, which gave it its very popular Land Command and Farm Command technology.
Those types of expenditures are behind Farmers Edge now and it’s ready to roll. Investors obviously believe in the company by the IPO response, Patrick said.
The company hasn’t lost touch with its rural and agricultural roots. Co-founder MacKinnon still operates out of Pilot Mound, where he oversees testing new products with a staff of about half a dozen. MacKinnon also still farms. Its chief operating officer is Trevor Armitage from Miniota. One Farmers Edge hub is out of an abandoned school in Kenton, a little northeast of Virden. “It had a daycare. The deal was we would buy the school for next to nothing but we would maintain the daycare,” said Barnes. The Kenton operation has 12 – 15 employees. The company’s headquarters are in Winnipeg, with about 75 employees, on Rothwell Road, off Route 90. More than 40 tech people are based out of Lethbridge, Alta., and it has a big U.S. office in Omaha, Neb.
Barnes is optimistic the company can hit its 40 million-acre target in 2022. “Our U.S. business will probably, by the end of 2021, be close to the size of our Canadian business,” he said.
[i] “Farmers Edge share offering oversubscribed,” by Ed White, The Western Producer, March 3, 2021