Value added services are a way that product companies can differentiate themselves from their competition. In the two previous posts in this series, we looked at U-Haul and USAA. In this post, we see how an agriculture business, as part of its growth strategy, recently made a major acquisition to add services to its portfolio.

According to their website,

“Monsanto is a relatively new company. While we share the name and history of a company that was founded in 1901, the Monsanto of today is focused on agriculture and supporting farmers around the world in their mission to produce more while conserving more. We’re an agricultural company.”

Since 2000, they exclusively developed and sold products to farmers. The products generally fall into these broad categories:

  • Conventional and biotech seeds
  • Seeds modified to grow faster or be disease resistant
  • Herbicides

Recently, Monsanto announced a major acquisition that will begin to reshape the company into the value added services segment in a major way. Here is the headline from their Oct. 2, 2013 press release:

Monsanto to Acquire The Climate Corporation, Combination To Provide Farmers With Broad Suite Of Tools Offering Greater On-farm Insights

These are the two bullet points under the headline:

  • Investment creates industry-leading capabilities to meet the needs of farmers in the agriculture information age
  • Combination to put more information in farmers’ hands to increase productivity, utilize resources more efficiently; expands near and long-term opportunity for Monsanto’s business and Integrated Farming Systems platform

This is what the Chairman of Monsanto had to say about The Climate Corporation:
“The Climate Corporation is focused on unlocking new value for the farm through data science,” said Hugh Grant, chairman and chief executive officer for Monsanto. “Everyone benefits when farmers are able to produce more with fewer resources. The Climate Corporation team brings leading expertise that will continue to greatly benefit farmers and their bottom-line, and we want to expand upon this tremendous work and broaden their reach to more crops and more world areas. We look forward to working closely with our distribution partners and others in the agricultural industry to bring this suite of information resources to the farm.”

The Future

Again, from the acquisition press release:

“Combined Company to Be a Leader in Data Science, Acquisition Expected to Drive Near-and Long-Term Growth Potential”

“The acquisition of The Climate Corporation represents a natural extension of Monsanto’s vision to increase crop productivity, conserve more of our planet’s natural resources and improve the lives of people around the world. It will also greatly expand The Climate Corporation’s capabilities in data science, agriculture’s next major growth frontier, an area that represents a potential opportunity of $20 billion beyond Monsanto’s core focus today. The companies estimate the majority of farmers have an untapped yield opportunity of up to 30 bushels to 50 bushels in their corn fields, and they believe that advancements in data science can help further unlock that additional value for the farm.”

“The combined capabilities will immediately expand both the near- and long-term growth opportunities of Monsanto’s Integrated Farming Systems platform and research and development pipeline in the coming years.”

Key Takeaway

Is there any doubt that Monsanto understands the long-term potential of entering the value added services business? What lessons can you take away from the Monsanto story and apply to your business? Can you do some things at a very small level to gain experience, create loyal customers, and differentiate yourself in the marketplace?