Granular announced its acquisition of AcreValue, a farmland valuation platform, for an undisclosed amount. San Francisco-based Granular offers a farm management and analytics platform that aims to help farmers increase efficiency, yield and profit.
“Granular’s mission is to help the agriculture industry use data to make more accurate business decisions,” said Sid Gorham, Co-founder and CEO of Granular. “It’s critical for expansion-oriented producers to find the right land at the right price and, over time, AcreValue will improve the efficiency of the farmland market.”
AcreValue’s goal is to bring data and transparency to farmland rental and resale markets. It aggregates public data sources and applies computer models to provide customers with valuation estimates and downloadable reports for any field using soil, climate, geography, crop history, and other factors. AcreValue had been charging $15 per report and now intends to make the reports available for free.
Short of paying for a full appraisal it can be difficult to assess the value of a parcel of farmland generally and to your operation specifically. The last decade has seen the farmland market in the U.S. change dramatically. And with more and more small farmers selling their land and operations to larger farm groups, a lot of land is expected to change hands. The information that facilitates these sales is not standardized in any digital format and there is widespread frustration from the all sides of the farmland rental and resale markets.
Zillow and Auction.com are good examples of the direction AcreValue could go. Those companies, which provide transparency in consumer and commercial real estate, grew out of similar data based services, which ultimately turned into listings on those companies’ sites.
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Chris Seifert founded AcreValue in 2013. A former data scientist at the Climate Corporation, Seifert got the idea for the company after his family had an argument about whether to sell the family’s farm in Iowa. Since a simple, reliable and trustworthy model to quantify the value of their farm did not exist, Seifert tried to create one. He then gathered two of his friends that he had met in his Stanford dormitory and began working on AcreValue.
“Emotions around farmland and heritage are really powerful things. I was helping to bring some data and add transparency to our decision making process,” Seifert said.
Seifert says AcreValue’s models have been tested with growers and are based on publicly available data. The company runs two major sets of models, local and macro, to quantify the farmland value. The local model determines value based on local sets of data such as soil analysis and historical yield for the specific plot of land. The macro model incorporates broader market metrics such as interest rates and commodity prices.
With Granular’s help, AcreValue plans to build out its capability and get into more regions faster. It’s currently only available in Iowa, Illinois and Indiana. In addition, Granular just announced that Bruce Sherrick, a professor in agriculture and applied finance, will join its advisory board, and focus on helping AcreValue’s data science team extend its product.
For Granular’s existing customers, the acquisition of AcreValue appears to be a good thing. Granular has focused on large scale farms in the U.S., and many of these customers could be buying or renting more land in the upcoming years as land is anticipated to be changing hands. Therefore, having a tool to more easily evaluate the land could help these customers with their decisions.
Gorham sees farmland real estate as another example of the broader professionalization and consolidation of the agriculture industry. Just as the grain markets trade globally, it is likely that the farmland market will transition from local to national and global. In fact, farmland could be even easier to sell globally than other real estate because it’s less subjective. With the right tools in place for Ag land sales, a buyer could have a full, trustworthy, and backed up picture of the property they intend to buy, without ever seeing it in the first place.
This is an interesting development for the AgTech industry. Aside from Monsanto, it looks like Silicon Valley backed startups are looking to take the lead on acquisitions, similar to Silicon Valley fueled startups in other industries.
Photo Courtesy Granular/AcreValue.