Is CropX’s acquisition of CropMetrics a signal of increasing consolidation in digital agtech in 2020?

Soil sensing and data analytics company CropX has acquired cloud-based precision irrigation provider CropMetrics. The terms of the deal were undisclosed.

“The acquisition makes a lot of sense for us in terms of just expanding our US market faster,” CropX CEO Tomer Tzach told AFN. “CropMetrics has done a great job in establishing a very significant presence in the breadbasket areas and that’s a place where CropX doesn’t have as strong a distribution channel as CropMetrics, so in that sense, it fits very well.”

Nebraska-based CropMetrics currently counts 500,000 acres under management and has been operating in the US market for a decade. CropMetrics is hoping the deal will help it expand its US sales footprint and bring its product to a larger audience, according to a press release announcing the deal, while CropX is hoping to offer its current customers more ways to use technology to fight resource limitations, profit challenges, and sustainability demands. 

“Both companies started as companies that help farmers do irrigation better and smarter based on soil sensing from the ground,” Tzach explains. “CropX developed its own soil sensor and we believe we can provide significant additional value to CropMetrics’ customers.”

CropX’s current offering includes proprietary soil sensing technology and what it describes as a “feature-rich” decision-support platform developed by in-house agronomic, data science, and software professionals. It also integrates crop models, satellite imagery, and weather forecasts to help farmers make business decisions about things like planting, applying inputs, and using critical resources like water.

Its in-house developed sensor is the star of CropX’s technology offering, however. Tzach describes it as the only do-it-yourself sensor available to farmers today — we’re not sure the team at Arable would agree — and claims that it can be installed in five minutes. He also believes it to be more affordable than other sensors on the market while describing its data collection capacity as very efficient. 

CropMetrics will continue operating under its brand name. CropX plans to support CropMetrics’ existing customers the same way while adding the option to access additional features, Tzach explained. He was unable to discuss pricing at this time.

Will consolidation be the new game for agtech entrepreneurs?

AFN was pitched this news by CropX’s PR agency as another signal that consolidation within agtech was on the rise. Last year, a merger between Plant Response Biotech and the biologicals arm of Koch Industries was reported as the first in a roll-up for that segment of agtech. And in the digital space, two agtech veterans, Pat Christie of Conservis and Wade Barnes of Farmers Edge, have told AFN they think consolidation will trend in 2020 and beyond.

But Tzach was vague about future acquisitions.

“I can’t say yes and I can’t say no. It’s not like we are on an acquisition crusade but it’s definitely something that Crop is open to and we think there are opportunities out there. There are companies offering soil sensing technologies and ones that offer apps that help farmers do a better job. But at the end of the day, there are many companies out there poking farmers and there seems to be a lot of consolidation opportunities. I think that’s where the agtech market is heading.”

Conservis founder Pat Christie recently told AFN about his doubts over whether Conservis would see as much success if it launched today as a standalone company. He’s no longer sure that standalone product launches will be successful unless they generate substantial capital at the outset. One of Conservis’ investors, Middleland Capital, is also anticipating more consolidation as we head into 2020 particularly when it comes to biologicals and digital agriculture.

In his 2020 predictions, Farmers Edge founder Wade Barnes also sees the consolidation writing on the wall. He recently told AFN that he anticipates seeing larger platforms “gobble up” smaller agtech companies in the new year as main players aim to claim more market share.

As more companies enter the market offering competing technologies, acquisitions allow bigger players to keep challengers at bay while fast-tracking their expansion plans. For companies that can make the financial aspects of an acquisition work, it’s an attractive proposition. For the acquisition target, having to answer to new management after operating independently can come with headaches, but it also comes with deep pockets. 

“In terms of the pace in which things happen in agriculture specifically, building a distribution channel takes time. I think this is just a faster way to get to market. We believe that this is a very cost-effective way to get to market quicker,” Tzach says.