Farmers weigh up Bayer's big data pricing proposal

Farmers weigh up Bayer's big data pricing proposal

Grain
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Bayer's outcome-based pricing concept has got farmers interested - although they say there are still many questions to be answered.

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Kaniva farmer Jonathan Dyer says a profit sharing model between Bayer and its customers could benefit farmers in certain years, but he has queries regarding the impact on research and development.

Kaniva farmer Jonathan Dyer says a profit sharing model between Bayer and its customers could benefit farmers in certain years, but he has queries regarding the impact on research and development.

AUSTRALIAN farmers have watched with interest as Bayer discusses the possibility of transitioning from traditional per-unit based pricing for its products to an outcome-based pricing model made possible over a digital data-sharing platform.

Grain producers said there would need to be much more detail provided before they would be comfortable signing up to some sort of risk-sharing payment arrangement, where Bayer was paid on how effective its products and advice were, but said there could be merit in the proposal.

Jonathan Dyer, a farmer at Kaniva in Victoria's west and a former Nuffield Scholar who conducted his research on the use of data within farming systems, said he could see some instances where the proposed Bayer model could work.

"The classic instance would be in a year such as 2016 here, where it was much wetter than usual.

"We probably did not put out all the inputs to maximise the yield potential we had because we were a bit concerned with the risk, given the return on investment is not there in our normal years," Mr Dyer, who farms at Kaniva, in western Victoria, said.

"However, if we had a risk sharing model in place we may have been more inclined to try and target those higher yields that all the models said were possible."

Grain Growers chairman Brett Hosking said the Bayer proposal would change the way farmers thought about data.

"It would definitely mean we would have to look at who we shared our on-farm data with and what level of information we were comfortable providing," Mr Hosking said.

Mr Hosking said the opportunity to have more tailored agronomic solutions, relevant to each individual farm was something he thought growers could be interested in.

"It's obviously not something we want to rush into, but it is definitely worth having a think and a chat about."

He said there were some issues that would need to be addressed before growers were comfortable in using a system similar to what Bayer proposed.

"I'm a little apprehensive regarding how they calculate how effective their advice and products are, if you went out and put a heap of nitrogen on and the yield went up accordingly, would they be paid more as a result of the nitrogen you bought elsewhere?" he questioned.

He also said he did not think farmers would be comfortable in any arrangement where they were forced to use only Bayer products, and if farmers used a mix he said it could be difficult to break down what product did what in terms of boosting yield.

"We understand this idea is only at the concept stage, there is an awful lot you'd need to work through, but we'd definitely have a conversation with Bayer about where we saw the scope for some benefits."

Mr Dyer said he saw potential downside in research and development if risk sharing models took over.

"Does it mean products will be pushed out quicker without the necessary research into efficacy, will the research component just be pushed out onto the farmer?"

"It might be they are not confident to sell the product so offer it on the no-result, no payment model, but then that means you don't use a rival's product which you know works, so you'd need to be confident in the efficacy in the products you were prescribed."

In terms of handing over intellectual property in the form of farm data, Mr Dyer said that would be a decision for each individual farmer.

"It all depends on your attitude and how much you think you can gain from it.

"This is the beauty of capitalism, you can give up your data if you think the opportunity is mutually beneficial or if you don't think it is worth it, then don't do it."

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