www.ubs.com/investmentresearch This report has been prepared by UBS Securities LLC. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 15. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Global Research 29 June 2020 Future of Farming Transcript: Precision Ag and Future of Farming Call Series: Farmers Edge discusses digital ag Integration of technology, and actionability of data, are key issues We hosted a conference call with Wade Barnes, CEO of Farmers Edge (FE). Our speaker noted the distinction btwn digital and precision ag, with precision focusing more on the mechanical execution, and digital, which is earlier in development, focused on data analytics. Many companies offer precision ag technology, and most new equipment is digitalized & collects data from the field. However, farmers are left to integrate the data, which can be even more challenging with a mixed fleet. Our speaker noted that Climate Corp and DE, along with FE are leaders in this regard. Beyond that, however, farmers are left to interpret the data, and CC & FE are the leaders there; DE with JD Ops Center presents the data to the farmer and relies on 3rd parties to interpret it. Digital ag tech has more room to boost profitability than precision ag Our speaker believes farmers will see more benefits from digital ag offerings than just the higher yields offered by precision tech. Actionable digital solutions can help reduce industry risks to weather and supply-demand. Additionally, digital solutions can share data with other stakeholders, such as insurers, lenders, and customers, more easily, accurately, & consistently than traditional methods. Combined with the mitigated risks, these tools could help farmers realize better credit terms, lower insurance premiums, and premium prices (for premium or eco-friendly crops), thereby increasing profitability. Our speaker also noted that these solutions open the door to companies offering outcome-based pricing (e.g. Bayer with seeds). Building an ecosystem improves stickiness and cross-selling Building an ecosystem is important for companies, as the ease and scale of integration makes the platforms sticky, & leads to a higher farm wallet-share. In our speaker's opinion, DE & BAYN/Climate Corp, with JD Ops Center and FieldView respectively, are the leaders in this regard. DE is able to lock farmers into their ecosystem by connecting the tech already in the equipment, aggregating it, and presenting it back to the farmer in JD Ops Center. BAYN/CC's ecosystem is similar, but is more focused on seeds and agronomy. FE presents an alternative to the...
