As long term trends go, Calgary’s Hemisphere GPS (TSX:HEM) might be addressing one with unparalleled staying power.
The global demand for food is always rising, yet because of development and climate change, the amount of farmland is disappearing. According to Environment Science and Policy, Africa alone could lose 247 million acres of farmland by 2050 due to climate change. And The American Farmland Trust estimates that US farmland is disappearing at a rate of two acres per minute.
Steven Koles, the CEO of Hemisphere GPS, says one of the ways this trend trickles down is in the adoption of precision agriculture techniques to maximize the yield per acre of farmland. Koles was in Vancouver Thursday to address attendees of the Pender Small Cap Investment Conference, where he talked about a future in which farming will be done “by the foot, not by the field.”
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Koles says the adoption of precision farming techniques is in its early stages, pointing out that there’s less than 40% penetration of guidance systems on farms over 500 acres, and fewer than 20% of farms use any kind of auto-steering guidance.
Precision farming, or precision agriculture, is a term that only began to gain traction at the end of the last century, but since that time since has become an increasingly important method of increasing crop yield worldwide. The burgeoning industry has attracted the interest of farm equipment manufacturers like John Deere, and large agrochemical companies like Dow Elanco and Monsanto.
Koles says the recent $210-million acquisition of Precision Planting by Monsanto has created a lot of buzz in the space. Precision Planting, which makes designs hardware and software that helps farmers improve seed depth and spacing, is a client of Hemisphere GPS.
Although Hemisphere GPS growth has slowed of late, says Koles, he believes it will resume because of the company’s investment into new products. In August the company will release its Outback Guidance system, which it describes as the “next generation of precision farming”. The company also added a software platform when, in January, it picked up Pennsylvania-based AgJunction, a provider of a cloud-based data management for precision agriculture retailers and growers.
Shares of Hemisphere GPS closed today down 2.7% to $.73 cents.
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