Not since the Dust Bowl days of the 1930s have farmers struggled this much.
The trade wars over the last few years combined with falling crop and real estate prices have left many farmers in bankruptcy.
To make matters worse, the shuttering of restaurants during the COVID-19 pandemic slashed demand even further for this $2 trillion industry.
When all of this is over, the agriculture industry is going to look a lot different. But, that doesn’t mean we still don’t need food.
U.S. farmers are being forced to cut down on the number of fields they tend. They are restricted in both labor, which is a growing problem, and machinery costs.
But as with any business that faces these kinds of issues, the solution is to increase efficiency and productivity.
Beyond fertilizer and pesticides, there weren't many farmers could do to increase yields just a few years ago. But a new booming subindustry is popping up that could save their businesses in a big way.
5G Tech Meets Agriculture
Precision Agriculture Software sounds like something from a futuristic movie where robots grow food. But it is a real subindustry that’s gaining huge traction right now.
The idea is to use every piece of data you can find at your farm and crunch the numbers.
That includes precise measurements for agricultural inputs like seeds, fertilizer, and pesticides. It means, monitoring labor costs down to how much each row of corn costs to tend. It also, finally, means real-time top-down crop monitoring.
This last bit is possibly the most exciting breakthrough in recent years for this tiny subindustry.
With the use of high-frequency satellite imagery, farmers are able to keep an eye on all their fields at all times without expensive labor costs. Satellites do it for them.
With falling prices and economic turmoil already here for farmers, this kind of cost-saving and efficiency boost is a boon.
And while the subindustry is still adapting and innovating, one company seems to be gaining a lot of attention.
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The Complete Efficiency Package
Corteva Inc. (NYSE: CTVA) is well-known in the agriculture business. It carries a market cap of $19 billion. And its brands are staples for farmers.
The company is kind of a do-it-all ag business. It sells seeds, treatments, inoculants, crop protection and more. But what makes this a real growth opportunity is its technology and software arm.
Corteva’s tech business is called Granular. It is both easily adaptable for many different types of farms, including livestock, and customizable for each individual farmer’s needs.
Granular Agronomy, for instance, takes decades of analytics and formulates the exact right amount of fertilizer and seeds for each field. This saves both input costs, as well as wastage.
The improved yields from that alone are crucial for the current agricultural rut farmers are in. But there are many more Granular handles.
Granular Insights is the monitoring software. This includes the satellite imagery next-gen farmers are going to rely on. It automatically operates in the background and sends updates when moisture levels drop too low or weeds crop up.
Granular Business runs the overall operation. It tracks labor, input and machinery costs. It spits out analytics about the individual fields and systems at each farm.
Granular is even getting into tracking real estate markets for expansion or downsizing, something we’ll see a lot more of over the next few years.
Of course, Granular and its parent Corteva aren’t the only players in this game. But they are the only ones that handle all parts of farming efficiency… from seed to satellite.
Yet, remarkably, Corteva’s stock is being lumped in with the rest of the agriculture industry:
This gives you a short-term opportunity. As farms are forced to sell or switch to more cost-cutting measures, tools like Granular are going to continue to be in demand.
Once those sales hit the company’s income statement, investors will notice. Expect this play to skyrocket in the fourth quarter of this year into Q1 of next, as farmers make the switch between planting seasons.
To your prosperity,
Joshua M. Belanger
Executive Publisher & Founder