A European company formed to deliver satellite-based crop data directly to farmers plans to export its service to the United States, Canada, South America and elsewhere in 2006 on the strength of its initial success in France.
The Farmstar venture, backed by EADS Astrium’s Infoterra Global and Arvalis, the French agricultural-research cooperative, expects to book about 2.5 million euros ($3 million) in sales in 2006 through subscriptions taken out by more than 10,000 French farmers.
EADS Astrium has been struggling with the Farmstar business model since the late 1990s and at one point had tried to cut a joint-venture agreement with a similar initiative started by the Boeing Co. called Resource21.
That attempt foundered and Farmstar retreated to its French home to perfect its services offering but on a smaller scale. EADS Astrium has since become majority shareholder of Spot Image, the Toulouse, France-based company that commercializes Spot satellite data worldwide.
Infoterra and Farmstar are now delivering satellite-based crop-status maps three to five times a growing season to 10,000 farmers who collectively have 250,000 hectares under plow.
Bernard Coquil, Infoterra business director for agriculture and agro-environment, said the company expects to double that in the next two years in France. Once that milestone is reached, the French market, Europe’s biggest agricultural producer, will be about saturated, he said.
“We have begun work in the United Kingdom and Spain and our first task in 2006 is to consolidate that work,” Coquil said here Feb. 27 during a press briefing at the annual Agricultural Exhibition. “Then we need to pursue our work in the United States, Canada, South America and Australia.”
Coquil said Farmstar’s initial investment in a trial service in the United States in the late 1990s ran aground because managers had not yet perfected the satellite maps to be sent to farmers.
Jean-Paul Bordes, head of Arvalis’ technical service, said 75 percent of the farmers subscribing to Farmstar resubscribe the following year. Among those that do not, he said, the decision is based more often than not on a farmer’s nearing retirement or other issues that do not throw Farmstar’s efficiency into question.
Subscribers pay an average of 10 euros per hectare per year for Farmstar. The satellite evaluations are delivered in the form of maps that detail crop status and prescribe irrigation, fertilization and other treatments.
Bordes said Farmstar surveys have found that farmers often save as much as 25 euros per hectare by following Farmstar indications, which even after subtracting the 10-euro charge makes for a profitable investment.
Joeal Cottart, head of a farm cooperative in France’s Oise region who has been using Farmstar for three years, said it is difficult to predict the savings afforded by the service because some of the benefits come from saving a farmer’s time.
“Instead of having to go parcel by parcel to determine the status, I have a clear indication from the satellite maps of where I need to add nitrates, for example,” Cottart said during the press briefing. “But in some areas, like fertilizer use, I can track the savings fairly easily.”
In a 2004 survey of subscribers, Farmstar found that for nitrate fertilizer alone, the direct savings from using Farmstar averaged 6 euros per hectare. The figure does not include the environmental benefit to regional water aquifers of using less fertilizer.
Cottart and Bordes said the cost of programming a satellite and acquiring the image remain too high, especially if the region to be covered is as small as France. Bordes said Farmstar expects to about break even in 2006 with nearly 2.5 million euros in revenue, but he noted that the company is spending 800,000 euros per year on satellite data.
“We are pressuring Farmstar to keep these costs as low as possible,” Cottart said. “Farmers will not accept the service unless they can demonstrate that it is cost effective.”
Substantially larger subscriber concentrations in the United States, Canada, Brazil, Argentina and Australia, among other regions, will be indispensable for Farmstar’s ultimate success given the logistics of satellite coverage.
Farmstar uses three French Spot satellites, each with a coverage area of 60 square kilometers. It also has started to use, through Spot Image, India’s IRS spacecraft.