“We believe the claim referenced in your email does not have merit and we are defending against it,” said Laura Workman, general counsel and corporate secretary with Farmers Edge in an emailed statement.

“It’s business as usual at Farmers Edge.”

Former investors in Manitoba-based ag tech firm Farmers Edge have asked the B.C. Supreme Court to certify a class action lawsuit against the company, former leaders and its main shareholder.

Vancouver resident Willson Leung and Ottawa resident Philippe Golin, both identified as former shareholders in Farmers Edge, filed the suit on February 22.

Farmers Edge is a digital agronomy firm that offers services such as variable rate nutrition management and FarmCommand, a data management and analytics platform.

Farmers Edge, founder and former CEO Wade Barnes, former chief financial officer David Patrick, Fairfax Financial Holdings and several financial underwriters are named in the suit asking for a combined total of $270 million in damages.

“Defendants misrepresented material facts about the Company’s business. The Plaintiffs bring this action on behalf of FE securityholders who suffered losses as a result of these misrepresentations in the primary and secondary market for FE securities,” says the statement of claim.

None of the allegations have been proven in court. No statements of defense have been filed.

The statement of claim says the company was heavily indebted via debentures owed to Fairfax, its major shareholder, and was unable to secure additional capital at the time it launched its initial public offering in March 2021.

It also alleges that it overstated the number of partnerships and the nature of the relationships it had with companies that it said would assist in marketing or promoting the company’s products to farmers.

It further alleges that Farmers Edge misrepresented its income from farmer subscriptions to its products.

Barnes declined to comment on the statement of claim. David Patrick and Fairfax Financial have not responded to requests.

In its IPO, Farmers Edge sold nearly 7.4 million shares at $17 per share for total gross proceeds of about $125 million, according to a company news release.

On the day the company went public in March 2021, Barnes told media the company would use the new funding — totalling a little over $125 million — to build on its vision of digital farming.

“We’ll be scaling up our teams to grow the business,” he said. “We’ll also be developing new products.”

However, share prices dropped steadily and the company was beset by financial woes. Barnes left the company in early 2022. In August 2023, it announced it was laying off 20 per cent of its workforce and consolidating operations in North America.

At the beginning of 2024, Farmers Edge inked a deal with Fairfax to sell all common shares for 35 cents apiece — at the time, Fairfax owned 61 per cent of the company’s shares — and to take the company private again.

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Vancouver resident Willson Leung and Ottawa resident Philippe Golin, both identified as former shareholders in Farmers Edge, filed the suit on February 22.

Farmers Edge is a digital agronomy firm that offers services such as variable rate nutrition management and FarmCommand, a data management and analytics platform.

Farmers Edge, founder and former CEO Wade Barnes, former chief financial officer David Patrick, Fairfax Financial Holdings and several financial underwriters are named in the suit asking for a combined total of $270 million in damages.

“Defendants misrepresented material facts about the Company’s business. The Plaintiffs bring this action on behalf of FE securityholders who suffered losses as a result of these misrepresentations in the primary and secondary market for FE securities,” says the statement of claim.

None of the allegations have been proven in court. No statements of defense have been filed.

The statement of claim says the company was heavily indebted via debentures owed to Fairfax, its major shareholder, and was unable to secure additional capital at the time it launched its initial public offering in March 2021.

It also alleges that it overstated the number of partnerships and the nature of the relationships it had with companies that it said would assist in marketing or promoting the company’s products to farmers.

It further alleges that Farmers Edge misrepresented its income from farmer subscriptions to its products.

In its IPO, Farmers Edge sold nearly 7.4 million shares at $17 per share for total gross proceeds of about $125 million, according to a company news release.

On the day the company went public in March 2021, Barnes told media the company would use the new funding — totalling a little over $125 million — to build on its vision of digital farming.

“We’ll be scaling up our teams to grow the business,” he said. “We’ll also be developing new products.”

However, share prices dropped steadily and the company was beset by financial woes. Barnes left the company in early 2022. In August 2023, it announced it was laying off 20 per cent of its workforce and consolidating operations in North America.

At the beginning of 2024, Farmers Edge inked a deal with Fairfax to sell all common shares for 35 cents apiece — at the time, Fairfax owned 61 per cent of the company’s shares — and to take the company private again.

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A newly-formed Fairfax subsidiary inked a deal this January to purchase in cash all common shares of Manitoba-based digital agronomy firm Farmers Edge, taking the company private again. Fairfax already owned more than 61 per cent of the company’s shares.

Shares of Fairfax, a property and casualty insurer, sank 12 per cent on Thursday, and set for their worst drop since Sept. 2008.

Fairfax currently has a short interest of 0.65 per cent of free float worth C$203.81 million ($151.36 million), with short sellers having made over C$21 million in paper profits so far today, according to data from Ortex.

The Canadian company’s insurance business has struggled to remain profitable even after the hurricane-related catastrophes in 2017, Muddy Waters wrote in a research note.

“This underperformance pressured Fairfax into becoming aggressive in pulling accounting levers starting in 2018,” the short seller said.

“We find that Fairfax has consistently manipulated asset values and income by engaging in often value destructive transactions to produce accounting gains,” it added.

Fairfax disagreed with the report, while assuring shareholders it “has prepared its financial statements and reporting in accordance with all applicable accounting principles”.

Reuters was not immediately able to verify the allegations made in the report. Short sellers make money by betting that the price of a security (such as a stock) will decrease.

Fairfax was founded in 1985 by Canadian-Indian billionaire Prem Watsa, who is also its chairman and CEO. He is also known as ‘Canada’s Warren Buffett’.

“We see Fairfax as far more akin to GE than to Berkshire Hathaway,” the hedge fund said.

It also alleged Fairfax carried several of its investments at “unrealistic” carrying values. According to the hedge fund, the market value of its shares in Indian outsourcing provider Quess Corp was $477.2 million, while Fairfax continued to carry it at about $1 billion.

In 2019, Fairfax raised its stake in Quess to more than 32 per cent after acquiring over 256,000 shares. As of Sept. 30, it carries the Indian company at a 87 per cent premium to its market value, Muddy Waters said.

Last year, Muddy Waters bet against the credit of the Luxembourg-based commercial landlord CPI Property GroupO5G.DE in November and Blackstone’s real estate investment trust in December.

Fairfax becoming the latest short-seller target comes nearly a year after hedge fund bets against Canada’s TD Bank Group hit $4.2 billion, making it the world’s most-shorted banking stock, according to data provider ORTEX’s calculations.

In its most recent third-quarter earnings report, Fairfax reported a profit that more than doubled to C$1.19 billion, compared with C$582.7 million a year earlier.

Net premiums written also grew 4.8 per cent, while gross premiums written also rose 5 per cent in the quarter.

“The MW report does NOT raise concerns with the earnings power of the business,” National Bank of Canada wrote in a research note on Thursday.

“The MW report does not describe any fraudulent or nefarious accounting tactics, but only potentially aggressive valuation marks,” it added.

–Reporting for Reuters by Mehnaz Yasmin, Manya Saini and Shashwat Chauhan in Bengaluru, with Glacier FarmMedia files.

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The move to go private comes nearly three years after Farmers Edge’s initial public offering (IPO) when shares started at $17.

A newly-formed Fairfax subsidiary intends to purchase in cash all common shares Fairfax and its affiliates don’t already own, Farmers Edge said in a news release. Fairfax currently owns more than 61 per cent of the company’s shares.

Farmers Edge announced it was considering a proposal from Fairfax in November with an offer of $0.25 per share.

The transaction is expected to be closed in the first quarter of this year following approval by shareholders, the release said.

Farmers Edge, founded in 2005 in Pilot Mound, Man. by agronomists Wade Barnes and Curtis MacKinnon. Barnes left the company in March, 2022.

On the day the company went public in March 2021, Barnes told media the company would use the new funding — totaling a little over $125 million–to build on its vision of digital farming.

“We’ll be scaling up our teams to grow the business,” he said. “We’ll also be developing new products.”

However, the digital agronomy firm was beset by financial problems. In August, it announced layoffs of 20 per cent of its workforce and consolidation of operations in North America. It also shuttered its Australian operation.

–Geralyn Wichers is associate editor of AgCanada. She writes from southeast Manitoba.

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Farmers Edge made the announcement via a media release on Nov. 16.

It said it had a received a non-binding proposal from its majority shareholder, Fairfax Financial Holdings Limited, which would see Fairfax acquire all common shares the company doesn’t already own at 25 cents per share.

When the company made its initial public offering (IPO) in March 2021, it did so at $17 per share.

Fairfax owns more than 61 per cent of Farmers Edge’s shares.

Farmers Edge said it has formed a committee of independent directors to evaluate the proposal and to “explore potential alternatives, including maintaining the status quo,” the news release said.

There is no timetable set for the committee to complete its review.

The digital agronomy firm has been beset by financial problems for some time. In August, it announced layoffs of 20 per cent of its workforce and consolidation of operations in North America. It also shuttered its Australian operation.

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The company is a Winnipeg-based provider of data-driven agronomy and farm management services. An initial public offering (IPO) allows a company to raise funds and sell ownership of some of the company to the public through a stock exchange.

Farmers Edge has been a darling of Silicon Valley and one of the first Canadian agriculture technology companies to be driven through the system by which consumer technology companies grow from startup to expansion to being taken public. An IPO results in a payday for the original investors and founders that drive the company — and the ability to scale quicker by accessing capital.

Like many other technology startups, Farmers Edge also has grown rapidly, but continues to spend more than it earns. According to the Globe and Mail, Farmers Edge lost $68 million in the first nine months of 2020. It operates in six countries and serves farms working 25 million acres.

The initial public offering for Farmers Edge had excellent timing as a surge in public offerings in Canada in late 2020 and early 2021 have found eager investors.

“It really leaves us with a clean balance sheet and dry powder to go out and really grow the business at a time when digitalization is really happening at a rapid pace in agriculture,” company chief executive officer and co-founder Wade Barnes said during a news conference marking the conclusion of the IPO, as reported by Western Producer.

There was a huge amount of interest from investors in the Farmers Edge offering, which allowed it to increase its IPO from $100 million to $125 million.

It’s estimated that nine orders to buy were put in for every share available.

An IPO is one way to generate investment in a growing company, but the success of the Farmers Edge IPO should make other agriculture companies, especially those building ag technology take notice.

Agriculture may finally be getting a more equal standing with consumer tech companies.

The success of the Farmers Edge IPO is also about the fact that many day-trading investors have come into the market during the pandemic, driving many new stocks to sometimes unreasonable highs.

Still, Farmers Edge is serving as a model for future agriculture tech companies.

The challenge for agriculture technology is that it doesn’t fit the template for technology commercialization that has propelled many consumer-facing products into the market.

There are several reasons for this, including the fact that agriculture technology takes longer to prove (growing seasons take time and livestock need a while to get through their growth cycles), the technology is often dealing with biology, which is unpredictable and most farms are diverse small businesses that require more time to build to a larger scale.

I’ve talked to startup agriculture technology companies that have found the traditional technology startup process frustrating due to a lack of understanding about the timelines of agriculture tech.

That’s why we need to continue to grow a system for technology incubation and then a route to market that fits agriculture. It needs access to mentors, early stage funding and spaces to test in farm conditions. Lots has happened in the past year.

Bioenterprise has become the lead in creating an agriculture and food incubation network, partnering with universities, colleges and groups across the country. Universities like Guelph are thinking about how their experts can help and create offshoots into which technology companies can easily flow.

We also need more of an entrepreneurial and risk-taking culture in Canadian agriculture technology. Use Ontario as a base to grow globally. 

Dominic Barton, whose 2017 report pointed to agriculture as a potential global leader for the Canadian economy, recently said during a Canada’s Food Day interview that Canada continues to lack five to 10 world-leading companies in agriculture and food.

We’re not even close to that, as we watch any that get to the world stage be bought out. 

Bold, global thinking is critical.

But back to the starting line of companies: Farmers Edge is unique in that it had people who waded into the world of the global tech giants. It had people who had the necessary connections and who understood the game. Other Canadian companies need to learn lessons from Farmers Edge and we need to see them launching their own agriculture IPOs.

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Farmers Edge, founded in 2005 in Pilot Mound, Man. by agronomists Wade Barnes and Curtis MacKinnon, has carved out a niche using field-centric data, artificial intelligence and its FarmCommand data management platform.

CEO Wade Barnes called it an exciting day during an online press conference Wednesday marking the event from the firm’s Winnipeg headquarters.

“It’s a transformational day for Farmers Edge and a huge change for all of agriculture as we see the digitization of the most important industry in the world,” Barnes said.

Barnes added that the company will use the new funding — totalling $125,001,000, based on 7,353,000 common shares issued at $17 per share — to build on its vision of digital farming.

“We’ll be scaling up our teams to grow the business,” he said. “We’ll also be developing new products.”

In many ways the IPO process represents the maturation of any company, he said, but added that it accomplished some specific things for Farmers Edge.

Most of the venture capital that’s been raised over the past few years has now been converted into shares, he noted.

“It leaves us with a really clean balance sheet, and lots of dry powder to go out and grow the business organically,” he said. “This is at a time when digital agriculture is growing rapidly.”

Responding to questions from financial journalists during the virtual question-and-answer session following company presentations, David Patrick, Farmers Edge’s chief financial officer, said interest was strong in the offering.

“Our underwriting partners told us there was about nine times the interest as there were available shares,” he said.

By 2 p.m. on the day of the IPO, share prices had already climbed to $19.64, rising $2.64 from the IPO price of $17 per share.

The company initially aimed to sell a 16 per cent stake with shares priced between $10 and $17 each, according to Feb. 9 sale documents.

National Bank of Canada and Canadian Imperial Bank of Commerce led a group of five investment banks on the IPO, and have an option to acquire an additional 15 per cent of the offering.

The company will trade on the TSX under the symbol FDGE.

— Gord Gilmour is editor of the Manitoba Co-operator in Winnipeg.

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The company’s farm management dashboard will now send email alerts when algorithms show that there’s a change in field crop health.

Why it matters: Farmers are more likely to adopt farm information systems when they get automated analysis for the data. The Farmers Edge alerts are a first for satellite imagery.

Jamie Denbow, global digital ag lead with Farmers Edge, said several years ago farmers were challenged to find the value in satellite imagery that could only deliver images every 10 days. They had to make a management decision about a crop issue before 10 days was up, so the satellite imagery was used for post-mortem analysis.

That’s why Farmers Edge signed a deal with Planet Labs — a company putting large numbers of satellites into the Earth’s orbit — so that it now has imagery arriving every two days.

Denbow said farmers soon realized that meant a lot of images to view.

“They said ‘I have so much imagery, I have to use an hour of my morning each day to discover what I’m finding.’” That made an automated evaluation system a priority for the company.

Farmers Edge launched its automated crop health change detection tool Oct. 24, after testing it around the world with farmers.

Instead of sifting through satellite images, the computer system will do that for farmers, comparing the most-recent image with images up to 14-days old and sending farmers alerts by email that will tell them there’s an issue with a certain part of a certain field.

So, now, like dairy farmers with robot milking systems and hog farmers with automatic sow feeding systems that send alerts when parameters change around animal health, crop farmers can get automated alerts that tell them about changes in their crop health.

The system doesn’t just say ‘look at this field’, it borders the problem spot within the field and makes a new layer in the company’s FarmCommand dashboard. That layer can then be loaded into the company’s scouting app and a farmer can drive directly to the problem area.

“This will drive efficiency. Crop scouts can scout more acres, better than before,” Denbow said.

The free upgrade can be added in a 20 second process under alerts in the FarmCommand dashboard.

“I think this is a monumental product launch,” said Denbow. “The automation is huge.”

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Winnipeg-based digital ag consulting firm Farmers Edge recently released Health Change Maps and Notifications, a new function that automatically scans the company’s daily satellite imagery and alerts growers of any changes in field health or spots where the field’s condition departs from the norm.

With new satellite images available daily at a three-metre resolution, and the system on an “aggressive” setting, the grower can pick up “fairly subtle” changes that wouldn’t be quickly detected at a 10-metre resolution or through images delivered less often, Jamie Denbow, global digital ag lead for Farmers Edge, said in an interview.

“Last year, we solved the challenge of infrequent, inconsistent imagery available to growers with the integration of daily satellite imagery into our platform,” company CEO Wade Barnes said in a release. “Now, growers see at least one, if not multiple, field images per day — which is a good problem to have, but it can also be time-consuming.”

On average, Farmers Edge said, growers spend three to six minutes per field checking imagery. With the Health Change Maps function, however, the Farmers Edge platform instead identifies areas of alert and informs the grower with automatic notifications.

The new tool’s algorithms, proprietary to the company, spot significant changes in the satellite imagery and automatically trigger notifications outlining positive or negative vegetative changes in the field, delivered to the grower by email.

In those notifications, a grower is directed to Map Manager in the company’s FarmCommand farm management platform to view the Health Change Map and the exact locations and details of the change.

By spotting such changes, the company said, a grower can head off potential problems, such as pests, disease, nutrient deficiencies, inclement weather, missed applications, equipment malfunctions or drainage issues, and “react to crop stress before yield is impacted.”

The system offers both “positive” and “negative” alerts to growers; for example, a “positive” alert where vegetative growth exceeds the rest of the field would show a double-seeded spot or an emerging weed problem earlier in the season, while a “negative” alert, later in the season, would show spots where growth isn’t keeping up with the rest of the field.

A crop scout can then head directly to the flagged area, Denbow said, rather than wander the field in a ‘W’ pattern scouting for problems that may or may not exist.

For example, he said, the notifications recently given to crop scouts in Brazil using the system helped them detect emerging weed patches and outbreaks of cutworm.

Brazil is the only area with active growing crops right now where Farmers Edge clients are using the system, he said, but noted it’s been beta-tested throughout the world, including in the Canadian Prairie provinces and Ontario and in the U.S. Midwest, as well as in Australia and Russia.

Growers get the option to set the notification parameters at “aggressive” or “conservative” levels, and can also add other users and field service providers to receive notifications, Farmers Edge said.

From user feedback, Denbow said, the “aggressive” setting is expected to be the preferred option, whereas growers with field under irrigation or at a less time-sensitive stage might instead opt for “conservative” mode.

The system also gives growers a better idea of the geographic scope of problems such as hail or excessive rain, he said, which would be helpful when dealing with crop insurance adjusters.

Given time and machine-learning, he said, such a system might also be able to help detect the more specific nature of the problem, not just alerting growers that a problem exists.

For now, the system can be set to ignore unavoidable issues on a given patch of land, such as sand ridges or low spots, so a grower wouldn’t receive notifications about issues on those spots for a set period of time. Over subsequent years of use, he said, the data gathered will help improve the system’s understanding of each field.

Health Change Maps and Notifications joins a list of other notification options Farmers Edge released earlier this year, including Rainfall and Growth Stage Notifications, the company noted. — Glacier FarmMedia Network

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“We think this will be game-changing,” Farmers Edge president and CEO Wade Barnes said in an interview Oct. 3.

“I think it’s going to make a huge change to how farmers manage their crops.”

The multi-year, multi-million dollar deal announced Wednesday makes Farmers Edge, the Manitoba-based, international precision agriculture company, the sole distributor in key agricultural regions, including Canada and the U.S., for Planet, an integrated aerospace and data platform company. (See sidebar below for the full list of countries.)

Farmers Edge will have the right to use and distribute high-resolution, high-frequency imagery from Planet’s three satellite constellations — RapidEye (eight-metre resolution), Planet “Doves,” (3.7-metre) and SkySat (one-metre), which was recently acquired from Google — as well as future sensors developed by Planet.

The highest-resolution option makes plant counts possible, but in most cases resolution is less important than how often images are available, Barnes said.

Satellite companies have promised field images weekly, but in fact only delivered two or three a growing season — not frequently enough to alert farmers to problems in their crops, Barnes said. Farmers Edge will provide farmers with images every two or three days, and in some places, daily.

“This is going to be like a safety net for the grower,” he said. “This technology will save fields.”

The images will be integrated with Farmers Edge’s services making it easier for farmers and their agronomists to spot problems that could undermine yields, such as inadequate fertilizer, poor drainage, weeds, insects or diseases, Barnes said.

“We know the field-centric weather, we know the planting dates, we know the varieties,” he said. “We are already doing modelling. We’re saying there will be a disease outbreak in the field and then the imagery starts to monitor and you’ll be able to see an issue, say where there’s die-back, and then triangulate it together. What we’re hoping is we’ll be able to predict things and get guys to go out and act on it before you see a problem. The Planet Dove is going to be the eyes and ears of the field, so to speak, throughout the growing season.”

A lack of timely satellite images drove some farmers to drones, but the time and effort required makes it less attractive, Barnes said.

“I’d say in about two years people went from being very excited about drones, to not,” he said.

But drones are still useful, he added.

“Where I see drones having incredible value is with niche things like drainage, or having real problematic areas where you want to go out and physically see the field from the drone while you are flying it,” Barnes said. “Drones will have their place. I just think that people thought drones would replace imagery from satellites and that’s not really practical. My view is that you won’t see less drones. I think you’ll see a more targeted approach to it.”

Access to satellite NDVI (normalized difference vegetation index) images will cost farmers enrolled in Farmers Edge’s Smart and Smart VR programs just over $1 an acre more. Farmers with existing contracts will be allowed to opt out, but based on trial runs this summer, Barnes said he doubts many will.

“Our gut tells us based on what we’ve heard from farmers is that everyone is going to want this,” he said. “For just over a dollar an acre it’s just something that would be difficult to turn down.”

While large competing precision ag companies won’t have access to Planet’s images, local ag retailers, co-operatives, machinery dealers and agronomy consultants can partner with Farmers Edge to access the satellite images, Barnes said.

It reflects an evolution in Farmers Edge’s business model. It started off in Pilot Mound, Man. in 2005 as an agronomy consulting company, competing with other consultants. But when Farmers Edge expanded into the U.S. it partnered with consultants providing them with enhanced services, Barnes said. For the last year and a half, Farmers Edge has been moving in the same direction in Canada.

“Our view is Farmers Edge is much more technology based,” Barnes said. “We’re building the tools so that existing consultants that have relationships with farmers they’ll do a better job on those farms.

“Our view is that we want to be somewhat the Costco of ag tech where we provide a good product at a really good price. We think a lot of the retail agronomists, and paid for consultants, can use our product on those farms as a base and then be able to provide a more boutique service on top of that if required. Not all farmers want a boutique service. Some of them want more of a Costco-type service. We want to be the underlining engine that powers other people’s tools. Our view is this will enable a crop consultant or an agronomist to be able to manage more acres, more effectively.”

— Allan Dawson is a reporter for the Manitoba Co-operator at Miami, Man. Follow him at @AllanReporter on Twitter.

Where Farmers Edge has sole use of Planet’s satellite imagery

Farmers Edge has exclusive access to Planet’s satellite images in the following countries:

Argentina, Australia, Brazil, Canada, Chile, Commonwealth of Independent States (CIS) (including Russia, Ukraine, Kazakhstan, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova Tajikistan, Turkmenistan and Uzbekistan), South Africa, United States and Uruguay.

Farmers Edge by the numbers:

• Funds raised: $125 million
• Employees: 450
• Acres: 20 million expected by the end of the year.
• Global weather stations: More than 4,000.
• Connected farm equipment: More than 9,000.

About half of Farmers Edge’s acres are in Canada, followed by the U.S., Brazil, Russia and Australia.

“By this time next year we’re projecting Brazil will be No. 1, the U.S. will be No. 2, and Canada will be No. 3,” said company president and CEO Wade Barnes. — A.D.

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