New technology is changing the business of farming

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By now, many farmers are already familiar with subscription-based services, and between auto-guide and telematics services, they may have a few of their own.

In the year By 2022, the Association of Equipment Manufacturers (AEM) has made 13 predictions in its “Future of Food Production” report covering the next 10 years. They include changing farm ownership models, increasing global production demand, reducing environmental impact, geographical shifts in production, developing artificial intelligence and narrowing the communication gap. At the intersection of all these trends, AEM predicts that new business models will emerge in the agricultural machinery industry.

Citing data from the 2014 USDA Land Tenure, Ownership and Agricultural Land Transition Survey, AEM Senior Vice President Curt Blades points to the shift in farm ownership as one of the biggest trends in particular that is driving the emergence of new business models. At that time, 39% of U.S. farmland was leased, which increased to 54% of land used for crop production. This trend has continued since 2014. Looking specifically at Iowa, the proportion of Iowa farmland increased from 53% in 2017 to 58% in 2017, according to data from Iowa State University’s Iowa Farmland Ownership and Tenure Survey.

“The business structure has improved a bit with less direct ownership of farmland,” says Blades. “So whether you’re in ag equipment or inputs, you have to match that business model to what the farmer is using.”

Subscriptions in the marketplace

Device manufacturers see “device as a service,” a model largely used outside of North America up to this point as a payment model with subscription services. This allows farmers to rent the equipment for a fixed period of time, paying fees based on the equipment’s output, along with other services that go along with it, such as data analysis and preventive maintenance, according to the AMM report. Blades likens this to custom assembly practices.

“‘Tools as a service’ are the type of small farms that are focused on,” says Blades. This doesn’t really exist here in America, but you can definitely see where it applies to a small farm, because they don’t have to make that capital outlay.

Hardware, until recently, has always been a one-time purchase, says Jim Chambers, senior vice president and general manager of Trimble Agriculture. Farmers would buy receivers and then pay various unlocking fees based on the accuracy required for their equipment. Costs would be relatively high, but the hardware was owned for the lifetime of that technology. Owners of Trimble devices require an annual subscription to access higher accuracy and additional features.

Instead of paying for hardware entirely up front, Trimble has started offering subscription deals that offer a cheap entry point equivalent to a cell phone plan, Chambers said.

“You can cancel anytime you don’t want to or if we’re not meeting your needs,” Chambers said. “It forces us to be better suppliers because we have to get your business again and again.”

Following a time-based model, John Deere offers subscription services such as RTK guidance signals. Joel Dawson, director of product and precision ag marketing at John Deere, said Deere plans to expand its service offerings with time- and usage-based pricing models.

“These ‘as-a-service solutions’ allow farmers to pay only for what is needed for their farm, reducing priority costs and increasing efficiency,” said Dawson.

Case IH has not yet launched any machines under the “equipment as a service” model. As technology hardware costs rise and market conditions change, the company will continue to evaluate business models, with the goal of making the machines cost-effective, said Chris Dempsey, global director of precision technology at Case IH.

Determination of pricing models

Telematics isn’t new to agriculture, so there’s plenty of market speculation from competitors and related industries driving pricing, Dempsey says.

“The other reason is that any time we bring new products to market or consider price adjustments, these are largely based on customer feedback, and it’s the customer groups we work with to have those conversations,” Dempsey says.

John Deere approaches pricing by analyzing the competitive landscape and considering the cost of alternatives available in the market, Dawson says.

“Our preferred pricing strategy is to facilitate a quick return on investment for farmers to improve their profitability,” says Dawson.

Most precision ag and telematics subscription services are offered on a machine-by-machine basis, but in some cases, vendors can combine the services to offer fleets or multi-part packages for specific needs from a farmer.

Waiting for working hours

Any downtime during critical points during planting or harvesting can hurt a farmer’s bottom line. Most of these subscription-based services require a data connection for full functionality, but access is not always necessary.

“The data is always embedded in the display or architecture on the tractor, combine or any other connected piece,” says Dempsey. “When it resumes the connection, it sends the corresponding data that was entered during the interruption.”

Getting timely customer service is also important. Deere and its network of dealers have used the internal management tool for several years, which the company is expanding with new features.

“Establishing a strong infrastructure is critical to effectively managing the complexities of subscriptions,” says Dawson. “It’s an important part of ensuring a comfortable experience for all stakeholders involved.”

According to Chambers, over the past two years, Trimble has invested a “significant amount of money” in preparing for the future of the company’s digital transformation across its entire portfolio.

“We’re using transportation, geospatial and construction to build a common infrastructure that allows us to track our customers,” he said. “We can know how you’re using our products, and we can provide the closest and best insight, and make sure we have everything you need to find the content you want. Want to message someone? Chat with someone? Just go on the Trimble site and read a document yourself? All of those options are available.” .

Accuracy for small farms

Precision technology is flowing into the machinery market faster than farmers can buy new equipment. Historically, advanced technology was first adopted by large-scale farmers, and often small-scale farmers could not justify the investment due to scale constraints.

“This highlights the key benefit of our ‘solutions as a service’ offering,” said Dawson. “Our solution results in lower upfront costs, enabling smaller farms to adopt the technology. This approach ensures access to all farmers, allowing them to integrate emerging technologies at their own pace and pay only for what their farm needs.”

Deere entered the retrofit market for similar reasons.

“While we value selling new equipment, we also emphasize selling technology that enhances the intelligence and precision of existing machinery,” says Dawson. This commitment ensures that technological advances benefit all farmers, regardless of the age of the equipment.

Case IH has made refurbishing the company’s machinery and mixed fleet one of its main objectives, Dempsey said. CNH Industrial’s recent acquisition of Raven Industries has further accelerated the company’s presence in the aftermarket.

AEM is working to enable farmers to reap the financial and environmental benefits this technology brings to their farms.

The organization supports two pieces of bipartisan legislation — the Fair Farm Loan Program Act and the Fair Trade Act — that would be used to include precision agriculture by authorizing money to improve equipment, which Blades hopes will be included in the upcoming farm bill.

Product interaction

“Most farmers have a mixed environment of machinery and equipment,” says Chambers. Although they are mainly one color. He said.

Trimble, which recently entered into a joint venture with Agco, is still focused on servicing hybrid fleets, with 40% of its agricultural operations sold to OEMs and factory-fitted, with the remaining 60% sold in the aftermarket from various dealers. .

“Trimble’s goal is to be this open environment,” Chambers said. “You can be an independent OEM and you can still brand any of our technology brands, but behind the scenes, it’s the Trimble system, the Trimble data structure, that makes it easy to bring the farmer’s data together.

AEM has worked closely with the Agricultural Industry Electronics Foundation (AEF) over the years to improve manufacturer compatibility and implement international standards for electronic and electrical components such as ISOBUS equipment. As telematics services and precision ag technology enter the market, data compatibility is becoming increasingly important.

According to the group’s website, AEM regularly engages with Aggateway with the goal of developing “resources and connections that drive digital connectivity in the global agriculture and related industries.”

“We have a little ways to go on both sides, but we’re all really committed to making sure it works,” Blades said. “There is a three-way memorandum of understanding between AgGateway, AEM and AEF to work together on data and hardware interoperability.”

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