John Deere Decides to Farm Data

A familiar pattern over the last decade has been for long-established companies to become disrupted by new technology players and lose their market dominance. The celebrated tractor manufacturer John Deere is not one of them.

With origins stretching back to 1837, the company became famous for its trademark green farm machinery. It is now pushing the boundaries of precision agriculture with a remarkable digital transformation that leverages its legacy technology and uses it as a data platform.

There is a lot at stake. John Deere estimates that precision farming will create USD150 billion in value and that, as a market leader, it is uniquely positioned to collect farm data. 

The transformation is heavily backed by investors worldwide who are re-evaluating John Deere as a technology play and a positive contributor to global efforts towards greater sustainability. As a stock market investment, John Deere is now appearing on lists of companies backed by some of the world’s biggest sustainability and ESG funds.

Agriculture and food production are estimated to be responsible for more than 25% of global greenhouse gas emissions. But a switch in diet to more efficiently grown broadacre crops with lower emissions intensity is seen as part of the climate transition solution.

Tracking tractor-harvested data

At the forefront of Deere’s strategy is to turn its farm machinery into data-gathering machines. The company has the largest fleet of farm vehicles in the world and sees that it has a unique opportunity, and has backed that with around USD1 billion spent on research and development.

It moved into telematics in 2012 with the implementation of a device that allowed remote monitoring of all equipment. 

The strategy has gained momentum organically and through acquisition to the point that Deere’s see-and-spray rigs, which spray weeds while leaving crops untouched, now have 36 specialized cameras which not only guide the machine but also collect data. Precision agriculture means these machines use 80% fewer chemicals than conventional weed control.

“Companies are going to buy these technologies to improve their profitability”

Earlier this month, John Deere announced seamless compatibility between its SmartApply Intelligent Control System and John Deere Operations Center, enabling users to flow data into the center to monitor and manage their work.

This change has been made to help growers quickly and efficiently analyze past work, guide future business decisions, and document savings using the SmartApply Intelligent Spray Control System. Another strong push at John Deere is for retrofitting, and the Spray Control System can be added to almost any blast sprayer, regardless of make or model. 

The new 8R self-driving Deere tractors also have 12 specialized cameras and use software created from collecting more than 50 million images over the last five years. This is an ongoing process, and the database of images is growing all the time, improving the software and creating a more compelling offer for farmers. 

Deere is also backing the push to expand access to 5G networks in rural communities, understanding that better connectivity will mean a more extensive takeup of its new products.

Engine of growth

“Companies are going to buy these technologies to improve their profitability,” the company’s chief financial officer Joshua Jepsen said while releasing results last year.

Analysts who follow John Deere forecast that the precision agriculture division will drive three-quarters of the company’s sales growth over the next three years while accounting for less than half of overall sales.

Another change they see is that as the company moves into providing driverless tractors to the industry, it has an opportunity to change its revenue model to a per-acre business. 

This would be similar to the software-as-a-service subscription model fared by many software companies. It would have a further transformative effect on the company and its value. 

Not every legacy organization has the same opportunity as John Deere to digitalize and transform. Still, it is a case study example of how traditional assets can be leveraged to enhance a company’s legacy business to an advantage.

Just as auto companies are now re-inventing themselves as “mobility providers,” John Deere is transforming into what could be both a data and information business in addition to a hardware provider.

For the historic tractor manufacturer, it’s a new take on being green. 

Lachlan Colquhoun is the Australia and New Zealand correspondent for CDOTrends and the NextGenConnectivity editor. He remains fascinated with how businesses reinvent themselves through digital technology to solve existing issues and change their entire business models. You can reach him at [email protected].

Image credit: iStockphoto/Nicholas Smith