BONDURANT, Iowa : Deere & Co has sold its tractors and other equipment to farmers for decades, but the world's largest agriculture machinery manufacturer is tearing a page from the technology world's playbook - combining cutting-edge hardware with software and subscription models to drive revenue growth.
Investments in automation for high-horsepower equipment is only at its inception for Deere and rivals AGCO and CNH Industrial. The next step is to equip machines to plant seeds using satellite imagery and soil data, Sanchez said. The timing comes as the war in Ukraine and widespread drought in key grain-producing countries have roiled commodity markets, causing grain and farm input prices to spike as supplies shrink. That, in turn, has U.S. farmers scrambling to boost crop yields, yet limit their fertilizer and pesticide use.
While the new tractor will be priced at $500,000, the autonomy feature will be sold separately. Deere declined to reveal the pricing model, but executives said earlier this year a subscription service is one option. "After expenses, every incremental dollar falls straight to the bottom line," Edward Jones analyst Matt Arnold said."We would expect it to be an attractive offering to farmers given the efficiency it offers them, and lucrative to Deere."Farmers have long been wary about how machinery and supplier firms profit off the data gleaned from their operations, and how secure such data is.
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