The race toward precision agriculture

In mid-July farmers in the Netherlands turned out en masse to block highways, an airport and various food distribution routes. Those acts of civil disobedience were sparked by resistance to the European Union’s “Green New Deal,” which establishes a host of new environmental regulations that Dutch farmers think will significantly affect their production methods.

It’s part of what seems a new reality for farmers everywhere. Environmental regulations like those pending in the EU are likely to be imposed sooner rather than later in most developed countries, regardless of the objections of producers. And meeting them may require producers to rethink many production methods.

Coincidently, only a few days before the Dutch farmer uprising began in earnest, the topic of enhancing modern production methods to meet climate change initiatives was discussed at AGCO’s timely “Sustainable Technology Event” in Germany.

“The Green Deal really sets the stage for Europe to be the first climate-neutral continent by 2050,” said Louisa Parker-Smith, director of global sustainability at AGCO, during that event, which was held at its Fendt assembly plant in Marktoberdorf, Germany. Not only has the EU set out interim targets to reduce greenhouse emissions by 55 per cent by 2030, she noted, it has also made the targets legally binding through the European climate law.

At that Sustainable Technology Event, AGCO executives laid out how it sees the technologies their brand is currently offering — and those it expects to develop in the future — are what farmers will need to not only meet ambitious environmental goals, but also bump up their bottom line profits by as much as 20 per cent in the process.

[VIDEO] AgDealerTV: AGCO and precision ag

And to prove it, AGCO took event attendees out to a privately owned German farm near the Fendt plant to highlight an example of how one farmer, using those AGCO systems, is already doing exactly that.

Seth Crawford, AGCO’s senior VP and GM of precision AG and digital, addresses the audience at the company’s Sustainable Technology Event in Germany in June.

photos:
Courtesy AGCO

Depending on the individual farm, of course, some of the efficiency gains and GHG emissions reductions may not be that technically difficult to achieve.

“In Europe, 70 per cent of the fertilizer is applied with a spin spreader today,” said Seth Crawford, AGCO’s senior VP and GM of precision AG and digital. “So the precision isn’t all that great. The reality is when you grow a crop, the crop can’t always reach out and grab those nutrients. If you get a heavy rain, some of it will wash away, creating environmental concerns.”

For many EU farmers, adopting new production methods seems unavoidable.

“They (EU regulations) include several targets which impact farmers directly,” said Parker-Smith. The regs will reduce pesticide use by 50 per cent and fertilizer by 20 per cent, and also increase the amount of land under organic production.

Back in this country, Canadian farmers are likely to see similar pressures. The federal government is already targeting a 30 per cent reduction in nitrous oxide emissions from nitrogen fertilizer use by 2030.

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Data from Agriculture Canada shows that greenhouse gas emissions from Canadian agriculture have remained relatively stable from 1981 through 2016, but much of that is due to the increased ability of Prairie soils to act as a carbon sink, offsetting nitrous oxide emissions from increased nitrogen fertilizer use. . Canadian agriculture has even shown a slight improvement in the Agricultural Greenhouse Gas Index, dropping from a score of 78 in 1981 to 74 in 2016. That puts us in the “Good” range.

But there is still room for improvement, and broader use of precision agriculture technology seems the most likely way to achieve the most significant gains here too.

“The full suite of precision technologies are vital now more than ever in moving forward with sustainable food systems and achieving the climate targets,” said Parker-Smith.

AGCO’s Crawford said his company’s strategy to achieve the widest adoption of those precision methods in the shortest time is through retro-fit systems. AGCO plans to continue to develop add-on systems that offer increased precision on existing machines across all brands. Executives recognize not all farmers can afford to go out and spend hundreds of thousands of dollars on equipment that incorporates the latest in technology.

A breakdown of how each of AGCO’s precision products affect the expense and profit of its privately owned demonstration farm in Germany.

photos:
Courtesy AGCO

Getting retrofittable precision into the hands of smaller producers and those who currently use less efficient equipment stands to make the largest impact and would go a long way toward achieving overall emissions targets for the entire sector.

“We’re the only OEM that focuses on retrofit first,” Crawford told the audience. “And the reasons are simple… we believe it helps us to do this. We believe we can get to market faster.

“When you look at the number of farmers that buy new equipment every year it’s around seven percent. But 100 per cent will want to enhance their operation. And there’s no doubt 100 per cent of those farmers are going to be under the umbrella of the Green New Deal or other regulations somewhere else in the world. They’re going to need to make investments to keep up. But not all of them are going to want to sink $500,000 into updating their fleet. Some are going to have $20,000 or $30,000, and they’re going to want products to buy.

“We want dealers to engage with those buyers. We believe that helps us to grow. We think the race is definitely on in the precision ag space.”

As AGCO sees it, pushing precision technology is a win-win all around. Chasing increasing precision is not only good for the planet and farmers, it’s good for the corporate bottom line too.

“The precision ag business overall, depending on which report you read, is growing somewhere between 10 and 15 per cent (annually),” Crawford said. “Over the last five years we’ve exceeded that every single year. And we’re going to see more growth.”

With the audience at the Sustainable Technology Event made up primarily of investment brokers and financial analysts, that kind of message was one the company wanted to emphasize.

Crawford also addressed — in contrast to Deere — the lack of a fully autonomous tractor making up part of AGCO’s current product offering. The company does have one in the final stages of development, he said, but it wasn’t going to offer it just yet.

Most importantly, even without a fully autonomous product in AGCO dealerships, the new technologies that company has developed and is continuing to work on are driving profits at the company, because it could offer them as individual features on existing new machines or upgrades for older models .

Still, full autonomy isn’t far away, Crawford said. “It wasn’t too long ago we thought this (autonomy) was going to stretch out into the 2030s. The reality is it’s coming sooner. That’s why we’re working so hard automating each of the tasks along the way, and bringing our autonomous tractor as well.”

“Our strategy is primarily on automating features first,” added Eric Hansotia, AGCO CEO, during a Q&A session at the end of the presentations.

“We can get paid for every one of those. We can add value today. We felt there wasn’t a value-add to put that (autonomous tractor) into the market until it can do all those things the operator does in the cab rather than a single task. We’re automating all those things, and later on we’ll decide when the time is right to pull the operator out.”

It’s no surprise, then, that in the last few years AGCO has made R&D in precision agriculture systems a top priority within the company.

“We feed the R&D rate in the precision business at a much higher rate than the equipment business,” said Crawford. “To compete in precision ag, we have to.”

While the company used to rely on technology developed by corporate partners, AGCO has moved to bring that R&D in-house. It has ramped up its own efforts and purchased technology companies it once partnered with, such as Winnipeg-based JCA Industries.

AGCO sees technology development and its retro-fit marketing strategy as one of the largest drivers of corporate profit. And it could be critical in meeting the future needs of its customers, too, especially as the spectrum of new regulations drive demand for even better precision technologies.

“How big is the retrofit market?” Crawford asked.

“My answer to that is there’s only a cap if we stop innovating … I don’t think we’re going to see the regulations slow down anytime soon.”

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