Meet the Evergreen Deere

John Deere’s been around for 184 years. Yet, the company is making significant strides using technology like Machine Learning, AI, Cloud and Edge Computing.

So how does a tractor company make use of all that technology?

In more ways than one!

In this article, we take a brief look at Deere’s use of technology to deliver cutting-edge solutions to their customers through their three sector verticals - Agriculture, Construction and Forestry.

Disclaimer: I’m long Deere ($DE). No part of this article is a recommendation to buy or is meant to be financial advice.

Deere Business Snapshot

Tech at Work

The truth is Deere is not new to technology. John Deere was the original innovator, pioneering the steel plow in 1837 to make it easier for farmers to till their fields. Since then, the Company hasn’t stopped innovating - introducing tractors, and then better tractors, better construction equipment and so on. Deere has always focused on improving life in Agriculture, Turf Maintenance, Landscaping, Construction and Forestry. Now, they’re just using the latest digital technology to enhance their offering.

In 2020, Deere introduced a revamped strategy focusing on technology, speed and efficiency. They hired a Chief Technology Officer and reorganized operations around production systems instead of being organized by products or geographies. They have committed to direct investment and research dollars to their “smart industrial effort”.

Agriculture aka “Precision Ag Tech”

Agriculture still remains the lifeblood of any economy… and the world really. So Deere’s technology has multiple benefits in ensuring efficient and sustainable farming practices. They have renamed their agriculture division Precision Ag Tech, which is meant to cater to each plant individually.

They’re solving several problems -

• Better crop yield

• Less waste

• Less herbicide

• Less pesticide

• Less fertilizer

• Less fuel

• Less emission (they already have hybrid and electric solutions)

• More cash savings

That’s a pretty long list!

See & Spray™ 

Deere acquired Blue River Technology in Sep 2017, a company started by two Stanford graduates in 2011 and former head of Trimble precision technology.

Blue River’s See & Spray™ technology is a 90-foot boom, fitted with 97 robots to identify and spray herbicides only on weeds, thus reducing chemical-use by 77% and protecting good crops from collateral damage.

Data & Machine Learning

The CommandCenter is a touchscreen display that can be installed in the cab. It combines with the StarFire™ Receiver to collect and store data to provide automatic guidance.

Deere’s goal is to know where every single plant is in the field and care for it individually with the right amount of nutrients. It can also mark areas in the field that need special attention such as rocks, tile lines, or weeds.

The data collected through the systems can also be used to train the equipment for self-optimization, so the machines get smarter with every operation and can even predict when they need maintenance.

Autonomous Solutions - AutoPath™ and AutoTrac™

AutoPath™ helps create full field guidance. After the first pass, the system gathers data and then automatically creates guidance for planting, spraying and harvesting.

AutoTrac™ RowSense™ provides hands free guidance so that farmer can spend less time looking forward and more time monitoring other features such as spraying. It’s semi-autonomous driving.

AutoTrac™ Turn Automation, as the name suggests automates the process of turning. It can automate the process of making perfect end of path U-turns and figure-eight turns. AutoTrac Implement Guidance helps the farmer accurately plant seeds or dispense fertilizer.

Active Fill Control automatically detects the trailer or truck next to the harvester and automatically begins filling with a preselected fill strategy. Since the transfer can be done with precision, farmers can harvest at night as well.

In August 2021, Deere announced that they would be buying Bear Flag Robotics for $250 million. Founded in 2017, the startup, founded in 2017, has built fully autonomous tractors. The tech is compatible with existing machines, allowing farmers to retrofit their tractor fleets with autonomous systems.

Operations Center

The Operations Center allows for the transfer of field data to the home through a using “JD Link” technology and the machines will stream regular updates on how and where they’re operating. A person can monitor field conditions, temperature and climate from their iPads, Mobile Phones or Computers.

The information is relayed to the “MyJohnDeere” website which is a one-stop site for information, payment on machinery and everything else a user may need.

The data is also fed back to agronomists (crop scientists) who can analyze the data and provide suggestions. Deere had teamed up with Bayer CropScience and they also have their own agronomic division.

Construction Tech

When it comes to Construction Tech, Deere is not the leader. Caterpillar and Komatsu are far more popular. In fact, Caterpillar has teamed up with Trimble’s heavy industry division for their technology.

While Trimble systems can be used with a Deere machine, Deere has also introduced their own SmartGrade System, which is a “A 3D grade control system that is fully integrated into the machine”, so they don’t have to be attached separately. From what I understand, better grading can help engineers and construction workers increase efficiency, and finish projects fasters.

Deere also provide “Payload Weighing” for the Articulated Dump Trucks. This system provides precise measurements so that the there is no overloading to reduce tire and machine wear. It can also track the total weight and number of cycles that the truck makes for better project planning.

Again, information is transmitted through the JDLink Technology and Deere’s connected support can monitor machine health and conduct remote diagnostics and programming, making it safer for the workers.

Here’s an article I’d written about Trimble. They have some impressive technology.

Forestry Tech

The Forestry Tech is also quite impressive. They have two products - Timbermatic™ Maps and TimberManager™

The Maps is an onboard software solution that can acts as a guidance system and can map out the best routes. It also shares the wireless connection between machines.

The TimberManager is a web-based solution for computers, tablets or mobile devices and connects through the JDLink system to the Maps feature.

Using both these tools ensures that the project manager has real-time information about the progress of work and an estimate of how long it will take to complete the work.

Final Thoughts

Deere is a solid company. It’s been a leader in Agricultural Machinery for decades and they’ve been an integral part of the farming community. They have one of the strongest dealer networks and a very robust financing arm.

In 2020, the Company provided temporary relief to dealers and retail customers in the form of payment deferrals for three months or less, and for some dealers reduction in short term interest rates. This is not the first time they’ve done this. In 2009, they provided similar support to the community.

Ever since John Deere himself, the company is always looking for ways to make life easier for people in their sector and, they have maintained a strong balance sheet while doing so. They are nevertheless, a cyclical business so that’s something to look out for with the stock. Looking at Deere’s financials will require a separate post, one which I will work on.

The key challenge for Deere will be the ability to constantly attract talent to keep up the level of innovation. But, the great thing about technology is, sometimes you didn’t even know you needed something, until it was introduced.

Before I go, let me leave you with a fun fact:

As always, remember there’s a story behind the numbers. Safe investing!

Sincerely yours,

Ayesha Tariq, CFA