Not all that many years ago, I remember reading a magazine editorial where the writer wondered aloud when we would hit the 500 horsepower mark in production farm tractors. Now, that milestone has long since been surpassed by a healthy margin, as peak horsepower offerings climb well above 600 in tractors from all the mainline brands. But if a new study commissioned by AEM (The Association of Equipment Manufacturers) is accurate, We’re unlikely to see that go much higher.
AEM’s prognostication is that within the next 25 years producers will increasingly opt for the advantages of smaller machines rather than bigger ones, especially as autonomous field machines begin to hit the market. It’s a trend line that isn’t lost on executives at the major brands, if my recent conversation in Regina with Richard Kohnen, AGCO’s marketing director for large ag equipment, is any indication.
“Have you seen our Xaver Fendt robotic concept,” he asked. “Then, I think you can see the direction we’re going with autonomy.”
The Xaver robots are virtual pipsqueaks, designed to work in mass swarms.
That move toward smaller equipment was part of just one of three changing trends the AEM report mentioned. The reference to it was included in the first of the three general predictions, which suggests in the very near future growers will significantly accelerate their adoption of precision technologies. That means brands will need to keep up with the latest from the digital world. By and large, we’re seeing that already.
“Equipment manufacturers will be forced to either innovate and change with the times or become irrelevant in the market.” Said Doug Griffin, principal at Context Network, the firm that did the research for AEM.
The second major trend has to do with demographics and the implications of that. The average age of a North American farmer is 58, which means there will be a major shift in farmland ownership in the next quarter decade. And AEM predicts the number of acres under the control of very large corporate farm entities will explode. That will occur in large part because the next generation is increasingly looking to urban life instead of carrying on the family farm.
What’s significant about that for ag equipment brands is it’s the corporate bean counters who will increasingly be in charge of buying ag machinery. So brand loyalty will likely be a thing of the past. Only the bottom line will matter under that scenario.
I remember having a drink with executives from a brand that builds both construction and ag equipment a few years ago. One of them told me had just crossed to the ag side from marketing the construction equipment line, and things were very different there. Because construction machines were most often sold to large companies, the people who buy them would never drive them. So operator comfort and things of that ilk were irrelevant. Only efficiency and cost mattered. None of the buyers cared about the brand or its history. So it’s pretty easy to see that mindset sifting to ag purchases with large corporate ownership dominating the landscape.
Lastly, the study showed those brands that can offer a “full service” approach to equipment, data and technology are the ones likely to own the market. Farmers, it predicts, will want a one-stop shopping experience for all their field equipment, data and analysis needs. John Deere executives have been saying that loudly for several years now, and they’ve been showing us their vision for achieving it. So no surprise there either.
It will truly be a brave new farming world.