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Agri Innovations


Three Trends Agriculture Equipment Manufacturers Should Be Ready For Over the Next 25 Years

Mon, 02 Jul 2018 12:16:16 CDT

Three Trends Agriculture Equipment Manufacturers Should Be Ready For Over the Next 25 Years Bottom line instead of brand loyalty. Tractors and harvesters will look more like computers. Data will drive productivity.


These are just a few of the realities that equipment manufacturers will have to contend with over the next 25 years, according to an Association of Equipment Manufacturers (AEM) research report written by the Context Network.


"We launched this research project in order to examine the broader trends with which our members will have to contend, and to help them better prepare to compete in the marketplace of the future," says Curt Blades, AEM's senior vice president of agriculture services. "It would be to every manufacturer's benefit to sit up and take note of these industry-shaping trends."


The research project synthesized original research and expert interviews to explore the impact of several major trends that are influencing agriculture, and mapped out the challenges and opportunities that manufacturers will face in building the next generation of farm equipment.


A free webinar on Thursday, July 19 at 12 p.m. CT will explore the first of these trends and its impacts in depth, as well as recommend steps that manufacturers can take to prepare. Pre-registration is required.


According to the AEM and Context report, these three trends will have a significant impact on agriculture over the next 25 years:


Changing Farm Structure and Retiring Farmers Selling Land


Over the next 25 years, a massive shift in farm ownership will change the face of American agriculture—driven in part by the aging demographics of today’s farmers.


“Economics is the primary driver of farm structure change,” says Doug Griffin, principal at Context Network. “Just as with most other industries, scale drives improvement in margin. Therefore, farms continue to evolve into large operations with improved efficiencies and lower cost.”


However, there are more than two farmers over the age of 65 for every farmer under the age of 45 in the industry today. The average age of farm operators is 58—higher than it’s ever been—and many of these farmers’ children have already gone on to establish their own careers off the farm.


According to Context’s research, the agriculture world is primed for a shift in operation and ownership, as these farmers begin to retire and eventually pass the land on to their children. With little interest in working the land themselves and their own retirements to plan, many of these children will choose to sell their families’ land, leading to a mass increase in corporate farm ownership.


When it comes to equipment purchasing decisions, this means a shift toward bottom line-oriented decision-making and less emphasis on brand loyalty. As growers continue to increase in size, they will have greater buying power and increased leverage over the equipment manufacturer.


The Accelerating Adoption of Precision Agriculture Technologies


Precision agriculture technologies are already in use. The next 25 years will determine who the dominant players will be—and fierce competition is expected.


“This latest wave of technology will provide substantial improvements in farming practices,” Griffin says. “Equipment manufacturers will be forced to either innovate and change with the times or become irrelevant in the market.”


Today’s farmers already have access to software tools that can provide them with real-time field scouting and conditions reports. Sensors and soil sampling enable them to make on-the-spot decisions tied to their bottom line.


Griffin says more than 80 percent of farm operators surveyed by Context are using yield monitors, GPS and soil sampling technologies.


AEM’s research with Context finds farm operators excited by the gains in productivity precision Ag is able to provide them; it also shows they’re frustrated by the multiple sources of information and the inability of equipment brands to interface with one another. Operators want a single platform that ties together all aspects of their operation.


Thus, the race is on to create and implement such a platform, with equipment manufacturers competing with one another—and outside disruptors—to be first to market with such a technology. In 2017, investments in agriculture technology reached an estimated $2 billion.


Context forecasts operators will increasingly depend on autonomous power units and artificial intelligence. Growers will gravitate toward the versatility offered by smaller machines, and technology will have a much shorter half-life than the actual equipment, as growers become more comfortable adapting to the new products and services at their disposal.


The Service-Based Economy: a New Sort of Trusted Advisor


With more industrial-style farms using a growing array of technological advances to maximize productivity, farmers will have a greater need for sound advice from a trusted advisor, and equipment manufacturers have a generational opportunity to fill that role.


The most valued service providers are able to interpret information and provide recommendations with a total enterprise profitability perspective of the operation. Ultimately, the role of “trusted advisor” will reside with whomever the grower shares their data and helps to manage and interpret that data.


“Today’s definition of ‘service’ usually refers to repairs and maintenance of equipment,” Griffin says. “In the future, service will relate to providing complete solutions to customers.”


Smarter, more technologically advanced equipment in farm fields will position manufacturers to offer the best advice, if they are able to expand their service offerings into the realm of providing complete solutions to agricultural operations.


As technology in agriculture equipment advances in complexity and reliance on software, operators will likely be less capable of servicing and repairing it. They will look for flexibility and agility from their equipment suppliers and fast repairs during high-demand time periods will be critical.


Source - Association of Equipment Manufacturers



   

 

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