Tractors & Technology: John Deere’s Self-Driving Tractors

Autonomous technology and enhanced data integration are changing the way agricultural equipment manufacturers are addressing farmers needs.

Advances in technology force us to change the way we interact with the world around us, allow us to seek new and innovative ways of operating, and provide opportunities to gain efficiencies and optimization which was previously impossible.  Although many sectors have faced changes, the farming industry has undergone an incredible technological revolution to reduce labor and crop yields.  Earlier this year, I read an article in the Wall Street Journal about Matt Reimer, a Canadian farmer who converted his tractor into an autonomous vehicle by using a tablet, drone parts, and open sourced software [1].  The alterations cost approximately $8000 [2].  After reading the article, I began to wonder: what problems are facing the modern farmer, how can digital technology help, and what are major companies like John Deere doing to stay relevant with an increasingly technologically sophisticated customer.

Farmers often face tight margins and fluctuating crop prices.  Land and agricultural equipment account for high fixed costs and large capital investments.  Additionally, farmers must control variable costs such as fuel, pesticides, and fertilizers [3].  Therefore, maximizing operational efficiency is critical to success.  Advances in technology and the advent of precision agriculture allow farmers to maximize crop production per acre and use analytics to minimize variable costs.  In order to help farmers maximize efficiency, John Deere developed digital solutions to improve operations in agricultural vehicles ranging from GPS guided to self-driving functionality [4].

At first glance, John Deere’s product offering appears to be a dizzying array of acronyms, sensors, and satellites melded into green and yellow tractors [5].  However, John Deere’s various data packages are designed to: more effectively monitor fields/equipment, link the functionality of machines to maximize productivity, and more accurately drive equipment to maximize the farmed area through AutoTrac [6].  The equipment monitoring features are relatively simple, but the AutoTrac feature and other efficiency tools provide sophisticated solutions to improve efficiency.

AutoTrac is the heart of the self-driving software.  It uses a combination of GPS, laser range finders, thermal infrared sensors, color cameras, and inertial navigation to safely steer machinery [7].  In order to enhance the accuracy of GPS, John Deere developed its own RTK radio towers and linked its Starfire receivers to NASA’s ground stations to achieve a stated accuracy of +/- 1 inch [8].  The self-driving technology can be utilized to reduce fatigue, maximize field usage, and integrate the automatic distribution of fertilizers, seeds, water, and pesticides [9].

Although digital network integration and monitoring is not part of John Deere’s traditional business model, I believe it is valuable for two reasons.  First, a clear need for enhanced data monitoring and increased automation exists in the agricultural industry.  If John Deere continues to innovate, there is no reason they cannot compete in this market. Additionally, the sale of heavy machinery tends to follow the broader economy.  Establishing a consistent revenue source from network subscriptions will help protect John Deere from larger economic downturns.

John Deere certainly faces some challenges from the external factors and competition to achieving success in data monitoring and agricultural optimization.  The regulation of the RF spectrum concerns management [10].  Losing the ability to use current frequencies will result in large additional costs to both John Deere and the consumer [11].  Autonomous technology also faces risks with regulation.  Currently, few regulations exist regarding self driving technology in the agriculture industry [12].  As self driving regulation reaches the automotive market, laws may become more inclusive.

The installation of the AutoTrac system and subscription fees are expensive compared to competitor options.  Depending upon the required driving precision, installation alone may cost over $20,000 per tractor [13].  Also, the John Deere hardware/software combinations are not compatible with other digital operating systems.  As a result, considerable friction exists for the customer to initially purchase the product or quit using the product.

In order to maintain a competitive edge, John Deere must either invest heavily in marketing or consider partially subsidizing the equipment installation to gain market share.  John Deere should also look to differentiate their product offering through robust encryption and cybersecurity [14].  The October cyber attack which exploited the “internet of things” demonstrated the importance of cybersecurity in the modern environment [15].

Word Count: 695

 

  1. Bunge, J. (2 May 2016). Farmers reap new tools from their own high-tech Tinkering. The Wall Street Journal. Retrieved from: www.wsj.com
  2. Ibid
  3. Schnepf, R. (7 September 2016). US Farm Income Outlook for 2016.
  4. John Deere Precision Ag Technology, Deere and Co Corporate Brochure. (2016).
  5. Ibid
  6. Ibid
  7. Johnson, D. A., Naffin, D.J., Puhalla, J.S., Sanchez J., and Wellington, C.K. (2009). Development and Implementation of a Team of Robotic Tractors for Autonomous Peat Moss Harvesting. Journal of Field Robotics 26(6-7), 549-571
  8. Hall, L. (16 Novemer 2016). How NASA and John Deere Helped Tractors Drive Themselves. Retrieved from: www.nasa.gov
  9. John Deere Precision Ag Technology
  10. Deere and Co. (2015). 2015 Annual Report. Retrieved from: www.usaa.com
  11. Ibid
  12. Peterson, A. (22 June 2015). Google didn’t lead the self-driving vehicle revolution. John Deere did. The Washington Post. Retrieved from: www.washingtonpost.com
  13. Ibid
  14. Ibid
  15. Blumenthal, E. and Weise, E. (22 October 2016). Hacked Home Devices Caused Massive Internet Outage. The USA Today. Retrieved from: www.usatoday.com
  16. Image: Deere and Company

Previous:

Online-to-Offline (O2O) and the Future of e-Commerce

Next:

Walmart’s Acquisition Strategy to Stay Competitive

3 thoughts on “Tractors & Technology: John Deere’s Self-Driving Tractors

  1. What a great narrative of how technology is transforming even the oldest industries. I believe John Deere is doing the right thing by moving into the data integration field. The massive amounts of data they gather could be monetized in the future by offering farmers better insight into crop rotation patterns and soil content.

    My worry is the cost. A slightly used John Deere S Series combine still fetches around $400k.[1] While an additional $20k only adds 5% to the total price, will the added technology increase yields by at least 5%? If not, it may be a hard sale for already cash-strapped farmers.

    [1] http://www.tractorhouse.com/listings/farm-equipment/for-sale/list/?Mdltxt=S680&Manu=JOHN+DEERE

  2. I think this raises several really interesting issues. First, to the last point of the cost of the tractors, I wonder if John Deere could invest in IoT technologies in its factories or supply chain to produce their tractors more efficiently and be able to reduce the end price to farmers. Also, assuming that autonomous tractors and other farm equipment would enable farmers to reduce head counts at their farms, I think John Deere could pitch the equipment as paying itself back partially in the salaries the farmers save on the workers replaced by autonomous tractors. I think an argument could also be made that the autonomous driving software for tractors could be (slightly) less robust than that for cars since they presumably will largely be used in areas nearly devoid of people or obstacles to run into.

    There has recently been something of a boom in investment in UAVs (drones) for agricultural use [1] and I wonder if there is a way that John Deere could integrate aerial robotics with its autonomous tractors, either through feeding data to the tractors on where they should go next, or performing some sort of subsidiary navigational functions. You raise an interesting point also re: subscriptions- is the future for John Deere in selling autonomous machinery, or in selling the software that goes with it along with analytics capabilities? This article [2] (which starts with discussion of a self-driving John Deere) discusses some of the applications of data analytics as it is being applied to farming, and I wonder if John Deere’s value add in the long run lies in the provision of the equipment itself or in the creation and sale of the software run by that equipment.

    [1] Anderson, Chris. “Agricultural Drones”. MIT Technology Review. https://www.technologyreview.com/s/526491/agricultural-drones/ Retrieved 19 November 2016.
    [2] Satariano, Adam, and Alan Bjerga. “The Weather-Predicting Tech Behind $62 Billion Monsanto Bid.” Bloomberg. 9 June 2016. http://www.bloomberg.com/news/articles/2016-06-09/big-data-technology-is-boosting-farmers-productivity Retrieved 19 November 2016.

  3. Pat great article. To be honest I was initially thinking John Deere could target farms owned by corporations because they may have more access to capital to invest in this technology, but according to the USDA, 97% of the 2.1 million farms in the US are family owned operations [1]. John Deere clearly can’t dismiss the cost burden this technology may be for many American farmers. However, you did bring up some great points of how this technology can improve efficiency and crop production for farmers, but it will be interesting to see if John Deere can keep prices low and effectively market this technology as a long term profit generator.

    Also, I was wondering if you came across any research to suggest that John Deere was looking to implement cheaper technology in lawn mowers or smaller tractors that could be used for homeowners with large lawns? I guess I am thinking about this coming from the perspective of the oldest child who was given lawn mowing responsibilities from the time I was 7 years old. I wonder how long it will be until John Deere is making autonomous lawn mowers for families in the suburbs!

    [1] http://www.usda.gov/wps/portal/usda/usdamediafb?contentid=2015/03/0066.xml&printable=true

Leave a comment