Too Fast – Is Agtech outpacing primary producers in the current market?

 

In the latest Farmer Coach sessions, we included members from John Deere in our discussions on equipment efficiencies and optimization. Aside from the clear distain of current market pricing from a primary producer perspective, one of the largest take-aways for the industry partners I believe was how little the industry was utilizing their technologies and data. In all honesty, I could see a look of confusion on the indifference between what the industry thought they were providing for value and what the producer base was actually getting from it. In fact, for being an industry leader in Agtech it had a bit of a sobering effect in the room.

 

So, the next question was why? With the significant amount of research and development being placed on technology around grain production, how come the majority (not a generalization) of farms today only use a small amount of what’s available? And before you argue that I am focusing only on large farms when it comes to adoption, I have seen numerous large-scale producers that are not running technologies that have been available for decades. This is an industry problem, not a consolidation or size issue.

 

I happen to work with Hebert Grain Ventures, an organization that has placed a large amount of value on data and technology in their operations. However, this also has made it easy to watch others fall behind when it comes to new technologies and not gain the same momentum in growth. This is a double-edged sword as the bias also gives me a strong ability to play devil’s advocate. So, why are primary producers slow at adoption?

 

It’s Never Been Done This Way

 

The agriculture industry is built on heritage and legacy. In fact, the “lifestyle” is what drives the majority of producers to remain on the farm and try their hardest to have it pass generation to generation. Although a great mindset to have in terms of morals and values, it also is a crutch for many operations when it comes to change.

 

Any machinery purchased in the last decade most often have an internet connection in the cab. In fact, automated guidance (GPS) has been available since the year 2000 (23 years ago). Now, I believe that the majority of producers have finally jumped on this train, but it took over a decade to get to this position. The thought of not driving your own machinery was foreign. In fact, even on our farm today, the thought of allowing a combine to pick the speed, line, and capacity of horsepower scares most operators. It took multiple years of trials to get the majority to adopt that the combine drives itself better than any manual person. In this instance it was not fear, it was trust and hatred of change.

 

Cost Versus Investment

 

I’m going to generalize here, but most farmers are penny pinchers. Now, don’t get me wrong, I always have the inside joke that way too many farmers have Malibu boats, so this does not apply to all aspects of life. However, when the discussion of Agtech comes around one of the main arguments is cost.

 

A recent poll on Twitter ( X)  caught my attention and I shared it during one of my coaching sessions.

 

The question was simple, if given the choice would you reduce the amount of technology and advancements put into equipment in order to eliminate cost? This I believe sums up the argument of where the minds of many producers currently fall, they would rather save money that see technology on equipment move forward.

 

In a way this disappoints me. If this continues to be the sentiment we will lose out on huge areas for efficiency, data analysis, and research and development in the industry moving forward. If we had said no to Agtech earlier in this cycle we would most likely not have sectional control on drills, variable rate technologies for fertilizer applications, or possibly even massaging seats in the tractors (okay I added the last one for sarcasm). Regardless, I believe that one of the main factors of slow adoption is that farms cannot see the future value over the current cost. Partially this is an industry issue for not being able to show the savings or revenue generation from their products, but also partially it is producers always focusing on cost over ROI (return on investment). I see it with labour all the time, and Agtech is not farm behind on this spectrum.

 

The only caveat to this argument I believe is the next generation. The majority of farm owners are moving towards the age of 65 and as such we are looking at the next generation for change. This is the cell phone generation, the ones who were not alive to see dial-up internet. This I believe will be a front runner for change on the cost versus investment. Also, equipment dealerships are not going to pull back. In fact, John Deere double down on Agtech being the main priority moving forward when the new CEO came in during the last decade. This is a positive in my mind as the majority of operations will need to be early adopters or they will get left behind.

 

Fear

 

Possibly the largest holdback on change is “fear”. Whether it be in business, personal life, or really any area where decisions are required, fear is often the deciding vote. So, in an industry where we only get one change per year to succeed, how do you eliminate fear?

 

The graph above I used from social media; it identifies an area called “the chasm” which I believe is also an area strife with “fear”. Visionaries, or early adopters, often are built with minimal constraints led by emotion or fear. I see it in our organization daily. My business partner has very little effect by stress or fear, almost to the point where it actually increases my own fear. However, I also have the ability to see the bigger picture and often this is the right mediation for fear. As you will see however, the early adopters only make up around 13.5% of the total industry. This is why Agtech is slow compared to most other industries.

 

What Iphone or Android are you using? The majority of people I know make it an annual or at least every two years, update to their phones. When was the last time you “feared” changing your cell phone? This is where the market needs to get to overcome this holdback. We need some significant wins when it comes to Agtech in order to show the masses that the value is higher than the dis-trust. I believe again, the next generation will move towards this light, but at what pace is yet to be seen.

 

In the end, I have been alive long enough to see the good and the bad when it comes to technology. I have also seen numerous really good ideas fail as they were too quick for the industry (ahead of their time). So, how as an industry do we work on closing the gap between developers and producers? And if we don’t, how many revolutionary ideas may fail before their time? Instead of too big to fail, try too fast to succeed.