In our latest broadcast, you'll notice we've changed up our regular format due to the big moves in the market by John Deere that are making waves beyond just green equipment. This week we take an in-depth look at what Deere's announcement of its acquisition of Precision Planting and Monosem will mean for the farm equipment industry as a whole.
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I'm Managing Editor Kim Schmidt, welcome to On the Record. We're departing from our regular, varied-storied and departmental format this week to go more in-depth with two major acquisitions by John Deere that occurred earlier this week.
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Deere Bulks Up Precision Planting Offerings
John Deere has had a busy week, with two acquisitions in 24 hours. After first announcing the acquisition of shortline planter manufacturer Monosem, which I’ll get to in a moment, Deere announced Tuesday it had agreed to buy Precision Planting from The Climate Corp., a subsidiary of Monsanto, for an undisclosed amount.
Precision Planting develops advanced technology and systems for the precise seed spacing and depth placement control to increase crop yields.
The agreement will enable near real-time data connectivity between certain John Deere equipment and Climate’s FieldView platform.
According to published reports, Climate Corp. will retain the digital agriculture portfolio that makes up the FieldView platform.
The Climate Corp. arrangement with John Deere is not exclusive, and FieldView will continue to be available for most tractor brands. We spoke with Cory Reed, the senior vice president of John Deere’s Intelligent Solutions Group, to get additional details on the deal.
"There’s three parts to the deal we announced yesterday. The first and the major piece of the deal is our acquisition of precision planting organization and that’s a majority of the portfolio — the hardware, the sensors, the displays — that the precision planting business has today.
"The second piece is the data connectivity to the FieldView platform. They have a series of sensors, hardware that might be installed on a planter or combine that ultimately comes back and is displayed by a display, the 2020 seed sense monitor and essentially we’ve acquired everything up through that monitor.
"And in addition to that monitor there’s a hard wired connection between the monitor and Climate’s FieldView platform, so their mobile application and their platform that they offer to customers called FieldView.
"And we’ve agreed to maintain that connection between Precision Planting and FieldView. And for any new customers of FieldView in the future we’ll create that real time connectivity to John Deere equipment.
"The third piece is we’ve also engaged in an API agreement with them whereby consistent with our approach and we have over a dozen partners here that customers will actually have the opportunity to choose how and where they connect and where they want to send their data to.
"And there will be the ability for customers to move their data from any of the data collected by John Deere to FieldView and from FieldView to John Deere."
Precision Planting was founded by Gregg Sauder in 1993. Monsanto acquired Precision Planting from Sauder in 2012 for an estimated $210 million and later rolled it into its Climate Corp. division. Sauder returned to the market with a new company, 360 Yield Center, just over a year ago.
Reed says Deere intends to maintain Precision Planting as a wholly owned subsidiary that will be managed as a separate brand. He adds they will also maintain Precision Planting’s existing dealer network. Precision Planting has an estimated 400 dealers in the U.S., which include farm equipment, co-ops and independent ag retailers.
"We'll maintain each of those existing dealer contracts.
"They have a series of contracts, their Premier Dealer contracts across the industry. Obviously some of those are OEMs but a lot of the OEM equipment dealers, but a lot of them are not, they could be an ag service provider, they could be an agronomist.
"Our intent is to maintain that Premier Dealer network in the industry. In addition, we’ll offer John Deere dealers obviously the opportunity to become a premier dealer but they’ll have to meet the same requirements of each of Precision Plantings Premier Dealers today.
"The opportunity will be there for John Deere dealers to become but it’s really Precision Plantings network.
"They have an existing network that will be maintained and we’ll offer that opportunity to others and in this case John Deere dealers to become part of that Premier Dealer network as well.
Ag Equipment Intelligence editors got on the phone with several dealers to get their take on the deal. Included was the perspective of Case IH dealers, whose major-line inked a deal just last year for Precision Planting row units and components to be allowed as a factory option on its Early Riser planters.
The dealers we spoke with say they, and Case IH corporate, were fully caught off guard by the Deere-Precision Planting deal. One dealer said Case dealers bought test meter stands and parts, sent employees to training and made investments in Precision Planting technology. These dealers are feeling like they’ve been duped — told that the Case IH-Precision partnership would immediately bring them best-in-class row unit and control technology while seamlessly accommodating farmers;’ requests for factory options.
Ag Equipment Intelligence reached out to Case IH corporate for comment and plans,
but has not yet heard back.
UPDATE (Monday, Nov. 9, 2015; 2:06 p.m. CST): According to Dan Danford, public relations and sponsorship manager for Case IH, the change in Precision Planting’s ownership will not impact current arrangements with CNH and Case IH dealers. Read Danford's full response here.
Among the many questions dealers have cited is the longer-term future of the technology on the planters they’ve ordered and will be delivering for 2016. According to Deere’s Reed, these agreements will be honored as Precision Planting will continue to operate under its current structure.
When asked how the leadership at Case IH is likely to react now that a Deere-owned company is in their supply chain, one dealer said he hoped Case was talking in some fashion with Kinze Mfg. If ever there was a time for a move, now would be the time, he said.
We polled Farm Equipment readers to find out what they thought Case IH’s likely reaction would be.
Thirty-four percent said Case IH should create a similar partnership to the one it had with Precision Planting with another technology source. A quarter of respondents said the manufacturer should invest in its own proprietary solution, 23% said there should be no change and Case IH should continue to contract with Precision Planting, and 18% said they think Case IH will acquire another manufacturer or supplier.
We’ve also heard from AGCO dealers who have expressed some concern, as a number of Precision Planting Premier Dealers are also AGCO dealers.
As Ag Equipment Intelligence spoke with several independent precision farming dealers that represent Precision Planting, there was mixed reaction to the news. There is concern as to how well the cultures of the two companies will blend, and what that could mean for the long-term stability of Precision Planting’s independent dealers, as there’s now — virtually overnight — a greatly expanded dealer network competing for the same aftermarket sale.
We also polled Precision Farming Dealer readers to find out how concerning the new Deere-Precision Planting partnership is to small independent dealers.
More than half of the respondents said they were highly concerned and that they better start looking for new technologies and services. Another 27% said they were concerned while 16% said the news was not at all concerning as there is room enough for all types and sizes of models.
There was also optimism that at least in the short-term, the acquisition will raise the profile of Precision Planting and present new sales opportunities or partnerships for independent dealers.
Steve Cubbage, president of Record Harvest, was one dealer who expressed some optimism.
“One of the things could be the financing arm of Deere, possibly through their Farm Plan.
"That’s speculation on my part, that’s total speculation, but if I had to say what could help us as a dealer and spread that technology, knowing that we might be able to use some of the Deere financing vehicles, to implement it, I think it would be awesome."
Tim Norris, CEO of Ag Info Tech, shared some insights on the potential negative of the acquisition.
"On the negative side, I have to be worried about the two cultures coming together because they’ve kind of fought each other for so long.
"I think it’s going to be hard to get those two cultures to merge together and I think it’s going to take great efforts and communication from John Deere’s management and the management of the Precision Planting division of John Deere.”
On Monday of this week, Deere also announced it had signed a definitive agreement to acquire Monosem, a European manufacturer of precision planters with four facilities in France and 2 in the U.S.
Monosem is recognized as a technology leader, credited with introducing the first vacuum planter in the U.S. market in 1980, and the first twin-row planter in the market in 1996. Headquartered out of Edwardsville, Kan., Monosem’s website recently listed 160 U.S. dealer locations.
John May, president of agriculture solutions and chief information officer for Deere, says Monosem will retain its own brand and trademark and will not change the independent nature of the company.
The announcement, which came prior to the Precision Planting news, was said to accelerate Deere's market reach in precision planting equipment and adds engineering expertise to further develop planting technology.
In early October, Deere and DN2K formed SageInsights, a joint venture that will initially serve the ag industry with further development of DN2K’s existing cloud software platform, MyAgCentral, for ag retailers and consultants.
Deere has also supplied Ag Equipment Intelligence with additional information that viewers can find on our website.
Dealers on the Move
Dealers on the move this week include Belkorp Ag and 3 dealers adding the Claas line of equipment to their offerings: Agriterra Equipment, genAG Inc. and Smith’s Equipment Sales.
Belkorp Ag, a Modesto, Calif.-based John Deere dealer, is planning to build a new store in Modesto and is currently waiting for land to be rezoned. The dealership has a total of 4 locations.
AGCO dealer Agriterra Equipment’s Eckville, Alta., location has joined the Claas dealer network. genAG Inc.’s Winkler, Man., location and Smith’s Equipment Sales in Lougheed, Alta., will also join the Claas dealer network.
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