The Rural Tower Network's 40 RTK towers covers 3.5 million acres in the Red River Valley of the Dakotas and Minnesota.
Dealers are getting involved in the signal business, ensuring guidance reliability for farmers and strengthening customer relationships.
For several years, manufacturers of GPS guidance equipment and systems have been knocking on the door to the future of precision farming. But it took equipment dealers to open the door to the full benefits these advanced technologies offer farm customers.
By constructing RTK tower networks, progressive farm equipment dealers are now bringing GPS signals to the farm where they can do the most good and fulfill the promise of true precision agriculture.
During the past four years, Farm Equipment has reported on several startups of these vital RTK networks around the country. In this report, we're revisiting three of these dealers to determine where they're at in the development of their networks, how they've grown, where they're going next as well as the potential for other dealers.
What we found is that they've developed their networks in their own way, yet they're all expanding. The one thing they all have in common is a goal of providing an essential service to farmers ready to take their operations to the next level. And — whether or not their RTK services are yet profitable in themselves — the network capabilities and know-how are helping these dealerships grow overall equipment sales and strengthening relationships with their customers now and in the future.
Rural Tower Network: A Dealer Alliance
With 165 current subscribing customers, the Rural Tower Network was one the original dealership pioneers in the Midwest offering farmers a reliable real-time kinematics (RTK) signal for precision guidance.
The network was established in 2005 by three of the nation's largest equipment dealers — Titan Machinery, representing Case IH and New Holland, RDO Equipment, which covers John Deere machinery, and Butler Machinery, a major retailer of Caterpillar and AGCO's Challenger brand of farm equipment.
In its first year, RTN constructed 13 dedicated towers, each of which provided service to 50,000 acres in the Red River Valley of North Dakota and western Minnesota. Farm Equipment reported at the time, that each of the 100-foot towers cost about $50,000.
By the start of 2008, the Rural Tower Network was providing RTK signals from 40 dedicated towers covering 5,200 square miles and 3.5 million acres throughout 13 counties in North and South Dakota, as well as Minnesota.
Commenting on the partnership that brought the three competing dealerships together, David Meyer, CEO of Titan Machinery, says, "There was no sense in each of the three of us having our own towers; no value to each of us duplicating the other.
"Our goal was to give our customers the highest quality, lowest cost signal. Not many farm operations can justify the cost of a tower system on their own."
Resolving Technical Issues
Kirk Johnson, who oversees the Rural Tower Network as project manager for the three dealerships, notes that the biggest advantage for farmers in working through an established RTK network is the resolution of technical issues that will inevitably arise.
"Each of the dealerships involved with the network has a team of precision ag specialists that can resolve issues of compatibility and provide technical service and support."
While Johnson is not engaged in selling the GPS equipment, he is active in promoting the concept of the network itself.
"Rural Tower Network sustains a business model that separates it from the dealership's efforts to sell compatible equipment and subscriptions."
But, he adds, that there's little doubt the existence of the network "drives equipment sales for each of the dealerships involved."
No Universal RTK
One of the Rural Tower Network's biggest challenges is that each of the dealer organizations utilizes different GPS guidance systems. "There is no universal RTK signal and the codes for each are proprietary," says Johnson.
Case IH has partnered with Trimble and John Deere has its own auto-guidance system. Butler Machinery's utilizes Beeline GPS apparatus for its AGCO-Challenger products. In December 2007, Hemisphere GPS acquired Beeline.
Johnson says that farm customers who purchase a guidance system from a dealership other than those associated with the RTN could utilize the signal service, but it needs to be compatible with the network's capabilities.
While further expansion of RTN's service is in the offing — seven more towers are planned for this year — expanding the coverage outside of dealerships' sales territory will require setting up alliances with the competing dealerships to offer a wider coverage area.
Signal from Kunau Implement: Need to 'Define' RTK
Compared with other dealership groups that have taken the initiative to establish tower networks, Kunau Implement may be among the smallest ones. With only two stores that carry Case IH and New Holland equipment in Preston and DeWitt, Iowa, Kunau erected its first tower in 2006.
And unlike the massive Rural Tower Network in the northern plains that uses dedicated towers to relay its RTK signals, Kunau has taken advantage of existing structures for mounting its relay systems.
The network, which is called Signal from Kunau Implement, currently has eight towers, according to Rodney Bratthauer, precision ag specialist for the dealership. Each base covers an estimated area of 6 miles.
"We know we can deliver sub-inch repeatedly in this range," he says. "In some areas, we might get the RTK signal out several miles further, but true sub-inch repeatability drops off at greater distances."
He says plans are underway to add eight additional towers by this spring.
Kunau Implement relies heavily on targeted direct mail and radio and newspaper advertising to promote its RTK service. "We try to segment each mailing," Bratthauer explains.
"In some cases, we'll target growers with at least 500 acres. We'll use different criteria in other cases to keep the mailings manageable. Let's say we send out a mailer today and we anticipate that it'll get to the customer in a week. We follow up with a phone call and ask, 'Did you receive our flyer? Do you have any questions? Can we set up an appointment to discuss our RTK service?'
"We need to go face to face with customers. We get their attention with direct mail and newspaper or radio ads, but when it comes down to selling, it has to be face to face. It's not an over-the-phone thing," Bratthauer says.
Face-to-face interaction is critical, he explains, because the sophistication of RTK is new and many have questions about what it's really going to do for them.
Bratthauer says the cost of the RTK service is not the major issue. "They want to be confident that RTK guidance is really going to work. They ask questions like, 'Is it really going to drive this tractor or this implement the way it's supposed to be driven? Or is it a host-type deal?'
"It's my job to help them understand that it will drive the tractor, can handle field contours and can compensate for tilting when they go around the side of a hill," Bratthauer explains.
"We tell them that they'll need implement guidance to minimize side-hill drift of that implement. These concerns and questions can only be addressed face to face."
Bratthauer says another major selling point to the farmers is "they don't have the exposure to the changing technology. We take on all of those risks and the required investment the technology requires."
No Accuracy Standard
The salespeople selling and servicing these systems also must understand the nuances of various systems. Just as there is no universal RTK standard, Bratthauer says, "There is no standard out there for what RTK stands for in terms of accuracy. It's our job to explain this to the customer."
For example, as a Case IH and New Holland dealer, Kunau Implement works with Trimble equipment, and according to Bratthauer, the Trimble system has the capability of true sub-inch repeatability 95% of the time.
"That means 95% of the time our system is repeatable, pass after pass, to within an inch," he says.
Making Good Progress
All in all, Bratthauer feels Kunau Implement is making good progress. They accept RTK subscriptions from customers that purchase their GPS equipment from another dealer, but in these cases, Bratthauer says, "They surrender the technical support that comes with the membership and subscription fees. The equipment purchase along with the membership fee brings the support."
To support his efforts, the dealership recently hired a second precision ag specialist to work with Bratthauer. "It's helping us with our equipment sales, and hopefully our customers see that we are taking a risk and making an investment to help them."
Birkey's RTK Network: Agronomy is Key
With 14 store locations throughout Illinois and one in Indiana, Birkey's Farm Stores is a Case IH and New Holland dealer that began offering RTK signal services in 2007. Its 9 towers cover 2,300 square miles and 750,000 acres across 15 counties.
In terms of support, Birkey's has taken a different approach as they employ degreed agronomists to work with their service subscribers.
Ron Birkey, president and CEO, pushed to have an agronomist head up the dealership's RTK service because he believes the end result of what farmers are trying to accomplish is good yield and good agronomic practices, and guidance is only a tool to help them accomplish this.
Darin Kennely, who heads up Birkey's RTK program, began working for Birkey's Farm Stores in August 2005, about a year before the dealership initiated the service. "Ron really didn't want someone who was only savvy with a computer. He wanted someone who knew what the farmers need to accomplish and could talk to them about agronomic needs and benefits and how auto-guidance falls in line with those needs."
The Price Barrier
Kennely occasionally runs into resistance when it comes to price. "There is a significant jump in costs going from a lesser GPS signal to RTK, mostly in the first year when the customer needs to purchase hardware and upgrade other GPS components," he says.
"If they haven't gotten into GPS at all, the best way to overcome the cost argument is to get them to start out with something that's fairly simple and work with them to upgrade over time."
When it comes to upgrading existing GPS systems to RTK, Kennely stresses the long-term benefits of the investment. He also gets them in touch with current RTK customers. "Farmers like to hear from other farmers and customer testimonials help to confirm the benefits," he says.
In the current environment, Kennely points out that "most of our customers have the money in their pocket right now, but cash rent, fertilizer and other inputs have risen significantly, too. We stress that if commodity prices do drop it's likely that inputs will remain somewhat higher.
"What this means is the grower needs to be very efficient with their inputs and this is where RTK guidance really falls in as far as improving efficiency," he explains.
"By not overlapping seed or fertilizer and banding fertilizer and planting near that band is where RTK guidance really pays off. Maintaining those efficiencies when commodity pricing isn't where it's at today is going to be even more critical."
Currently, Birkey's Farm Store utilizes 9 tower stations mounted on existing silos, grain legs and grain elevators. Plans call for establishing "at least" 7 more during 2008.
Service subscription sales originate from each of Birkey's farm equipment locations with Kennely providing sales and technical support.
As both the number of subscriptions and interest in the RTK system has grown throughout central and north Illinois and western Indiana, Kennely says that the dealership hired another agronomist in February to support the individual stores in expanding the signal services.