Precision farming is a constantly changing field, requiring dealers to closely monitor their segment of business. Precision Farming Dealer sat down with 5 precision farming specialists, across all colors, to ask them how their business is evolving and adapting to industry trends.
Q. What level of brand purity exists with precision farming products and how do you distinguish yourself from the competition when it comes to sales and service of technology?
Kelly Degelman, precision farming specialist, Young’s Equipment, Raymore, Saskatchewan (Case IH dealer):
“For the most part, customers just want something that works and to know we are there when they need help. The integration of technology with new equipment requires us to be fluent with the products coming to us from the factory. Our equipment customers rely on our expertise and advice on what they choose for precision equipment. With 9 stores covering a huge area, we need to focus on how to be efficient in supporting customers rather than driving around ‘putting out fires.’
“Dealing with too many brands can sometimes be a service nightmare. We sell several lines including Case IH and each of these companies may have different options for precision farming equipment from the factory. Some manufacturers have features that others don’t, but too many options can be confusing to the customer. We rely on support from suppliers when problems arise so our relationship with them plays a part in what products we promote.
“Dealing with one or two brands seems to yield better results when it comes to providing support. Big picture, we want satisfied customers. They appreciate our ability to provide an all-inclusive approach to machinery and precision products.”
Aaron Hacker, precision farming specialist, Elite Ag Solutions, Warren, Ind. (independent precision dealer):
“Brand purity isn’t as prominent as it is on the iron side or with your main OEMs. For precision ag, a lot of it right now is dealing with the aftermarket products and being able to retrofit them onto any brand of machine. There’s not as much pressure as there is on the main iron — your John Deere, Case and AGCO dealers — as there is in the precision ag industry I’m sure there are some manufacturers who would like us to focus more specifically on their product lines. But in general, we have to provide solutions that our customers want and some of those solutions require a different product line.
“Service is the key If we do a good job supporting a product, it doesn’t take long to earn customers’ business. If we do a bad job supporting a product, it won’t take long to lose that customer’s business either.”
Steve Kaufman, Integrated Solutions manager, PrairieLand Partners, McPherson, Kan. (John Deere dealer):
“We sell primarily John Deere AMS equipment. However, Deere does offer some Raven components that we sell, but all of it integrates with the Deere equipment and technology We do run into situations when a customer has a competitive planter, for example, and requests that we install a Deere rate controller for their fertilizer system.
“We do our best to install and integrate what we can, but our main focus is John Deere Greenstar systems and components In addition to the hardware, we offer a call center for our customers called the Remote Support Center This has been a foundational piece for us to be able to provide more consistent and timely AMS tech support when our customers need it most.”
Lance Larsen, Precision Ag Specialist, South Dakota Wheat Growers, Aberdeen, S.D. (precision farming retailer):
“Most of our customers are pretty open-minded. We have about a dozen who will say ‘This is what I use and if the manufacturer doesn’t provide it, then I don’t need it.’
“But for the most part, the broad spectrum of customers we deal with daily will bounce around from company to company when it comes to precision. One thing that sets us apart from a lot of other dealers is we actually sell Ag Leader, Raven, Trimble and Precision Planting. We’re kind of the go-to guys for a lot of customers because there’s a lot of finger pointing between dealers if something doesn’t work.
“If a farmer has a red planter with Precision Planting on it and Trimble guidance running the planter the Trimble dealer may say, ‘You have to a call the Precision Planting dealer or you need to call the Case IH specialist.’ When we show up at the field, it doesn’t matter whose technology is on there, we’ll get them going. We strive to have that can-do attitude that we can and will fix anything.
“The fact that we offer so many different brands is part of the reason our customers aren’t tied to one brand of precision. The only way I’m going to go out and push a product is if it’s going to be better for the producers we’re dealing with at the time. If we see the need for something in their operation, we point it out and explain why”
Nathan Zimmerman, product technology specialist, A.C. McCartney, Wataga, Ill. (AGCO dealer):
“Once a customer gets into a certain brand it’s hard to get him out of it and switch him over to something else that might be better for him. On the dealer side of things, we have pretty much done everything with Ag Leader just on the basis that they have something for any color of equipment.
“Being an AGCO dealer, gets us in the door of a lot of the competitors because we’re able to service their precision products and the customers start to get to know us and what we offer, and sometimes that turns into an equipment purchase. Right now, we probably do more one-on-one than most companies. We spend a lot of time, especially with the customers who are new to precision farming. We go out of our way to give them extra attention. If they need 2 days of training, we do that and they have unlimited phone support from us.”
Q. What revenue potential do you see for sales of unmanned aerial vehicles at your dealership and what are the greatest challenges to turning a profit with the technology?
“This technology creates some very exciting opportunities. Our dealer group has not become involved in services related to agronomy or field data yet. Our primary focus has been equipment sales and servicing what we sell. There are some innovators or ‘techies’ in our area who have started using quadcopters with onboard cameras to do some basic field scouting.
“I do see potential for this technology to create revenue, but not quite yet. We have yet to see most of our customers completely buy in with data management and analysis. I’ve asked many customers if they plan to do anything with their farm data, and the answer is usually no. If we can show customers how to maximize the potential of what is already being recorded, then the concept of using drones won’t be such a huge step.
“Our customers have operations ranging in size from 1,000-50,000 acres so they have different needs. Drones will not be for everyone. I see them as a service-based business that would require a significant investment in equipment, training and customer awareness. This technology is evolving fast and there will soon be a paradigm shift in agriculture.”
“There’s a huge potential for UAVs to be a profitable segment of our business. We’re trying to figure out how to best present that to the customer as an offering. It’s still a work in progress. Some of it is going to depend on the regulations and what options we have once the Federal Aviation Admin. comes out with its guidelines. That will ultimately give us the direction on what we can and can’t do.
“There are two different aspects of how it will work. One is where we sell the product to the customer just like any other product. They’re going to own it and use it, and we might be able to support them on the backside with some of the software,] the analysis and things like that. The other avenue we’ve looked at is offering it as a service to the customers where we go out if they want information on a field, process the information and give them the results. The regulations, from our standpoint, will dictate what direction we’re going to go with it.
“I wish I knew. Part of it depends on the regulations. We’ve really wanted to get into this area and experimented with a UAV, but it’s been more on the marketing side. We’ve had customers ask if we’re going to sell them and if we have enough customer demand, we’ll get into it, but I’m just not sure of the time frame at this point.
“If we’re going to use a UAV for data analysis, once we capture that data, those files are so large you have to be able to process them in a timely manner for it to be usable for the customer. At this time, processing the data and stitching the images together is a major challenge. We have been able to capture some great footage of fields, crops and irrigation systems, but the actual data processing and analysis of the data is a work in progress. We will continue to experiment in this area and hope to come up with a solution that is a win-win for both the dealer and the customer.”
“We’ve actually bought one and have been doing some testing with it. We’ve had our share of hiccups. I think the biggest mystery is just finding an efficient use for it. At this point, I don’t know if there is huge revenue potential for selling UAVs for us, but that may change in the future.
“We’ve considered renting out UAVs rather than selling them. The main direction we’re thinking of going with UAVs is our agronomists providing a service inspecting fields and giving recommendations — sprayer recommendations, fertilizer recommendations, etc. With that platform or service, we would bundle in the UAV service. If a customer had X amount of acres where we provide recommendations, then throughout the year we would provide 2-4 UAV trips across the field to inspect it.
“The biggest shortcoming is it’s not very efficient as of yet, and with the high resolution imagery that is coming down the pipeline, I don’t know if its going to hinder the UAV market or not. There are a lot of unknowns that need to be answered before we get too amped up on UAVs.”
“We’re still in the infancy in terms of looking at UAVs. We’re researching them and trying to figure out what would be best for our customers. I think there’s going to be a market, but I don’t know how soon. It seems like it’s going a lot faster than anybody thought. We have customers who already have one or two of them. So they’re using them. I don’t know what they are using them for, but they have them already. The only revenue we’ll see is in the sales of the actual product and servicing it, sort of like with the precision farming hardware.
“We don’t have agronomists on staff. We help the farmer gather data, but we don’t make application or planting recommendations. It’s just going to be the sales and service of the equipment that we’re going to see on our end. We’re debating between using copters or fixed-wing planes. We’ve found a few that seem really easy to run, so that’s what we’re going to strive for — ease of use and getting data customers need.
“The more expensive UAVs will be a hard sell to customers, but if we stay under $3,000, I think it will be a little easier. It all comes down to what the customer wants to do with it. It will be more of a problem for the smaller farmers as opposed to the larger ones to spend that kind of money on a UAV.”
Q. What impact has more farm machinery coming factory-equipped with precision hardware had on aftermarket sales and how are you evolving your precision business to account for this trend?
“We are seeing a high percentage of new equipment being ordered complete with precision hardware, which presents a challenge selling technology over the counter. The majority of sales are used equipment and some new that didn’t come with guidance from the factory.
“Big picture, we are selling a total equipment and service package. When our product support technicians go do an orientation with a customer who has bought a new piece of equipment, there is a benefit to having a common interface such as the Case IH Pro700. If there is a problem with the precision equipment that is factory equipped, we have a better support system in place. There is no finger pointing when systems are not factory integrated.
“We now see growers ordering entire equipment fleets with factory monitors, GPS and guidance. They are more likely to buy the complete package up front if it is sold with the machine. We have seen a huge increase in Trimble’s Centerpoint RTX subscriptions by including the unlock as standard equipment. We are more likely to sell aftermarket systems for some of the older equipment rather than new. We will soon reach a saturation point where all new equipment we sell is equipped with precision farming technology. Most won’t even function without it.
“Now, more than ever, water management will be a large portion of our aftermarket sales. These products are not available from the factory on the equipment we sell.”
“It’s forcing us to continuously evolve our business practices, and find that next precision product that’s coming out that the OEMs haven’t gotten to yet. Precision farming is always going to be evolving and there’s always going to be new technology the smaller aftermarket companies can develop quicker, bring to market quicker and implement into farming operations quicker than what big iron companies can do.
“We’re constantly looking for new features, capabilities and new product lines. There might be more service-oriented things we can offer customers coming down the line as recurring revenue as opposed to focusing so much on a specific product and selling a piece of hardware to the customer.”
“We used to have our AMS guys structured more toward the selling of the equipment, but obviously there’s less potential for that newer stuff because it’s already onboard. Now, our focus is on upgrading used and end of life displays and receivers plus services that revolve around customer data and analysis. It seems to be a good fit for most of our customers at this time who want to optimize their technology and equipment investments by collecting, analyzing and making decisions based on their own field data.”
“We haven’t seen a huge impact as far as sales on precision equipment. Case IH recently announced their partnership with Precision Planting. That might hamper us, but at the same time there’s still John Deere, White and plenty of other companies as far as Precision Planting products go that we could still sell into.
“We’re more focused on the service aspect of things than sales of hardware. In the future, we may have to try and compete with planters coming equipped with precision from the factory. We’ve got a pretty good working relationship with the dealerships around here and it might get to the point where they might just say, ‘Go talk to those guys for service.’
“There probably is going to be a little bit of a ding on the equipment sales for us, but it doesn’t really concern me a lot at this point. The other reason I’m not extremely worried about it is corn isn’t $7 per bushel any more. I can see customers keeping planters for longer and just updating the equipment they have on their older planters. We already saw a little bit of that last winter.”
“It’s had a big impact. It’s pretty hard to find a planter without clutches from the factory on it nowadays. It’s hurt our hardware sales, but at the same time it is saving us hours in labor. We can actually get out and do more than putting clutches on all day long. AGCO recently announced it’s going to be equipping its combines with Ag Leader technology. It’s going to save us time, but it will hit us on the revenue side. It’s kind of a break even deal, but we’re not to the point where we’re not selling anything aftermarket.”