Spotlights
John Deere (DE): De hightechtransformatie van de landbouw
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Robots en AI nemen de landbouw over
Discussing technologies like satellite geolocalization, 5G networking, autonomous vehicles, and robotics, investors tend to think of companies like Tesla (TSLA ) or Palantir. However, these technologies have applications beyond the automotive and defense sectors, and one of them is agriculture.
Since the beginning of agricultural mechanization, the sector has been at the forefront of innovation, with ultra‑specialized tools doing everything they can to save manpower and increase productivity.
Today, farming is becoming very much a high‑tech sector, with machine learning, AI, computer vision, autonomy, and advanced sensors working together to create so-called precision farming methods.
No company has been as important in agricultural innovation history as John Deere. The company is continuing this trend with the creation of the dedicated John Deere Technology Innovation Center (JDTIC).
As farms become increasingly dependent on high‑precision data and embrace autonomous systems, the company is poised to stay a leader in the field, with activity not just in farming but also in forestry and construction.
DE Prijsgrafiek
John Deere Geschiedenis
The almost two-century-old company, founded in 1837, started with farming innovation when John Deere, who apprenticed as a blacksmith, invented a new type of plow blade that could shed the sticky soil of the Midwest prairies better than the existing designs.
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Two plows were sold in 1838, then ten in 1839, and forty in 1840. The business would be fully launched by 1843 with an agreement with local businessman Leonard Andrus, and would sell 1,000 plows per year by 1846.
Soil clung to the plow bottoms, and farmers had to stop and scrape off the dirt every few feet.
Convinced that a plow with a highly polished surface would shed the sticky soil as it moved through the field, Deere made a plow using steel from a broken sawblade.
The need for a self‑scouring plow was so great, that it is said hundreds of people gathered at the farm of Lewis Crandall near Grand Detour to see the young blacksmith test his new product.
They then started to Engels staal importeren en een productie van 10.000 ploegen bereiken tegen 1857.
The company moved into more complex manufacturing over time, moving into harvesting equipment, tractors, and engines just before WW1. By 1928, the company had already taken a more familiar form, with 50% of the company’s sales coming from tractors, engines, and harvesting equipment.
After WW2, the company took on international expansion, with factories in Mexico, Germany, and Spain.
The 1960s were also a period of modernizing for the company’s line‑up with larger four‑ and six‑cylinder tractors, and the launch of the consumer equipment division producing lawn and garden tractors and attachments like mowers and snow blowers. John Deere even added recreational product lines, like bicycles and snowmobiles.
John Deere embraced early digital technology, with the yield‑mapping package for combines in 1993 and on‑board cameras. Since then, it has added to its offer more and more advanced technologies, like satellite maps, apps, AI control of tractors, etc.
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John Deere Segmenten
Productie Landbouw
The largest segment of John Deere’s business is the so-called “production agriculture” segment, with very large tractors and specialized pieces of machinery like combines, cotton pickers, cotton strippers, sugarcane harvesters, etc.
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This segment also sells many specialized modular tools like pull‑behind scrapers, tillage, seeding, and application equipment, including sprayers.
This is a very demanding activity, with maintenance and servicing of the machine another important revenue driver for John Deere.
Kleine Landbouw en Turf
This segment covers smaller tractors used in small farms for moving around materials, like hay, removing snow, lifting materials, bringing feed to cattle, etc.
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It also covers the “turf” segment, which mostly means mower tractors for golf courses and public spaces.
Constructie & Bosbouw
This is a sector where Deere is a lot less dominant, compared to rivals like Caterpillar (CAT ). It is, however, a useful segment for John Deere to be active in, as the heavy machinery factories used for tractors can also be used for excavators, loaders, etc.
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The dense network of sales points and maintenance workshops in rural areas is another advantage for John Deere for its forestry activity.
John Deere in Cijfers
With 75,800 employees (45,700 outside U.S. and Canada), and $51.7B in net income in 2024, John Deere is the #1 agricultural equipment company in the world.
While a multinational company, Deere is still a rather North American‑centric company, with “only” 34% of the company’s net sales and revenues outside of the USA & Canada.
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The agricultural equipment is still the core of the company, but the forestry and smaller equipment are important as well, making up half of the company’s revenues.
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Innovatie van John Deere
The company is spending a lot on R&D for a manufacturing company, with a rising percentage of total sales dedicated to innovation, up to 6% when counting both R&D on software and equipment.
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A central reason for John Deere’s success in innovation is the John Deere Technology Innovation Center, built in collaboration with the University of Illinois and contributing technical expertise to John Deere’s product development.
John Deere’s efforts are concentrated around a few technological axes: sensors, connectivity, autonomy, and alternative energy.
Camera’s & Sensoren
An important addition to modern tractors and heavy machinery has been a strong increase in detection capabilities.
For example, the See & Spray Ultimate system, launched in 2021, uses 36 cameras to help identify the difference between a crop plant and a weed and optimize herbicide consumption, using computer vision and machine learning.
That distinction happens within 200 milliseconds using vision‑processing units that can scan more than 2,100 square feet per second. It has already been used on 1 million acres in 2023, and reduced herbicide usage by 8 million gallons.
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In agriculture, this allows the development of precision agriculture, where data from cameras, satellites & aerial mapping, as well as analysis of soil (pH, nutrient, water content, etc.), are used to better use the resources of the farm.
This level of AI is achieved thanks to edge computing, where the calculations are done locally on hardware in the tractor, and not on the cloud.
Building on our 186‑year‑old roots as a world‑class manufacturer, we are now set up to become a world‑leading robotics and artificial intelligence company.
Jorge Heraud – Vice President of Automation & Autonomy
Connectiviteit
When farms started to digitalize a decade ago, dozens of apps started to emerge for every task on the farm. This has often been revolutionary, but also overwhelming.
As a result, centralized apps tend to perform better, as they are able to integrate these data and are natively communicating with the main equipment like tractors, combines, etc.
Think of the John Deere Operations Center as the digital twin of a farm (or ultimately, the construction or road building site). It’s our flagship solution that helps users manage critical operations, monitor job quality and productivity, and analyze the season’s results to improve the next season’s crops.
This level of connectivity also allows dealers to perform remote diagnostics, programming, and over‑the‑air updates.
Connectivity is also important at the factory level, with a private 5G network now deployed. This is important compared to standard WiFi networks, as 5G can support a vastly greater number of devices per radio: Deere reports up to 800 per radio within its private 5G cellular network.
To date, the company has deployed more than 100 automated guided vehicles controlled via 5G to move engines, drivetrains, cabs, wheels, and other parts within the assembly process. Computer vision, leveraging 5G’s ultra‑low latency and fast data throughput, is used to inspect welds for quality control as well as monitor worker safety.
Autonomie
While a lot of farm labor has been automated with mechanization, farm owners are still putting up with very long hours of work, in large part driving tractors through thousands of acres per year.
This could change as tractors are actually likely to reach full autonomy much earlier than cars. John Deere launched in 2022 its first fully autonomous tractor, a driverless version of its 8R row crop tractor. It oriented itself thanks to GPS and six pairs of stereo cameras for 360‑degree obstacle detection and navigation.
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This launch followed John Deere’s acquisition of startup Bear Flag Robotics for $250M.
In 2023, John Deere also launched a robotics‑based fertilizer system to optimize chemical application.
ExactShot uses a sensor to register when each seed is in the process of going into the soil, Deere said. As this occurs, a robot will spray only the amount of fertilizer needed, about 0.2 ML, directly onto the seed at the exact moment as it goes into the ground.
Alternatieve Energie
John Deere also launched an electric excavator in 2023, with a focus on construction projects in cities looking to reduce noise pollution. It uses a Kreisel battery, an Austrian company in which Deere acquired a majority ownership in 2022, which manufactures high‑density, high‑durability electric battery modules.
Kreisel’s battery tech concentrates on maximizing battery life and durability, even for outdoor conditions, by reducing cell aging to the minimum possible, making it a great fit for equipment like John Deere’s.
The machine works extremely quietly yet still has a high compaction force – I didn’t notice any difference. It is also good that the machine is operated in exactly the same way as the diesel machine, meaning that I could get started as usual, right from the outset.
So far the electric solutions are mostly focused on the non‑agricultural segments, with 20+ electric and hybrid‑electric construction and forestry models by 2026, essentially an electric option for every model.
The reason is that tractors are much more demanding machines energy‑wise, and operate much further from the support structure, especially for the cultivation of commodity crops like corn and soybeans.
“One of our bigger tractors, the 8R… if we were to use a battery to power that, the battery would be twice the size of the machine.
The 9R’s fuel capacity is 400 gallons at an additional weight of nearly 2,800 pounds. Changing that to full electrification would mean almost 60 batteries at a weight of nearly 67,000 pounds — more than 20,000 pounds heavier than the tractor itself.”
Deanna Kovar – President, Wereldwijde Landbouw & Turf Divisie
Until batteries are improved enough for this use case, John Deere is more looking to increase engine efficiency and boost usage of biofuels, notably working to develop an ethanol‑burning 9‑liter engine.
This does not mean there will be no electric tractor, with, for example, the E‑Power tractor prototype with a smaller size than some of the company’s much larger combines.
Data is Koning
The long‑term effort to provide all John Deere tractors with connectivity is also paying off by providing the company with a massive advance in data collection. Currently, 775,000 John Deere‑connected machines are being operated, farming as many as 455 million acres, of which 125 million are classified as “highly engaged” and 197 million acres as “sustainably engaged”.
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As the company’s digitalization progresses, it is increasingly turning into a software and data company, embedded into the equipment sold.
This is why it is advancing quickly in digitalizing not only farming but also creating “precision forestry”.
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Tarieven
As a manufacturing company with massive exposure to the North American market, the question of sensitivity to Trump’s tariffs is an important one for potential investors.
Deere has mostly kept its manufacturing in the USA, with 75% of all products sold in the USA assembled there.
Het bedrijf leek de richting van politieke relaties en potentiële handelsconflicten correct te hebben voorspeld, with $2.5B invested in the company’s American factories since 2019.
“In terms of component sourcing, about 10% of our U.S. manufacturing cost of goods sold come from Mexico, with less than 2% coming from China and approximately 1% from Canada.”
In total, the company hires 30,000 people in more than 60 U.S.-based facilities across 16 states.
We are a net exporter of U.S.-assembled Ag & Turf equipment. John Deere is a global brand that operates in over 30 countries.
However, tariffs can be cut both ways, and retaliatory tariffs against the USA are hurting Deere’s exports of US‑made machines. This also disrupts the company’s supply chain, as at least some components are made abroad, and in the same way, it likely sources at least some raw materials like electronics, steel, chemicals, and plastics from other countries.
In september 2024, Trump announced he would impose a 200% tariff on John Deere’s products should it move more production capacity to Mexico.
Poor sales of commodity crops, as China is looking to replace US suppliers in retaliation for the tariffs, could also affect Deere’s main customers: US farmers.
So trade wars and tariffs could affect the company in the short term, but it should not have to massively relocate its entire supply chain, contrary to some automakers for example.
Reputatie en Marges
John Deere is known among farmers as a very powerful and advanced manufacturer. It is also known for its very high prices, with many smaller farms giving up on long‑time fidelity to the brand simply because they cannot afford to pay the price tag for Deere’s premium tractors.
Another point of contention between Deere and farmers has been the handling of all the digital innovation and software embedded in the tractors. This is because almost any update and modification to the software needs the approval of the company. It leads to maintenance, repair, and debugging often come with a pricey servicing bill.
“De “techniciteit” van zware landbouwmachines is een belemmering geworden voor betekenisvol eigendom. Nu hebben bedrijven zoals John Deere het volledige ecosysteem voor apparatuur verticaal geïntegreerd, waardoor klanten reparatieservices exclusief bij dealers moeten aanschaffen en software wordt gebruikt om onafhankelijke reparaties te voorkomen.”
As a result, hacken sommige boeren illegaal hun eigen tractoren, met behulp van onofficiële en illegale softwaretools.
As the company estimates software fees will account for 10% of its revenue by the end of this decade, this could become a serious issue if a new law with “right to repair” were to pass, or if farmers start deserting Deere over the restriction on software updates.
So while not yet dramatic, this is a topic investors will want to stay informed if they own shares of John Deere.
Financiën
John Deere is known as a very shareholder‑friendly company, with ~63% of cash from operations returned to shareholders between 2015 and 2024.
The company has been returning this money in the form of share repurchases, with $3-4B per year in the past decade.
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It has also been steadily raising its dividends since 2004.
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Overall, the company is profitable, with a steady growth of operating cash flow in the past years, although 2024 was lower than the record‑breaking numbers of 2023.
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Conclusie
John Deere is a global leader in farming, but also forestry, and construction equipment, from the largest one to commercial and hobby farm and turf maintenance.
It is also a company that, from its inception almost 2 centuries ago, has known that innovation and high quality are the only way forward. Today, this covers technologies as varied as machine vision, AI, autonomous tractors, ultra‑durable batteries, 5G‑connected smart factories, and advanced software and apps.
Deere is also a quintessential American manufacturing company, despite the occasional polemic for its overseas factories. And it seems in a better position to handle an era of protectionism and high tariffs than many other heavy industry companies.
This transition to a software and data company is, however, not without hiccups, and a balance between control over data & profitability, versus farmers’ autonomy and right to repair will likely need to be found.
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