It is often said that the only thing you can count on is change. That statement certainly holds true when looking into the future of the agriculture industry.
My 8-year-old son has a toy combine his grandfather gave him for Christmas. This toy has a 30-foot platform header and is to scale with the main harvester used on my family farm. When my father gave it to my son, he told the story of the first combine harvester his father (my son’s great-grandfather) purchased for the Blades farm. It had a 36-inch header. In a little more than a half century, the scale of farm equipment has grown exponentially. That sort of generational change is hard to wrap your head around, but, if anything, it is only going to happen faster in the years ahead.
Recently, AEM commissioned a study to look into the future at the impact some broad trends will have on equipment manufacturers, dealers and farmers. We are sharing and discussing these findings through a series of thought-provoking articles in AEM publications, member webinars and media interviews with the intent of spurring thought and conversation.
A common theme coming out of these discussions and findings is that precision farming, big data and artificial intelligence could have as much of a revolutionary impact on our industry as mechanization in the late 1800s or the advancement of seed genetics over the past century. It is an exciting time to be in agriculture.
One of the biggest changes in our industry is a direct result of our aging farm population. Farm consolidation has been happening for many years, but it will likely accelerate in the next decade. When looking at this future structure, it is important to separate the ownership of the farm from the ownership of the land. The fact is, very little farmland is transacted on the open market. The vast majority is transferred through inheritance or private sale to a family member. Increasingly, these family members are further removed from material involvement in the farm and even the ag industry.
It is hard to predict the exact impact of this continual increase in absentee landlords for farmers, but it is safe to say that someone multiple generations removed from the farm will have a different expectation on the returns from their land ownership than someone with a stronger emotional attachment to that same piece of ground. This change in structure will continue to force farmers’ focus on total farm profitability. Our industry must continue to provide proof of economic returns for the farmers who buy machinery.
One key way our industry is responding to the need for positive economic returns is through innovation and adoption of new technology. The labor-saving technology of machine guidance is already revolutionizing our industry. One can only imagine the possibilities of a future when machines are able to completely drive themselves without much human interaction. Today, much of the weight of equipment is tied to creating larger, more labor-efficient machines. With autonomous machines, labor becomes less of a limiting factor, opening up a whole new paradigm for machine design and usage. Couple this autonomous future with the collection and use of production data, and you soon have a future ag production system that looks nothing like the industry of today.
But products aren’t the only factor considered when assessing return on investment. The economy as a whole is quickly shifting focus from products to service. This same trend is making its way into the ag industry.
Today a farmer buys a piece of equipment from a local dealer, purchases crop inputs from a local retailer and may tap into a few advisors to assist in making agronomic and business decisions. Building on the trend of farm structure changes and adoption of new technology, it makes sense that a farmer’s need for services will increase significantly.
The ag industry is poised to respond to this trend with new service offerings to meet the needs of customers. Our research shows that the role of “most trusted advisor,” one who can bridge the gap between agronomic information and precision farming hardware, is still up for grabs. This provides a tremendous opportunity for AEM members to respond to farmers’ needs for services with new product offerings, ownership models, technical support and other pay-for-service programs.
You don’t have to look very far into the past for the most advanced equipment on the Blades farm to look like my kid’s farm toys today. It is difficult to predict what the future of agriculture will look like, but we can all agree that it will look different than it does today. For me, I could not be more excited to be a part of this ag equipment industry as we grow to meet the needs of tomorrow’s customers.
Curt Blades is a senior vice president in agricultural services for the Association of Equipment Manufacturers, a North American-based international trade group representing off-road equipment manufacturers and suppliers, with more than 950 companies and more than 200 product lines in the agriculture and construction-related industry sectors worldwide. The equipment manufacturing industry in the United States supports 1.3 million jobs and contributes roughly $159 billion to the economy every year.