The Old AgTech Guard is Getting Out

Oct 12th, 2023 - My 40th Edition of Easy Observations in Agriculture

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Opening Thoughts:

It’s almost been 2 months since I last wrote anything here and it’s not for any weird reason beyond I’ve been busy with my new business Boundri. I’ve talked a little about it and sort of called it out last time, but as many know you just have to concentrate on the most important things. By all means, check it out if you need some good ideas for a holiday gift with a mapping flare. I’ll end the self promo on that note.

With that said, I’ve missed writing here so I’m sort of trying to put some extra brain power again to get myself back into the mix. I’ve also been thinking about changing it up (for like the 10th time) a little bit in talking more broadly about Ag as a whole and even business as a whole from an entrepreneur standpoint. Not only is that what I’m doing now, but also growing up in an entrepreneurial family for almost 30 years I’ve seen some things to say the least. Maybe it’s something people will like.

What that will be or how I will go about that is unclear now, but I plan to plan it out I guess sometime soon. I do still plan to meme it out as I typically do and naturally will still throw in some Agriculture and AgTech pieces here and there.

Getting back to it: The Old Guard

I want to set this up by saying what I mean about the “Old Guard.” What I mean by this are groups that have been in AgTech for atleast 15-20 years. While there have been many that have already been sold to others, there are some recent ones that in of themselves have been pretty big deals. Those groups are also pretty big in size and stature. So I thought I would talk about that a little and provide some general comments. I also have some hot gossip too so make sure to continue reading.

Why the Change:

Now as you see, I’m really focusing on the two groups above in Raven and Trimble Ag, with the later being the most recent story. For those that don’t know, Raven was bought by CNH heck almost 2 years ago. Trimble’s Ag division to AGCO very recently. While that is a big time difference it really doesn’t matter to the point I want to talk about. Also, they’ve both been around long enough that a year or two doesn’t really change anything. You could probably add in some other groups in a way as well such as AgWorld, Agrian, and similar groups over the last few years. Not going the software route today.

I think it’s safe to say that all these companies have had pretty good success and some of the numbers showcase that while sometimes maybe feeling overvalued to some with these acquisitions. It doesn’t really matter as it still happened and what’s done is done. What does matter is why did these groups sell or want to be sold. I think it showcases a very hard to see thing happening to most and what that means as well.

I’ll group Raven and Trimble Ag into one bucket with one concession, while I don’t 100% know on the Raven end I do know Trimble has been shopping out their Ag division for years. Just wanted to throw that out there.

This bucket consists of some of the last remaining GPS hardware system in Ag that were on their own of sorts (even though they were public entities). Where I’m going here is that I think most can easily say these groups were not winning the Precision Ag hardware business and the groups that bought them were not either. A perfect marriage maybe? Hard to say still…

The megalithic leader in this space is John Deere to say the least. I’m not sure the exact numbers, but in all equipment they own something like 60% marketshare. Could be higher in certain areas. The funny thing is that even some of the dealer networks that can’t/don’t sell JD equipment have been some of the biggest side sellers (giving in to clients wants) and supporters of JD precision ag hardware from monitors to GPS gear. They basically own their main competitors markets in some cases (cough AGCO).

While this is complex, I think it comes down to a few main points.

1. JD sells the most machinery equipment in Ag

2. JD controls all their stuff themselves

3. The others have had to piece together stuff from different providers since the start

4. The others are paired with other companies and brands throughout the world while JD is just JD

5. The others have major legacy issues

6. Dealer networks are much stronger on the JD end

7. JD has Ops Center and has poured tons into it while making it seamless with the hardware plus free

8. The others have piecemealed software together and haven’t spent the money

9. The others have a painful past in interoperability and dead hardware tech

All in all, JD has been able to control their narrative easier than their main competitors in CNH and AGCO from almost all sides well before even modern tech came into play. Now the others have to play catchup and for years they basically just gave up in trying.

Why the desperate change now is due to some very real factors and with that I’ll tell you a story. A person I know that deals heavily in precision ag/agtech products within AGCO stated it this way. He said that just because JD had a better perceived fully automated turn by turn navigation system than Fendt’s (AGCO brand) system that a certain group of farmers were not going to buy around 17 million dollars worth of AGCO equipment. The farmers liked the AGCO equipment better and it was cheaper, but they were willing to spend almost a 1/3rd more just because of the turn by turn automation of Deere’s. This is just one instance of many.

To say the least, that’s a big deal! He ended up saving AGCO face by just showcasing that Fendt’s system actually worked just as well through making a YoutTube video himself. To me, that is also a major failure by the marketing and support teams. It’s not just because the hardware from the others can’t do this or that, but sometimes comes down to just how it’s supported and marketed.

Overall, the other major equipment manufactures have failed and waited too long to figure out their AgTech and Precision Ag plays via in-fighting and ignorance. They had many opportunities to be better and they’ve tried to slight extents before, they just didn’t put enough into it.

The change is coming…maybe?

Now that AGCO and CNH have respectively chosen their futures through these acquisitions of Trimble Ag and Raven I believe they are now fully in finally. That’s good and they needed to do it. AGCO also getting Precision Planting was big too, but I don’t think they’ve fully brought them into the fold yet as I hear they still run fairly independent still. Their cultures are oddly different I’ve heard as well.

Regardless, there is a path. In saying that it also showcases to me a problem with the groups that they bought. Raven and Trimble’s goal was to push their own narrative towards the industry without the need to be a machinery group. They wanted to be the add on to all systems. They’ve had success in doing so in certain ways, but just not enough while Deere was basically gaining and taking over day by day.

I call it a twofold issue in that their main buyers were that of CNH and AGCO anyway or at least that was their hope while also grabbing some Deere marketshare. In the end I think they all started to see the writing on the wall and that is what I’m really getting to here soon.

To talk about each I’ll start with Raven/CNH. Can CNH/Raven make it work together and gain marketshare? Maybe, but they have legacy issues to deal with first. CNH’s hardware is okay at best and is still everywhere. Raven has the same going on themselves. It’s going to take a lot of time for it all to be seamless. It is what it is, but it’s a factor. It’s fairly similar with AGCO/Trimble as well with legacy issues. Heck, there are still legacy issues between Trimble and CNH from the past. Add in Precision Plant and yeah it’s going to take some time and money for sure. AGCO also has Topcon and other European systems to contend with like their own internal attempts and other former partners. Messy

Can that change the narrative and help with sales and marketshare in the short term? No, I don’t think so. It’s going to take 5 years to get to that point at least and the danger is it’s going to be really hard at first and might actually hurt and lose money for a bit. I hope they get this and understand it’s a long play.

The Bigger Issue:

Now I’ll finally get to my main point. I think these sales/acquisitions with some of the old guard throw a major wrench into the narrative of AgTech adoption throughout the industry. It is not going well and it’s forcing the strong forces that traditionally could stand on their own to get out of the way. This is true with other software systems too in recent years.

This hockey stick movement in adoption hasn’t happened or worked beyond some of the crazy dollars some of these companies have sold for. The adoption though hasn’t hockey sticked at all. It’s a big reason why I criticize the AgTech industry as I never felt it was possible to grow that fast at those rates in Ag. Very few things can do that. Sure GMOs basically did, but that is it I feel in pure reality. From the AgTech standpoint GPS guidance is maybe another and yeah, even they are selling out as I’m literally talking about now!

What this all shows me is the trust in where a precision ag/agtech is going for these groups is less than positive. While for many the goal is to sell and that makes plenty sense while also being 100% legit, I’ve been hearing, feeling, and seeing the narrative also being that something isn’t working the way we thought.

The writing is on the wall for many currently in the AgTech space in overpromises and not delivering. I’ve wrote about it plenty so I’m not going to get deeper into it beyond saying again that a big reset is about to happen and that is okay. It might be good for everyone just as these giant acquisitions of Raven and Trimble Ag likely will long term be a good thing. It’ll get weird here for awhile, but there is likely some light at the end of the tunnel.

Who else is left?:

With all the above said I have to ask and bring up what other Old Guard AgTech/Precision Ag groups are left and why? First off and in a weird way I guess one of them is my own families company Satshot. Being around since 1994 puts us in the mix and there is tons of history from all of it in the industry. We are no Raven or Trimble or others in any realm. Maybe got close to seeing that path, but yeah. We’d gladly listen to some offers though if it made sense I’ll just say ;) Who wouldn’t?

As for other bigger groups there isn’t much left. Ones that come to mind are AgLeader and DTN. I’ll start with AgLeader as they invented yield monitors and are still privately owned by Al Myers and family. To keep it blunt, he’s not selling to anyone anytime soon I don’t believe. He doesn’t need to and has had plenty of offers over the years. Also, I don’t know who would even be a good buyer beyond Deere really. They’d be the only ones with the funds and beyond. The thing is Deere doesn’t need them at all. The only thing I could see is a deeper relationship between them and Kinze which is already a thing. Maybe they’d merge, but I see zero reason why they’d have too. Those stubborn Iowan Ag companies…

Now as for DTN (and that hot gossip), well let’s just say a little bird told me they are actually tying to sell their Ag Division behind the scenes. Trimble Ag was also doing this so it’s not some crazy revelation, but fun news to say the least. Why they are selling? Let’s just say they’ve bought a lot of groups over the years and it hasn’t resulted in the returns they hoped for from my and others perspective. Ag revenue for them is not great. I don’t know what that is, but tying some of this and that together I’d say they can’t fetch anything over 100 million for sure, but that is purely speculation too. Who’s a buying contender? It could be anyone really and even from smaller groups I guess by grabbing extra money from investors. This will be a fun one and you likely heard it here first folks.

As for others out there, like I said there just isn’t many left and while I know of some smaller groups like my families business or other niche software groups, there really are not many larger entities left from the way past. Maybe I’m forgetting someone obvious and please let me know who or your perceived group from your world.

In the end, it shows there is a want to get out and that might be from where the industry is going and dealing with be it a lot of new money and companies that haven’t amounted to expectations to maybe just being tired. The later could make the most sense as I can tell you it becomes very tiring to fight and fight over the same crap over and over again and again. It’s hard to keep that passion, but you have to do it. Such as life really.

So between the old guard big guys and little ones, all I can say is slowly they are becoming extinct. At least in being independent in certain ways. Nothing controversial and bad, it’s just a state of business affairs and how it all works typically. We all hope to build something successful that we can pass on while making some money from it to support other dreams. Here is to all of them and from the past to the future! I wish everyone luck in finding the best paths they can find. Cheers!

In Closing:

I’m not sure if I showcased my main point yet with all of this, but if I can give it one last go it goes like this. The groups that have played the long game in AgTech/Precision Ag while trying to help, figure it out, make money, and build something big, almost all see the need to move on while also see somewhat of a bigger wall in the way that they are not sure they can get over anymore. I can’t say that is true for all naturally as everyone is different in their niche, but times a changing!

I just hope that all the new groups in AgTech that have popped up lately at least see and educate themselves on the ones that have built the AgTech industry from the beginning while giving them some kudos. Some still have some fight in them and always are looking for opportunities. I will say, they are way more stubborn to deal with as they’ve seen most of it all too.

Give the Old Guard their due and I guess learn from their ups and downs while you still have the chance. You might find that there is a lot of value in the time spent and knowledge gained over the years vs just having the next “Big” idea. I think AgTech can learn a lot from these groups/people and maybe can work with the veterans of the industry to guide and help the newcomers. We’ll all have to work together anyway to get us through as what I see are some big challenges ahead.

Thanks for reading Easy Observations! Please Share, Subscribe, and Comment if you would be so kind. I’d also be happy to get together and meet if you’d like to talk more in-depth about AgTech or Earth Observation in Ag. Feel free to contact me at my website. All the best!