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| Precision Farming’s Global Future | December 5, 2016 1
Precision Farming’s Global Future
Markwart von Pentz
Agenda
• Farming continues to have a great future
• The evolution of agriculture and economic headroom
• John Deere Precision Ag
| Precision Farming’s Global Future | December 5, 2016 3
MEETING THE DEMAND FOR MORE FOOD, FEED, AND FUEL
► 21st Century Challenge:
Sustainably produce enough food, feed, fiber, and fuel from the same or fewer resources utilizing new technologies
Population Growth in
Urban Areas
Improving Diets Enabled
by Higher Income
Limited Arable Land, Water and
Environmental Constraints
Rural to Urban
Migration
Agriculture and Global Challenges
Urbanization: Rural -> Urban Population Shift
-
1
2
3
4
5
6
7
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Bil
lion
s
Urban Population
Rural Population
Source: United Nations Department of Economic and Social Affairs, 2014 Revision
6 | Precision Farming’s Global Future | December 5, 2016
Source: USDA ERS, 2014; GHI, 2015
The global challenge: to ensure there is no productivity gap
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Global Agricultural Productivity (GAP) Index
Required Rate
Current Rate
• Global food production must increase at least 70% by 2050.
• Little additional land available, less water, climate change, societal constraints.
• Investment in agriculture must increase 50% by 2050 to meet required productivity increase.
World food flows Net interregional trade
-250
-200
-150
-100
-50
0
50
100
150
200
250
NoAmer SoAmer BlkSea Australia CentAmer SSAfrica Europe MENA Asia
MM
T
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2019
Exporters more land
than people
Importers more people
than land
Source: UN FAO, USDA, GTIS Global Trade Atlas
The Evolution of Agriculture and Economic Headroom
Farming 1.0
Mechanization -Animal Power
Innovation and Technology in Agriculture
Farming 2.0
Mechanization –Combustion
Engine
Farming 3.0
Guidance Systems and
Precision Farming
Farming 4.0
Connected Farming
John Deere Precision Ag Goal: To identify the economic headroom in key production systems
| Precision Farming’s Global Future | December 5, 2016 10
Economic Headroom The identified opportunity that can be unlocked through cost reductions and/or revenue improvements in the production system
$/Acre
Revenue Increase Potential
Value in System Now
Cost Reduction Potential
Reven
ue*
Cost
For a Job or Set of Tasks
Eco
no
mic
H
ead
ro
om
Agronomic/economic model
Example: Precision Weed Management • 2% yield increase • -50% herbicide costs reduction
$23/Acre Economic Headroom
Key Production Systems Across the Globe
Sugar Soybean Dairy Rice Grain Corn
What’s the Business Case for Precision Farming ?
| Precision Farming’s Global Future | December 5, 2016 13
A Farm is a Factory in a Remote Area
90%
40% 50%
| Precision Farming’s Global Future | December 5, 2016 14
1.Product
2. Smart Product
3. Smart, Connected Product
+
+
+
1.Product
2. Smart Product
3. Smart, Connected Product
+
+
+
5. System of Systems
Farming 4.0
Precision Agriculture Evolving Innovation Challenge 2016 and Beyond: A System Approach
4. Production System
WHEAT PRODUCTION Key cost elements, yield and profit (avg. 2013-15)
Yie
ld (
bu/a
c.)
Costs
/pro
fit
(USD
/ac.)
0
20
40
60
80
100
120
140
160
0
50
100
150
200
250
300
1
Machinery Diesel Seeds
Nitrogen Phosphorus Potash
Herbicides Fungicides Insecticides
Profit Crop yield(incl.
subsidies/rent)
Alberta 4900 ac.
Germany 3200 ac.
Ukraine 16,500 ac.
Russia 49,400 ac.
Source: agri benchmark data (typical farms = highly detailed case study data)
| Precision Farming’s Global Future | December 5, 2016 16
Economic Headroom Calculations for precision farming technologies (Expert judgment, non cumulative)
-10 0 10 20 30 40 50
AutoTrac SF1
section control: nutrients and CP (6x5 sections)
AutoTrac RTK
section control: individual nozzle control, seed control
variable rate application N
variable rate application P/K
variable rate application CP (fungicides, CGRs, full width)
manure sensing + variable rate application
small grain singulation
spot spraying weeds, two products
optimized combine residue management
variable rate application CP (fungicides, CGRs, by section)
controlled traffic farming
Sc. 1
Scen
ario
2Sc
enar
io 3
USD/ac.
Revenue Seed Fertilizer Crop Protection Depreciation & Interest Repair Fuel Labor
Source: Project of HSWT University with John Deere
XXXL Farming in Kazakhstan: Growing Small Grain
Management & Overhead
Costs
Tillage
Seeding + Fertilizer
Weed Management
Harvest
Total cost = $3.98/bu Price = $4.55/bu Yield = 19.3 bu/ac Profit/ac = $11.0/ac
Farm size = 2.2M ac Total profit = $24.2M
$0.39/bu
$0.70/bu
$0.24/bu $0.61/bu
$2.03/bu
Total Cost $3.98/bu
Source: agri benchmark data (typical farms = highly detailed case study data) 2011 data
SOYBEAN PRODUCTION Key cost elements, yield and profit (avg. 2013-15)
108
29
0
10
20
30
40
50
60
0
50
100
150
200
250
300
1
Machinery Diesel Seeds
Nitrogen Phosphorus Potash
Herbicides Fungicides Insecticides
Profit Crop yield
Iowa 1700 ac. Brazil 3200 ac. Ukraine 6400 ac.
Yie
ld (
bu/a
c.)
Costs
/pro
fit
(USD
/ac.)
Source: agri benchmark data (typical farms = highly detailed case study data)
(incl.
subsidies/rent)
| Precision Farming’s Global Future | December 5, 2016 19
82
0
20
40
60
80
100
120
140
160
180
200
0
100
200
300
400
500
600
1
Machinery Diesel
Seeds Nitrogen
Phosphorus Potash
Herbicides Fungicides
Insecticides Profit
Crop yield
Key cost elements, yield and profit in corn production (avg. 2013-15)
*
Iowa 1700 ac.
Brazil 3200 ac.
Ukraine 16500 ac.
Yie
ld (
bu/a
c.)
Costs
/pro
fit
(USD
/ac.)
Source: agri benchmark data (typical farms = highly detailed case study data)
France 270 ac.
-58
-202
* Profit = net return after all costs (incl. own land and labor) and incl. subsidies
| Precision Farming’s Global Future | December 5, 2016 20
FX impact: corn – major exporters
$3.49
$4.91
$6.75
$8.33
Source: Bloomberg, 28 November 2016; Deere analysis
200
300
400
500
600
700
800
900
1000
2014 2015 2016
USd/b
u.
UAH Corn
ARS Corn
BRL Corn
CBOT Corn
John Deere Precision Ag
| Precision Farming’s Global Future | December 5, 2016 22
Data enabled agriculture The future is NOW
Operations Center
Data, Data Management
Telematics
Site specific farming
Guidance
Easier. Smarter. More Precise. Bigger. Faster. Stronger.
Precision Agriculture Traditional Agriculture
Connecting People, Equipment, Technology and Insights
Machine & Fleet Monitoring
Connect Machines
Operator & Job Management
Connect Operators
Set-up & Analyze
Connect Fields
Dealers Partners
John Deere suite of mobile apps Get more out of your
equipment and your business
Value
Transparency
Control
John Deere Data Principles
www.deere.com/trust
GROW LEAD ENABLE
CUSTOMER VALUE
Economic Headroom Potential JD Precision AG Small Grain example from Europe
Higher yields with less Inputs
Equipment
Technology
Better Job Execution
-50% ADMIN
Higher yields With less inputs
-10% INPUTS
Better machine uptime and performance through Connected Support
+20% PERFORMANCE
Better machine operation due to Automation
-10% INPUTS
Dealer Services
AMS Support Non-/Connected Machine MyJobConnect MyFieldConnect
POWERGARD
-20%
Summary :
1. In order to feed 9.5B people field
output has to double
2. You are competing with lower cost
producers around the world
3. Production Systems and Economic
Headroom concepts are foundational
4. Precision Farming allows to grow
more output with less input
From planning to harvest, only John Deere seamlessly connects
people, equipment, technology and insights to give you a greater advantage.
