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Agrimarketing : June 2009
45 Equipment Industry Update:32 Feature Story 6/12/09 1:14 PM Page 45 OURWORLD HAS CHANGED: PART THREE IN A SERIES THEAGEQUIPMENTINDUSTRY L by John Demerly, Director of Business Development, Adayana ike a shopping cart pushing a combine, demands of today’s consumers pose challenges and opportunities that the agriculture industry has never seen before. Consumers demandmore food that is safe and lowin cost, creating the need for efficiency and traceability. Additionally, consumer and government demand for renewable fuels creates a parallel but different challenge for the industry. Agricultural equipmentmanufac- turerswill find challenges and complexity inmultiple drivers of change, including technology, energy, producer consolidation, environmental regulations, and the ever-increasing availability and complexity of data.Understanding and responding proactively to these factors can help agricultural equipment manufacturers turn challenges into opportunities. CHANGE IN TECHNOLOGY Technologywill continue to change in response to consumer demands and ultimately, the need formore, safe food.As our global population grows,more foodmust be produced on less available land andwater due to increased urbanization and industrialization. For example, totalwaterwith- drawal is projected to increase by as much as 50%by the year 2025. The seed industrywill lead changes in agriculture as innovations in germplasmand traits shift how crops are grown and open new markets for specialty products, disease and insect control, and even drought- or saltwater-tolerant crops. The integration between a farmer’s seed decision, tillage practices, and crop protection that beganwith the introduction of Roundup Ready soybeanswill continue as newtraits enter themarket, providing agricultural equipmentmanufacturers unique opportunities to integratewith other aspects of the production system, such as irrigation, seed bed preparation, harvesting, handling and storage. The demand for safe foodwill require accountability, likely through increased traceability. Consumers will expect reliable information regarding chemicals, seed, harvesting, and storage of their food. Farmerswill look to newinformation technologies to integrate their tractability requirements, decrease their costs, andmonitor the quality of their harvest. Environmental concerns of con- sumers, alongwith oil price volatility and government policy, have perpetuated an increasing demand for biofuels.Although skepticismremains around commercial success in cellu- Althoughmany larger operations use a single brand of agricultural equipment, our conversationswith large producers indicate that they use a single brand for efficiency, not brand loyalty, and that they are willing to switch brandswhen economically viable. Different distribution, sales, and even on-site servicemodels should be considered to better serve the needs of larger farming operations and decrease the likelihood of large producers switching to a different brand of equipment. THE OPPORTUNITY Changes in technology and farmer customers bring asmany opportunities as challenges for agricultural equipmentmanufacturers. Informa- tion technologies and integrated production practiceswill be critical for farmers to succeed, creating unique partnership opportunitieswith technology providers. The sophistication of technology losic ethanol, a byproduct of grasses and other plants,many organizations continue researching and the development of alternative fuels. As cellulosic ethanol becomes more viable, cellulosic ethanolmay be obtained largely through corn stover or other high volume feedstocks, such as swithgrass. Agricultural equipmentmanufac- turers need to be poised and ready to capture the newtechnologywith handling, harvesting, and storage equipment that comeswith the increased viability of cellulosic ethanol. CHANGE IN FARMER CUSTOMERS Changing farmer customersmakes technology changesmore complex.As the aging Baby Boomer generation retires, an increasing number of farm operationswill become available for sale or cash rent opportunities. The larger farmer customers that result have different needs than the traditional farmers agricultural equipment manufacturers have served in the past. of agricultural equipmentwill continue to grow, andmanufacturers must becomemore innovative in howthey provide and support that technology in the field. Finally, agriculture equipment manufacturerswill need to sharpen their brand strategy and value proposition to target a younger generation hungry for access to capital, trusted partnerships, efficiencies through technology, and aggressive growth in their own operations. The dealer network of agriculture equipmentmanufacturers will need to be equippedwith the latest skills in delivering technology, communicating and quantifying brand differentiation and value, andmaintaining strong customer intimacy. AM JohnDemerly is Director of Business Development for Adayana Company. E-mail: jdemerly@ adayna.com June 2009 s Agri Marketing 45
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