If food production is an essential long-term area for investors, Deere & Co. (DE) remains the sector’s indispensable long-term investment of choice. We first recommended Deere 10 years ago, and all the reasons we liked it back then continue to apply and then some, as the company keeps innovating and expanding its reach, maintains Stephen Leeb, editor of The Complete Investor.
Deere is the world’s largest farm machinery manufacturer. Its dominance in farming equipment is rooted both in its long history supplying tractors, dating back to its founding in 1837, and, even more important, to its commitment this century to providing cutting-edge technology that lets farmers produce food more efficiently.
Innovative technology that makes it possible to grow more food from a given plot of land benefits farmers and the world at large and is key to Deere’s continued growth. Deere has pursued its push in technology with the help of a large number of strategic acquisitions and partnerships.
The company has consistently won awards for agricultural innovation from the American Society of Agricultural and Biological Engineers (ASABE). It’s a leader in “precision agriculture”, referring to technology that pinpoints exactly where farmers need to apply essential inputs.
An example is the company’s award-winning See & Spray technology, introduced in 2021. Sensors and cameras on tractors, guided by software using AI, let farmers release herbicides only where weeds are detected. The initial version detected color variations in a field, making it suitable for tackling weeds (green) in a fallow field (brown).
The next year, Deere released a “green on green” version that allows for targeted spraying in planted fields – a feat farmers considered the holy grail of herbicide spraying. This precision technology lets farmers use less herbicide per acre, saving money. It also means farmers need to stop less often to refill herbicide containers, so they can cover a given field more quickly.
At a tech industry conference in 2022, Deere presented the first fully autonomous tractor designed for large-scale farming. The autonomous driving system is equipped with six pairs of cameras, three in the front and three in the rear, providing a 360-degree view of the tractor’s surroundings.
The images are fed to the onboard computer. The farmer can monitor and manage the autonomous tractor from a mobile application that provides live video and continuous data. A less expensive innovation is Deere’s AutoTrac assisted steering system. It uses GPS to guide a tractor along a preprogrammed route, allowing farmers to focus on field conditions.
And this spring, Deere introduced an upgraded display, modem, and receiver. The new G5 Universal display increases viewing area by 35% and offers three times faster processing speed along with a high-definition screen.
The company is making these offerings available as aftermarket options, allowing farmers to upgrade equipment they already own. Deere’s advances in precision agriculture and autonomous machines are underpinned by advances in AI and robotics.
Data is the lifeblood of AI, and Deere has a big advantage in that it can use the huge numbers of Deere farm vehicles being operated all over the world to collect vast troves of data related, for example, to the machine’s performance and farming outcomes under different kinds of conditions.
Recommended Action: Buy DE.
