MEMO FROM THE FUTURE: DEERE AND CO
CEO Edition
BOARD STRATEGY SESSION June 2030
TO: Deere and Co Board of Directors
FROM: Stephanie Khoury, CEO
DATE: June 2030
SUBJECT: Precision Agriculture AI and the Autonomous Farm
OPENING
Deere dominates farm equipment. But farming is becoming a data science problem. AI-powered precision agriculture can increase yields 15-25% while reducing water, fertilizer, and pesticides. Farms are desperately seeking this. If we don't lead this transition, AgTech startups will disrupt us.
This memo proposes investing $2-3 billion in AI-driven precision agriculture, positioning Deere as the technology leader in farming.
THE REALITY
Current state: - Revenue: $44 billion (farm equipment, construction, forestry) - Farm equipment: $28 billion - Operating margin: 24% - Customer base: Millions of farmers globally
Opportunity: - Precision agriculture: Use AI to optimize planting, fertilization, irrigation, and harvesting - Autonomous equipment: Self-driving tractors and harvesters - Data monetization: Sell crop/soil/weather insights back to farmers and agribusinesses
WHERE WE ARE
- Dominates farm equipment globally
- Limited AI/software capabilities
- No integrated precision agriculture platform
- Competitors: AGCO (Fendall), CNH Industrial (Case IH, New Holland)
THE OPPORTUNITY
Opportunity 1: Precision Agriculture Platform
The play: Build an AI-powered platform that helps farmers optimize crop yield, reduce inputs, and manage risk.
How: - Integrate satellite imagery, weather, soil, equipment sensors, and crop data - Use AI to generate field-specific recommendations: planting density, fertilizer, irrigation, pesticide timing - Deliver recommendations via farmer app - Track outcomes and continuously improve models
Estimated impact: - Farmers increase yields 15-25% - Reduce fertilizer/water/pesticides 20-30% - Software subscription revenue: $2-4 billion by 2035 - Deere equipment becomes the default choice (customers benefit from integrated ecosystem)
Timeline: 18-24 months to launch
Opportunity 2: Autonomous Farming Equipment
The play: Develop autonomous tractors and harvesters. Self-driving equipment eliminates operator labor and improves efficiency.
How: - Leverage autonomous vehicle technology (partner with or acquire) - Integrate with precision agriculture platform - Start with specific tasks (row crop harvesting) before full autonomy - Enable remote operation in near-term while autonomy is developed
Estimated impact: - Autonomous equipment improves efficiency 15-20% - Labor costs reduced 30-40% - Equipment productivity increases (can be used more hours per day) - Premium pricing for autonomous equipment (20-30% premium)
Timeline: 3-5 years to commercial autonomous equipment
Opportunity 3: Agribusiness Data Services
The play: Monetize the data generated by precision agriculture platform: crop yields, soil conditions, weather, equipment performance.
How: - Aggregate anonymized data across farmers - Create insights for seed companies, fertilizer manufacturers, agribusinesses - Sell premium insights (predictive yield, disease risk, input optimization) - Partner with agribusiness companies to improve their products
Estimated impact: - Data services revenue: $500M-1B annually by 2035 - High margins (data services are 80%+ gross margin) - Strategic partnerships with agribusiness ecosystem
Timeline: 1-2 years to launch
MY RECOMMENDATION
Pursue all three opportunities. Precision agriculture is near-term growth; autonomy is medium-term; data services are margin-accretive.
EXECUTION PLAN
Phase 1: Precision Agriculture Platform (2030-2032)
- Build AI-powered recommendation engine
- Deploy with 100,000+ farmers
- Target: $500M-1B subscription revenue by end of Phase 1
Phase 2: Autonomous Equipment Development (2031-2035)
- Develop autonomous tractors and harvesters
- Commercial deployment beginning 2034
- Target: 20-30% of new equipment sales autonomous by 2035
Phase 3: Agribusiness Data Services (2031-2033)
- Launch data services platform
- Build partnerships with seed, fertilizer, agribusiness companies
- Target: $500M-1B annual revenue by 2035
FINANCIAL IMPLICATIONS
By 2035:
- Equipment revenue: $32-36 billion (slow growth, offset by autonomous premiums)
- Software subscription revenue: $2-4 billion
- Data services revenue: $500M-1B
- Total revenue: $36-42 billion (modest growth, but higher margins)
- Operating margins: 26-28% (up from 24% today)
- Software/data margins: 60-70% (vs. 24% equipment)
Stock target: $520-580 by 2035 (from $385 today).
Stephanie
Confidential — Board of Directors Only