Ep. 86 Farm Equipment Upgrades: Challenges and Opportunities

Main Topics Covered

1. Precision Ag Technology:
   • The importance of updating farm equipment technology.
   • Challenges and opportunities in upgrading equipment.
   • The role of Precision Ag in modern farming, including auto track and yield mapping.
2. Equipment Upgrades:
   • Options for upgrading older equipment versus purchasing new.
   • Performance upgrades for planters, combines, and sprayers.
   • The impact of technology on efficiency and ROI.
3. Return on Investment (ROI):
   • Difficulties in calculating ROI for certain technologies.
   • Technologies with clear ROI, such as planting and spraying systems.
   • Examples of savings and efficiency improvements.
4. Maintenance and Planning:
   • Importance of regular maintenance to delay upgrades.
   • Encouragement to plan for next season's needs before storing equipment.
5. AI and Subscription Models:
   • The role of AI in advancing agricultural technology.
   • Subscription-based models for technology use and their benefits.
6. Advice for Farmers:
   • Encouragement to ask questions and explore options for technology upgrades.
   • Consideration of budget constraints and incremental improvements.

 

Connect with AgCredit on Facebook, Twitter and Instagram

Share questions and topic ideas with us:
Email podcast@agcredit.net

Transcription

Speaker 1 (00:08):Welcome to AgCredit Said it your go-to podcast for insights on farm finance and maximizing your return on investment. Join us as we talk to industry leaders, financial experts, and area farmers, bringing you skillful advice and strategies to grow your farm's financial future AgCredit Said It where farm finance goes beyond the balance sheet.

Phil Young (00:38):Welcome back to another episode of AgCredit Said It where we take you beyond the balance sheet of Farm Finance. Joining us today is Andy Drerup, director of Precision Ag at Tru Land Equipment. We wanted to bring him on today to discuss farm equipment technology and how to know it's the right time to update your equipment. So welcome, Andy.

Andy Drerup (00:55):Thanks for having me on. Appreciate it.

Phil Young (00:56):Yep. Yeah. Hey, we always like to kind understand what you do when we bring guests on, how you got to doing what you're doing, and so can you tell us a little about your position at True Land and what is Precision Ag and what you do there?

Andy Drerup (01:08):Yeah, so Precision Ag, it's got a lot of meanings. Right's always been for the last 10, 15 years of buzzwords around ag when it comes to dealerships and what do we really do and it's an ever evolving position. So director of Precision ag, I lead the Precision Ag team for true land equipment out of the 13 of the 18 stores. So we have 13 ag stores. I work with my team that's positioned outside of all those stores with customers, with internal people, and we do a multifaceted range of things just because precision ag has changed so much over the last decade. So we handle everything from new products, introductions, training internally, customer training, data management with customers.

(02:00):Like I said, it's multifaceted, it's everywhere. Precision Ag used to be backing up Precision Ag used to be the guy you called for your auto track, the guy, the person you called for yield mapping, stuff like that. And we still touch that stuff a little bit, but we've really mainstreamed some of that established technology like auto track, yield mapping, documentation, planting technology. A lot of that's been mainstream to where our sales service and parts departments handle that. So we've tried to focus more now on the newest stuff, the latest technology coming out, and try to take more of the training role and the advising role for internal so we can start teaching our teams how that works and a little bit and a lot with customers as well, training them on the technology they're buying because anymore so advanced that we never stop trying to learn and train and then get a new widget or a new piece of technology and have to adjust for that.

Phil Young (02:59):It seems like sometimes it's like drinking from a fire hose a little bit for guys when they buy a piece, they're trying to learn how to use it.

Andy Drerup (03:05):Fire hose would put it lightly some days.

Phil Young (03:06):Yes. Yeah, right.

Andy Drerup (03:08):And for us too, I mean, it's always something new. It's always a new addition. It's always a new change, and that just accentuates really cool, neat things and then if there is a software bug or something that's going on, it just accentuates problems even more. It goes beyond just the planner monitor or the auto track. It's an all encompassing thing now. Yeah, yeah.

Phil Young (03:29):And you've been with Tru Land for a while, right?

Andy Drerup (03:31):Correct. So this is my 22nd year with the company. I've held multiple different positions. I started out as a technician, moved into a lawn and garden technician role out of our Woodburn store for a while back to Van Wert. Was a parts department counter person for a few years, moved in precision ag and parts for a while. Then full precision ag, went to sales and our cold water location, and then now based in Van Wert, although I only see the office maybe once or twice a week as director of Precision Ag. So yeah, it's been a career of moving and changing, but a lot of different experiences and it's where I'm at now.

Phil Young (04:12):Nice. Okay, good, good. Yeah. We're going to jump in here. Can you share some common challenges or opportunities farmers face when it comes to updating their farm equipment?

Andy Drerup (04:21):Everything's always an opportunity. Yep, exactly. Especially when you're an ag equipment dealer. The biggest challenges that we face the farmers or customers face is it really revolves around the right time and to what extent. So the technology that we have now is just so widespread and customer base when it comes to where customers are at on the technology journey journey, it's hard to say this is a single challenge. Everybody faces this challenge. This is what we're going to run into because it depends where they're coming from. If they're coming from, they have autotrack now and they have a planter that's 15 years old, it's got the original, what they call seed star, the original precision based planting system to move up to a brand new planter that's X exact emerge, the newest technology of the X. It's a pretty big jump because we're talking about going from hydraulic drive to electric drive, from ground drive fertilizer with a wheel that's spinning back there, and a piston pump to a hydraulically driven pump. That's basically like a sprayer system. It is quite a big jump. So number one, there's a price jump that they have to make, and that's pretty substantial because adding so much to it, there's a little bit of a technology learning jump to, and we try to combat that with the best we can. But we've always struggled with this question, what's the biggest challenge? Because we also bring that right back to what's the return,

(06:03):And that's an age old question we've had with Precision Ag with technology and ag because I can remember back 15 years ago when we were getting doing a lot of auto track demos and everybody would say, well, what's my ROI? What's my return on this? We've never had an answer. What a return on investment for autotrack is, we can tell you what the benefits are, but we can't really tell you what the return on investment is. Now moving into planner controls, I'm in the planter mindset because it's spring.

Andy Drerup (06:38): I'm thinking Planters

(06:41):Planter technology and or combine technology. What's the return? Well, we can see that a little bit planters, we can see that we get more accurate seed spacing. We get population control on curves. We get all this stuff, individual row shutoffs, we get all this stuff that'll save us money. Now what's the actual return? We'd have to really sit down and do some calculation, and Deere's got some calculators, and they're okay that they do show a benefit if you have the right circumstances. But will that technology be a complete return on that investment right away? No, it takes some time to do it. It takes a couple years to do that. So for a customer that's got an older planner, going back to your question on common challenges, the biggest challenge is how far along on that journey are they and how far do they want to jump? If they're looking to make just a minor adjustment, we can look at that. We can do upgrades, we can do changes. If they're wanting to make a big swing, that's a big challenge. That's a big jump both in the operation of training and the financial aspect of making that purchase, if that makes sense.

Phil Young (07:46):Yeah. I think it's probably a little bit of helping the customer understand, Hey, we have updated equipment. That doesn't mean that you get to sit back and do less. You have to do some work. There's some time investment to learn it. To be able to operate it basically is a good way to look at it. Correct. It will make your life easier, but it's going to take time to learn it

Andy Drerup (08:05):First. It's going to take time to figure that all out, and we do everything we can to try to help 'em along that, but it takes, they have to also dive into the ownership of that and say, I'm going to figure this out. I'm going to fully understand this technology.

Phil Young (08:21):Yeah, and I mean, you guys aren't selling the piece of equipment to 'em and saying, good luck.

Andy Drerup (08:28):You're going to, yeah, we've got to have some sort of startup and we have startup packages available that go with the equipment to help 'em get started and things like that, and we will be out there. We never want to put a customer in the field and say, oh, congratulations. Good luck. That'd be dangerous. Now we're going to help get started. We're going to help you get in the field. But at the end of the day, they have to own it. They have to say, I'm going to understand what this does for me and how it does it because I can better utilize it.

Phil Young (08:58):And you've kind of touched on, you've got obviously these massive, not massive I guess, but larger dollar amount upgrades you can do all the way down to some minor things and what are some of the minor things you can do that maybe, like you said, you can't calculate the ROI, but you gain some efficiencies there. Maybe you get done faster, more, you gain time back. It's less stress to plan, it's less. You're less just involved, and once you get it up and running, it's not as crazy to do. I guess, where are some minor things you can do versus those massive things?

Andy Drerup (09:32):So yeah, minor things, excuse me, minor things. Deere's done a great job of in the last couple years, they've really gotten on the board of upgrading equipment from where we used to say, okay, you want the newest planter technology, newest, combine technology. Well, you got to buy a new one. A lot of competitors on the market were in that upgrade already, especially planters and combines updating that equipment rather than replacing Deere's really jumped on board in in the last couple of years with performance upgrades. So if we have a customer that's got a five, six, 7-year-old, 10-year-old planter, hey, it's hydraulic drive now it's got row shutoffs, just want to make it better. My frame's still good. And that's the common thing is when you look at, like I said, I'm still on planters in that season and we're on our early order discount period for planters.

(10:22):So it's top of mind when we look at what I'll call late model planters up to a decade old, that frame structure is still good. The pivot points, the wheel, the wheel bearings, everything's still good on that planter. It's still a very good functioning machine, but where's the wear on a planter? It's not on the frame. It's on the row unit. It's on the parallel arms, the row unit gauge wheels, everything down to the ground. So Deere's really jumped on this performance upgrades thing where, okay, I want to upgrade my planner. And actually, it's funny, I was just having a conversation last week with a customer where friends, we were actually vacationing together last week and he said, my planner's still good, but I want to upgrade it. Cool, we can do that. Okay. He's got a 10-year-old planter hydraulic drive, individual row shutoffs, pretty nice planter.

(11:15):I want to make it better. I want to make it so I can maybe get done a little faster. Hey, we can do that. Look at doing a performance upgrade and Deere's taking a different stance compared to upgrades that some other companies do nothing wrong, and we can do multiple ways of doing this. We can upgrade just the meter, we can upgrade the meter and the delivery system, or we can go personally. One preference is we can do a full row unit precision upgrade. So we go from a hydraulic drive planter, which that is not antiquated old technology, but we've had hydraulic drive for almost 20 years. We can take that planter now, very good hydraulic drive planter pull the hydraulic drive off, replace all the row units from the frame back, so new parallel arms, everything that's a aware item on that planter. We can replace all of that with new row units, new electric drive system, get high speed delivery system.

(12:14):So we're talking taking a planter that runs four and a half to five mile an hour now up to 8, 9, 10 mile an hour for a lower price than saying, I'm going to take my 15-year-old planter, trade it in and buy a whole brand new one or a 1-year-old planter. We can pull back and say, okay, my frame's still good. Everything about the machine is still very good condition other than my wear items are starting to show damage or show problems where I want to replace them. Cool. We upgrade this performance, we get electric drive. We take that planter from a 10-year-old planter to a brand new plan. Yeah. Now I say that tongue in cheek because there's a little bit of things we're still learning. Like I said, Deere's really got into the precision upgrades or performance upgrades here in the last three or four years. So from the lending side of things, customers got a 10-year-old planter. The serial number says it's 2015. If he replaces all the row units and has, by the way, it puts another serial number on that. That's for the upgrade. So it's got two serial numbers that way we can track for warranty and stuff like that.

(13:30):When that customer wants to trade that in, is it a 2015 plan or a 2025? It's kind of both,

Phil Young (13:38):Right? Yeah.

Andy Drerup (13:38):So we're still learning what that resale market is and what that looks like as we go forward. If a customer does this upgrade in two years, three years, four years, what is that true value? Because yes, it's a 2015, but it's got exact emerge high speed delivery for seed. It's got exact rate fertilize. It's just all the technology

Speaker 4 (14:01):That

Andy Drerup (14:02):A 2025 planter would have, but the serial number shows older, so rambling once again, but we have a lot of options, not just planters. We can do that with combines. Now we have performance upgrades for combines back to 2012. We've got sprayer upgrades that we can put what we call exact apply, which is our individual nozzle control. We can put exact, exact apply ink or individual nozzle control solenoid, PWM controlled spraying systems all the way back to sprayers to 2012.

Andy Drerup (14:36):So long answer here, but when it comes to how does the customer upgrade, what are the small steps? We can do small steps. There's still customers that don't have auto track that we could add auto track to, and we've, Deere has supplied us with newer systems that are lower cost of entry to get customers into that technology, and we're talking just for reference, for an auto track ready tractor that has the capability to do it, used to be a display and receiver would cost upwards of 10 to $12,000, 500 acre farmer. That's a big chunk to bite off. That's a lot. We can now sell the customer a precision essentials kit, display receiver modem to connect it to operation center, the web data platform for four or $5,000. So I have the price

(15:35):With a subscription, annual subscription, so there is a subscription. They pay to keep the auto track anything else they want, but the lower cost of entry allows the smaller grower to jump onto that technology journey and start working toward where they want to go. Sure. Yeah. So long story here, but what are some options? We can go everything from auto track or adding an adjustable spout to the combine, unload doer, all the way up to taking your planter from a 10-year-old planter to a brand new planter with all the technology you could ever want. You got lots of different options to do

Phil Young (16:08):That. Do you see a lot of guys maybe kind of in the market we're in right now where maybe cashflow is a little tighter? Are they starting to opt for more just like the a la carte upgrades to older equipment? Have you seen a change in that? Have you seen that ebb and flow over the last however many years you've been doing this?

Andy Drerup (16:29):We've seen a little bit of change here in the last couple years. Yeah. We've seen the customer that wants to make that small adjustment go toward that upgrade route. It's kind of a balancing act for us. We want to keep that new equipment line flow because we want to. That creates use market.

Andy Drerup (16:47):We’ve got to have that complete system, but at the same time, we want to do it for what's right for the customer, and if it fits their system, if it fits their organization to have an upgrade, then we won't work that way. And we started off upgrades. Were probably the minor, very little, and we've seen that increase here in the last couple of years with promotions and with honestly visibility toward it.

Phil Young (17:12):Yeah. You kind of talked about ROIA little bit, and then I know there's some technologies where you can kind of point at and say, it's hard to kind of slap a number on it. Is there technologies out there that it's like, man, yeah, this for sure has an ROI number to it. What are those technologies? It's like, yeah, I can probably throw together a number for you.

Andy Drerup (17:36):Those definitely come back to planting in spring. Do. Yeah. That's the ones that we really see. The RO. I mean, if you take a planter that if you don't have individual row shutoffs and you don't have a good fertilizer, fertilizer control is probably the biggest one, because individual Roche had also been around for a while, 10, 15 years or 15 years. I've been in the business too long, too long ago. Roche shuts had been around for a long time. So a lot of the planters, a lot of customers planters already have those. So that's an ROI. Right? If I'm reduce and overlap by 30%, that's a savings. That's seed savings. Sure. Fertilizer control has always been on the backside. So we had a piston pump that was ground driven. It just put 28 beside the row, preferably at least two inches beside, two inches below across every row whenever the planter's in the ground. Right?

Andy Drerup (18:32):Well, what if we have a point row where only half of the rows are planting? Well, we're still dropping fertilizer. What if we're coming in carrying the planter after the seed shuts off? Yep. We're carrying fertilizer. So there's a big overlap. There's a big fertilizer, ROI that is attainable. So we look at adding a fertilizer control system, and Deere's got exact rate, which is the individual row control, or we have Surefire, which is a subsidiary company, deer, where we can do banks of rows, 2, 3, 4 rows in a section. Well, now we start cutting that fertilizer. We start cutting that fertilizer cost. Yes. Is it a huge major bonus? Not necessarily, but it is dollars we're saving. We are still pulling money back. So planting, seeding fertilizer is the big gain right now. That's where the savings are. Makes sense. Adjusting that fertilizer system to have row shutoffs to have quantity control to pull that overlap back spraying the big one here recently, exact supply came out and we've got over 80 or over 70% of our customers moving toward exact supply now for their spraying, because once again, instead of having an 11 foot wide spray section or a 15 foot wide spray section, we're going down to 15 inches. If we have 15 inch nozzle spacing.

(19:57):So now we're shutting off every nozzle individually. We're saving water, we're saving chemical point rows. Once again, end rows, point rows, waterways. If they're mapped out, we can just drive right through. It's going to be shutting those nozzles off as needed, pops 'em back on when we need them.

(20:14):That has a savings to it. And I used to sell fertilizer or fertilizer sprayers too. Commercial applicators a customer. This was, wow, 10 years ago, they were really resistant. I don't know if I want to jump into that technology. I've heard there's issues, and then we had some issues with Xactly when it first came out with harnesses and that, and all those are resolved. Solid technology. It's in the industry now. Everybody's running. It works great. I don't know if I want to jump in that technology. We talked through it. Alright, we'll do one sprayer with it next year came around. They're talking about rolling sprayers. Give me exact apply.

Andy Drerup (20:54):Why? Well, they did batch loads and they told me how many gallons of extra they were making for their sprayers that didn't have exact apply, and it cut it to a quarter of that. Oh wow. By one exact apply. Just the savings for them in doing batch loads was worth it to put it on every machine. So that was a huge advantage to them. And that's an A SP talking 10,000, 11,000 acres. It's a lot of acres. But that comes back to the grower too, if they have it, and once again, that's one of those upgrades we can do. If a customer's got a 2014 sprayer or 2012 sprayer, we can go and put a kit on there to reduce their overlap and do individual nozzle control.

(21:37):Take that one step farther. The new spray technology is seen, spray, see the weed spray that's really just starting to come in the market. Deere had a really good promotion on it. We put a lot of those kits on sprayers to upgrade late model sprayers into that technology. Now we're talking, instead of saving a little bit on the overlap on the headlands and on the point rows to really just changing what we're spraying, instead of just blanketing the field, now we're just hitting the weed or right around the weed. That's the common misconception. Oh, I'm just spraying the weed. Okay, we're not actually just spraying the weed. We're going to spray a little bit before, a little bit after and a little bit each way so we make sure we get that coverage. But now we're talking major advantages because we're reducing the early coverage differences. We're going from a hundred percent coverage to 30 to 40% coverage of the field.

(22:40):So 60% of the field, we're not spraying 70%. We're just driving across the field and it's hitting wherever it's needed. That doesn't come without changes though. Yeah. 60, 70% savings on chemical is amazing. That's awesome. But the biggest thing we have to combat as a dealership is when we have those conversations with customers, it's not about just savings. It's understanding what the system does and how it does it. Because a lot of times when we get into conversations about sea and spray, the first thing we hear is, I don't see how that fits my program, my applic, my control, my weed control program. You're a hundred percent right. It won't, will not fit your weed control program the way it's designed right now, because your program was designed around bandit spraying around complete coverage. I challenge anyone that wants to talk sea and spray before they talk to us, go to their agronomist and say, design me a weed control program for this technology

(23:54):And watch the agronomist wheel start turning about what they can do differently. Deere had a program, we put a good number of those kits in the field this year. We're starting to see 'em hit the ground. Had a customer run in one last week, ran it across 500 acres to see what the technology to do. The incentive deer had required the 500 acres to be covered. Hey, that's cool. I'll go do my 500 acres. His plan was to have a residual down early and their pre-plant. So they had a residual, which is going to be on the ground and cover anything that comes through the ground along with a contact for anything that's above ground. That was their initial pre-plant pass. Then their plan was to go back and do another, possibly another residual, but another contact herbicide plan before going into fungicide. Well, we had a wet spring, so if we have a wet spring, that residual kind of got washed away a little bit. It's not as strong as what it could have been. You're going to have some escapes. So this actually worked out. He was going into spring season. He is like, I know I need to hit my 500 acres. I'm not sure how I'm going to do it. What am I going to do to hit those? Okay, now I had a wet spring.

(25:10):I want to go back and hit these 500 acres and see how it does. So he goes out and sprays residual herbicide or not a non residual contact herbicide. Goes out and sprays and does 500 acres. We just put a residual down a month and a half ago. So realistically, they should have clean fields, not a hundred percent. It was clean, but he still sprayed about 6% of the field or 6% of that 500 acres. Now, if he didn't have sea and spray and he said, my residual going away. I see some weed pressure. I need to go out and spray. If he didn't have sea and spray, he's spraying a hundred percent

Phil Young (25:50):Of it. All of it. Right? Yeah.

Andy Drerup (25:51):So he saved 96% of his chemicals to go back and do that secondary pass to take care of any of those escapes that came through.

(26:02):That's success number one for me. It gives us another option to go back and take care of what might've been missed. The other success was, and I've done this countless times with sea and spray ever since they first released it. We went out to an event. Deer had spraying through the field. Sure enough, look over and nozzle turns on. There's no weed there. Pull back on the hydro stop. Get out, go over there. Look down. There's no weed. Why it spray? So we started looking around a little bit more, pulled the soybean back a little bit. There was a blade of grass, and this was his example from last week. He said, I stopped. I got out of the cab, went down there, white it spray, and we had put blue pondi in the sprayer as well, so we could see where it was spraying. Sure enough, he pulls back that soybean and there was a blade of grass, a quarter inch tall underneath that bean plant or right beside the bean plant that is sprayed because it solid. That's wild. Absolutely crazy. And the other neat thing was we were looking at his maps afterwards and he had one field. There was a strip right through the middle. That was just, I mean, it was almost like he banded sprayed that area.

(27:20):I raised a question. I'm like, why is there so much weed pressure? And we have weed pressure maps we can look at to show how many weeds there were basically in that area field from low to high, that's all red. That's high weed pressure. What's going on here? Why do we have a strip? He goes, remember when we had Setaside acres in the nineties? Said I was young. But yeah, those were set aside acres. That's wild carrot. We've always had problems with wild carrot. So it went back and hit that wild carrot after it emerged. Okay. So there's a lot of advantages to that. There's a lot of savings, a lot of ROI that can come from that. Is there, is there a cost to get into it? Absolutely. But if you can change your program to put your residuals down early, and we've got two different systems. This is the premium system, so premium is a single product. If you can change your system to go do that residual early with a contact herbicide and then focus on a contact herbicide afterwards, there's an advantage there. And then we have an ultimate system, which you have to buy that on a spray or a new sprayer. It can't be an upgrade, but you can buy a brand new sprayer. It's got Ultimate Now. It's got a residual system and a spot spray at the same time.

(28:34):So you've got essentially two sprayers in one. One doing a residual application across the whole field, and then a spot herbicide spray. Okay. What's more to come, I know Becks has done some research on this. I'm interested to see as we go through the next couple of years, how it works, but what's coming next? What do I want to see next is what is the crop health? What's the yield advantage to that? Because if the crop isn't metabolized, if every plant's not metabolizing chemical because herbicide delays growth, it holds back crop health. If we're not spraying every plant, are we going to see a yield bump for it? So now the RI goes away from chemical savings to yield increase to see if it makes it better.

Andy Drerup (29:23):That's

Phil Young (29:23):Fascinating. Yeah, definitely worth kicking the tires on. There's a lot of

Andy Drerup (29:29):Things to think about there.

Phil Young (29:30):Yeah, for sure.

Andy Drerup (29:31):Yeah.

Phil Young (29:33):Yeah. One to shift gears here a little bit, I guess, and we kind of talked about this, but I mean maintenance, just equipment maintenance, not necessarily upgrading, but is there a part to play there where guys maybe can just get their equipment maintained and maybe delay an upgrade? Or is that something you're seeing that guys are foregoing or they need to do more of or?

Andy Drerup (29:59):I think customers in general have always been very good about their maintenance systems, their maintenance plans, especially Planters, combines a little bit with sprayers. I mean, that's kind of our big three.

Phil Young (30:09):Sure. Yeah. They're high dollar items, right?

Andy Drerup (30:10):The high dollar items that really are determined to crop health. Not to put tractors on this side and say it's not important, or hay products. We haven't talked about hay products a lot. There's a story to tell there when we look at Hay products and maintenance. But for the most part, in general, I think customers have always been really good about the maintenance side of things. Just as long as we're maintaining correctly. We've had a lot of customers start to do their own, and I'm fully on board with customers doing their own maintenance, but I really push that, yes, do your maintenance. If you have the shop of customers, have a lot of our growers have nice shops that they can work in year round. Do your maintenance, do your repairs. Make sure we do the inspection though, because for as much as you might see, our technicians see so many more of them that they know the things to look at. It's great that you can do your repairs and do the investment into the equipment to be ready to go for a season, but if you miss that one bearing, if you miss that one parallel arm linkage or that common thing that our technicians see, everything you did in the winter is almost a waste. Now you're down in season, now you're down.

Phil Young (31:27):Right, right. Exactly. Yeah. That's a good thought. How can, I dunno, if there's websites or events you guys do, how can someone stay informed about updated technology if they're curious about it or want to learn more about it?

Andy Drerup (31:42):Step one, talk with our salespeople. We had actually, we just had another one this morning. We have an internal training every other Tuesday. My team does what's called a Precision Ag Hangout with our sales team where we go through different things, new technology, we focus it on the season and what's going on. So right now it was on planter upgrades. We talked about exact shot, which is a go back to reduce overlap. It puts fertilizer in the row starter fertilizer just on the seed and spots it through the field. So salespeople are always up to speed. If not every store's got a precision ag person that can join that salesman help. On that conversation podcast, we have our own podcast. True Talk with True Land Equipment. True Talk. I like that. True Talk with True Land Equipment. Make sure you subscribe on Apple and Spotify.

Phil Young (32:30):Okay, nice.

Andy Drerup (32:32):But we talk about a lot of performance upgrades and a lot of technology on there as well.

Phil Young (32:36):Okay, nice. Is there government programs, grants, anything available for any type of technology like this or upgrades that you're aware of?

Andy Drerup (32:45):When we look at in Ohio, mainly when we look at H two Ohio, there's some grants and some government incentives there, but it's going to be mostly focused on fertilizer control and water quality control. So it's not going to be as much on auto track and combines and sprayers as it's planter fertilizer systems, or especially strip till. Those are kind of the big ones. For H two Ohio. That's about all we have for upgrades. Now. Deere has their own incentives. They run on their time schedule for when the planter orders are going in or combines and that sort of stuff. There's some discounts that go along with it then.

Phil Young (33:24):Okay, gotcha. Okay. And then, yeah, really last question here. Yeah. What advice would you give to a farmer who's hesitant to invest in it or just has budget constraints?

Andy Drerup (33:34):Never be afraid to ask the questions because we should be able to come up with a solution to make that work, to get you to where you want to go, whether it's getting into auto track, whether it's getting into auto track or upgrading what you have, or just making a little addition, a little change. Let's talk through that because the common misconception is I can't afford that technology. Well, we know that. We know you feel that way, but let's talk about how we can get there instead and make the little changes that start to add up to the ROI.

(34:14):Now, I will divulge into that a little bit. So I mentioned subscriptions earlier. Can we talk about that a little bit? Yeah, yeah. Yeah. Because that's a big thing of it. As we go forward, that subscription or usage base is a big thing that goes along with that, and yes, we're making it the entry a lot easier to get into. It. Is a lot of this new technology looking at usage base or time-based subscriptions? Yes. We talked about sea and spray. I mentioned combine upgrades to where we're now looking at SAT maps and doing automated speed and crop changes as we're looking at the crop toward us coming toward us. The big thing we have coming into ag right now is the utilization of ai,

(35:04):All this new technology and where we're going with this technology, where a lot of the meetings we have with Deere over the last couple of years, we talked about the wave of technology. We are still on the upcycle of the wave. It is increasing yearly. The percentage of new technology and new stuff coming at us is just increasing exponentially every year, and it's not slowing down, and a lot of that is driven from ai. Okay? AI is not a technology that you buy once and it is infinitely good forever. It's a learning technology, it's artificial intelligence. So as we look at thing, I want every customer to keep in mind as we get into this, as we look at the new technologies, don't be afraid of the word usage based license or license unit or subscription or any of the other buzzwords that's used for it, because number one A, it's a lower price, so it's going to help you get into it as you utilize that system and pay that usage fee.

(36:13):That money or that cost goes toward the AI side of things to make it better. It's learning and there's work behind the scenes to help it become better. Sea spray is the perfect example. When it came out 10 mile an hour, top speed, 30 inch rows, corn and soybeans with the row, very limited what it could do. It could go straight down a 30 inch row and only do Q2 crops. Since then, three years later, we went to seven and a half rows. We can spray crossways. We can now go with the ultimate machines over 15 mile an hour, and we've added cotton and some other crops. As we utilize the machine, as we put those machines in the field, those cameras are pulling images back. Those images are being processed. Those images are being learned and adjusting that machine to make it better. So as we talk about technology additions, as we talk about return on investment, yes. Is there a reoccurring investment that comes along with it? Yes, but there's benefits you gain from that,

(37:30):And Deere is keeping a very close eye on how they do that. For example, Sainsbury spray, going back to that one again, at first it was every acre you ran across with Sea and Spray on, you got billed so much dollars per acre. Now they're going to a system where it's only billing you for when the system is not spraying. So rather than you paying for the product to apply on the field and the license unit, if I'm going across the field, say it's a hundred acre field and the system sprays 50% of it, I'm only paying for 50 acres worth of license units, so I'm paying for where I didn't spray and then paying for the chemicals where I did spray. So there's that style. There's yearly subscriptions, but when it comes to an AI system, we're putting money, we're putting effort back into that to make it better.

Phil Young (38:29):Yeah, you're kind of reinvesting every year to dial it in.

Andy Drerup (38:33):Correct. And the advantage you get are speed, efficiency, accuracy, things like that. I always go back to the, I thought five years ago, I forget what manufacturer is now, but a car company came out with a subscription based heated seat. You had to pay a yearly fee to use your heated seats, and this is the example I've used with a lot of customers when this conversation comes up. Okay, that car company, you had to pay 'em every year to use your heated seat. What benefit did you get? What added benefit every year did you get besides a heated seat? Heated seat, right, right. Yeah. It's a button. I either have heat or no heat. It's all there is. They've since retracted that they don't do it anymore. The difference between that sort of subscription or I listened to Spotify on the way here and I didn't get ads, do I get any benefits besides that? No, no ads in unlimited skips. That's what it's going to be as long as I pay that subscription. When we look at the AI subscriptions or usage base license fees in ag, especially with Deere, it's not about, well, I get the button or I don't. It is more about I get the button on and then I can look forward to increases in utilization as I go forward.

(39:56):We used to not be able to spray volunteer corn and beans because usually by the time it really came out, the beans were canopied. We couldn't see the ground. Now we can start using sea and spray and canopy beans, taking care of volunteer corn. We're adding to that abilities as we go, which changes that conversation about why do I have to pay this again, if that makes sense. Yeah. Yeah, it does. That's my soapbox for the day. There you go. Yeah. Yeah. It helps provide perspective. Yeah, have perspective. Don't shut down because you see it, because you see that usage base fee. Have the conversation about what it's doing on the backside and why we're going that way.

Phil Young (40:36):Yeah. Yeah. That makes sense. Any other last minute thoughts you have regarding this topic and technology and equipment and upgrades?

Andy Drerup (40:45):We're in the middle of season, plants are in the ground. They're starting to grow, starting to look good. Let's talk about next year, especially when we're talking planter preseason stuff. Sprayers, this is the big time for sprayers and planters for us. Let's talk about next year before you put it in the barn, before you put it away and forget about it. Are we doing an inspection so we know it needs done to it? Are we talking about trading it or upgrading it? Never wait until right before season. Let's do it now. Before you put it away, let's make sure that machine's ready to go next spring. Whether it's your machine being rebuilt or it's upgrading it, or it's replacing with a new one that's coming in, that'll come in January, February, December, January, February. Let's talk. Have that conversation now rather than wait till last minute because the minute you wait until you pull out of the barn next spring, you're just setting yourself up for delays in failure. Let's get it ready now. Let's make the investment now so the return comes next spring when we hit the ground.

Phil Young (41:47):Yep. That makes sense. Okay. Well, Andy, thank you so much for joining us today. Appreciate your time and just appreciate your knowledge. No problem. Thank you. Yep, and thank you guys for listening to another great episode. Tune in next time and we'll see you then.

Speaker 1 (42:07):Thank you for listening to AgCredit Said It. Be sure to subscribe in your favorite podcast app or join us through our website at AgCredit.net so you never miss an episode.