Nothing Runs Like a Deere…With a Live Satellite Feed

People often forget that the futures market predates the stock market, and the futures market was started by farmers so they had a market for their crops and they could hedge those prices before harvest occurred.

That’s why the heart of the US futures market is at the Mercantile Exchange (“the Merc”) in Chicago. And Ceres, the goddess of the harvest stands atop the dome with stalks of wheat in her hand.

Source: Flickr

Remember, most farmers are working off a loan every year. They borrow to plant, grow, and harvest their crops. Then, they get paid for their crops and pay the bank back. Whatever is left is what they’ve made. That makes every aspect of their work crucial to a successful harvest.

Industrial farms have had the advantage of much deeper pockets and have been exploring using satellites and GPS to help plant and harvest for years. Some of the agricultural machinery companies have also been upgrading their cabins to become sophisticated high-tech workspaces in recent years.

As a matter of fact, Deere & Co. (NYSE: DE), the iconic farm machinery company, has made some major moves in recent years to incorporate cutting edge tech into their farm equipment.

DE has teamed up with StarLink to provide internet beamed into their new tractors’ cabins, but DE is also going a step further and retrofitting older tractors so they can access the internet as well.

This is a huge opportunity. It means farmers can access real-time weather and use DE proprietary software to determine when to plant, where to water, and when to harvest.

If farmers can keep their costs down and their productivity high, they can make more money, and ag tech is key to that goal.

For example, if a farmer can maximize their productivity so they harvest only the fields that are ready, there’s less waste and higher yields. If they don’t use more fertilizer or pesticides than necessary, they save money. The same goes for running equipment more efficiently.

Send in the Drones

Along with a tech-upgraded tractors, there’s also the ability to integrate drone technology into the mix as well. Drones can go out and observe what’s happening in real time and feed that data back to help better manage harvests or livestock.

But you get the idea.

There are more than a few ways to play the Ag Tech MegaTrend. The equipment players are DE and Caterpillar (NYSE: CAT). Two other stocks that are worth a look at are precision farming companies AGCO (NYSE: AGCO) and Corteva (NYSE: CTVA).