Good evening to those of you joining us for our webcast. My name is Greg Peterson. I head up Investor Relations for AGCO. It's my pleasure to welcome you to AGCO's third annual technology event. We have three important objectives to accomplish over the next two days. First, objective is to demonstrate to the group the significant progress we're making against the technology deployment goals that we gave you in December. That's number one. Number two is to highlight the benefit that AGCO is gonna see both to the top line and to our operating margins as we deploy the technology and grow our precision ag business.
Lastly, and most importantly, we wanna show you the benefits that are accruing to the farmers, the pain points that we're helping them with, and as importantly, we've had a long-standing target of improving farmers' net income by 20%. Over the next two days, we're gonna demonstrate savings or net income improvement of at least that much. A lot to think about and a lot to digest over the next couple of days. With those objectives in mind, let's look at the agenda for this evening. We're gonna start. Eric Hansotia, our Chairman, President, and Chief Executive Officer, is gonna start tonight with a brief overview of our Farmer-First strategy. He's gonna explain how growing our precision ag business fits with that strategy.
After Eric Hansotia, our global head of engineering, Kelvin Bennett, is here to share with us our plans for clean energy product development, our strategy for clean energy in the coming years. Lastly, Seth Crawford, our chief technology architect and head of our Precision Ag busines, is gonna give us a technology update and give us an overview of what we're gonna see tomorrow in the field event. With that, let's cover the safe harbor information. Tonight, we will make forward-looking statements, including statements with respect to strategic plans, demand, product development and technology deployment, engineering e-expense, supply chain disruption, inflation, acquisitions, financial outlook, input cost, sales, market share, margins, earnings, cash flow, and other financial metrics.
Actual results may differ materially from those suggested in these statements for a number of reasons, including declines in product demand and other adverse developments in the agricultural and equipment industry, including those resulting from COVID-19, supply chain disruption, weather, cyber incidents, exchange rate volatility, commodity prices, inflation, changes in product demand. Additional reasons are provided under risk factors in our Form 10-K for the year ended December 31st, 2023, and in the other filings with the Securities and Exchange Commission. We disclaim any obligation to update any forward-looking statements except as required by law. The slides we'll use this evening will be posted on our website at www.agcocorp.com. Finally, we'll have a replay of this meeting on our investor relations webpage.
Then, I also wanna mention that after our speakers, we will save about 15 or 20 minutes for Q&A.
Since it is webcast, we'll ask that you raise your hand, and we'll get to you with the mic. We'll introduce you and let you ask your question. Appreciate your patience, and with that, Eric, please join us.
Very good. Thanks. That Safe Harbor Act just never gets old, right? There we go. Hey, I'm really excited about the next couple of days. We're gonna be able to go out in the field and see real-life solutions in action. We've been talking about it a lot with you folks over the last couple of years, and we're excited that we went through the effort to be able to really get you hands-on. Greg talked about the fact that I wanna frame this up a little bit. Two, three years ago, we started redesigning our strategy, and we said: "What's the future of AGCO, and where do we wanna position ourselves?" You folks are all bottom line folks, so I'm gonna start with the element of that strategy that deals with results. Essentially, it's really just a simple thing.
Three results that we, zeroed in on as most critical for our company, and we try and have everything that we do run through these filters. The first one is to be the most farmer-focused company in the industry, become the partner of choice to our farmers. Well, what does that mean? What does farmer-focused mean? Aren't all of our competitors and us farmer-focused? I would say no.
The difference is many companies are product-focused, and essentially, the difference here is, if I can kind of make it a little bit more clear for you, when a product-focused person goes onto the farm, they say: "Well, tell me about your tractor. What'd you like about its horsepower and its lift capacity? Was the seat comfortable? How about the fuel economy?" Asks a lot of questions. When they're all done, they leave.
Like, the whole discussion was about their product. A farmer-focused company person goes to that farmer and says: "Tell me about your farming operation. What are your major pain points? What are you struggling with today? What would be the one or two things that, if we could fix, somehow would make the biggest difference for you?" It's about the farmer. It's about their success. It's about their challenges. It's about what they aspire to become.
That's an entirely different conversation. We didn't mention the word product once. Now, it's our job to hear what we hear to go back and take what we heard and say, "Now, what do we need to do with our product, with our data, with our dealers, with our services, to attack the issue that they identified from a lot of different angles and solve it?
How do we make them money?" It's a fundamental rewiring of the company. We're not all the way there yet, but we're making great traction on the pursuit of being the most farmer-focused company in the industry. Talked to a number of our dealers today that came through. They said they're really feeling it. It's showing through to the customers. That's number one. Number two, with any organization that's going after a very big, hairy, audacious goal, you got to get an organization aligned to the target. Get a fire in their belly to go get it.
It's about the spirit in the organization, the excitement about where we're going, the meaningfulness about what we're pursuing, and the impact we can make to farmers all around the world, and the value we can create for shareholders. We wanna be the employer of choice for our employees, and the only way you do that is get them really aligned and really excited about what they're doing. On the first one, we're holding ourselves accountable to that net Farmer First ambition by measuring net promoter score. It's so much so that we're putting it right in our incentive system. On the second one, we're measuring employee engagement. That's also in our incentive system. We're holding ourselves accountable and putting our teeth in the game.
The third one, is when you do those two, first two things really well, we wanna be the investment of choice for folks like that you represent. We've got some targets here, about 12% operating margin as just a milestone on a larger journey to goals even higher than that. Strong cash flow generation, and return on net assets is our way of measuring kind of an overarching measure that takes into account asset efficiency and things like that as well. These are also in our incentive system to make sure that we're driving those. The outcomes are really critical. We've got to make sure that we're driving results, and these are the three things that we've really focused on. You've heard me say: How do we get those results?
How do you get the margins to go up? How do you add more value to farmers? Well, to simplify it down, there's three growth drivers that we're really excited about. The first one is taking our Fendt business, making it full line, tractors, sprayers, combines, planters, hay equipment, all the solutions a farmer needs throughout their cropping cycle. We've expanded that, and we've filled in a full line of equipment now. Secondly, take that full line and bring it to the global market, wherever the best of the best farmers are that expect the most. It's a new value proposition to the marketplace.
It's better than anything else out there, and when you talk to the farmers that have experienced the Fendt machine and the Fendt experience, because there's a whole different kind of experience they have, different warranty packages, different kind of service experience.
When they feel that entire thing, they don't wanna let the demo machine get off the farm. We're seeing great closure rates by taking Fendt global, North America and South America. We've doubled our business in North America in the first couple of years. We aim to double it again in the, in the four to five after that. Steadily growing this business. Number two, it's our carrier of the advanced technology. These best of the best customers want the most productive machine, highest quality machine with the best service. It's our platform to carry out to the farmer, ready-made technology solutions. The second business is the one that Seth's gonna talk to you about a fair bit in a little bit, but I'll just give it a headline, and that is our precision ag and digital business.
We go to market with a couple of brands here. One is Fuse. That's for our internal technology. When we put it on a Fendt tractor or a Massey Ferguson tractor or something like that, or combine or planter, we call it Fuse. It's our common technology, guidance, telemetry, things like that, common technology that is carried out across all of our brands. Precision Planting is where AGCO is very unique in the marketplace. It's about retrofit, but it's about mixed fleet retrofit, and that takes an entirely different culture. Some of our competitors are starting to talk about retrofit now because of our success, but it's a very different retrofit that they're describing. They're saying: We'll take some of our technology and sell it to some of our customers that have some of our older machines.
What we say is the scope of our approach is to add value to all customers in the marketplace. No matter what brand they own, we're gonna allow them to upgrade it to have more capability. Our mindset, our innovation process, our investment, it's all different. It takes an entirely different culture to be a mixed fleet retrofit company, and our whole mission is to get this technology out to everyone. This business, we said at the beginning of last year, we said, "We're gonna grow this business to $800 million," the combination of Fuse. Halfway through the year, we said, "You know, it's going so well, we're gonna raise it to $900 million." Last December, we committed to you that we're gonna grow it to $1 billion. Highly confident we're gonna nail that goal.
This business is high margin, high growth because it's adding a lot of value to customers. The third one is service and parts. Service and parts is all about moving from reactive to proactive. Remotely monitoring the machine, understanding when an issue is about to happen, and bringing a solution to that machine before it happens. The combination of these three businesses, if I put it in your language, not only are high margin, not only are high growth, but they also reduce the cyclicality of our business. Service and parts, we've never had a down year. Precision AGCO, we've not had a down year. They're just growth businesses. There's no cyclicality to them. The larger they become, the less cyclical our overall business is. Our Fendt business, as we grow it global, it's a new entrant to the market.
It's a new value proposition that doesn't exist in the marketplace. As we're spreading our wings, having a broader product range and a broader geographic playground, it's also new, and whether the market's up or down or up or down, we can grow. The net of all these things is exciting growth, adding a lot of value to farmers, and less cyclicality. Finally, I'll just introduce what you're gonna see tomorrow. You're gonna see some really cool stuff. You're gonna see it all operating in real farm conditions, planting real seeds, harvesting real crops, baling real straw. It matches right up with the commitments we shared with you in December. We planted some flags, and we said, "You know what? We're gonna commit." We're gonna commit, number one, through our farmer-focused innovation, to be rolling out autonomous solutions.
In the near term, a retrofit autonomy solution, you'll see that in 2024. Many more to come after that, because once you solve the first one, you can use a lot of those modules to do other applications, such that we have the entire cropping cycle covered with autonomous solutions all the way around the cropping cycle by 2030. You'll see a couple applications of that tomorrow. Targeted spraying is just an example, but I'll talk about targeted spraying is using artificial intelligence libraries to be able to identify the difference between a weed and a plant, spray only the weed. You'll see that in action tomorrow, too. It's one of those machines that is a smart machine that has the capability on board to be able to make decisions for itself, and it's automating features.
You're going to see several things tomorrow about automating features, you're going to see autonomy, and then finally, you're going to see some clean energy solutions. Kelvin's going to talk a lot more about this, but you're going to see e100. It's our model of fully electric tractor. Not only is it clean emissions for society in general, but it doesn't use any diesel fuel. For a lot of applications, the farmer can get a good payback on that just as it is. Not to mention the other benefits of very low sound, in terms of using in a municipality, indoor applications, a vineyard, all these kinds of things.
I think there's a lot of niches that this is going to be a winner for. We've got a great program for you. You're going to hear a lot more about the details. Buckle up, tomorrow's going to be a great day.
Thanks so much for being here. With that, I'm gonna turn it over to Kelvin.
Hey, thanks, Eric. Greetings, everyone. Good evening. Kelvin Bennett, I'm Senior Vice President of Engineering. Several of you I saw last year at Leipzig. Some of you is new faces. I look forward to engaging with you the next day and a half. I think it's gonna be a cool time. Thanks, Eric. Good segue. I'm gonna talk a little bit about our product strategy to get ready to support our sustainability effort. I'm a farmer, I'm a family man, I'm a concerned citizen. Sustainability is really important to me, but it's also important to our company.
There's a ribbon in that Agvance goal that goes right across, talks about sustainability. One of the best things that we can do to do that is to improve our products. What I'm gonna share about today is not only future tense, it's present tense.
I think we have some really good solutions we're gonna talk about today, and you'll see tomorrow in the hallway. There's also a lot of good things coming, as Eric said, our commitments we made last December. What are we gonna do? You know, again, sustainability is important to me as a farmer, but there's a lot of challenges out there. When we developed our strategy as a management team together, we put a lot of thought into this. Some of those challenges are, you know, the availability and affordability of clean fuel on the farm. Not in some other country, not in some other place in the city, on the farm. We have some really good solutions today that could achieve better if this was on the farm. Projecting that is also, was very important.
The total cost of ownership, I think Greg alluded to it, you've seen this. We wanna increase the net farm income by 20% with these smart solutions that we're developing. This product, these solutions that we develop, have to contribute to that. There has to be a market there, a pull. That's also ingrained in our, in our strategy that I'm gonna talk about. Lastly, complexity. You know, we're in a business that's been dominated by diesel-driven products for 50 years. That's a very simple portfolio. As we look to the future, it's gonna get a little more complex, not only for us, but also for our customers that has to deal and carry multiple fuel types, different ways of infrastructure to support this.
All of this rolled up, all these challenges, is what we put into our strategy. Maybe a simple way to do it, you know, Eric and Greg, we talked in threes. I'll take you back to fifth grade science class. Fifth grade science class, the three stages of matter: solid, liquid, and gas. Each one of those can carry energy, and we can take that energy and deploy it for use. We have a solid energy system, battery, electric. You probably have a car that's battery electric. A little more challenging in a tractor. You drove, or many of you drove the e100 last year. You'll see it this year or tomorrow, and we're gonna bring it to the market soon.
We'll have a detailed discussion on that. The bottom, liquid fuels, so diesel, but we can get better. We can use more renewable diesels.
We can make our systems way more efficient. That's another solution enabler that will be part of our overall scope. Crunched in the middle, the other form of matter, gaseous fuels, clean gaseous fuels. Architecturally, it's a little bit closer to a conventional tractor, but it's got some, you know, unique use cases that drive some changes in the products, but we think can be a great enabler for a cleaner future. I'm gonna talk about each one in more detail. As we looked at all of this innovation, maybe the top left, you know, we're focused on the customer. What is their total cost of ownership?
What's our ramp-up curve so that we can bring these technologies to the market at the right pace to match demand, but we're also not overrunning the market, and we can scale quickly? I think we'll do that. Lastly, I'm just gonna say, you know, a lot of our competitors, very good competitors out there, they may have lawnmowers, they may have UTVs, they may have construction equipment. Those are a lot easier to challenging, but easier to some advantages to get it more sustainable. If you remove that and you keep the ag portion of their business and compare it to our fleet, we're convinced we're very, very competitive today in our internal measurements and what we hear from our customers, and we think we'll maintain that advantage going forward with this strategy. Let's look at the details.
Here's a picture graphic of what I'm talking about a little bit on these three phases. On the x-axis is horsepower. This is our product lineup from smallest to biggest. Right below it is our technology options or enablers. On the y-axis is some of the use cases where some of these products are used. Again, starting on the left, the electrification, E100. You know, you'll see it tomorrow. We'll talk about it, you already know that one, I think. We're gonna electrify, as we talked about last December, we're gonna electrify many of our products in that portfolio. We think there's some great use cases with a good total cost of ownership for the customer that we're gonna bring to the market between now and 2030. Right in the middle is the core engine.
I don't know if you saw it. It's a little wider than 32 inches, so it's not in here, it's in the hallway. If you passed, you got the food, hopefully, you stopped and looked at it. That's a backbone, a future-proof engine that we've developed, we brought to the market last year. We're gonna bring its baby brother to the market later this year, and then we're gonna deploy him more broadly, and we're gonna talk about that. That's already a 10%, today, benefit versus the previous models we did. It's no change. It's there. There's an engine change, but it's on the farm. No change for the customer, and it's already providing value. Here's the sweet spot of some gaseous fuels, so there's some unique applications there. I'll show you a picture of a prototype.
Plug-in hybrid, a hybrid's not for every use case, but there are some, we're gonna bring that to the market. Lastly, improved efficiency on our high horsepower product. We think we're bringing a lot of different solutions to the market that's gonna help this, and that's gonna allow us to scale as the markets open up. One last thing, the little gray font, the cloud, the thing, that's a projected cradle to grave product, CO2 efficiency improvement versus the previous model. A lot of good things. We have a model that we predict this, and this is the backbone of our strategy, E100. Again, we drove it. You're gonna drive it tomorrow. That's a unique one. That's gonna position us in the market. We've got the diesel tractor, and we'll have the electric tractor.
We're gonna already start seeing consumer buying preferences, where they use it, how it's being deployed, so that we can learn. The models below it, the next generation, is on the drawing boards, and we're already developing them now. As we learn where this is effective, we're gonna be able to apply all that to the next generation, more broadly scale it, and bring that to the market. It'll be in Europe, so it'll be launched this fall at AGRITECHNICA. It'll be rolled out in Europe next year and then in North America the year after. Really looking forward to it, and then once we add the other models, we think this will fill it up to about 150 horsepower. Gaseous fuels, so which fuel? There's a couple. Biomethane, this is a prototype. You won't see that tomorrow.
That's why I included this picture. That's in sugarcane fields running right now. It's kind of a unique use case that provides a great CO2 reduction versus the current one. It's all decked out in camo, but it's being run on some sugar mills right now in South America. We think we can mature it in the next two to three years and bring it to the market around 2027. Another gas fuel is hydrogen. There's a lot of buzz, for good reason, in hydrogen. Hydrogen and biomethane is a challenge. You know, there's a little Fendt tractor on the table there. I can show you later. Getting enough onboard storage of the fuel to get your autonomy is a challenge. It's not gonna work for everything, but for some applications, we think it's a really great solution.
Hydrogen in gen sets, for sure, will come. You'll see a hydrogen-powered version of that engine out there at AGRITECHNICA this year that we're gonna continue to evolve, improve, and make it available for the market once we think the market is ready for it in our applications. Really exciting stuff with that. You know, back to the old liquid fuel, the tried and true. We can still improve it. That core engine that we launched last year, 5%-10% better than the one before, but it's future-proof. It's future-proof for tomorrow, whether it's hydrogen, spark ignition on hydrogen, run biodiesel, ethanol, methanol. I forgot to include that we are ready today to ship from Valtra, all of our tractors that's filled up with renewable diesel. I wish they ran on renewable diesel their entire life.
I mean, 80%, 70%-90% improvement. That fuel's not available everywhere. The tractor's ready, the engine's ready, and as infrastructure evolves and improves, they've already got it there. Let's keep that improving. There's other fuels that's ready, so it's a very future-proof engine, our backbone, and we're launching other sizes of it soon. Lastly, hybrid capable, so we'll add a hybrid version of that over time for those specific use cases where that's of value, and there are some for sure. Lastly, AGCO's investing in a broad spectrum of technologies, but we're also very keenly focused on what the farmer want, where there's value for the farmer in the market, and there's an equal pull to it. We're gonna bring it to the market, get it ready.
It's in a use case that's we think we see high value, starting today with the e100 and this engine, all the way to 2030. We've got the technology, we have supply chain, we got manufacturing, we got service and support. We're gonna scale as the market matures and is ready for it. That's fuel infrastructure. I mean, just the last couple of point, you know, it's a big piece of the puzzle. There's clean fuel, and every day you read on the news about investments in it, and that's really good, and I hope it accelerates. That's one of the pacing factors of us achieving what we want to achieve, because we think the products will be ready. It's just getting the fuel ready as well.
With that, I want to turn it over to my colleague, Seth, who's going to talk about a lot of technology stack, some good stuff that's going to put on these products, and the combination of the two is going to take us to a winning place. Thank you, Seth.
Thanks, Kelvin.
Yeah.
I get the luxury of working with Kelvin, and our teams together develop a lot of these products. Kelvin has the platforms, I get the technology that goes on those platforms, and that's what's exciting to talk to you about today. What's even more exciting is what we get to do tomorrow, 'cause for us, it's one of the best days of the year because we're out in the field operating the machines, and I hope you're looking forward to it. Might be a little warm, but that's okay. We got plenty of water. Just remember, we're gonna have a lot of fun. In all of our presentations where we've been getting together lately, we talk about this addressable market, and we talk about how AGCO is going to market.
The key for us is not whether it's $150 billion or $250 billion, whatever it might be. The key is, how do we get it down to that farmer level? That is truly the key in this space. What we've learned, and you're gonna ask these questions, and we're ready for them. You're gonna say: "Well, how much are you gonna charge for that? When are you gonna bring that to market?" The reality is, we're gonna go to the farmers, and we're gonna learn, as we tackle different parts of the crop cycle, what's it worth to them? How are we delivering value to them? As we're delivering value, we're able to determine what's the payback period for those customers.
We identify that, then we have a good understanding of what's the value that we can gather as we grow our business. The key is, we have to be able to determine that that value is there agronomically, economically, and that we can apply the technology and then harden it so it's ready for market, and we're truly able to deliver for that farmer with an easy-to-use product. In many of our sessions that we've had, we've talked a lot about planting. You know, it's in the name of Precision Planting. Well, we're gonna talk about more than that. In fact, we're gonna talk mostly about all the other things, because we wanna talk about big opportunities that we see on the horizon. We've shared previously that we want to go beyond planting in the crop cycle.
We want to start at the preparation and planning phase, continue to build our presence in the planting phase, into the protection and nourishing that plant, the harvesting, and then the storage phase. We think those are all areas ripe for our retrofit technology, and we're excited to show off what we're doing. What you're gonna see are examples of what we're doing in the nutrient management space. Really, what I think you're gonna learn through that session is just how archaic that is. It hasn't changed in 100 years, and we think we can truly disrupt it, and we think we're very well positioned to do it.
The next area is the crop protection phase. There is a bunch of information out there on selective spraying technologies and how we're using targeted spraying to take care of weed issues in the field. You hear it from everybody. What you're gonna hear from us is how we're different, how we're going to market, and how we're building on that to address much broader scope of the total addressable market. The final piece is labor, and the labor part's important because a lot of times we hear that, well, the farmer only needs somebody for three weeks in the spring and three weeks during the harvest time. You know, it's only $15, $20 for a labor per laborer. What's the problem? The reality is, for a farmer, it is a huge headache.
It's hard to employ someone year-round, and it's hard to find someone for very short seasons that they can have operate at a very high level. When we talk about the labor problems, it's about labor that can do the job right and that where it's trusted. We see a tremendous opportunity, not just in autonomy to solve the labor problem, but in all the automation steps along the way to get there. With that, the farmers face a dilemma, and this dilemma is in: how do I sample my soil and get the right prescription, so I'm delivering the right amount of nutrients to my products throughout the year?
Because farmers will be able to tell you, I can put in some cases, they can put $1 of fertilizer on their field and get a return of $5 in crop output if they time it right and do it in just the right way. Now, here's the dilemma that we all face. There are 200 million tons of fertilizer applied in the world, and half is wasted.
The plants only take up half of that fertilizer. Well, and the farmer is conflicted, like, "I know more is generally better here," but you got to get it in the right spot. What farmers haven't been doing is sampling their soil, because you had to bag it up, you had to package it, send it off, or have somebody do it, go out, take the sample, and send it off to the lab.
With our technology in the Radicle lab, which you see behind me, we're able to take 27 steps of this soil sampling process down to one step. It automatically puts it in the cylinder, it geo-references it, so as it flows through the lab, and that local agronomist puts it through that lab, they're able to do that, load it up overnight, come back in the morning, and they're ready, and that information's automatically uploaded so that farmer can see it, their agronomist can see it, and they can share that data wherever they go.
What's really helped us succeed with our Precision Planting portfolio is that first, we're able to shine the light on a problem for a farmer, and we teach them about the differences that they can make in that operation, and then we provide the tools to help them solve it, and that's exactly what we're doing. Radicle is one big flashlight that we're coming with to shine on that problem, to take precision to a whole new level. The next area that's a big area and a big focus is the path to autonomy. In autonomy, we don't see autonomy as a product. It is really an evolution of automating features. You've heard a lot in the industry about the grain cart and combine synchronization.
You've heard a lot in the industry about tillage automation, and we think those are gonna be valuable to farmers, and we have farmers that are engaging with us now as we work through the development. Eric showed the dates when we're gonna bring those to market. We're also a key leader in the hay business. In the commercial hay space, we're number one in the world. Why not go after that? Anybody here know how often a hay farmer in the high production areas, how many times they cut and harvest their hay a year? Very good, Jerry! Jerry, you've been here too many times. No, Jerry's right. You know, 12 times. Sometimes they're doing it every 21 days.
They cut it, they may fertilize it, they're irrigating it, and they're going right back down those same paths and do it again. The areas where they're doing that, it's heavily focused on migrant labor, and there's a huge opportunity there because they want the repetition, they want the perfection in everything they're doing, and there's a lot of value there. The other thing is, when you're in those areas, you're not necessarily baling that hay during the daytime. You're doing it in the evening when the dew sets in, because then it holds its leaves better and it, and it's. There's more value for that hay as it goes through the value chain. You're able to do it in a more consistent way and get more for your output, so it's quite exciting.
The next topic, there are a couple of topics out there that I think are really confusing, as you go through the stations tomorrow, we're gonna talk about automation and autonomy. On the automation topic, this is where you have an operator in the cab, but they're not interacting with the machine. The interactions are automatic, it's where we're, if you want to use the techie term, leveraging RPA to automate these features all the way through. What it means to a farmer is, my life is easier, and the job gets done better because I don't have to hit, you know, 10 buttons as I come to the end of the field and do something, and I don't have to adjust the machine as we go through. That's the automation of the features.
What's great about this is we're able to take feature after feature and bring value to the farmer, where the job gets done right, day in and day out. When they hire an unskilled operator, that unskilled operator gets up to a higher level, much faster. That's very exciting for the farmer. It's exciting for us. They get the job done right. The other thing that's exciting about this from a business aspect is, we get paid for it. From a business standpoint, they wanna buy this, they wanna automate it, and we're able to bring these features to market. On autonomy, this is performing a specific task without the operator, yet having the full without the interaction with the machine.
The farmer is still going to be able to view this anywhere they want, whether that's through a tablet or the phone or whatever it may be, but it's really separating out, and now we're able to pull the operator out. We think there's a tremendous growth path in both of these areas. We believe automation has to come along to enable autonomy, and the beauty is we're investing heavily in both, and we think both will yield over the long run. I think automation will yield the most, and that's why we're so heavily focused on it, and you're gonna see more of that, but you're also gonna see the teasers about autonomy over the long run.
The other thing that I wanted to highlight, Eric talked about what our aspirations are, and what we're going to be delivering by 2024, 2025, 2026, and then 2030. 2030 is when we're gonna have the entire crop cycle automated. The planning prep, the planting, the care of the crop, the feeding of the crop, the application during the season, the harvesting of the crop, all the way through the storage, having that automated all the way through that crop cycle. That's the moonshot that we've called out for our organization, and that's where we're driving. That means we're not gonna have the operator in the cab in 2030 across those operations. That's a huge step forward for us, and we're quite excited, and it's very motivating for the whole organization to pull together.
Not waiting for, you know, what's one next step, we're now looking at the full portfolio, and that's a big step forward for us. I think what's important there, to build on the theme from the prior slide, it's the fact that all those features that we're building, the capabilities that we're building, from one customer experience platform up to the tasks that we're automating each step of the way, those are things that are gonna bring value to the farmer, and they can buy incrementally, because we're very focused on that scalable architecture that allows them to build into their fleet, and that we can make good business off. That we're not betting on huge R&D expenditures only to let down our shareholders in 2030 if it wouldn't happen just that way.
We believe that we're gonna build, learn, and bring value to the farmer, and bring value to our shareholders along the way. The next area I wanna talk about is the targeted spraying or selective spraying. There are a lot of questions about: What is AGCO doing? Everybody else has got one solution, and they're all in on it, and here you are with a couple different solutions.
The reality is, farms come in all shapes and sizes, and there are differences around the world, and the technology that you're seeing on the screen and that you're gonna see in the field is interesting to more than just the largest of the large farms. For most of the technology that's out there today, it's out of reach for most farmers. I have yet to meet a farmer that doesn't wanna get better every year.
Our data shows that the majority of farmers expect to get better, and they know that their current approach is not yielding the best results. They all wanna reduce cost, they all wanna increase their yield in the end. What we're doing in this space is we do have the Bosch BASF partnership that we've publicly announced, that we'll be coming with factory availability on our industry-leading RoGator sprayers, and that's quite exciting for a lot of our producers. The other thing that we're coming with is our Symphony portfolio from Precision Planting. It's not just for new sprayer owners, it's not for those sprayers that you see in the video that might be driving a different colored new sprayer. It's also for the farmers that have the 20-year-old Spra-Coupe.
Even more so, you wanna talk about total addressable market, it's even for those farmers that have a pull-type sprayer. We're not talking thousands of units a year, we're talking hundreds of thousands of units of addressable product in the market. Like all products that we bring from Precision Planting, it will be highly scalable. A farmer that has $20,000 or $50,000 to invest, they can invest the money and they will see returns, and we're always committed to bringing products to market that will be able to yield that payback in one to two years, and that's quite exciting. Small farms to large farms, pull-type sprayers, to old sprayers, to brand-new sprayers, we're gonna have a solution.
We're super excited where this is going, and this is one where we're going to open up the orders this fall with limited commercial sales for 2024, and we're quite excited about where this one's gonna go. What we wanted to do today is bring up that we're more than just planting when we talk about precision ag, and we're more than just guidance on our integrated products, on our Fendt and Massey Ferguson products. Those products, between the Precision Planting portfolio of that, of automating the planter and the guidance and the rate and section control and those machine control developments, that's really gotten us to this point in our technology, between our Precision Planting and our FUSE portfolio.
We're taking it across the entire crop cycle. In 2017, we learned what it was to be a retrofitter when we bought Precision Planting. We didn't just try to change Precision Planting, and I think if you ask anybody that at Precision Planting, it's fun, actually, for me, it's in my business unit, for them to say, "AGCO leaves us alone. We're a standalone business unit." What's great about that is there are actually a lot of back office things that have been integrated, but they feel that their culture is intact, and that culture is, we're gonna be innovative. We don't wanna be beholden to new machine sales.
We're gonna innovate for the benefit of the farmer. We're gonna be in the field with our jeans on and dirty boots. If your boots aren't dirty when you come to work, you're not doing your job. That culture remains, and we've grown it substantially with the growth in engineering talent and capabilities and the acquisitions that we've brought into the same family of companies now as Precision Planting.
That culture remains, and we're the only player in the industry to truly serve mixed fleet customers in the retrofit business with a specialized channel, and we're growing that channel, and we closely monitor how much we're selling through that channel versus all other channels, 'cause if we ever start to see that decline, it means we're not innovative enough, and we need to be able to do that to prove out that technology, prove out that it can work, that it's reliable, that it's easy to use, and most importantly, that it adds to our portfolio in delivering that net farm income. We're pretty excited to now take this all the way around the crop cycle. You're gonna see more of it tomorrow and experience it.
That's where I wanted to touch on the stations, because this is where we want you to experience what we have in a benefit statement. First of all, you're going to see and experience the station talking about our alternative fuels and propulsion. You're gonna see the autonomous baling. You're gonna be able to see what that's gonna bring to a farm and how that could be put to use in a not too distant future, and that's exciting.
What we show on here, we show what it does to the net farm income for that farmer from a % standpoint. You'll see small letters below each block. That talks about what we're going to be able to demonstrate from our tech stack. You'll be able to see those come to life, whether that's our sensing or automation capabilities in those areas. We don't wanna make you an engineer by the end of the day, but it's leveraging this and the reuse that we're able to capture across the full crop cycle. You're gonna see targeted spraying. You're gonna see how we're gonna be able to reduce the herbicide usage and what that's gonna mean for a farmer. The autonomy with the grain cart, that's gonna be in the field.
I think it's the first time we've shown it to this group. It's quite exciting for us. It's for sure, quite exciting to the farmer. One of my favorite stations is the soil fertility station, because it really starts to complete the full cycle or enable us to complete the full cycle. Historically, the agronomist would draw up a map and you'd kind of blow and go. You go across the field, blowing this fertilizer all over, and they're gonna talk about this tomorrow. Now, that's kind of a wild way to do it when you think about half of the nutrients we're putting out don't actually get used by the plant.
How do we put it out, and how do we get that uptake? You're gonna see it. You're gonna see how we are the only company in this space, and we're the leader in being able to measure what you need and feed that crop all year long. You're gonna see the automation that we're bringing to the planting business as well. We can't be here and talk about our technology and how we're leading edge and not talk a little bit about planting.
When we add it all up, the other piece is the grainView . You know that we have the Grain & Protein business, and what's exciting is farmers in that space want technology, too, and it's not a whole lot of fun running out to your grain bin and checking samples to see, do I need to turn the fans on? Do I need to turn them off? What's my moisture, et cetera.
You'll get to see how we're innovating there, and I think we're really going to be able to change that for the better as we go forward applying that technology. In the end, we say we wanna improve the net farmer income by 20%. Here's how we're showing off some of our developments this year and our innovations. We're excited to show it off. With that, I'm gonna invite Greg up so we can start our Q&A.
Thank you, Seth. For webcasting, I'm gonna ask that everybody waits till the microphone gets to you, and when it does, I want you to introduce yourself and then ask the question. With that, Curran will be around with a mic, and we'll get started. Actually, why don't you guys wanna come up and-
Yeah.
Hi, good afternoon, everyone. This is Chad Dillard from Bernstein. I was hoping you guys could talk a little bit more about your recurring revenue opportunities and how you're thinking about it from each of the product and production cycles.
Do you want me to start?
Sure.
As you go around the sessions tomorrow, the ones where it's the most obvious recurring revenue, I talked about GrainView to finish my portion. Prior to that or during the presentation, I was talking about Radicle Agronomics. Those were designed really from the ground up. They have natural consumables and recurring revenue with those. On our base today, Chad, we have our guidance systems with the correction signals.
The other thing that we've just enabled, and this isn't necessarily recurring revenue, but we've enabled, we now have over 55,000 connected assets out there running in fields around the world, and we've now enabled those vehicles to be able to unlock features throughout the life, and then be able to, in some cases, push the feature. The key is to unlock a feature. You maybe bought the tractor at first, you didn't want the something, but later, it's either switches hands or that farmer does want it, they can unlock it, so it's an immediate uptick in revenue opportunity for us. Those are some of the areas where we've been innovating, not just in the product, but also in the business model. When we get to...
We didn't talk about Panorama today, our Precision Planting data sharing app, that will have recurring revenue. For our targeted spring, we haven't announced pricing there, but there are obviously opportunities as well. Lots of opportunities, definitely something that we're thinking about, but we don't have a specific target as far as an absolute dollar amount that we're ready to share.
Thank you. Hi, Jerry Revich, Goldman Sachs. I wonder if we could just talk about the technology path to get fully autonomous farming by 2030. Where does R&D need to go for AGCO to get there? Who are the key partners, and, you know, how do you envision, sharing the labor? As we get there, what's the revenue opportunity if we hit that goal for AGCO?
Wanna start, Kelvin?
Sure. Yeah, well, the R&D path, automation to autonomy. Any feature or adjustment a person does today, we wanna operate that or take the manual element out and fully automate it. In the field, you can adjust, you know, feature to feature. We're putting that on all the products across the crop cycle in a retrofit application and then a factory install. Maybe there's a higher degree of sophistication in factory install, but they're both for both customer faces. We're gonna add that. We're gonna add revenue and sales along the way to help pay for this, and then as the machines get ready, we'll be fully automated again with a full complement of solutions by the end of it. You've seen the commitments on tillage, grain cart.
I mean, these are some of the first movers. Then we're gonna add to it every year or every couple of years, a new thing. We think it's gonna, you know, by the year 2030, we're gonna have a full complement of solutions that will do it in at least North and South America. Revenue, we're not announcing anything that I'm aware of. We're still addressing the market, the take rate, and things like that. If it has a value and a return like what we think it is, we think it's gonna be a, you know, it's gonna have a pretty good ramp-up curve. Anything else?
No, just maybe a little bit. The, you know, Kelvin's description of the automation of features, we've got a list of about 150 of those. Got a clear line of sight to what needs to be automated, all the things that are being done in the cab. What other partnerships do we need? We actually feel really good about our tech stack. We invested in Apex.AI. It's a good functional safety layer expert company to make sure that as we drive forward with autonomous software development, that we're leveraging their skill set. That's a partnership. We bought JCA last year, kind of an industry, a hidden, quiet leader in autonomous development. You're gonna meet the engineering manager of that tomorrow at one of the stations.
He'll talk to you about what they've been doing and what they are doing. We feel pretty good with about our internal tech stack and the investment in Apex.AI.
Damon, you wanna hit on, financial amounts, annual?
Yeah, I think, Jerry, the way to think about from an R&D perspective, we've been increasing our R&D over the last couple of years. I think directionally, 4% of sales, sort of the long-term run rate. This year, again, we've got to ask questions. It's about a $100 million increase from 2022 to 2023. The vast majority of that is technology-orientated. We're hiring software engineers around the world. We're working on the iron as well, but think about 4% directionally per year, but again, that's, it's about a $100 million this year increase.
Thanks. Steven Fisher from UBS. Eric, you mentioned in the beginning about how you've doubled the Fendt business over the last couple of years. You're gonna double it again. Can you talk about sort of the makeup of the different? You know, what's gonna be different in the second doubling than the first doubling? Was it maybe more tractors first, then it's gonna be the combines? Is it leveraging different customers? How is this, each phase, gonna be different?
Two things. You had to earn the right to be Fendt. You had to earn the right to be a Fendt product, and you had to earn the right to be a Fendt dealer. Step by step, we've been bringing in Fendt products. One after another, we've been bringing Fendt tractors into the North American, South America markets that have earned the right to be Fendt. Historically, say 10 years ago, you'd say: "Well, why didn't you bring Fendt over then?" They weren't designed for North America farming. They were designed for European farming, and they were kind of locked in.
One after another, we've been redesigning the entire tractor platform to be able to be great at the European farming and great at North America farming. It's a different tread spacing of how wide you plant the rows of crop in North America versus Europe.
The tractors fit. Tractors was one evolution, bringing on the IDEAL combine.
Developing the Momentum planter. We just launched the sprayer, which is the latest new product. Sprayer, planter, tractor, combine. Step by step, over the last five years, we've been adding the portfolio, and that's been kind of a ramp-up period, and that's why some of these are still fresh, and in fact, we still haven't brought all of those into the market yet. There's a product element. There's a dealer element. We grew from a maybe 20% market coverage to about 75% market coverage today with the stores we've turned on to say, "You can offer Fendt." In a given dealer, we had several of our best dealers here today. In a given dealership, maybe they have 20 stores. Store by store, they had to earn the right to sell Fendt.
I don't think there's any dealers that all their stores can sell Fendt. They had to have the highest bar of technician training, parts stocking, all the capabilities to deliver the world-class experience of Fendt. There's a channel growth element, product and maturity element, and we think both of those still haven't fully deployed in the marketplace.
Thank you.
Thanks. Larry De Maria, William Blair. Just to follow up on Steve's question on Fendt first, can you talk about the... You know, you doubled once, you're gonna double again, the cannibalization of Massey, what the impact has been over the last few years, and how you think it plays out over the next few years? You know, where is that share coming from? Obviously, some of it must be coming internally. Secondly, on the targeted spraying, we have a Green Solution, you have your Precision Symphony, and then there's a kind of a shared Bosch solution. Why do you need Bosch to come in for your solution if you're gonna obviously develop one internally? What are the shared economics gonna be like, and what's the, you know, margin impact?
Okay. hit your first question again?
The cannibalization of Massey.
Cannibalization. Yeah, yeah. Okay, I got to thinking about your second question. Cannibalization, I feel really clear about. These are two very different products going after very different customer segments. Before we even reset our strategy, we had a whole project on brand identity, brand value proposition, targeted customers. We segmented the customer, the marketplace in every region into five customer groups. Fendt goes after a certain set, Massey goes after an entirely different set. If you sit in a Fendt tractor and a Massey tractor side by side, it'll be very clear to you that quick, you know, you don't even have to ask anybody any questions to say, "Okay, this is going after a different customer than this one." The go-to market strategy is different in terms of the service offering we offer.
I feel very, very comfortable. There's been minimal cannibalization so far, and we expect it will remain that way. We have a whole brand governance group within the company to make sure everybody plays their position on the field. Second one is on targeted spraying. Why have two solutions? Seth hit on this. It's essentially going after two different kind of customer groups again. There's the Bosch BASF, that's highly featured, but then highly, more high-priced solution for most likely larger farmers that demand, you know, a very high precision solution. The retrofit solution is gonna go on anybody's existing sprayer, all the brands, but at a much lower price point. We're going after two different segments that way, with two different solutions.
10 years from now, we'll see how much sharing goes on back and forth and all that type of thing, but right now it's such a huge opportunity going from spraying an entire field with every square inch to targeting. We felt like having two horses in the race was a good thing.
Thank you.
Hey, Karen?
Yep.
Okay, over here.
Hi, thank you. Kristen Owen from Oppenheimer. Follow-up to Larry's question first, regarding the unit economics, since Seth, you mentioned we should ask that question. Today, if we look at that net farm income impact that you're having, 6% for planting, I think if I'm remembering the slide correctly, what is your share of that value capture today? How should we think about some of the future product pipeline in terms of what you can capture of that 20% net farm income impact?
Yeah, the way we look at it is we wanna be able to capture half of that. Because we think that the value is there for the farmer, and especially with the short payback period, we've found very good success with that. It's a very simple formula. I won't say it applies perfectly, because farmers have different results in different areas. There are times when they say: "Boy, you messed up in pricing that one," and makes us feel good about what they got, but, you know, probably could have been a little more economically viable on our side. There are some that take a little bit longer.
We're working through that, but I think again, the key is, we don't see autonomy as a product, we see it as an evolution of automating many, many steps, and we expect to leverage this model all the way along as we automate those steps.
Thank you.
Anybody else? Awesome. Great. Thank you very much for your attention. Thanks everybody on the internet for joining us. We wish everybody a pleasant evening. We look forward to talking to you soon. Thank you.
Thank you.