Please welcome Chief Executive Officer CNH Industrial, Scott Wine.
Well, good morning. I'd actually like to clap for all of you and really thank you for making the trip out to Phoenix to join us for this. Actually, and I'm gonna talk a lot about first, this is our first ever tech day, and we're thrilled that you're here to be a part of it. If you came in from downtown Phoenix, like many of you did, you'll realize how big this city is. I mean, one thing about Phoenix, you can go a long ways. What we've tried to do today is give you the opportunity to see our tech portfolio in its fullest right out here in these fields. You know, it's gonna start with a little bit of talking. I'm gonna talk for a very short period of time 'cause that's not the value of today.
What the value is to see what we're driving from what we told you at Capital Markets Day and where we're going with our tech stack and how that's gonna drive and benefit customers. Speaking of customers, I think one of the highlights that you'll hear today, we've got Brady and his father, Keenan here, Fahlman, to tell you what they've seen using one of our autonomous products and how it works. That customer-inspired innovation is so important to us, and I think you're gonna see that infused throughout the day. You know, we also have the benefit of having our largest and probably most important dealer, Titan Machinery, David Meyer, and his whole board of directors is here, so if you get a chance to talk to them. A few other people just, I'll give you the cheat sheet.
If you get a chance to talk to John Preheim, it'll be the best time you spend all day. You know, he was really one of the key parts of Raven that came in. Talk to Parag, of course. Really, there's a whole team as you go through these stations that you're gonna see really bring to life our technology that we're so excited about. Really, it's the idea of fusing our great iron and great technology. We talk about breaking new ground, and it's interesting, you realize, we're a little bit being agile and adjusting here. They had 1.7 in of rain on Sunday, Monday, and year to date they've had four. Put that into perspective of what it means for our equipment. The team's done a really good job bringing that together.
This corporate purpose we have around the breaking new ground, the words underneath it are important because we don't say it, but it's customer-inspired innovation is what the first word is. Then we talk about our commitment to sustainability and productivity. If you've heard it from me once, you'll hear it a bunch of times. This whole game for us is around improving productivity and yield for farmers. I think one of the things you're gonna take away from today is how much value we can bring in those two areas, productivity and yield for farmers. That's where our investment's going. No greater example of that was the investment we made almost a year ago exactly, you know, when Dan and his team decided to come with us on this journey.
You know, I think there was a lot of questions about Raven. You know, we'd had a long-standing relationship with them, but the value unlock that we've seen has been significant. What's interesting and exciting for me is how much of that value is still yet to come. But the early wins that we're seeing are exciting, and you'll see a lot of that today. It really is infused in almost everything you see, the value that we're getting from that acquisition. The value's important because we are in a difficult world. You know, we've had a darn good year in many respects with financial results. But that's just the really hard work that Derek and his team are driving, but it's brutal out there. I mean, think about what we're seeing. We've got tremendous focus on sustainability all over the world.
For those of you in from Europe, honestly, I don't think it's possible to be more focused on climate change than the Europeans are. A little bit less so here in the U.S., tremendous opportunity, and I think you're gonna see from us today how we can bring a focus on sustainability and value for our customers at the same time. You know, that value, as we think about autonomy and precision, it helps offset some of the concerns we have, all of us, about getting the necessary labor. I mean, it's getting a little bit better, but we see inflation all over the place and, you know, we're trying to drive that. We've got solutions that can help people get by with less labor or less skilled labor. You'll see some of that today. You know, we're working hard to offset inflation.
You know, we've got a very aggressive strategic sourcing program we're driving. Unfortunately or fortunately, we're actually pretty darn good at passing on price over cost. Derek and Oddone will talk about how we're continuing to drive that value for shareholders along the way as well. At the end of the day, look at that picture on the right. We just passed over 8 billion people in the world sometime earlier this year. That's a lot of mouths to feed. There's not much more arable acreage, our focus on bringing technology to bear to solve those problems is significant. It's not new. We've been at this for over 180 years. We brought the first twin rotor combine. We brought the first Quadtrac tractor.
I mean, we know how to bring these innovations to life, and now for the last 25 years, it's been about bringing tech to life as well. Why don't you use today what you're gonna see? I've got a quick video that I'll play for you now to talk about the value that we've built over these 180 years and give you an idea of what's to come.
The pace of change has always been fast. CNH Industrial and our brands have never stood still. Our legacy is farming's progress. We have written the history of agriculture for over 180 years. Always innovating for the farmer, our customer. Helping generation after generation get the job done. An endless dedication that has led to more firsts than any other agriculture company. We revolutionized and kept reinventing for the industry, making operations more efficient, more effective, more profitable. Utilizing precision technology to drive higher yields. In changing times, we are working to make our world more sustainable. Our concepts challenge the status quo. Introducing the future today. Paving the way with electrification and alternative fuels. We stand with the world's farmers, doing the hard yards, carrying the banner of progress. Forever breaking new ground.
You know, we are proud of our history, there have been a lot of firsts, but the focus that you're gonna see today is about what we're bringing to the future. These advanced technology cover all... What you'll see, what we've tried to demonstrate is across this farming cycle that the values and the benefits we can bring. Bringing it to the farmers so they can see that technology coming to life as they're running their business, making it better and more productive for them. You'll also see today one of the significant investments that we're making in sustainable fuels. I could go on for a long time. Excited about what Derek and the team are driving with our partner, Bennamann, to bring the methane tractor to life.
If you think about what we're seeing with fuel prices, with energy prices, and the idea to drive a negative carbon footprint on a farm, it is really exciting, and it's coming to life very, very quickly and, gonna be one of the most exciting things you'll see here today. You're also gonna see just tremendous capability and technology. The tech stack is really coming to life and getting born and getting built. The products you'll see, the technology, the benefits. Ultimately, the biggest takeaway I want, I mean, you can read the words on the slide. Obviously, you know, we got great technology. It's much more market ready, but what I think you're going to see is how much impressive and incredible capability we currently have.
Yes, it's about where we're going and what we're doing, but when you see the autonomy, the automation, the way these machines work, the way we bring technology to bear for our customers, that's the exciting part. If just one of you walks away and says, "Wow, I didn't realize that's what they did," then we win. Thank you for being here. Enjoy the day.
Please welcome Chief Digital Product Officer, Parag Garg.
Good morning and welcome. I'm Parag Garg, Chief Digital Product Officer at CNH Industrial. It is great to spend time with you again. We have so much to share with you today. One, we continue to break new ground with customer-focused innovations that are delivering the technology and value our farmers seek. Two, we are fully leveraging the Raven advantage as we accelerate our autonomy programs and enhance our tech stack capabilities and deliver solutions faster. In just over a year, we've already developed and deployed cutting-edge technology to the market that is being scaled across multiple farming operations at an exceptionally fast pace. Three, CNH Industrial is fulfilling our promise to be the best answers to agriculture's biggest challenges as our automation experience, our autonomy technology, enhance our leading brands and elevate farmers' productivity, sustainability, and profitability. Let me explain.
What I found exciting working at CNH Industrial is how uniquely positioned we are to shape an industry with a growing breadth and depth of choices we offer our customers and to rethink the conventions of how farming gets done. There has never been a time when farmers have had nothing to worry about. Farmers recognize that we are listening and responding to them with automation and autonomy solutions to improve the entire farming cycle. They appreciate how hard we're working to earn the right to be their trusted business partner, and we do this with our boots-on-the-ground approach. In the late 1990s, our brand, Case IH, was the first to introduce precision technology into agriculture to provide simple GPS guidance for tractors. This led to an agricultural revolution requiring every practice of farming to be more accurate and controlled.
As the team and I have engaged farm operators, we feel the tremendous pride they have in being stewards of their land, making better choices to preserve their farms and be able to carry on their family legacy. Profitability increases when farmers use all their resources more efficiently, with less waste of seeds, fertilizers, pesticides, and water consumption. Precision farming supports sustainability, reducing greenhouse gas emissions and the overall use of fossil fuels. This is truly a case where less is more. Since I started leading digital product technology development over a year and a half ago, I've seen how our technology impacts farmers' processes through incredible precision. Here are some things I've learned along the way. Every farm has its unique challenges. Therefore, we must continue to design and manufacture great iron connected with groundbreaking innovations.
This means that everything we produce continues to have unmatched toughness to handle the unpredictable and to adhere to the highest quality of standards. I've learned that the dedication from our employees is unparalleled. Our agile approach to developing technology in the field is important as we see the challenges of farming firsthand. As we work with farmers, the flexibility of our process and our team ensures that we're getting the testing and feedback we need no matter what. Last but not least, I've recognized that we're in an enviable position to develop next generation technology today. When we say we're breaking new ground at CNH Industrial, we mean it. That brings me to today. I'm gonna share the progress we're making in three key areas: connected platforms, automated solutions, and autonomy developments.
You'll also hear how our investments in our tech culture will generate a consistent path forward for ag tech development and further position CNH Industrial as an employer of choice and our customers' best answer to agriculture's biggest challenges today and tomorrow. Let me begin by defining a few key terms that make up our suite of precision technology. Connected platforms help seamlessly connect farmers to their machines, fields, teams, and partners, so they're able to manage their operations and collect their data from anywhere on any device. Automation, it's when the operator is in charge of the machine but can transfer limited control of a specific function. You're gonna hear a lot and see a lot of automation work today in our equipment portfolio throughout the day when you're in the fields. There's autonomy, where the machine accomplishes all of its tasks without direct operator interaction.
With that understanding, let's begin with connected platforms. For today's farmers, having a digital experience is essential. The connected platform is at the center of how things work and is the heartbeat of the system. As automated and autonomous solutions expanded through a suite of digital tools, we are focused on optimizing equipment productivity and job quality to ultimately improve profitability. We are providing a seamless, intuitive, comprehensive connected platform, allowing customers to collect, store, visualize, and analyze their farm operation data. Our customers wanna leverage data. They didn't sign up for a PhD in data analytics. The goal is to ensure that data and software helps them make informed decisions that they can trust and execute.
We are continuing to pursue an open digital ecosystem strategy, and we believe in facilitating data flow from our platforms to all leading ag digital platforms, so farmers are able to control who they share their data with. At Capital Markets Day, we shared that we're building a robust and flexible tech stack with ubiquitous farm management capabilities, and we've been taking this even further. Our connected platforms are setting the foundation for our customers' day-to-day operations with automated technology. This involves moving from batch data to real-time data. When you're in the field, every minute counts, so it's important to be able to use valuable inputs on tight timelines and even real-time. We will continue to make advancements in all of our connected platforms. Most notably, we're giving richer analytics to our customers as they make data-driven decisions to react to future challenges.
Next, let's turn our attention to automation, where the machine operator has full control while being able to engage for specific automated functions. The key message here is currently we are delivering immense customer value across the segments, and we're poised to deliver a lot more value to the marketplace in 2023 and beyond. We are taking advantage of Raven's cutting-edge guidance technology and integrating it with CNH Industrial's existing modular architecture. We're doing this with the goal of taking the flexible and robust tech stack and making it essentially tech-agnostic. Let's dig a little deeper by examining the benefits of our automation technology brings to the full farming cycle. Let's start with tillage. Depth and quality of dirt are critical. With changing conditions throughout the field, it is just too much work to manually reset the till for each zone.
Typically, farmers set their machinery and apply those settings across the entire area. This is problematic because calibration issues are more likely to occur, leading to underperformance. Our tillage automation technology allows the operator to set tilling depth to an accuracy of one-tenth of an inch as our sensor monitors and maintains the depth throughout the entire job, leading to the best seedbed while maintaining an average speed of 10 mi an hour. Research has shown that farmers can save 17% on fuel and yield nearly three more bushels of soy per acre as a result of automatic adjustments. In total, our tillage prescriptions enable farmers to earn over $36 more per acre. In addition to this, we are in customer testing stages for semi-autonomous tillage solutions. Why? These are the applications that farmers are most likely to wanna automate. Next, onto planting.
During the planting season, farmers generally have a 10-day window to get seeds into the ground, and if they miss it, they lose profit. Therefore, they need a reliable solution. Each row on our planter robotically changes the seed rate to put seed in the ground exactly where it needs to be. Our patented speed-adjusted vacuum fan and auxiliary alternator provide the optimal vacuum and power to the planter automatically without operator intervention. This has led to a 17% seed savings for our customers, and has increased productivity, giving the operators the ability to drive twice the average speed compared to traditional planting technologies with improved seed depth, spacing, and seed to seed to soil contact, ensuring early and uniform crop emergence. This leads to yield increases of up to 26%. This is another example of pairing great technology with great iron.
Next, we have application, which means spraying crop protection products. This is another example where CNH Industrial has proven to be the best answer to agriculture's biggest challenges. A typical farm can have an upwards of 100 million plants, and Raven's vision guidance system helps operators take care of every one of them, steering the equipment with sub-inch accuracy precisely down the rows. Our automated sprayers have more than 125 individual microprocessors controlling up to 109 precision nozzles on a 135-foot boom. These microprocessors maintain coverage and prevent crop damage from over and under application at speeds of over 20 mi an hour, which is faster than any comparable solution. This has enabled our customers to experience 15% less idle time, 10% product savings, and the ability to cover 20% more acres per day.
While lowering machine hours, farmers are also reporting increased confidence and satisfaction and less stress to the operators. You'll see this in action in our demo stations later this afternoon. This brings us to the all-important harvest. Maximizing grain harvest is one of the most critical operations within the farming cycle. Both quality and quantity of grain are crucial in generating revenue for farmers. In Brazil, we had a customer that didn't see the value of our harvest automation system until they turned it on. It saved them $30,000 per year for each machine, reducing fuel costs and allowing them to cover more hectares per hour. Our harvest automation reduces the number of functions that an operator needs to manage from 12 down to three, generating productivity benefits for both semi-skilled and fully skilled operators.
Our technology measures everything from ground speed, crop harvest conditions, to the quality and quantity of the grain they harvested. The automation system uses sensors, including a multispectral camera with advanced artificial intelligence to optimize performance. Every 20 seconds, our neural network selects the best action out of 280 million possibilities to maximize a farmer's harvest. Overall, the use of harvest automation has generated 33% less grain loss and 25% increased throughput. All as a result of automated technology designed to drive productivity, sustainability, and profitability for our farmers. This is another area we are in customer testing stages for driver-assisted harvest solutions because they could generate greater and consistent success for our farmers. Let's take a look at cultivation of hay and forage for animal feed, bedding, and energy production, which is essential to our energy and food supplies.
Operators need to minimize the need for manual intervention to monitor changes in field conditions. Our award-winning technology takes the guesswork out of the process and provides automatic steering and weight controls. The LiDAR system you will see in action today emits a laser pulse. The pulse is then reflected off the surface of the field and row, and the processor then calculates the position and shape of the row, and then controls the position and speed of the tractor. The sensors inside the baler chamber measure the crop flow to fine-tune and to the steering and speed to even further maximize the inside of the baler to achieve high quality performance. Results have shown a 15% increase in productivity and a 7% reduction in fuel consumption with baling automation. Delivering solutions to farming's biggest challenges. Finally, let's look at orchard vineyard.
When working with permanent crops like vineyards and orchards, farmers must not only take care of the individual fruits, but leave the plants unharmed and healthy to produce again and again. Our systems automatically adjust to the varying plant height and ground level and picking speed needed to ensure quality yield and a repeatable crop. Our automatic system scans the harvesting job ahead 33x per second. It monitors the plants and terrain a full 10 meters ahead of the machine and self-steers automatically along the crop canopy, even at high picking speeds. The system is also equipped with infrared technology to work even in the darkest of nights since the characteristics of the fruit, specifically the sugar content, are often at peak overnight.
Customers have experienced tremendous sustainability improvements with 10% savings in herbicide and 35% savings of fuel per acre and a 35% reduction in CO2. As farmers continue to reduce their costs and waste and increase yields, they'll see a significant difference in their productivity, sustainability, and profitability while recognizing CNH technology has proven to be the best answer to agriculture's biggest challenges. Our last segment is autonomy, which means the machine is able to accomplish all of its tasks without any operator interaction. The automation we're delivering for customers that I just spoke about are the key contributors to the journey to autonomy, and we have plenty going on in the autonomy space. Our investment in Raven gives us a solid jump-start and a clear advantage as we are rapidly accelerating integration. We introduced the Case IH Trident 5550 Applicator with Raven Autonomy earlier this year.
It's the industry's first driverless applicator, which is the number one fertilizer applicator farmers have requested. Later today, you'll hear from our customer, Brady Fahlman from Fahlman Acres, who was one of the early adopters of the product this year. We have Raven's autonomous grain cart solution. It allows a combine operator the ability to driverlessly call a grain cart tractor directly to the harvester to offload without a second operator. Two machines, one driver, twice the productivity. There's been an incredible amount of progress this year on autonomy. I'm excited to spend time with you in the field to show you exactly what we've been up to. The Raven advantage is playing a major role in accelerating our autonomy program and enhancing our tech stack capabilities. We will continue to scale Raven's capabilities across multiple farming operations.
Up until now, I've talked a lot about our technology, and it's great technology, but it means nothing without our talented teams and our tech culture. I believe it's important to share how our tech-centric culture plays a vital role in our ability to continue to drive results. Precision technology is a top priority, our culture is prepared for the journey. We've embraced this mission model, we're unified in a customer-centered purpose, building technology that breaks new ground for customers. Our bedrock belief is if you start with the customer, understand their problems, and make decisions in their best interest, you'll end up in a great place. Throughout the day, you'll meet incredibly talented and passionate people delivering these exceptional technologies.
You will see firsthand how our people and our culture have their fingerprints all over the technology we bring to farmers and how it generates a positive customer experience for folks. With a larger team, we're innovating faster. Over the first three quarters, we have added 50% more global employees to our Raven Precision technology focus team, we're going where the talent is. We will continue to build our pipelines as we increase our investment in our R&D centers and open brand new ones through our robust internship programs, STEM outreach, and recruitment campaigns. As a leader in precision, it makes me really happy to see how well the Raven integration has proceeded. It's the people and culture that has made it impossible to know where CNH Industrial ends and the Raven team starts. Our One Team philosophy is focused on serving customers.
In closing, a few weeks ago, our chair, Lady Suzanne Heywood, spoke at the Polytechnic University of Turin, one of Europe's leading universities for engineering.
She said, "When used wisely, technology can enhance our humanity." It is no secret, connected platforms, automation, and autonomy will improve the lives and work of our farmers around the world. CNH Industrial, through our people and culture, will continue to partner with farmers on every continent as they serve growing populations. We will continue to lead in shaping the industry and rethinking the conventions of how farming gets done. CNH Industrial will continue to prove to be the best answer to agriculture's biggest challenges. Now, let's hear from some of our engineering leaders in our first panel. They'll explain how we're integrating and implementing this tech culture across our organization and give you a deeper dive into our technology. I look forward to spending time with you the rest of the day. Thank you.
Well, good morning, everyone. It's a pleasure to be here. Man, they really know how to throw a party here in rural Arizona. My name is Cherilyn Jolly-Nagel. I'm a farmer from Saskatchewan, Canada, where it is minus 30 degrees Celsius at home when I left the farm. For those of you doing Fahrenheit math, that is like, carry the one, minus a million degrees Fahrenheit. It is really, really cold at home, but productivity had dropped on the farm just enough that I could get away.
I'm thrilled to be here. I farm with my husband. We are both 4th generation farmers, and our families are farming the some of the same land for more than 120 years. We grow chickpeas and lentils, and we grow durum, which makes pasta, and we grow canola, which is a heart-healthy oil. We have two children. We're raising two tractor-driving, gun-slinging, dirt bike-riding teenage daughters.
Everybody in the Nagel family is having a great time farming, and we're all really excited about the future of agriculture. It's my absolute pleasure to be here to help celebrate Tech Days and, selfishly, to help celebrate the innovation that is so important to farmers like me. With that, please join me in welcoming our panelists for the Precision Tech panel. We have John Preheim, Vice President of Raven Product Development, Dan Eslinger, Vice President of Precision and Vehicle Electronics, and Mukesh Agarwal, Vice President of Precision Software and Cloud Applications. Gentlemen, have a seat. This is the famous John that Scott was referencing this morning. I get the first chance to visit with him. No pressure, John. I thought we would start this morning by giving the audience an opportunity to get to know you a little bit.
CNH Industrial has a tech culture, and that has to start with a tech-focused leadership. Would each of you share your personal technological background and how that's relevant to your role in CNH? Mukesh, we'll start with you.
Well, thank you, Sherilyn. Good morning. I'm Mukesh Agarwal. Look, at my core, I'm a software engineer. I absolutely love designing, developing, delivering purposeful software. Now if that makes me a geek, I proudly respond to that. I have about 30+ years of experience at Microsoft, UnitedHealth Group, and 3M. You know, the thing that really, really resonated with me is really the charter that CNH has. CNH's charter of feeding and building the world really relates to me. You know, more than even what I personally believe, there's also a great opportunity in agriculture right now. The ag segment has mounds and mounds of data out there, and we're just beginning to scrape the surface of that.
That's the opportunity I see of bringing that data to life and making sure that our ag segment can drive the maximum productivity for their operations.
Great. Dan.
Yeah, sure. Thanks. Dan Eslinger. grew up not too far away from you, Sherilyn, in southern Alberta. grew up around ag for my my childhood. As I got out of engineering, spent eight years at Deere. I ended up leading their StarFire GNSS receiver development before I left, starting as a software engineer there. took a 10-year break from precision ag and worked in aerospace, worked in multimedia, public safety, and came back in and I'm really excited at this point. I spent my time at Deere, really watching the precision market adoption mature and the technology mature and the robustness. In this 10-year intervening period, it's really come through that farmers now count on that technology. it's really become an integral part of the operation.
I really do think that we're at an inflection point where we're poised to adopt even more operational efficiencies, more autonomy, and more automation in particular, as we drive more value for our customers in the fields.
Thanks, Dan. John.
Yeah, good morning. I have a slightly different background than Dan and Mukesh. I grew up on a small family farm in eastern South Dakota. We raised livestock, cows and hog, primarily, and we farmed crops, primarily corn and soybeans. I was driving tractor before kindergarten, and I loved every minute of it. All the way up through high school, I was very actively participating, but I also had a very strong love of science and technology. I had a couple of brothers who really wanted to farm, so I decided to go for engineering, and there was no precision farm or precision technology on our farm when we were growing up, kind of in its infancy stages yet.
I went to college to get an engineering degree, and when it came time to start looking at what I was gonna do for a career, post-college, I realized that 30 mi from where I grew up, there was a little company called Raven Industries that focused, at least one division primarily on precision technology for agriculture. I ended up taking a job there, and I've been there ever since. It's been awesome. It's so easy to find purpose in helping feed the world. It's been awesome being able to continue the staying close and connected to ag, watching my family, my wife's family, use the technology we produce to help make them more efficient and profitable. It's been really amazing to see the journey from where we started.
When I got into precision technology, guidance and steering was a very advanced concept at the time to now what we're gonna see this afternoon with autonomy running out there. It's just been a fabulous journey.
I, too, remember the manual days. John. Mukesh, you mentioned mounds of data. How are farmers using this data today, and how is CNH Industrial working to make that a better experience?
Well, thank you. Look, farmers that use precision technologies, they use the data to track their machinery to drive operational efficiencies, which, you know, I want to kind of go back a little bit to what Parag said earlier, right? Parag said it best. Farmers didn't sign up to become data experts. They didn't sign up to get a PhD in data analytics. What are farmers trying to do? Farmers want to save cost. They want to save time. They want to increase the yield. They want to increase efficiencies. That's where we come in, you know. What we want to do is we want to take that mounds and mounds of data and convert it into actionable intelligence for them. What we want to also do is provide them with a connected platform.
You know, as you heard, connected platform is nothing but a suite of tools that allows farmers to connect with their crops, with their field, with their equipment. What we are trying to also do is make sure that decision intelligence is at their fingertips. Then we want to do all of this by providing them an easy-to-use interface, so they don't have to muddle through complex interfaces. Then, of course, we want to make sure that farmers are able to do all of this from any place, any time, from any device. That's what excites us.
Dan, there's certainly a spectrum when it comes to farmers. Some of us are early adopters, some of us are on the other end, where it takes a little more time to justify the value of it. How would you communicate the in-cab technology to someone who is unfamiliar with precision agriculture?
Yeah. We find that we have to do that, just as we interact and tell our families what we do, you know, outside of. Not a lot of people involved in agriculture, not nearly as much as there used to be. The quick answer to it is that, with a short period of time, limited training, you can take somebody off the street almost and put them in a cab and get them to where they're an adequate operator. When you start talking about our automation capabilities, that really I'd like to refer to them as our superpowers 'cause that really takes somebody who's a rather adequate operator, and it makes them an adept operator, meaning we can get the same quality as a very experienced operator out of somebody when they've been used our automation capabilities.
I can use a personal example of harvesting millet in Eastern Colorado last harvest. I was out there with one of my colleagues. The farm we were visiting, he had an emergency. He had to go into town, we took over his harvest operation for that day. With my colleague, he had a very clean grain bin, and he was very adept at operating the machine, and that was part of his skill set. When I looked in my grain bin, it was not nearly as clean a grain, so there was gonna have to be more reprocessing, which was not a great outcome for our customer there, for the farmer.
Toggle the switch, engage automation, and all of a sudden, my grain looks just as good as a very adept operator. That was really awesome to see and, you know, a great outcome for the customer.
Well, Dan, I am not going to tell my father-in-law that there's an opportunity that technology will make me a better operator. It won't go well for me at Christmas. John, can you share with us from your perspective how the integration of Raven with CNH Industrial will drive value?
Yeah. Scott mentioned earlier this morning, we have a long history of partnership. It's a decades-long journey we've been on, the partnership was great. We're united with a common purpose. We're helping to improve farming, improve profitability, improve sustainability. We have that common purpose to start with. Now what we get to do when we're bringing the organizations together is really leverage our complementary strengths. Historically, Raven's done very rapid innovations. We introduce new technology in the aftermarket, lets us stay with our innovations. You get immediate feedback from customer. We're gonna hear from Brady this afternoon or later this morning about that. You have CNH with a strong strength in hardening the technology, getting it deployed, extremely broad global reach, huge customer base, a lot of different platforms.
We get to bring those two together, and that's why the three of us work so well together, what we get to do is really increase the cadence that we can deliver value to the customers.
Mukesh, you had already talked about the connected platform. How is that going to enhance data visualization for farmers?
Yeah. A great question. Look, at the end of the day, visualization is the name of the game, right? Really, the center of the universe for the farmers is the connected platform. What we do is we empower farmers to be able to visualize all their farming operations. Things like, how do I set up? How do I plan? You know, how do I monitor? How do I analyze? That's what we do. Let me just give you an example. You know, we had a customer who called us and said, "Hey, you know what? You can show me during harvest season how my combines are operating, right? Great, I can optimize my combines.
Can you also talk to me a little about my operator efficiency?" We were able to use the data that we have and provide them that visualization. That drove tremendous value for the customer. Those are the sort of visualizations that really enhance the experience. You know, you all are gonna be watching a bunch of demos today. I really encourage you to look at our tillage and planting demos, where you're gonna see how we take this concept of a prescription and how do we put that onto the machines. Those prescriptions can be easily generated by our systems or other systems. We can put that there. When you go into the harvest demo, you're gonna see that how the setup plan and monitor allowed you to really see the yield from your harvest.
Those are the sorts of things that you're gonna see as visualizations.
Yeah. I'm looking forward to the demos. Dan, I would say each piece of our equipment today now contains tens of thousands of dollars' worth of precision technology. Can you walk us through an example of all the technological components that would reflect that high cost value?
Yeah. Happily. And you're gonna see some of those this afternoon in our planting station as well. I'll use the tractor and planter combination that you'll be seeing later today, as an example. With that, the customer value, the farmer value is they can go and plant twice as fast, so they can get through the field twice as fast, saving 17% input cost of seeds. That also eliminates skips and doubles. For those of you not familiar with the skips and doubles, skips are you miss planting a seed in a piece of earth, or doubles where you plant two seeds. Either way, it's a very poor, costly agronomic outcome if you have either skips or doubles.
In order to accomplish that 2x as fast and saving 17% seed, we need 60 computers. 28 of those live on the tractor, 32 of those live on the planter, 4 of those are precision controllers. Those have a technical stack of Android, Linux, real-time operating systems, Assembly, C++, Java, 3D graphics engines. We really have a complex technical stack. If you're adept at using a mobile phone today, whether that be Android or iOS, you can get into the cab and be a. That's all hidden from you, and you can be an adequate operator. Lots of complexity made simple.
Well, John, as operators, we come across so many different obstacles in the field. Some of them are permanent, like power poles or trees, some of them are temporary, maybe vehicles or animals. Can you share with us how CNH Industrial is going to use artificial intelligence to drive automation and autonomy?
Yeah, of course. As you and I probably know, even good operators sometimes miss those things, and my dad discovered if you start too young, you miss them a lot. Really automation and autonomy, all of it revolves around sensing and acting. Everything you're gonna see today is based off that. We've been doing this for years. It's not new. Some of the stuff around perception, for example, hopefully we're able to run it, the best in the industry, vision guidance system that we have going, the LiDAR following for windrowing, all of those require a lot of data, a lot of processing. Those aren't even using AI yet. We are using AI in some other products that we're gonna get to see today. Harvest automation is an example.
There's, I think, 280 million different configurations, and they leverage AI to analyze the quality of the grain and make decisions on how to optimize the combines. There's an example of artificial intelligence being used. Directly to your autonomy question, there's a few autonomy platforms running out there this afternoon that are also gonna be leveraging artificial intelligence, and that's really around safety. As you increase the number of sensors, as you increase the number of decisions that have to get made, the complexity becomes really significant, and artificial intelligence is getting leveraged today in the field to solve those problems already.
Yeah. I'm glad you brought up the safety aspect of that, 'cause that's a real challenge for us. Mukesh, We talked about the connected platform as the center of the universe. Why does CNH use the connected platform as the major pillar for its precision offering?
Yeah. No, I love that question, by the way. It's. Look, you heard John and Dan talk about, you know, the tech stack, about automation, about autonomy. These are some key investments that we are making. Let me just enhance that with some data. We have, in the month of October, 25 billion, with a big B, pieces of data that we took from our machines, and we processed it, we analyzed it, we stored it, we made sense of it. That's the scale of work we're doing. We have 63 TB of data from the last three years that has just telematics information. Before this, I was checking with my team. There was 3.9 million calls that we made to our integration platforms.
I mean, that's the sort of stuff that we are investing in. That's what gets me excited. Let's say I put all of this aside. The investments that we are making today are focused on the customer. We are a customer-first company. We are focusing on customer needs of decision-making. How do I help my customers make proactive and dynamic decisions? On collaboration, how can they maximize their connectivity with their partners with their advisors? Last but not the least, maximizing the short seasons. 10-day planting season. How do I maximize their uptime so that way I know where the equipment is, how is it working, and how can the farmer connect with the machines, and how can machines connect with each other? Those are the sort of investments that we are making.
Well, Dan, let's talk about the embedded technology then. How is the embedded technology evolving?
Yeah. We're making sure that we have development capability in-house, that allows us to go at a faster pace with higher quality and truly lets us own the customer experience. We're not a technology for technology sake, company. We go and take that technology and solve true customer problems with it. It's the application of technology that's really exciting for us. With our modular architecture, John and Mukesh and I are all marching forward to make sure that our aftermarket capabilities are strong as our factory fit, and those march together across our portfolio. That, that's the evolution at this point.
John, we'll throw the last question to you. There's certainly no shortage of places for the company to spend their time and energy and resources. How will CNH Industrial prioritize those pieces of the autonomous puzzle?
Yeah. Today, we're gonna see three autonomous applications out in the field. The first one is the autonomous grain cart, some of you have probably seen already, the autonomous spreader that got unveiled this year at Farm Progress Show, and then, the first peek for anybody, we're unveiling our autonomous tillage platform, assuming it stays sunny and windy. It's not often in winter. I'm hoping it stays sunny and windy so I can get into the field to do field work, but I am today. How we prioritize those, we really focus on what customers are most willing to adopt first and minimum impact to their workflow. As we look at autonomy, we know there's gonna be changes to workflows for the customers. Again, I suspect that Brady's gonna talk about this today.
It's a lot of stuff that we've worked with him on, how we can minimize workflow impacts as autonomy becomes prevalent. We're prioritizing based off that and what the farmer's most comfortable with. Our close ties to farmers enable us to make those decisions.
Very good. Well, that is all the time that we have, gentlemen. Join me in thanking our panelists. Thank you for your time.
Thank you.
Up next, we welcome Scott Harris, Case IH Brand President, to welcome to the stage another Saskatchewan farmer.
Good morning. I'm Scott Harris, Brand President, Case IH and Steyr. Now we're going to change it up a bit. Instead of hearing from us at CNH, and has been foreshadowed by Scott and others, we have a unique opportunity to hear directly from a grower who's been using some of our advanced technologies. His insights are really meaningful and will help develop a really clear understanding of exactly how impactful these emerging technologies are. Maybe more importantly, how growers' current operations are impacted and maybe modified to really capture the entirety of the value proposition that these new technologies represent. All the way from Holdfast, Saskatchewan, Canada, Case IH and Raven customer, Brady Fahlman. Brady? There he is. Hi, Brady. Have a seat.
Brady is a long-time fifth-generation farmer, Case IH and Raven customer, as I said, and he farms his original family homestead in Holdfast. He and his team are really progressive operators, early adopters of technology, particularly as it relates to addressing some of the labor challenges that are so pervasive in our industry today. Brady, so happy to have you join us. Thanks for being here.
Yeah. Thank you. I also think it's very cold in Saskatchewan, so it's an absolute pleasure to be in Phoenix for five days. Like Scott said, I'm the fifth generation of my family farm up in Holdfast. I grew up in Holdfast, town of 100 people. Had a fairly typical small town upbringing. My mom is a teacher. She taught me kindergarten, grade one and grade two. Dad's a farmer, and I pretty much spent my younger years having free reign of the skating rink and riding around with dad in pieces of equipment. After high school, I attended Lethbridge College for two years, and then I came back to farm full-time in 2009. That was kind of the start of our, of our growth period, I guess, for our farm.
We picked up 10 quarters of rented land that year. In 2019, we had the opportunity to purchase 13 quarters from a neighboring farm, which was our cousin. Inside that 13 quarters was one of our original family homesteads. Right now we farm all 3 of our original family homesteads. This summer, we had the opportunity, sorry, to pick up another 22 quarters going into spring of 2023. That puts us at our current size of about 13,000 acres. Alongside dad and I, we have three full-time guys, Nolan, Kelly, and Jason. My girlfriend is part of the team. She does all of our grain marketing. My younger brother, Landon, my brother-in-law, Kyle, and my uncle, Tim, come and help us out during the busy times.
What a great legacy, Brady. Tell us and share with us a little bit about how you're using automation and precision technologies today and how they impact your operation?
Using precision technologies or really any of the latest tech products is not something that's new to us. It's something that I learned from my dad by watching him through his farming career, and he kind of instilled that in us. Across our fleet, Patriot sprayers, AIM Command FLEX, Viper 4 monitors and field hubs to get the data out of the sprayers and into our office. We have 2 580 Quadtracs that just hit our dealership actually up in Davidson, so we're looking forward to getting those into our operation. Then 50 series combines with Harvest Command. The Harvest Command is something that had a real immediate impact on our farm.
As I kinda said before, my brother-in-law likes to come out and help us for harvest, and he doesn't come from a farming background at all, so he's a very inexperienced operator, we'll say. Having that Harvest Command there, we had the confidence to know that throughout the day, the combine was going to adjust, the quality of the grain was gonna stay right where we wanted it. It made it easier for Kyle too, because it was one less thing for him to worry about. All he really had to do was worry about driving it and trying not to hit anything. It got him comfortable very quick, then we could teach him more after that. Then we use AFS Connect to bring it all together.
It doesn't matter how much data all of our pieces of equipment produce in the field, if we have nowhere to put it so we can look at it, analyze it, and use it to drive our management decisions, it all doesn't really matter. We use AFS Connect, for us, the next natural step is autonomy.
Awesome. Well, let's dig a little deeper into autonomy and what does it look like for you today, and maybe more importantly, tell us a little bit about the process of implementing it on your farm.
For sure. Autonomy is something we've sat around, talked about, discussed how it would work in our operation and something we've been very, very excited about and have been waiting for to get it out. When we had the opportunity this year to demo the Trident with the Raven Autonomy, we were very excited. For us, you know, a lot of the conversation around autonomy is focused on labor, and it's true. Seasonal labor for us is hard to find. When you throw in tight weather windows and tight application windows, it's even harder to have that labor ready when we actually need it. Autonomy is, to us, is just a necessary next step to improve the efficiencies of our farm.
If we can get guys out of the cabs and we can use our labor that we have already more efficiently by supporting this equipment and just feeding the equipment, you know, sprayers with chemical and water, getting the grain off of the fields fast enough to make sure our combines run efficiently, that's really what we're looking for and where we see autonomy fitting in our farm.
Yeah. Excellent. There are implications to the support operations to implement autonomy effectively.
Yeah, absolutely. You know, as the equipment's gotten so good and gotten so big, we are more focused on logistics and support of that equipment. When you take a guy and tie him up in a cab for 12 hours, we're just not using the labor that we have efficiently. That's one reason, a big reason why we want it on our farm.
Yeah, really clear. In our last couple of minutes here, what is your outlook on the future of automation and autonomy on the farm?
I've been asked this question a few times about the future of autonomy. To me, you know, I was able to sit this fall in the driver's seat of my half-ton and click play on the GCS, and I watched that Trident go up with nobody in the cab and drive up and down the field, and it was the best moment that I've had in my short farming career, to see something that we've talked about and actually get it onto our farm. You know, to me, the future is, the future is now. I don't wanna look at stuff anymore. I want it now.
What you guys are gonna see out there, you know, Dad and I had the opportunity to go out there yesterday and look at all the different stations out there and Harvest Assist and, you know, we're seeing sprayers that are doing precision spot spraying and over at the tillage, and we're talking with all those guys and everybody out there about the different ways we can implement this on our farm and different uses. It's just incredibly exciting. You know, what I can say is everybody's excited. My dad, who's, you know, farmed forever, to our youngest guy, Nolan, who's 29 years old, we're all excited about the future, and we're ready to go, though. We're ready to get this autonomy. We're ready to get the tech. We want it on our farms.
Everything out there, we can see the benefits and how it's gonna help us, and we just want it really as fast as we can get it and as much as you guys will give us.
Yeah. Very good. Outstanding. Thank you, Brady. Tell us just briefly how would your maybe your dad might be better to answer this question, but how would your operation look differently today, if you without the technology? How did it look before and compare it to what you've got today?
Yeah. For me, that is a tough question to answer because I've actually never run a piece of equipment without auto steer in my life. Dad and I talk quite a bit about it, about, you know, he was saying this morning about dragging a tire in the field on his first sprayer, and that's how they lined it up for using the full markers, and they'd turn around at the end of the field, and it would be blown away. We talk a lot about where we've come from and how much more manual labor there was, how much more work there was, how much more taxing it was on them. We've got it pretty easy right now with the line of equipment, I guess.
We wouldn't be capable of doing, you know, the amount of acres and the efficiency of what we're doing right now. To take the next step and not even for, not even for growth, but even to do a better job of what we're doing right now, autonomy and all this tech is, to us, it's necessary for us to be better. Like I said, everything out there brings value, and it just gets me very excited.
Yeah. Right on. Thank you, Brady. Speaking of automation, our next panel of speakers is gonna dive deeper into automation, talking about building smarter iron. Stick with us, and you'll find out how we're applying precision to all stages of the crop cycle. Thank you. Thank you, Brady.
Thank you to Brady for a great introduction to this next panel. It is technological advancements that are inspiring CNH Industrial's proven iron platform. In the early days, the driver, farmers, would have to manually be responsible for the setting of each piece of equipment. I know my grandpa, my dad, and even me, I'm clearly older than Brady because I do remember the time having to manually set all of those adjustments, get in and out of the cab to detect and determine the problem and manually make all of those adjustments. Today, we are going to welcome our panelists, and we're gonna talk about the operation efficiencies that have been gained through this type of technology and how important it is to us. Join us on stage, gentlemen.
We have Darin Krantz, head of Precision Technology and Business, Monte Weller, Product Line Director, Global Crop Production, and Hay and Forage for Case IH, and Lars Sorensen, Global Product Manager for Combines and Headers for New Holland Agriculture. Thanks, everyone, for being here. Lars is our combine expert, so we'll start with you. We're going to talk a lot today about the future of technology in equipment. CNH Industrial has a history in the harvesting space that is worth noting. Do you wanna comment on that?
Yeah, sure. I mean, CNH Industrial has pioneered many game-changing technologies through time. We were the first to introduce twin rotor technology. We did that as early as 1974. We were also the first to introduce single rotor technology already in 1977. We have been leading both segments ever since. Today, I'm proud to say that our combine portfolio offers farmers more choices than any other one can do out there, from very, very big capacity, record-breaking combines to small conventional TCs.
That's a bit about the combine history. Darin, could you share with us how CNH has participated in the tractor segment and how that has evolved with the integration of technology?
Yeah. Similar to combines, Lars, CNH has a long history of tractor leadership dating back over 150 years to the days of steam-powered tractors. In addition-
I don't remember those days.
In addition, CNH has a long history of precision technology leadership dating back over 25 years ago to when the first precision technology division was formed. I think it's important to understand, I think historically, people have thought of those things as two totally separate items, tractors and precision technology. Today, when our equipment leaves our factory, we ship fully integrated solutions. What I mean by that is, for example, you see this Case IH Quadtrac tractor behind me here. When we ship that tractor from our factories, it leaves with a fully integrated display capable of not only machine functions, but precision technology functions, a GPS receiver capable of sub-inch repeatable accuracy, a telematic system for full connectivity, and a tractor automation system, that optimizes the engine and transmission for maximum efficiency and fuel savings.
In summary, the lines of technology and equipment are blurring.
It truly is unbelievable when you take a look at the picture that you were referencing and think about sub-inch accuracy. Really think about that when you're going through the demo days. Monte, from a crop production standpoint, applications of fertilizer, herbicides, and pesticides, those are some of the most important ways that farmers like me can improve our yields. How is CNH precision technology integrated with Raven to make those processes more efficient?
Thanks, Carolyn. Our newest sprayers have integrated with Raven technology to make spraying and spreading easier. What you're gonna see today out in the demos is how this technology of the Raven technology's integrated onto our sprayer platforms. It really starts with the most precise nozzle control systems in the industry. Our customers that have utilized this advanced framing technology has told us that they have seen up to 10% product savings in their operations. What that means today is, really that savings with record high input costs today is dollars back to their bottom line.
Our innovative camera-based, vision guidance and automated in-the-row turning technology that we have embedded onto our sprayers today not only reduces crop damage as a sprayer travels down through the field, but also probably more important is, it reduces the driver fatigueness. After hours and hours of spending, you heard Brady, that spend many hours in a cab, this really reduces the driver's fatigue. Finally, we've also heard that sprayers accumulate, you know, machine and agronomic data via our real-time connected portal.
We also know that when you ask, and then we're seeing customers' demand for having multiple vehicles in the same field running at the same time, this technology suite not only now is bringing much more productivity gains of having two or more machines running in the field and up to, you know, 20% gain in productivity and 15% less time, you've heard, idle time. That means more acres per hour, more acres per day, more acres per season. Productivity.
Monte, I'm really glad that you brought up the driver and operator fatigue. You know, labor shortage is a real issue on our farms today. The operators of those high-speed machines are going for hours and hours on end, and it can be a real marathon as we come up against weather conditions. Those efficiencies really cannot be underestimated from my perspective. Lars, let's go back to the harvesting capabilities. How is CNH leveraging technology to further augment the harvesting capabilities, specifically when it comes to combines?
Sure, sure. I mean, again, here, CNH was first with the first intuitive and proactive harvest automation system. In the other panels, the other speakers have been talking a lot about technical background on harvest automation. I'm gonna try and give a little bit of customer perspective here. When you set up a combine, there is 280 million ways of doing it. As crops, terrain, weather varies through the day, ideally, you should be changing your settings all the time. No one does that. It's too stressful. No one can keep up with it. What we have done with harvest automation, we've taken all that away from the operator, so now the combines are being fed data about what goes on inside the machine, and it's making adjustments every 20 seconds.
That optimizes productivity, of course, efficiency, fuel use per ton, losses back, out back the combine, the quality of the product, everything related to harvest. This makes even an experienced operator less stressful. It's less stressful to run a combine that's automated than it was before. The big advantage is really you can put anyone into a combine today, and they could be as productive within 10 to 20 minutes of instruction as an experienced operator. That's a big breakthrough. Another area we're pushing forward in is data collection. We have introduced near-infrared sensor technology on our combines now, so we are actually measuring the quality of the crop, not only the quantity. That gives us the ability to, with this data, to write very accurate prescription maps for the fertilizer systems coming after the combine.
Well, we have a highly competitive farm family. To be able to compare those efficiencies might be a really fun game at harvest if we're not stressed out enough. Darin, how does connectivity and digital services transform the role of CNH e-equipment in our operations?
Yeah. Let me try to take that question in two different parts. Let me talk about connectivity for positioning and connectivity for machine monitoring. First off, connectivity for positioning. Our GPS receivers that I referred to earlier communicate with over 120 satellites across four different constellations to give you accuracy within a couple of meters. We further refine that accuracy down to the sub-inch level with CNH's own RTK+ network, consisting of over 1,700 ground reference stations covering over 1 billion acres. This is the largest agricultural network of its kind, not rivaled by any other OEM. Secondly, connectivity for machine monitoring. Fundamentally, what we're talking about here is the ability to send data wirelessly to and from the machine.
Gone are the days of manual data transfer, where I have to take a USB stick or compact flash card and literally drive it many miles to the machine and back to get and receive data. Now that our machines are connected to the cloud, that allows us t o access that data anywhere at any time with any device.
Very good. Monte, we've talked about spraying applications, we've talked about combining applications. Let's go back in the season and talk about planting. Can you share with us some of the new technology involved in the planting piece of that puzzle?
Certainly. Planters are a great example of how we're leveraging our exclusive partnership with other industry leaders at developing their capabilities of their components to work seamlessly with our in-cab display for an exceptional customer experience straight from the factory. Our customers often tell us they want one display to be able to manage all their tasks and their operations from a fingertip control standpoint. This really speaks to our open customer-centric tech culture, really bringing our customers the most beneficial, smartest agronomic planters and that demand. We know farmers have a very tight window of opportunity in the spring to put their crop, and they have one chance to get it right.
That's correct. In fact, I would argue that Mother Nature is one of our business partners, and she's not always very nice to us. I've sent her many text messages that she's not responded to, and we are up against a really tight timeframe for each one of those particular seasons that all have to run perfectly. Darren, there's a lot of trends in agriculture. What trends are you seeing that can be solved with precision technology?
Yeah. I'd say there's three fundamental trends that we're seeing today, farm consolidation, larger farms, a lack of skilled labor, as well as rising input costs. I'm proud to say we have technology solutions in production today to address all three of those areas. You'll be hearing more about that this morning, seeing those solutions out in the field this afternoon.
Very good. Lars, how will harvest automation continue to evolve going forward?
Yeah. Sure. I mean, we're working on several fronts. Let me share 2 of them here with you today. We have harvested everything that goes on inside the combine, of course the primary function of a combine is to collect crop. The combine's also spreading biomass behind. It's getting rid of all the material we don't want in the tank. To make sure that this is spread evenly, our operator today has to be on top of that all the time because, again, conditions are changing. Crops are changing, weather is changing, the wind is changing. It's fair to say today it's done suboptimal. What we have done is build a system that fully automates the residue management. By putting radars on the back of the combine, we can now monitor the biomass that's thrown out of the back of the combine.
If we see an uneven load on one side or the other side, the combine will start making adjustments immediately. This system's so innovative that we awarded a silver medal at Agritechnica here in 2022.
Congratulations.
We're very proud of this progress here. Again, we're first in the industry to be doing this. The other area that's very exciting for us in terms of automating or making it autonomous is of course the technology coming from Raven. I mean, Raven has really filled a gap for us on the combine side with the autonomous grain cart, and we're very, very excited to have that as part of our future development into more autonomy and more automation to combine. I hope everyone will be as excited as I am when you see it out here. It'll be running. The combine will call in the grain cart. It'll start the unloading. Unfortunately, we won't be in the field because of the conditions, but you can see how it works.
When the combine is empty, another button is pushed, the grain cart will leave and go to a predesignated area to unload. That's very exciting technology and we're happy to have it here.
Monte, Lars has alluded to residue management. This is the terminology we use in the industry, but it makes residue sound like this is something we don't want when really it's a nutrient management. You know, we highly value what comes out of the back of the combine. It provides essential nutrients for the soil. It's important for us as farmers to have a beautiful seedbed come the next season that we plant. Residue management, the higher the yields, the bigger the crop, the more management we have to do around that residue. It has become an increasing challenge for us as farmers. Once the harvesting season is over, there are farmers who start shifting their focus towards tillage as a management skill set. How is automation going to make that process easier for farmers?
You heard from some others today, Case IH offers a tillage automation that enables the operator to easily set up, control, and monitor their tillage equipment from the cab of their tractor like they've never been able to before and to really manage those tough residue conditions. You know, tillage settings can be automatically adjusted on the go for the optimal agronomic performance. What this has done is really open a whole complete new paradigm in precision farming arena called prescription tillage. You're gonna see this firsthand today out at our demos. Our on-farm research has showed that this has positively, with prescription tillage, really increased their productivity by up to 10%.
When it comes to acres, that means eight more acres per hour, more acres per day, but also, we're seeing fuel savings by up to 17% and improved yields and return on investment from up to $36 per acre. This is a real new technology, and we're happy to really and extremely excited in the field today to give you a firsthand look and a sneak peek of this technology, not only this automated technology, but the first of what we're gonna show you with autonomy and tillage and what it means for us in the future. You do not wanna miss this demo today.
Thanks, Monte. I think even our non-farmers in the audience can relate to fuel efficiency as being a pretty big efficiency gain for us. That is all the time that we have today. We are going to turn the stage over for a discussion on sustainability.
Cool.
Good morning. Good morning to everybody. It's definitely great to be here for me. I'm Stefano Fiorati, Head of Zero Emission and Advanced Drivetrain. Before starting, I want to introduce you the two colleagues with me today, Mario De Amicis and Kelly Manley. Sorry. Okay, I'm gonna start talking about alternative fuels. Alternative fuels are critically important to unlocking a non-farmer circular economy. They give farmer the possibility to turn traditionally farm waste into fuel. They provide them enough power to run their equipment, their home, and in general, their operation. They unlock new revenue streams, where basically the farmer can sell excess of fuel or power to other farmers or even to the power grid.
Now, with emission-free net zero impact tractors, farmer will improve definitely the quality of the product they produce, and ultimately the food that we all eat. With our partner, Bennamann, we have created an end-to-end solution for farmers to make fuel-grade methane right on their farm by converting waste. For livestock farmers and dairy farmers in particularly, slurry can be used to create methane. Now I'm really excited and proud to announce the final step that makes this a circular process for farming. It's a major milestone in our clean energy journey, and I'd like to announce today for the first time, the New Holland T7 Methane Power, the first-ever liquid methane powered tractor. Now I'd like to show you the benefit it delivers. Wow. Wow. That's amazing.
This is a T7 with a 270 horsepower tractor that delivers same power, same torque, and same capabilities as a diesel machine without the need for any extra tank. Let me give you some numbers. Methane generate 80% less overall emissions when compared to diesel, and when compared to the limits allowed by the European Stage V emission regulation. The level of non- methane hydrocarbon is reduced by 90%, the particulate matter by 98%, the nitrous oxide, sorry, by 62%, and the CO2 by 11%. The T7 tractor builds on our existing T6 Methane Power, which is something, a product that you can buy already today.
The T7 liquefied natural gas tank can hold four more times fuel with respect, the natural gas, the compressed natural gas tractor, meaning that our customer can run any mission, including the most power-intensive operation without the need to stop and refill. One of the challenges with methane is the very low boiling point for the liquid natural gas. To keep the full gas tank cool, our jointly developed cryogenic tank technology keeps the liquid methane cool even when not being used. The technology in this tank normally is more often found in spacecraft than in farming, so we can all say it is out of this world. To get you all closer to this story, I want introduce you to Kevin and Kathy from Trenarlett Farm in Cornwall, England.
They are tenant farmers and are facing increased regulation, energy, and fertilizer cost. Together with Bennamann, we have implemented our process here, so Kevin and Kathy are converting their slurry into methane and fertilizer, and they are using the generator powered by their methane gas to generate an off-grid farm.This has all radically reduced their energy cost, satisfying 84% of their is electricity demand. It has delivered 787 ton per year CO2 benefit. That in other words, this system has prevented the same amount of CO2 escaping into the atmosphere as that generated by some 100 Western households in a year. This tractor means that Kevin and Kathy can, and definitely will take full advantage of the circular farm economy, creating a more profitable and sustainable business for them.
Both of the tractor, the T6 and the T7, can be fitted with the latest precision tech to drive a further productivity benefit. While I'm primarily talking about methane today, we continue to explore multiple avenues. We are also investing in R&D on hydrogen, ethanol, and other alternatives. As the accessibility for alternative fuel grows, we will provide equipment that can run on them, not only giving farmers choice, but adding value for them in making their work even more sustainable. Thank you all, and I give you the floor to Mario.
Thanks, Stefano. Morning, everyone. As Stefano just said, our farmers are looking for sustainable energy solution that provide a strong return on investment. All of our customer need to ready themselves to comply with emerging regulation. Those are which either being introduced or planned in line with the Kyoto Protocol, the Paris Agreement, and COP27. To cope with this market demand, our electrification roadmap will offer a range of product from ePower generators up to full electric vehicles. Our vision for a net zero future includes electrified vehicle technologies that also represent the next step in the company's decarbonization strategy. We don't just consider electrification as an alternative. It means to further improve the performance, efficiency and sustainability of internal combustion engines. We are developing our technology to offer different features for different mission in both agriculture and construction.
In agriculture, the key customer needs are higher productivity and higher outputs. Through electrification, we provide higher productivity through reduced operating costs and lower risk of soil and crop contamination. Electrification has proven benefits. It provides sophisticated vehicle controls that are ideal for autonomy and other intelligent solutions. We are innovating three direction. Light electrification, onboard electric power generation connected to an internal combustion engine, and these can also be used to electrified implements. Medium electrification, hybrid electric propulsion system that use an internal combustion engine and electrified driveline, which delivers higher driveline efficiency and better traction on top of the advantage of light electrification. The last one, full electrification. Battery electric tractor with no internal combustion engine deliver all the benefits of medium electrification alongside zero emission. We are really proud of two key developments in this space for agriculture.
First, e-Source, an external generator that provides energy to power electrified implements. I'm referring to sprayer, trimmers, and many others. A tractor equipped with e-Source can handle both standard and electric implements. In field operation, e-Implements deliver 35% reduction in fuel consumption and CO2, and 45% lower noise. Additional benefits include less soil contamination in the field, improved machine control, and safer operation versus the equivalent mechanical hydraulic implements. Today, we are really excited to share with you a world premiere, the new T4 Electric Power utility tractor, which you will see here today. Really nice, right? There are many benefits. It's a full electric tractor with no internal combustion engine, so that means battery-powered, incredible responsiveness, amazing drivability with smoother shifting gearshift, reduced noise and operating costs up to 90%.
It has the same tractor feel, but thanks to better drivability and enhanced comfort, it reduces strain during repetitive operation, such as loader work. As I mentioned before, this technology enables autonomy, and we will offer electrification technology combined with autonomous feature through our investment and partnership with Monarch. Monarch's autonomy on our new T4 Electric Power will improve our customer productivity through autonomous mowing, transport, and spraying, to name but three tasks. It will ease the strain of farm work, thanks to follow me mode and gesture control. The operator can control certain tractor function while standing on the ground, for example, moving the tractor forward into reverse, as well as raising and lowering the front and rear linkage. We'll also have mobile first digital application, enabling broader control, vehicle status, and fleet management. In the future, this solution will all work in harmony.
For low power demand application, full electrification is likely to best suit. For highest power demand, hybrid powertrains running with renewable fuels are the best solution. The development of this combined portfolio of technology is a key element in our zero carbon commitment. For this to succeed, we need to carry on innovating for our customers. These solutions can only work if our customers decide to use them. Our partnership with them is key to making all this a success. Thank you, everyone. Now I leave the floor to Kelly.
Thank you, Mario. Thanks, Stefano. As you've just heard now and in all the presentations and panels this morning, sustainability is a big part of our legacy and essential to our future. When we think and act sustainably at CNH Industrial, we're doing so in a way to address circularity and continue to reach the highest environmental, social, and governance levels of our suppliers, our employees, investors, the wider community, and of course, our customers. As mentioned at Capital Markets Day, we're aligning with the Science Based Targets initiative, which expands our goals and ambitions and increases the focus of our sustainability strategy on reducing carbon emissions in three key areas: our operations, our products, and with our customers. Stefano and Mario did a great job highlighting our company's opportunities for alternative fuels and electrification.
These innovations and the sustainable solutions they deliver for our customers cannot be understated. We're aiming to reduce the average lifetime emissions of our equipment dramatically, and we're doing so in a way that deliberately delivers our customers a variety of solutions that meets their needs without sacrificing any of the performance they depend on. As Mario described, our path forward on electrification is an exciting one. Beyond electrification, and as demonstrated earlier today, all our products are evolving in ways that improve performance, fuel costs, and efficiency, and that will result in reducing the carbon footprint and related impacts of our products. The dramatic advances in automation and machine guidance, the continuous improvement in machine optimizations, and the future incorporation of alternative fuels are all significant improvements that add up to real results for our customers.
All these innovations combine to deliver significant emission savings across our fleet, and more importantly, these solutions will deliver customers with the choice they need with emerging technology while also reducing their footprint. Yet, in our industry, our greatest opportunity for limiting carbon emissions is related to our customers' work and how they grow their business. That means there's a much greater, 10x , in fact, opportunity beyond the use of our products to support our customers in the balance of carbon and emissions in our environment. I'm most excited about the precision and autonomy solutions that you've been hearing about throughout the morning.
Whether it's automation, connected platforms, autonomous tillage, precision spraying, precision seeding, or other developments in the works, each innovation translates into real life benefits for our farmers, their yields, lower emissions, less wastage of fertilizer and crop protection products, and ultimately, a more sustainable outcome for everyone. Mentioned earlier, at CNH Industrial, we strongly believe in a vision of circularity for sustainability. To briefly touch on Stefano's comments with regards to Bennamann, we see a new way forward for sustainable agriculture and for our customers that is naturally self-sustaining and delivers wins on multiple fronts in multiple ways. We are in the business of breaking new ground, delivering the power of choice to our customers, and leading by example in our operations through our products and with our customers.
Now I'd like to leave the stage to my colleagues, Derek Neilson and Oddone Incisa, to talk about the business impact driving all of this. Thank you.
Good morning, everyone. Last presentation-
Yeah.
Before we go to the field, we'll try and make it quick. I think at this stage, you've already gained a lot of the insight into the groundbreaking technologies we have in the marketplace and the strengths of our agricultural business. Oddone Incisa and I would like to close this morning's session by sharing with all of you how this all comes together and how it reflects in our overall business. We believe what really sets us apart is how we are focused on using all of this technology to unlock value for our customers, which in turn has a positive impact on our dealers and our stakeholders everywhere. Our growth potential is tied directly to several key factors. To begin with, our global presence is one of our greatest strengths.
We are always close to our customers, supporting them directly in 180 markets through 6,500 sales and service points, with 29 manufacturing facilities, and 18 research and development centers, and with more than 100 technology partners. Following on from this, every farm, as you've heard today, has its own unique challenges, making our customer base very diverse in terms of farm type, farm size, and technology requirements. For that, we have a complete and competitive portfolio, providing real choice for a wide range of farmers. Finally, as Scott alluded to earlier, our organization is fortified by a culture that enables our people to be truly customer-focused.
For instance, when we are supporting our Brazilian farmers, we have our local experts in that region with our dealers to best understand their business needs, be it soil, crops, climate, or whatever farming practice they choose to use. By understanding this, we can really bring the best solution for our farmers, which in Brazil is clearly evident when you look at the customer Net Promoter Scores, which are truly best in the industry. In turn, all of this is reflected in our market performance. Again, this is just one of many examples of how our scale and global reach really can deliver tangible results. Let's talk technology. At Capital Markets Day in February of this year, we shared that the addressable market for the agricultural equipment machines and related parts and service is over $100 billion.
However, as our precision tech solutions continue to increase efficiencies and reduce waste in farmers' operations, we will start to take advantage of other profit pools. For example, if we look at the U.S. alone, farmers' total expense, according to the USDA, is estimated to be several hundreds of billions of dollars in 2022. By truly focusing on reducing these significant expenses, we are confident that we can grow our business further in what we expect to be a growing addressable market for us going forward. Now, with regards to speed of transition, if I look at a recent McKinsey study of more than 1,300 U.S. farmers, we can find some additional data points. Amongst those growers interviewed, almost a quarter say they will purchase precision technology in the next two years.
This research confirms that the demand for technology is growing and will drive replacement demand for agricultural equipment. When all this rolls up, within our Ag revenues for this year, 2022, we estimate that our precision technology will account for over $900 million. We expect that to continue to grow at between 10%-15% annually. Looking, you know, in the near term, we expect to deliver in excess of $1 billion in 2023. To give a little more color on some of these numbers, I'd like you to pass you over to Oddone, who can take us through with some more detail. Oddone?
Sure, Derek. Well, let me start with where we are today, I like the work that we have, or Derek and his team, to be fair, have done so far. Clearly, we are coming from a place of strength. We have, if we look at the first nine months of 2022, for Ag segment alone, so for agriculture, we have continued delivering solid year-over-year growth in net sales, as well as strong year-over-year growth in our EBIT margin. This year, actually, we have reached the highest profitability ever for our agricultural business. This has been achieved by a combination of product mix, volume, of course, price realization across all the regions, and we plan to grow further also with a higher proportion of technology solutions.
When we look at this growth path, we focus on gross margin because we think that our products with the technology that we're adding to them are delivering greater and greater value to our customers, and we're able to capture that value by offering more premium priced equipment. We have consistently grown all these tech-related revenues over the last 10 years, first through retrofit, and now more and more through factory fit solutions. Let me be clear, the $900 million, maybe it will be a little bit more than $900 million, that Derek mentioned as revenue components for 2022 comes exclusively from precision tech components.
We are including this number, factory fit components that are used for precision applications, we are including aftermarket components that are retrofitted to existing machines by our dealers, we are including technology that is sold by Raven to third parties, OEMs, or to independent dealers, and we are including fees paid by customers for unlocking or enabling some of the premium features that we are providing with our technology. What we're not including in this number is the revenues that comes from the sales of the number of equipment, be it tractor, combines, or other equipment, that nowadays probably will be hardly sellable without the technology in them. On that note, over the last two years, we have nearly doubled the estimated net sales contribution from precision tech.
Going forward, Derek said it, we expect to grow it between 10% and 15% annually. Now to support this growth, of course, we have stepped it up of CapEx and R&D expenses. We say that the Capital Markets Day, and we are confirming today, we intend or we are committed to invest around $4 billion in the next three years or in this three-year period of the Capital Markets Day of the strategic plan, which is double what we have been investing in three years prior to 2021. This year, as of September, we have invested $750 million on agricultural loan, and we are well in track to meet our commitments on R&D. Of course, we have advanced this with the Raven acquisition.
As we said today and Scott said before, we have been acquiring knowledge and we have acquiring experience resources. Over the last nine months, we have added more than 50% employees to the Raven Applied Technology team. You know, you heard today, you will see in the field, we are really excited to cultivate more and more of that, of that talent, because we need it for our growth. Now, growth in the margins with technology and the increased investments that I was talking about before are fully reflected in our plan that we presented back in February of getting to 14.5%-15.5% EBIT margin by 2024. I would say that with the 2022 numbers, we are demonstrated that we are delivering on that plan.
On that, back to you, Derek.
Thanks, Oddone. I think from the numbers that Oddone shared with you know, clearly our ongoing efforts to fully integrate our great iron and our great technology are truly paying off. This is really driving growth in new equipment purchases, but also in replacement demand. Now, installing precision technology before equipment leaves the factory is clearly a strategic advantage that only OEMs possess. However, many farmers cannot afford to buy new equipment every year. To grow the adoption of precision technology, we have to continue to offer retrofit solutions. This, in turn, allows us significantly to improve the capabilities of existing machines and help farmers do more without having to always purchase new equipment. Again, this is another example where we will be sure to do business in a way that is not only profitable for us, but also fair for our farmers.
When you roll it up at the end of the day, I mean, we're laser focused on one really important thing for our customers, and that is to ensure they have the freedom to farm their way. Speaking with farmers around the world, we know many of them want to own the technology, and our customer-centric approach will ensure those right choices are made. In parallel to this, enhancing the digital capabilities of our dealers is one of our key pillars of our strategic plan that we presented previously as we support customers in the field every day. If you look at our dealers, most have already installed control rooms at their premises, and they're adding data analysts and service personnel dedicated to support precision technology.
I mean, the increase in the connectivity of this technology also opens up new opportunities for additional service revenues, especially through retrofitting the capability to the older machines and creating and securing loyalty in our parts and service business. Humbly, as we know, like every business, we're not experts in every area. That's why we continue to look outside for solutions also. Again, Oddone will give us an insight on exactly how we're structured in doing that within the group.
One of the way we intend to maintain our competitive edge is through our strategic investment arm, CNH Industrial Ventures, which we have established with the goal of accelerating new technology adoption and capitalize on the many startups and the many disruptive innovations that we have on the market. We understand that sustainable development of agriculture requires a broader ecosystem, so not just us, not just equipment, and we are building on a broader network of partners. So far, we have invested in alternative propulsion, in digital, in autonomy, in robotics, in artificial intelligence. Today, we have a portfolio with a few company. This includes Monarch Tractor, and we have their founders here today, on the electrified agricultural tractors. Bennamann, we talked about it before on the fugitive gas solutions.
Both of them you will see application in the field. Our latest partner, which I'm pleased to announce today, is Stout, which is a U.S.-based startup focused on smart implements, which is powered by artificial intelligence. Our cooperation with these partners and their existing platform will help accelerating our development and their development of further solution that allow farmers to do more with less and more sustainably.
Thank you. In closing, we are committed to expanding our already formidable portfolio by continuing to automate across each step of the crop cycle that you saw today. Like we've referred to many times during the morning session, you'll see much of that in the field later today. We will then sell these innovations through an increasingly tech-savvy dealer network. I say it before, I say it again, as a pioneer in agriculture dedicated to serving our customers, we will continue to deliver on our purpose. That is what you read all around you here today, breaking new ground with technology. Thank you. At this point in proceedings, again, I'd initially like to thank you for your attention today. I know it's been a relatively long morning. I'd also like to thank our team.
I think their passion and commitment to the journey that we're on, you know, comes through in bundles. Again, I really appreciate the efforts and energy that they've put into today's event. At this point, we'll hand over to Jason Omerza, who's head of our investor relations, and we'll open up a short question and answer session because we really want to get to the field. At this point, I'll also invite back some of the speakers from earlier.
Well, good morning, everybody. It's great to see you all here. As mentioned, we're gonna have a short Q&A session, because we really wanna get you out on the field. Remember that we'll have some time at lunch and at dinner to ask additional questions. If you have a question today, press star one on your telephone. No, I'm kidding. Just raise your hand. We have a couple of handheld mics in the audience, we'll bring the mic.
Stick with investor relations, okay?
Just before you ask your question, if you could say your name and your company so that we can get that on the recording. Kristen, let's start with our first question.
Hi, Kristen Owen from Oppenheimer. Thanks for the question. You know, if we look at the four buckets that you've highlighted that are included in that $900 million of Precision Technology today and how you're thinking about the 10%-15% growth rate over the coming years, you know, what buckets would you highlight as being those with the greatest opportunity where you see maybe outsized growth relative to that 10%-15%? If I could ask you to double-click on some of the unique business models that you could see in that, in those buckets.
Well, I mean, obviously, we think we can grow all four pretty significantly. The near term opportunity is the aftermarket. You know, Raven was so good at that. We know how to do it. We've got a broad geographical distribution as Derek talked about. That is really good. You know, as Don and I talked about when we first acquired Raven, the real value unlock is when we fully embed their autonomy capabilities across our platform. That's gonna be a couple of years from now. That is the tremendous growth. Derek, why don't you just talk about what you're most excited about?
Yeah. I mean, genuinely, I'm excited about all of the opportunities. I mean, we're not prioritizing or focusing on one of them. There's a huge park out there of used equipment that we can take, you know, real significant advantage of. The vast majority of our heavy equipment leaving the plants today is 100% enabled in precision technology. There really is a huge breadth of opportunity across all of them. Again, we're betting on all of those and expect to grow significantly in all of those going forward. The 10%-15%, again, will be something that will grow for sure through the next year or so. We're confident in that as a minimum.
Take Stephen here.
Thank you. Just to follow up on the 10%-15%. You know, it seems like it starts off at maybe the lower end for 2023 to get to that $1 billion from the $900 million+ and then accelerates over the next couple of years after that. Can you just talk about what drives that acceleration over the next couple of years? Yeah, I guess we'll just start with that.
Remember, this journey that we're on, and then Parag started, I mean, it's about taking our tech stack, which I wouldn't call it, maybe fragmented. Is fragmented the right word, Parag? Somewhat fragmented.
Diverse, I would say diverse.
Diverse, somewhat fragmented, really taking that and making it really, really good. That doesn't happen overnight, trust me, if it could happen faster, Derek would have made it happen faster 'cause he's asking every single day, "How do we go faster? How do we do more?" As that tech stack comes together, it unlocks tremendous value. It unlocks value with automation, with autonomy, with better precision capability, just better solutions across the portfolio. We just can't get there overnight, therefore, that's when the real value unlock comes 2024 and beyond, when that really comes to bear, brings to bear on, for our customers.
Got it. The follow-up on that is, how do you juxtapose that with the farm cycle, given that, you know, it's a really robust time right now, for farm income, and how do you think about that, you know, accelerating spend and farmers trying to, you know, wanting to spend more two, three years out when it may not be as robust?
Yeah, I mean, let me just get back to the initial question for a few seconds. We said $900+ . We've still got 24 days to go in a year. We expect it to be a large plus. We can't just say the fact that all of this good technology and good stuff is happening in still a very complicated business environment. Supply chain is still constraining a lot of our plants to ship machines. Again, we are actively resolving that. We've got a huge portfolio of products out there as well. One could argue we could go above $1 billion this year if we could get enough products in a customer's hands, 'cause the need's there as well.
Again, the technology will naturally be constrained by some other factors, but we're confident as we, you know, get those products into the hands of our customers and farmers that we'll grow well in excess of $1 billion. The growth within itself in terms of the years, we're very customer centric. You can bluff what you're gonna give the customer and all the fantastic things there. If they don't appreciate real value, they're not gonna pay for it. The value they pay is based on the return they get as well. We are laser focused on prioritizing the right things that bring the right solutions for our customers across the globe. We're confident with that approach. As Oddone said earlier, we've increased our revenues by 50% in the last couple of years.
Yeah.
-by taking that approach. That. I don't think we have to change path or do anything significantly different than we're doing. We just need to keep on that path, keep religious in that path, and keep executing the plan that we presented to you guys and gals back in February this year. And again, the results are there, and we're confident will come even more significant in the future.
I would just add that you're gonna get the opportunity to see the value of the automation we give to our customers today. We're giving them a tremendous amount. You'll get to see that firsthand. Then you'll get to see the progressive on what that journey towards autonomy looks like. You'll see that in some of the stations. The upside is there, the opportunity is there, but, you know, we deliver an incredible amount of value to our customers across the farming cycle today. We're gonna just see more features and opportunities to unlock for them.
Hi.
David Raso, Evercore. The balance sheet. Assuming you have a big cash flow number for the fourth quarter, but assuming you hit that and any update on that would be great. The balance sheet's gonna have very little net debt on it at the end of the year if you hit those numbers. You mentioned some of the investment opportunities. They seem small. I'm just curious if you're getting any purchase options with those investments, and how should we really think about utilizing that balance sheet if we do indeed start next year with, you know, very, very little net debt?
Yeah. I mean, we said, we can be opportunistic in acquisitions if we have the right case and the right opportunity. We don't have anything large in sight, or anything of the size of Raven, but we have continuous discussion with the company we invest on, and we have other investment coming up the line. You say they're all small for the time being, but, you know, they can evolve.
I would add to that as well, we have some phenomenal products. Again, we said in February, in terms of our product roadmap with integrated technology and precision, we have some phenomenal products coming in the next two or three years. Again, we're looking for opportunities outside and how we can, you know, spend some of that cash, but we're really focused on bringing those products to market. That's gonna be the core of success going forward.
If there's nothing large on the horizon right now and you're doing $2.5 billion-$3 billion of EBITDA, even one turn of EBITDA is a sizable number. Can you.
Yeah.
a little bit if there are no large acquisitions on the horizon? Are you gonna let the balance sheet sit the way it is, or are there other things that we could do?
Never say never.
You know, we've been pretty clear, if you go back to Capital Markets Day, about how we intend to use our capital. We're gonna be first invest in growth, profitable growth for our customers and for us. We're gonna pay a solid dividend. We're gonna maintain our, you know, equity, you know, how we're viewed from the debt markets. We're gonna return, you know, cash to shareholders. Acquisitions are part of our growth story. We've not been bashful to date, and we won't be bashful going forward about buying something when it really accelerates our ability to deliver value for customers. That is. Our board's been really supportive of that. I mean, we're not trying to protect, you know.
We're just trying to deliver more profitable growth and more value for customers. We think they're very synergistic and, you know. We talked about our investments to date. We'll continue to do that. I don't lay awake at night worried about where I'm how much cash is on the balance sheet, 'cause I'm very confident we're gonna put it to use.
Quickly, I just want to make sure for the targets for 2024, are some of the R&D expense increases from the last three years?
No, it's-
Is that incremental news that is more of an expense than you originally anticipated?
It's the number we talk about today.
That's right.
The numbers that we had in the plan.
Okay.
We are working on that ballpark.
All right. Thank you very much.
You're welcome.
Tami.
Hi. This is Tami Zakaria from JP Morgan. I'm curious, what's the margin profile of the $900 million Precision Ag revenues? Do you expect it to grow as the base scales?
Yeah.
Up to you both. No, no. We. It's funny. We had a healthy discussion about how we were gonna answer this question. I was just kinda looking at which one of these guys is gonna answer this, because I think we came up with a very eloquent... Go ahead.
I'm optimistic, he's pessimistic. I'll let the pessimism go first. It's... I mean, as you can expect, the margin profile of that $900 million is higher than the average margin profile that we have on agriculture, to a factor of, and we came with a formula yesterday, of 1.5%, 1.5x .
Not 1.5%.
No, 1.5x . So that's what we are seeing. Then depending on the components, right? We have different components in there. We have factory fit, we have aftermarket, we have other components that have different margins. Roughly we can ballpark, we can work with that. Of course, and I said in the presentation, once we add more technology to our equipment, then the overall equipment becomes more valuable for the customer, and we can get a higher pricing.
We're not putting that part of increased revenues, if you want, on the base equipment in, into that number. That's, you know, the big debate that we have been having over time. It's the first time we've talked about a number for technology because it's always a bit uncertain how you measure it. We wanted to be very clear on what we put inside and what is excluded from there.
Again, just to complement that, yous guys and girls are gonna sit in a $350,000 piece of equipment today and drive it like an expert, and you're gonna run it 30% more effectively and efficiently than, you know, people who drove it two, three years ago as well. If you can really unlock that amount of value for customers, they'll pay minimum 30%+ for those type of solutions. Again, if you're given very niche, very small, very particular savings, then you can command margins accordingly. If you can really unlock these huge value pools, the margins are really, really, really positive. It can be well in excess of 30%.
Again, we know what we debate is it 31%, 32% or 33%. Or honestly, our attention is focused on unlocking value for our customers and then the margin for sure will come thereafter.
Got it. That's super helpful. One more question. You've had relationships with other companies in the past for your precision ag solutions. Now that you have Raven in-house, are there any immediate offerings you can bring in-house, or are you trying to stay with the existing relationships and build new stuff with Raven in your portfolio?
We have had and continue to have a great relationship with Trimble, if that's your question. I mean, let's just get that out there. Rob Painter and I have regular conversations. They're an important part of our business. They're important to our customers. With Raven, we have a lot of dissimilar capabilities, and we have to kind of manage through that. I mean, both are a key part of our future growth.
Got it. Thank you.
We only have time for one more. We'll take that from Nicole.
We'll take two more. Come on, Jason. You can. Otherwise we're gonna get just hassled when we try to eat lunch.
Thanks. Nicole DeBlase from Deutsche Bank. Can you just clarify on the Raven aftermarket solutions if that can be applied across the entire installed base, so all different brands of equipment? Secondly, when you think about the $900 million and the trajectory for the future, how much of that today would you classify as recurring revenue? Is there a target for recurring revenue, you know, over the medium or long term? Thank you.
I'll do the first part. Yes. The answer is simply yes. I mean, if we can take solutions and put them on any piece of equipment to unlock value for customers, then we'll do that. We're not in the business of restricting only for our products and trying to penalize farmers that use alternative equipment. If you look at many farmers today, they have mixed fleets. There's farmers that go very specific in one brand, but there's many farmers that have mixed fleets. I think it would be a shame if we restricted our technology to only the products that we paint in our colors. We want to give them the best experience. Again, that is an opportunity for sure. I'll have the recurring revenue and then Oddone will probably tell me off.
I mean, honestly, Everyone measures it differently. Everyone measures it back to front, upside down, inside out and comes with different permutation numbers. The simple fact is it's a huge pot of opportunity. Like I said, hundreds of billions. Again, we try not to lose time in trying to calculate this mythical recurring revenue, what's in, what's out, to three decimal points. We focus on value for our customers, profitability for our business and growth for both parties, including our dealers as well. If we keep down that path, we'll take full advantage of that opportunity as well, without losing an obscene amount of time in trying to calculate what's in, what's out, shake it all about.
Yeah. I mean, I think what you've seen is tech companies make a big pronouncement about their annual recurring revenue because everybody thinks it's safe. Well, when you're in our business, if you have a parts contract with a customer that's annual recurring revenue. Is it have anything to do with tech?
No.
No. What Oddone's built over many, many years in financial services is we have the ability to get paid by customers any way they want. If they wanna pay us on a subscription basis, we can do it. If we want another ad recurring revenue contract. As Derek pointed out, all of our focus is adding value to the customer. We're not gonna tell them how they want to pay us. What farmers want is productivity and yield. You, you make productivity harder to get if you start making them pay on a per acre basis. We're, we're just trying to make sure we can unlock that value better than anybody else in the industry and let them pay us how they wanna pay us.
I mean, a good example is the TomTom in your car. 10 years ago, you plugged a TomTom into your car. If somebody said back then you're gonna pay recurring revenues on a TomTom, you would look back and say it's insane. It's now integrated in every vehicle we drive today, a lot of this technology is gonna go exactly the same pace in ag space, so. I'm sure there'll be an endless debate.
You were right, Jason. No more questions. Thank you all very much.
Good luck. Hey.
Oh, is there one more?
Thanks. Larry De Maria, William Blair. Talked about mixed fleets and all the connected software. I mean, growers now are using JD Ops. They're using FieldView. Do you need to gravitate growers to your connected software for farm management in order to win? How are you gonna do that?
It's all about providing the best solution. I mean, the work that Parag and his team are doing, I mean, it's ongoing, regular work, is how do we give the most value to customers? You know, we talk about open architecture, we are committed to an open architecture environment. We wanna make it as easy as anybody else. If they wanna use a Case IH combine in their JD Ops, let's make it easy for them. You know, if they wanna bring in, you know, a John Deere tractor into our system, we'll make sure that it works. We are trying to make it as easy as possible for our customers to unlock value from whatever equipment they have. I think that's where you'll see our solutions going.
Again, if there is a restriction, it's not coming from our side. Like Scott said, I mean, we want to allow our farmers to farm their way with choice. We don't want to dictate to farmers how they should farm. I mean, you had Brady up here today, I mean, fourth generation farmer, they know how to farm. They don't need us in this stage to tell them how to farm. We are, I mean, if you look at our history and our heritage, we put the best of all breeds together and give that best solution to the customers. That's not gonna change. If there's some restrictions on how we can access that data, it certainly won't come from us.
Yeah. I think you'll see it in the field today on all of the different stations. Like we, you know, from tillage to harvest, we offer great digital solutions to ensure that our farmers have the digital tools they need to combine with the iron. To your point, like, if they wanna farm in a mixed fleet or a different environment, we give them all the tools necessary to support those, you know, roles too. Like, we're not locking people in, and we're ensuring that they have the best quality products and the best technology to farm the way they wanna farm.
Okay. Thanks everybody for your questions. I know that you're anxious to get out in the field. We're anxious to have you get out there.