„I will never put my name on a product that does not have in it the best that is in me“
– John Deere
9’700’000’000.
So many people will live on our planet in 2050, according to the United Nations.
Yes, that is 9.7 billion. Compared to 8 billion in 2022.
That is a lot of hungry mouths to feed. Agricultural productivity will have to increase significantly to meet the expected global demand.
Compounding the issue is global warming, intensified by dwindling arable land.
Farmland is turning into urban land, while climate factors like water scarcity further constrict fertile acreage. Agriculture, which is responsible for over 25% of greenhouse gases, consumes 70% of the world’s freshwater. Further, 78% of marine and freshwater pollution is caused by agriculture.
The task at hand: Revamp agriculture drastically to enhance efficiency, countering eroding land due to droughts, fires, and floods.
This is where a green giant comes in.
Chart 1: John Deere’s distinctive logo

The Tesla of Farming
Large tractors and bulldozers can capture the imagination of children. The leading player in this field is John Deere.
Deere controls 25% of the agricultural machinery market. The company is 7 times larger than its next largest competitor, CNH Industrial.
Founded in 1837 by John Deere, it is one of the oldest companies in the world to stand the test of time. Since then, it has been led by only 10 CEOs.
Impressive.
Deere has consistently produced best-in-class agricultural equipment leading to an intense brand loyalty and fanbase. This is deeply embedded in the company’s DNA as seen by today’s quote.
I am pretty sure you have seen their famous hats before.
Now, agriculture is getting its biggest tech upgrade in generations. And John Deere is at the forefront of innovation in farming. It is called “precision agriculture”.
Precision refers to optimal planting of seeds and targeted applications of fertilizer, herbicides, pesticides, and fungicides so farmers can improve crop yields and spend less on crop inputs.
Deere literally bets the farm on “precision agriculture. That is why it is also nicknamed the Tesla of Farming.
Its latest innovation: The autonomous 8R tractor. It saves time and work because it does not need a driver. It goes on a planned path and can work anytime.
This is just the beginning.
Good for us, because, Housten, we have a problem.
Chart 2: Deere’s autonomous 8R tractor

Automation needed
We are ever more people.
What has not changed?
About 60% of the world’s food production comes from five countries: China, the US, India, Brazil and Argentina.
One thing is clear: land is finite. The same amount of land available for harvesting, but rising demand. Improvements in crop yields have been essential to feed a growing population.
The world deals with:
- More people
- We aim to be CO2 neutral by 2050
- People move to cities, skilled farm workers are scarce
- More wealth, more meat-eating, more need for crops
- Climate change takes away land and makes growing crops harder
You see, crop yields might seem far from being one of the world’s largest problems.
But it is.
All these drivers mean that the demand for innovative agricultural machinery is continuously increasing.
This is a huge opportunity for Deere.
Chart 3: Change in cereal production, yield, land use and population, World

Cyclicality meets Exception
The industrial market in which Deere operates tends to be a cyclical business – which I usually dislike.
Exceptions confirm the rule.
Agriculture is partially insulated from the overall economy because demand for food is very stable. This comes up against an old fleet that needs to be modernized. For this reason, tractors are sold out at Deere until 2024.
We will get more information today pre-market when they release their quarterly results – stay tuned.
Backing this up is the $1.2 trillion infrastructure project in the US, which will provide another tailwind.
My final thought?
In inflationary times, farmland becomes appealing. It is a real asset offering stable long-term returns decorrelated from equities. Plus, worries about food and land scarcity boost farmland prices.
Thus, there are several structural factors in Deere’s favor.
They are the shovel supplier for all in this field.
A high-quality business gets even better.
Chart 4: Deere ($DE) vs. the S&P 500 ($SPX) since 2005

arvy’s takeaway: Amidst a surging global population and shrinking arable land, a green giant emerges: John Deere, the “Tesla of Farming.” With autonomous tractors and precision agriculture, it battles the looming food crisis and ecological challenges. As demand soars and resources dwindle, Deere’s innovation takes center stage. The scene is set for a high-stakes revolution – can technology triumph over adversity and reshape the fate of food?
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