Farming in America could not exist without John Deere. I don't care where you are, in the rural parts of
America, there's farmland, and you're inevitably going
to see green tractors. Specifically in the Midwest where people who've had Deere
machines for generations say that their family bleed green, it's really to that extent. But John Deere's tractors aren't the only thing bleeding green. John Deere is on pace to have its most profitable year ever. John Deere is forecast to make about $7.7 billion
in their fiscal year, 2021. That would be a record. But while John Deere shareholders and executives could not be happier, John Deere has been in
a battle on two fronts. Between a massive union
strike from upset workers and a legal battle with farmers concerning equipment repairs
called right to repair, John Deere must convince their
customers and their employees that they care about
more than just profits. This is The Breakdown. There's a saying that you'll hear either Deere say or other people say, "If farmers are profiting,
Deere's profiting." And Deere wants to do everything they can to make those farmers
a lot more profitable. Since the pandemic hit in 2020, and millions of Americans
sheltered in place buying nothing but groceries,
both John Deere and farmers became even more essential
in feeding America and both profited a
great deal as a result. Because the machines that they make are essential to an industry that has to provide an
essential product for consumers, not only in the United
States, but across the globe. John Deere's profits during the pandemic are eye-popping, and that wealth has
spread out to executives like CEO, John May, who brought
in $15,6 million in 2020, a 160% raise. And according to our Bloomberg data, he's gonna make about 30 million
for the 2021 fiscal year. So you're talking about
almost $10 million more for the CEO earnings. Shareholders also saw
their slice of the pie in part because of John
Deere stock buybacks. Buybacks are a piece of financial
engineering by a company to repurchase shares of its own stock to reduce the number of
shares in the market, which in-turn creases the ownership stake for the shareholders. The stock buybacks for
them have been significant. So in the past 12 months, they bought back $1.9 billion in stock, and they bought back 716 million alone in their fiscal third quarter of 2021. One group who thought they were not sharing in that wealth, John Deere factory workers. So the optics are obviously looking bad for the company now that a labor strike has broken out among part of their workforce. During this boom time, Deere offered their
workers 5% pay increase, that's when over 10,000
United Auto Workers who worked for John Deere went on strike. I had one person in particular say, "Our CEO is about to make $10
million more for this year than he did last year. The company is seeing
earnings go to records. The stock price is surging, and yet we're the group who
during the past recession and past down economic cycles
in the farming industry, we took cuts." After the union turned down two contracts, John Deere was finally
able to meet their demands in late November, which doubled raises and improved pensions for union members. Those employees that are
represented by the UAW are immensely valuable employees to us. We're super proud of where
the contract ended up. It's groundbreaking in a lot of ways, both from near-term wage increases, as well as the retirement
medical benefits that it offers. It's super helpful to
understand how the work is done in the factories, and what the opportunities
are to make improvements for whatever the operation happens to be to make the lives of those that
are doing that work better. So while John Deere workers fought and won their
battle to see the profits the company has brought in
over the past two years, farmers are still in
their own fight with Deere when it comes to repairing
their own equipment. So a lot of farms our size
use a variety of technology. We use old technology,
we use new technology. My name is Tom Brandt, and you are currently
in Plymouth, Nebraska. I am a farmer and also a State Senator. I represent district 32
Fillmore, Thayer, Jefferson, Salem, and Southwestern Lancaster counties here in Nebraska. The State of Nebraska's agriculture is the fourth largest
ag-powerhouse in the nation. We feed way more people
with the food we produce than just the 1.96 million people here in the State of Nebraska. The farm that you're on
today is a farm that's common to Southeast Nebraska. We rotate corn and soybeans. It takes hundreds of thousands of dollars to operate a small farm like this. Our margins are razor thin. Farming is an industry where we buy retail and we sell wholesale. While the principles of farming remain the same, the equipment used to farm
has changed dramatically. This is a 1952 Allis-Chalmers WD. This is the style of tractor I grew up on in the '60s and '70s. This tractor has not
started for two months. It's tough, and it works. And this is what American farm
equipment used to be like. Farming equipment for both John Deere and
their major competitors has become much more
technologically sophisticated in the past two decades. A little after 2000, tractors changed from being strictly just a power source and got to be a lot more computerized. Now they're all basically
drive-by-wire systems where there's no physical connection between any of our
controls in the tractor, except a piece of wire. And every generation tractor since is even more computerized. It surprises people every day how technologically
sophisticated the equipment is whether that's GNSS satellite
guidance in our equipment, or whether it's the digital information that comes off those equipment
that helps make customers... enable them to make better
decisions every day. This is the main computer
screen right here. It can show us moisture,
it can show us yield, it can show us some various
components on the combine. 20 years ago, our irrigated corn probably yielded 150,
60 bushels to the acre. This last crop we just harvested, we did 250 bushels to the acre. So if your crops are gaining
yield 40% over 10 or 20 years, you're gonna need bigger,
faster equipment to harvest it. And those bigger, faster machines have increased productivity
an estimated 1.4% per year over the past 70 years, and US farmers now produce
an average corn yield of about 175 bushels an acre. And then the really valuable information that starts to move markets is
what the harvest looks like. So now one of these enormous
harvesters will tell, in real time, through this modem, under the farmer's rear end back to Deere and who knows where,
to Goldman Sachs maybe? Exactly how much corn or
wheat is being harvested on that farm acreage at that moment. It's really staggering. We get a lot more done in the day. We can work longer hours, especially with the auto-steer,
auto-guidance systems. We can get a lot more hours in, we're not tired at the end of the day. So the efficiency factor
is great when it works. Unfortunately, like all electronics, it doesn't always work. And that's where there's a catch. While the technology in a
John Deere tractor or combine makes farming easier than ever before, there are very real
concerns from some farmers when it comes to repairing that equipment because as of right now, they can't. John Deere and other
agricultural machinery companies won't let farmers fix their own equipment without a licensed mechanic. For Deere and its dealerships, parts and services are three
to six times more profitable than sales of original equipment according to company filings. Historically, farmers have always repaired their own equipment. Farmers love to tinker, I will grant that. We all like to tinker with our equipment and we all modify our equipment. The right to repair gets
down to the nuts and bolts that currently, farmers don't have access to the computer systems
on their farm equipment. It doesn't matter whether
it's green John Deere, or it's red Case, or AGCO's,
they're all proprietary, they won't let us in on that. The thing that you fix on the tractor isn't necessarily a moving part, it may be something that has
to be fixed in the software or hitting a reset
button for your computer. We've had a few cases where we get an error code
on the panel and it is basic. You look it up and it says, "Call your dealer." So the dealer has to come out and they plug their
computer into the tractor, and they have to diagnose
what the problem is. We have operators who have had computer
glitches during planting. They have a newer tractor,
they have a newer planter. It happens on a Friday, they gotta wait till
Monday to get it fixed, they've lost 2 1/2 days. If they were given access
to the operating system, they knew what they had
to do to repair that. And there are literally billions of dollars at
stake for John Deere when it comes to repairs. They make a lot of their
money in the dealerships from parts and repair because
frankly, they have a monopoly, and that monopoly has been
significantly enhanced by these software controls
in the modern tractor. No one else can work on 'em. Annual parts sales increased 23% to a $6.8 billion from 2013 to 2020, while Deere's total agricultural
equipment sales fell 20% to $22.3 billion. So there's very real money at stake when it comes to repair. If a right to repair law allowed parts and services
markets to compete, it could be a huge blow to a vital income stream for the company. The farmers of the world say, "We've been repairing
these things forever." Farmers know how to fix things, know how to keep things
working in the field. And by denying us that, you're essentially taking
away a kind of birthright. John Deere is also the target of a potential federal
class-action lawsuit alleging antitrust violations
tied to its repair policies. John Deere declined to
comment on the litigation, but said it meets company
commitments to provide parts, information, and software
to owners of its equipment. However, there is precedent when it comes to right to repair. The best way of explaining the right to repair is to
go back to automobiles. As automobiles were built with more and more software and chips, it became more and more difficult
for the average car owner to fix their car because of the software, you didn't have the tools to do that. So in 2012, the State of Massachusetts
introduced a right to repair bill on light cars and trucks. They were the only state
in the nation to do that. And what that did is that
opened the floodgates and made it possible for
third-party mechanics, the mom and pop, to access
and repair all those vehicles. I can tell you locally, we have a situation just like that. Last January of 2021, based on the fact that
the Farm Bureau membership overwhelmingly wanted to
see a right to repair bill, we introduced one. That bill called LB543 was voted in favor 176
to one by the farmers. Yet right now, that bill sits in committee because it required
amendments to only reference repairing farm equipment
and not other electronics like iPhones, computers and televisions. Our position's fairly straightforward. We believe that farmers have the right to repair their equipment. Where we draw the line
is the right to modify and it generally involves
the embedded software that we put on the machines. Agricultural equipment is
less like consumer electronics than it is really like aviation. You wouldn't want just anybody fixing and repairing
software on an airplane because there is a safety component to it in the same way I think a
tractor going down the highway is a fairly comparable situation. That's really where our
efforts are best spent to try to make sure that people
understand the ramifications and the risks associated
with the conversations that are currently happening in the space. While farmers are waiting for a ruling to be made
on right to repair, some are taking matters
into their own hands by using gray market technology to run diagnostics on their own equipment. When you rebel against
a technological barrier, you hack it. And there are a number of farmers who've availed themselves
of John Deere repair and diagnostic software
from places like Hong Kong and other markets where things are sold without the proper licenses,
the software black market, or in this case, it's
really a gray market. Right now, the right to repair is still moving forward. But its future is anything but certain. Currently, LB543 is sitting in committee and we chose to have it
stay there for one year to allow all parties to
give us some input on this, and it's pretty much been crickets. But the human cry out here in
the country is getting louder. People want more regulation or at least the opportunity
to control their own destiny. They don't like seeing it in
the hands of big corporations. We'll keep working at it until we get it accomplished. I'm not afraid of a fight. I haven't met a farmer yet
that's not afraid of a fight. So we'll state our peace and
see what we can get done.
Good! Fuck DRM
Farmers trying to get a bill passed != farmer revolt