Why Rising Farming Costs May Actually Help John Deere
The world's population is expected to reach nearly 10 billion people by 2050, increasing the global food demand by 50%. A strong outlook for the agriculture industry drove equipment manufacturer John Deere's (NYSE: DE) stock price up over the past several years, until disappointing quarterly results last week wiped away recent gains. But new technology rolling out now may ultimately help the company capitalize on rising farming costs and fuel further sales growth.
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The USDA reports that as of April, year over year aggregate farming costs have increased 13% and the cost of chemicals have increased 17%. To address rising chemical costs, this spring John Deere announced its new See & Spray Ultimate technology, which uses machine learning to precisely aim herbicide directly at weeds. This technology evolved from a Blue River Technology lettuce bot, which identified in real time which plants to pick and which to leave after training the system from a library of images. In the field crop spraying format, the technology can drastically reduce the amount of herbicide; John Deere claims that targeted spraying can cut chemical use by two-thirds that of normal broadcast applications.
Source Fool.com