![]() Agriculture machinery manufacturer AGCO Corp. Those equipment companies may have both strong near-term prospects, as farmers spend their current cash, plus long-term prospects as precision agriculture gains greater adoption. "Precision agriculture can use GPS and weather forecasts to tell a farmer, 'You need to plant this year's crop in the next 4 days,'" says Calhoun. Some of the latest equipment and tech can tell farmers which parts of their fields need more or less moisture, or fertilizer (plus exactly which type of fertilizer to use). "That means more supply and higher productivity for the farmer in terms of their time, energy, and cost." "It effectively means you're using technology and data in the field to make farming more productive," says Wagner. Those new tractors are an example of so-called "precision agriculture"-a move toward closer monitoring of crops and soil in order to improve the land's productivity. ( ), also known as John Deere, are equipped with cameras and processors that let the tractor identify weeds and spray herbicide only on the weeds-preserving the healthy crops and dramatically reducing farmers' total use of herbicides. That dynamic means many farmers may use some of that extra cash to invest in the newest equipment, such as by buying the latest combines and tractors, providing a potential benefit to agriculture equipment companies.įor example, some new tractors made by Deere & Co. "Many farmers are making incredible profits right now," he says. ![]() But they're a positive for grain farmers in the West and other areas untouched by war, Calhoun says. High grain prices hurt food producers further along the food chain, such as chicken farmers who must pay more to feed their flocks, or vegetable oil producers who must pay more for inputs. Calhoun says that these dynamics could worsen over the next year because Ukrainian farmers likely planted significantly less crop this year than usual (and those impacts won't be felt until after the 2022 growing season finishes). Due to the confluence of war-related disruptions-from sanctions on Russia to the destruction wrought by tanks driving across wheat fields-much of that supply has not been making it into the global market, triggering elevated grain prices. Together, Russia and Ukraine normally supply around 30% of the world's wheat and 20% of its corn, Wagner says. Calhoun and Wagner say that to understand the current moment in agriculture one has to start at the bottom of the food chain, with grains.
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