Russian Agriculture

Precision Ag Products for CIS

April 30, 2012

We are talking about products for big farms. As usual they will consist of software and hardware. Here are my recommendations:
First of all in real life at least three people will work with your software package: agronomist, engineer and accountant. General Manager would like to monitor operations on his territory in his office. Think about your product as an integrated operation management package.
Scenario: agronomist created his/her recommendations for technology, then engineer will assign available tractor and implement and based on accountant calculations provide/plan all necessary logistics (logistics can be an additional person). Finally when tractor operator receives an order to work with a planter of certain width (possibility to have different tractors and implements) on a given field, the guidance and applications programs should be adjusted and so on down to logistics.
Add visualization feature: map of operating units. Different field colors can show a work progress. Pointing on a unit should give a summary like
• Operator’s name
• Tractor and implement
• Name of operation (rates, etc.)
• Current productivity/performance
• Time to refill (fuel, inputs)
You can add logistics soft or on the first stage link the deliveries of inputs and outputs via dispatcher.
Automate data “communication” between unit and corporate software
Programs of applications adjustment (combination of tractors and implements)
Add (features suitable for US market) also
• Mission planning
• Group driving (see photo from Brazil)
• Guidance to the field
• Mechatronics
• Performance management (speed control, gear shifting, fuel monitoring)
o Applications for tractor, sprayer, harvesters
I would recommend cooperating with seeders/planters and sprayers’ manufacturers to develop “quality” sensor (can be accelerometers) to support max speed during operation (or I can help with these developments).
Think about inclusion of others navigation systems (JD, Trimble, TopCon) in your management solutions soft.
Maintain a clear vision of how much better off your clients will be with your products because of the support that comes with it.
Create consulting service to optimize performance (SaaS). Right now there are no services to develop programs of applications. It will give you the most valuable feedback for continuous improvement and new product development. This service will be in charge of organizing yearly demonstrations (marketing programs) on farms of best performers. During demonstrations it would be good to share how these results were achieved. In Russia such service can be staffed with Russians and have one interpreter or Manager speaking English.
Think about Partners opportunities. Many European OEM (Amazone, Horsh, etc.) have heavy presence in Russia. You can investigate this opportunity to attach your navigation to increase their performance. It will be good the whole European market.
You can form JV with Russian soft developers. They already have relevant to you corporate clients data base. It can be stand-alone enterprise a good service base for you.
You can form JV with European non-competitors companies like Dacom or Fieldlook present in Russia. They are looking for navigation devices to increase performance of their services.
All mentioned above is applicable for Americas markets as well.
Another potential partner Chinese manufacturer Foton. They increase their presence in Russia, in developing countries and are trying to establish assembly facility in USA.
I can arrange meetings with Manufacturers in CIS (Rostselmash, Buhler, Terrion, Agromash, Belarus).
Overall thoughts/conclusion
• Interest and demand for PA in Russia are growing
• Market potential 1000+ units per year plus software
• You need
• New comprehensive products
• New partners
• New marketing campaign
What I can do for you
We should look at successful producers to
• Develop concepts and technical requirements for the new package/products
• Develop Strategy plan
• Identify potential customers
• Find a partners in Russia, Europe and USA (soft)
• Implement first stage of Marketing campaign in Russia
• Look at western tractors imports to determine tractors and implements portfolio suitable for your solutions
Product Line Action Plan
• Define customer segments and requirements so that we can meet current and future requirements
• Filling gaps in your current portfolio in Russia – You are not offering whole line right now.
• Spreading Your Solution approach via educational institutions, periodicals, dealers, PR.
• Product offer should be overwhelming in terms of benefits
• Customer benefits should far better of potential risks.
• Service offer should be considerably better that JD or Trimble

Posted by Andrey Skotnikov at 5:00pm

Overview of the Russian precision Ag products and services market

March 21, 2012

Precision Ag concept inRussia is known. Almost every dealer of Western Ag equipment suggests related products in one or another form. Every known firm working in this area tries to do something in Russia. But, none of them has a complete system or suitable operations management package.

There are two Russian Research centers near St. Petersburg and Moscow dedicated to this technology. They already published several books, a lot of technical papers, promoted this technology on Government level in order to get subsidies. Every major Russian Ag magazine has published articles dedicated to this topic. Every year there are several demonstrations on different farm shows.

Russian reference data of potential technology benefits is very good, promising and generally well understood, but all demonstrations are on technical level and as a rule are oriented on the end user (US approach). All solutions developed by research centers are cumbersome and require a lot of manual inputs and use “handmade” software.

There are a couple of good software development center in Moscow and Belgorod, which have compatitable with navigation devices software for crop production management. These packages include fleet management, technology of crop growing, and accounting. But in my opinion they are weak in GPS applications and newcomers from North America and Europe may use it to their advantage.

Now here is some info about competitors landscape.

John Deere is #1, about 30% of their vehicles have Green Star products. JD is oriented and will be oriented on new equipment. They still have legal problems with JD Link, but hope to resolve them this year. Sales are booming because JD has better brand recognition in compare with others and Precision Ag products associated with their equipment are sold at the same dealership. In spite of development and offerings of different application software JD does not sell or advertize a complete package.

EkoNiva (the biggest JD dealer) do not advertize Green Star products. Instead it sells the most comprehensive package available from Germany. In my opinion EkoNiva is a corporation heavily involved in crop, milk and meat production and a dealership for them just a cover to get equipment cheaper.

CNH is number two equipment wise, but all navigation is coming from Trimble. Russian CNH Management is not happy about it because they do not have control over it. On top of it CNH does not advertise Precision Ag on their websites. CNH lost their expertise to JD. They just hired almost the entire organization here in USA. But I still believe that Trimble will provide a significant input.

Trimble has the biggest presence in CIS market, but do not sell or advertize a complete package. The weak spot of Trimble is only navigation products and too many of them.

AGCO is number three equipment wise, but all their navigation is coming from TopCon. Russian AGCO Management as well is not happy about it. AGCO dealers do not have Precision Ag on their websites. According to AGCO management only 1% of their vehicles have navigation.

Other players like Omnistar, Agleader, AutoFarm, Dacom have very weak presence.

Many Western implement manufacturers sell their own controllers. In my opinion great potential have Kverneland and Amazone.

Now couple of words about Russian manufacturers: majority of them sell location devices equipped with data loggers and fuel sensors, some sell guiding lightbars.

Generally in Russian market here are a lot of components but not a system solution. This is an opportunity to create and market it.

Customers

A major misconception of Western dealers here is that the end user is a buyer. The end user is a not a buyer.

Crop Producers in Russia:

  • Former collective Farms (CJSC or OJSC)
  • Agri Holdings
  • Cooperatives
  • Individual Producers

There are very few farm owners (less than 5% number wise) actually working on tractors. Among working on tractors probably another 5% can afford Precision Ag equipment. Among last 5% only 10-20% would be allowed to buy it. So, do the math yourself.

Generally Precision Ag equipment dealers should sell solutions. Their target customers should be successful corporations, usually vertically integrated Agri Holdings with mixed fleet and 30,000+ ha under variety of crops. In most cases it will be conglomerations of former collective farms. They still have the same management structure. General Manager→ Major specialist (engineer, agronom) → middle managers → operators.

Typical crops will be variety of grains, sunflower, sugar beets, potato, silage and hay to support flour, malt, feed, and milk or meat production. These customers have continuous cash flow and can afford to buy high tech equipment.

As an example the average “collective” farm or operating unit has

  • 10,000 acres
  • 10-15 crops
  • Meat and milk production
  • 40-50 tractors, 20-30 trucks, over 200 implements
  • Own repair shop (10-20 people)
  • 1800-2000 hours/tractor per year

Now try to visualize your current products for this type of customer – General Manager of the farm.

Here is an example of successful producers

  • 300 big farms
  • own less than 1% of land
  • produce 16% of all ag products,
  • 28% of total revenue,
  • and 43% of profit.

Your potential customers buy the most crucial technologies. Decisions are based on efficiency of technology and equipment ($/t, $/ha). Dealer proximity, product mix, and service availability will affect the equipment/solution choice. Customers are buying like consumer goods based on immediate availability.

It the next blog I’ll present some ideas and thoughts on you could enter CIS markets.

Posted by Andrey Skotnikov at 9:32pm