Reposted from: https://prospect.org/power/rollups-big-tech-monopoly-down-on-the-farm/
One of the more successful Biden administration initiatives has involved the right-to-repair movement. The president made it a priority in last July’s executive order on competition, directing the Federal Trade Commission to write regulations preventing companies from blocking customers from repairing their own equipment. That same month, in a unanimous 5-0 vote, the FTC approved a policy statement that classified repair restrictions as violations of antitrust and consumer protection laws, and vowed to enforce that new policy.
The policy statement was quicker than a laborious rulemaking process, and it bore fruit. Last October, Microsoft, in a reversal of policy, agreed to grant access to parts and tools for third-party and customer repair. A month later, Apple did the same thing. It was remarkable to see large companies with serious market power change their long-standing opposition to right to repair after regulators signaled action.
But one major manufacturer has not budged. John Deere, the 180-year-old maker of tractors and other agricultural equipment, still requires proprietary software and tools to complete any repair, forcing farmers to use its authorized dealers and technicians. Since the federal crackdown, the corporation (which is formally known as Deere & Co.) has resisted shareholder proposals, fought legislation at the state and federal level, and is currently embroiled in several antitrust lawsuits with customers.
In just the past few weeks, North Dakota–based Forest River Farms and Alabama cattle farmer Trinity Dale Wells both filed suit against Deere. Wells says that a sensor wire on his tractor malfunctioned when it got wet, requiring the software to be adjusted. The repair took less than three minutes with a part that didn’t even need to be replaced, just wiped off, yet it cost $600.
The similarities in the cases suggest a class action is brewing. “Deere is in serious trouble,” said Nathan Proctor, senior director of the Campaign for the Right to Repair at the U.S. Public Interest Research Group (PIRG). “Their market dominance opens them up to these kinds of claims.”
The larger question, however, is why Deere refuses to relent on the repair issue, opening itself up to litigation, regulatory crackdown, and reputational risk, even as much larger businesses have switched course. There are several reasons, but the main answer can be found in the company’s emerging business model.
“John Deere is not an equipment company, they’re a technology company,” said Joe Maxwell, president and co-founder of the advocacy group Farm Action. Every action performed on the farm, from planting to spraying to harvesting, is tracked and categorized by Deere machinery. That data is collected and held, and can be sold to partners like seed companies, leveraged to personalize pricing, or enable Deere to speculate on crops. Information about crop yields or soil fertility used to be estimated in government reports; now it’s locked up on spreadsheets in Deere’s corporate headquarters.
Deere doesn’t want to give customers access to the software needed to repair equipment because it weakens their argument that customers shouldn’t have access to their own data. “It’s tied to the control that John Deere maintains on its overwhelming market share of equipment,” said Maxwell. “That data can be used against that farmer.”
Deere & Co. did not respond to a request for comment.
Walter Schweitzer is a hay farmer in Judith Basin County, Montana, where the growing season is short, and life can be stressful. “All of us are in the fields at the same time,” said Schweitzer, president of the Montana Farmers Union, in an interview. “We’re trying to beat the weather, trying to beat the season.” During those tight windows for seeding, haying, spraying, and harvesting, equipment breakdowns are commonplace, and there simply aren’t enough dealers to get to everyone.
Schweitzer, whose brother Brian was the two-term governor of Montana from 2005 to 2013, told me about one summer when his tractor started randomly shutting down. This is not uncommon; when one of the dozens of sensors on a Deere tractor identifies even a small error, this often puts the machine’s onboard central computer into “limp” mode, or shuts it down entirely. Clearing an error code requires access to proprietary diagnostic tools. Repairs are essentially impossible without unlocking the software.
“I called my dealer, because I’m forced to call my dealer,” he said. “They said they were not able to get to me until next week. I said, ‘Can I come in and borrow the diagnostic equipment?’ They said no. ‘Can I rent it?’ No. ‘Can I buy it?’ No, they said, they’re not allowed to sell it.”
The quality of hay degrades quickly, and there was rain in the forecast, which would just ruin it. So Schweitzer had to idle his $100,000 tractor and pull out a 40-year-old unit he keeps in reserve to keep on top of the hay baling.
When the dealer finally came to pick up the broken tractor, they needed to identify the problem. “If I had the equipment myself, I’d have the error code,” he said. “Instead, I had to pay a technician to drive it around the parking lot.”
Schweitzer didn’t get his tractor back for a month, and it cost him about $5,000, though he estimates that parts and labor didn’t add up to more than $1,000. The situation illustrated to him the absurdity of forcing all repairs through dealers, when farmers operate under tremendous urgency to work the fields at precise times.
“My dealers are my friends, I’ve known them my whole life,” said Schweitzer. “They would just as soon allow us to do [repairs]. They’re here to help me but their hands are tied.”
Deere is the company tying those hands. It is the world’s largest producer of farm equipment, with more market share than its two largest competitors, Case New Holland and Kubota, combined. The signature green tractors and combine harvesters are something of a status symbol in rural America. “John Deere is John Deere, it’s like wearing a belt buckle and a cowboy hat,” said Joe Maxwell. “It’s culture.”
Just as important, a farmer’s decision on buying farm equipment, which can cost as much as $800,000, is intimately tied to which dealerships are in the vicinity, as repairs and spare parts need to be handled quickly. And once you make that investment, it’s hard to switch. “If you spent a couple million to invest in Deere equipment, now they’ve got you over a barrel,” said Nathan Proctor.
As it happens, Deere has been aggressively consolidating dealership networks across the country. According to one of the right-to-repair lawsuits, Deere cut its total number of repair shop dealerships from 3,400 in 1996 to around 1,544 today. A whopping 91 percent of them are owned by a franchise with no fewer than five, and often many more, individual outlets.
Deere’s massive scale and its restrictions on repairs to authorized dealers made survival next to impossible for independents, which Deere often pressured to consolidate. “All dealerships in Montana are owned by three corporations,” Schweitzer noted. This allows repair charges to ramp up, as dealers can operate without fear of competition on service rates. And it gives farmers little choice but to buy Deere tractors that can be serviced at the nearest repair facility.
According to Deere, none of this is a problem.
When Green Century Funds, an environmentally conscious activist shareholder, filed its proposal last September asking Deere to reverse its stance on right to repair, the company repeated its long-held claim that less than 2 percent of repairs on its equipment are reliant on proprietary software. “They’ve never shown any evidence to show where the heck that number came from,” said PIRG’s Proctor. Others point out that 2 percent of repairs does not equal 2 percent of repair sales, and that multiple lawsuits, legislative efforts, and presidential-level endorsements of right to repair wouldn’t be happening if Deere allowed customers to make nearly all fixes.
Nevertheless, based on that phantom 2 percent figure, Deere sought to block the shareholder proposal. The company had promised back in 2018 that it would make software, tools, and diagnostic equipment available to everyone by January 1, 2021. That date came and went, however, with no changes.
Deere’s latest tactic has been to say that it is required to make some software changes proprietary to “protect the emissions controls.” Deere executive Grant Suhre told the Nebraska legislature that the company would be “liable to the EPA under the Clean Air Act to ensure that the emissions controls remain functional and perform,” and that the company could be shut down if emissions controls were altered on just one of its tractors.
Right-to-repair advocates were perplexed by the claim. In fact, one farmer asked the EPA whether this was true, and an EPA official responded that “manufacturers are not responsible for the end user tampering with their engines/equipment.”
PIRG has thoroughly debunked many of Deere’s arguments. “Once you dig into the engineering, I don’t know how else to put it, I just think Deere is being dishonest,” Proctor said.
Nevertheless, in November, Green Century withdrew its right-to-repair proposal. They couldn’t move the unmovable John Deere.
One reason that Deere is so adamant against farmers fixing their own equipment is that farmers will actually do it. Realistically, few iPhone users on a percentage basis are going to crack and modify their phones. Apple is not forgoing much money by allowing right to repair. But farmers have fixed their own equipment for decades. That only ended when the machines became computerized and unlocking the software became impossible.
And of course, monopolizing repair services is quite lucrative for Deere. The lawsuits allege that labor costs at authorized dealerships range from $150 to $180 per hour, plus travel and parts. “For Deere and its Dealerships,” the Alabama case states, “parts and services are three to six times more profitable than sales of original equipment.” The repair business has also grown more rapidly than equipment sales.
But Deere’s transformation into more of a tech company is also a major factor. Deere convened a Special Technologies Group in 1999, kicking off a slew of acquisitions in the space. The company bought NavCon Technologies in 2000, data management firm T-Systems in 2009, European precision planting company Monosem in 2015, and Blue River Technology, a farm-management corporation, in 2017. Deere also launched a startup collaboration program in 2019, which just added seven new companies in 2022. It also has an AI partnership with Audi and Intel.
At this year’s Consumer Electronics Show, Deere unveiled a fully autonomous tractor with a GPS guidance system that would be rolling out for purchase later this year. It features six stereo cameras, a machine learning network that guides the vehicle, and a mobile monitoring functionality that starts the device and can adjust operations with a swipe of a button.
Deere’s bid to become the Tesla of farm equipment only enhances the technology inside its machines. None other than current FTC chair Lina Khan wrote in 2013 about data collection through farm equipment. Deere tractors and combines “automatically transmit data collected from particular farms to company databases,” Khan wrote. The machines stream data to the John Deere Operations Center, where it is continuously analyzed and optimized. It’s unclear how farmers could turn off this data stream, even if they wanted to.
This information is incredibly valuable: It can inform where seeds should be planted, how much fertilizer should be sprayed, and other decisions to maximize yields. “On the farm, that data can mean the difference between profitability and nonprofitability,” said Joe Maxwell of Farm Action.
But the farmer can’t manipulate and customize that data to their needs; rather, it goes off to Deere corporate HQ. While Deere chief technology officer Jahmy Hindman stated unequivocally on a podcast last year that “It’s the farmer’s data … it is their data to control,” he hedged over whether farmers could get their data exclusively to do with as they please. “We can serve those insights up to them, because the data analysis part of this problem is becoming significantly larger because the datasets are so complex and large,” Hindman said.
This has many farmers concerned that Deere is turning the data into a commodity, and while access to the Operations Center is currently free, eventually they will have to pay up to access the information they generate in the fields. In fact, farmers already do have to pay for a connectivity plan to run the equipment. “They’re fighting my right to repair knowing that the next thing is the data harvesting,” Schweitzer said.
He explained how Deere is integrating data with seed companies like Syngenta; in fact, 184 different companies, according to Hindman, are connected to the Operations Center. Farmers worry that seed companies with insight into farm data could engage in price discrimination, charging more for some products that they know a farmer needs. If a company knows the economic value of a harvest, it could use that to raise prices on inputs.
Deere maintains that it doesn’t share data with seed companies. But Deere does run a thriving credit business, lending to farmers to buy land and equipment (potentially from Deere itself). For years, Deere has said it would consult data from machinery in making lending decisions, if the farmer agrees to it. That could lead to forms of de facto extortion as well.
Beyond just not charging for data, some farm advocates argue that farmers should be compensated for it. “The data has value and should be a profit center for the farmer,” said Maxwell. “That power it hands to that company is the issue.”
The way to make sure that farmers control their own data would be through legislating that right. The right to repair is an adjacent step to farmers retaining that sort of control. “Deere’s goal is unmanned tractors run by private equity,” said Austin Frerick, a former Treasury Department official and antitrust researcher now running for the state legislature in Iowa. “They want to control the data.”
Frerick is one of several officials using right to repair as a political issue. Pennsylvania Lt. Gov. John Fetterman, who is running for an open Senate seat in the state, wrote an op-ed last month about right to repair. His campaign said that complaints he heard from farmers on the campaign trail piqued his interest. “From my perspective it’s a fairness, freedom, and flexibility issue,” Fetterman told The Hill’s Rising.
While FTC rulemaking and enforcement could prohibit repair restrictions, Congress is taking action as well. Sen. Jon Tester (D-MT), himself a dirt farmer, last week introduced a right-to-repair bill specifically for farm equipment, a testament to how companies like Deere are the real holdouts. It joins several bills that have been introduced in the House, including one last week with bipartisan support. Farmers “simply can’t afford to waste time or money getting to a dealer-authorized mechanic in the middle of a season,” Tester tweeted along with a photo showing him repairing his own machinery. President Biden formally backed right to repair at a Cabinet meeting in January.
In the states, there have been nearly three dozen efforts to create laws protecting the right to repair, but none of them have passed. Schweitzer, who aided an effort in Montana, cites industry lobbying, particularly from Deere. “When we were doing this, we were able to get our bill out of Senate committee,” he said. At that point, Deere “parachuted in lobbyists, from Illinois, D.C., California, into Helena. One of my members, her dealer from a little town told her privately that she supported it. But then she testified against it. When we asked why, she said she got a call from Deere. They’re ruthless.”
Between lawmakers, advocates, and a growing number of farmer lawsuits, Deere appears to be on the run. Yet the company remains reluctant to give up an inch of its control of farm technology and data—a control that misshapes the power relationship between the company and the farmer.
“I believe in capitalism, I’m so proud of my country in many respects,” said Schweitzer. “But Biden’s absolutely right: It’s not capitalism without competition, it’s exploitation. And they’re exploiting us every day.”