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U.S. Farmers Are Being Bled by the Tractor Monopoly

441 points| NoRagrets | 6 years ago |bloomberg.com | reply

335 comments

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[+] leroy_masochist|6 years ago|reply
Farmer here - 200 head of grass fed cattle plus hay operation.

Just to be clear, the problem described in the article does not affect many (probably most) farmers; it primarily affects large scale grain operations that have harvest combines that use a lot of onboard computers.

It's a bit dramatic to frame this as "US farmers are being bled". Guys who grow grain on huge farms in the Midwest are not happy about the implications of the TOS they signed with Deere when they, grownups who can read, bought their tractors a few years ago. There, fixed the headline for you.

[+] LeifCarrotson|6 years ago|reply
Is there an alternative where they don't sign an equivalent TOS and still get the same features? Perhaps they have to pay for the privilege? Or is this a unilateral power grab by the manufacturers?
[+] toufka|6 years ago|reply
But "grain farms in the Midwest" is actually is a lot of people. Statistically, soybean farmers have almost the same tonnage output as cattle in the US, and corn is 4x that - so those "grain farmers" are a significant chunk of US farming.

And that is significant source of livelihood (and culture) for people in the midwest. Sure, different people think of different kinds of farmers when they hear the word, "farmer", however, for a sizable chunk of the US, that does actually mean grain (corn/soybeans) farmers.

And even 'smaller' operations have to upgrade their (shared) equipment at some point.

[+] captainredbeard|6 years ago|reply
Since you're here: where could good software help you run your cattle operation?
[+] BearOso|6 years ago|reply
Exactly—people need to know that there’s a spectrum of farmers, and they’re all very different. For instance, big commercial grain farmers like to convolute themselves with the family farmer when protesting laws that affect their bottom line. Things like proper buffering laws to preserve water quality aren’t going to affect anybody but the big conglomerates that want to abuse every square inch of their land for profit.
[+] kexx|6 years ago|reply
while every word you wrote is probably right, the point here is spotlighting of the latest (or not so, it's been going for while) trend that how big corporations try to take as much control as they can, only for the solely purpose of extorting as much money as they can.
[+] bricej13|6 years ago|reply
Disclaimer: My father worked as an engineer for John Deere for 35 years. I interned at John Deere writing code that runs on the tractor controllers.

Discussions on this topic always end up one-sided and simplistic. Hopefully I can shed some light on the more nuanced reasoning behind John Deere's position.

Having the DRM in place allows Deere to reduce manufacturing expense and increase platform flexibility. There is a very wide array of needs that farmers have based on what they do. Deere allows buyers to customize tractors to their needs for everything from engine horsepower, to wheel count, size, and type, cab quality-of-life, to hydraulic hookups for implements. Some of these changes are just a software change, while others are a software + hardware change.

Engine horsepower, for example, can be increased by a software update. Techincally, this is pretty cool. Designing and manufacturing engines is expensive. This allows them to manufacture fewer different engines that can cover a wider variety of use cases. It also allows farmers the flexibility to upgrade their engine horsepower at a future date. If I remember correctly each extra 50hp above the base costs ~10k, so the large configurations subsidize the cost of the base configurations.

With that understanding, think of how this can apply to Deere's obligations to the EPA or to warranties. Years ago, farmers found a hack where they could put a resister in-line between the diesel temperature sensor and the ECU and increase their horsepower. The hack spread like wildfire. This made the engines run in a configuration that had not been tested by Deere or approved by the EPA. Who would the EPA go after if it had caused emissions issues? Should Deere honor the warranty in this case of those who did the hack? How would Deere know if someone did the hack, borked the engine, then removed the resistor?

Liability is the enemy of automation. Deere has added some automation over the years, allowing the tractors to drive straight down the field without intervention, and executing perfect turns at the push of a button. This is functionality that no companies would let end users change. Much like my dad, a tractor is not a cell phone. Installing a custom rom on a cell phone is one thing, updating the autonomous driving of a 10 ton tractor is quite another.

There's got to be some middle ground, but I don't know what it is.

[+] zelon88|6 years ago|reply
> Engine horsepower, for example, can be increased by a software update.

How do you see this as an asset? Deere designed a part that's capable of doing something and your software chokes that back unless they poney up.

In manufacturing we have the same thing. You buy a CNC machine that comes equipped with 16mb of memory, but only 2mb is usable. If you want all 16mb (which already exists soldered to your motherboard) you need to pony up thousands of dollars for a 16 digit code that unlocks the added memory.

And you're trying to tell me that by requiring the manufacturer to share that code is bad for the consumer? Yeah, you don't sound like a shill or anything.

And no, Deere shouldn't fix that under warranty. It's the same with cars. You can do that trick to a Honda with a resistor in-line to the MAF sensor and it will run the car lean, giving the illusion of more performance while wearing out the engine and burning the combustion chamber way too hot. Should Honda fix that? No way! Should Honda let the customer do it anyway? Of course they should! Should Honda share the schematics with the customer so they not only realize that it's a bad idea, but also know WHY it's a bad idea? Yes.

Your argument is straw man. If you didn't have secrets you wouldn't need DRM. DRM doesn't protect anyone except the edge-case of idiots who shouldn't mess with the tractor even if you gave them the repair manual anyway. It's strictly to protect Deere.

[+] rfrey|6 years ago|reply
These are all benefits for John Deere. I don't think anybody thinks there is no incentive for JD to do this.

Reduced manufacturing expense - Yup, DRM and platform lock-down (machinery is a platform??) increases profits. Tractors sure aren't getting cheaper on account of these "improvements".

"Platform flexibility" is nothing more than the ability for JD to lock out capabilities of the machinery that the farmer supposedly bought, and sell it as an add-on later. Again, no doubt this is advantageous for JD, just as locking out portions of a game until later payment is advantageous for EA. It is still terrible for the farmer.

[+] jacquesm|6 years ago|reply
All of the advantages you list could be provided better without DRM from the viewpoint of the farmer, open standards and all that. The three point hitch is what made farm equipment investments a good destination of the money farmers had saved, not DRM.
[+] driverdan|6 years ago|reply
> If I remember correctly each extra 50hp above the base costs ~10k

Upping the fuel pressure and changing some maps should not cost the consumer $10k. The markup in that is ridiculous.

> Should Deere honor the warranty in this case of those who did the hack?

So long as the hack didn't cause the problem they are legally obligated to honor the warranty.

[+] x86_64Ubuntu|6 years ago|reply
Why does there have to be a middle ground? Things seemed fine before all the DRM. And I'm not sure too many of your things actually REQUIRE DRM to be carried out. And as far as your warranty FUD, it's known in other fields that if you make an unapproved modification to an item, or have it done by someone else that it voids the warranty. This is a problem that's already been solved that you are trying to use to support the case for DRM.
[+] TeMPOraL|6 years ago|reply
Thanks for posting this. I'm generally biased against DRM as it tends to enable abusive business practices, but you've made some solid points I wish people engaged with better in the discussion.

The liability angle is particularly interesting here - I didn't really consider that part of the drive to DRM everything might be pressure created by regulators. It's obvious in the case of autonomous driving, but not necessarily elsewhere. Then again:

> Who would the EPA go after if it had caused emissions issues?

Would they really go after Deere? I never checked this, but I think in case of cars, end-users are liable for the modifications; if the company has tests proving that the model under investigation meets the regulatory standards in its sold configuration, then they're off the hook. Why would the same thinking not apply to farm equipment?

--

In the perfect world, it would all work itself out. In the real world, while the farmers have every incentive to extract as much performance as physically possible from their equipment, JD - like every business - has a lot of incentive to screw farmers over. Competitive pressure is a traditional protection against too much abuse of customers, but it doesn't really apply all that much when you have a small amount of providers. DRM itself is, in its general form, a mechanism for creating a localized alternative reality, in which you can attach colour to bits[0]. It allows businesses to enforce arbitrary rules in their products - rules that would be impossible to enforce in pre-computer reality. This is open for abuse, and also kind of destroys the protection of competitive pressure - attach DRM to something, and its complementary commodities stop being commodities. Customers lose their traditional protection from abusive tendencies of for-profit businesses.

There must be a better way, one that creates a fair balance between interests of sellers and buyers, but I too don't know what it is.

--

[0] - https://ansuz.sooke.bc.ca/entry/23

[+] count|6 years ago|reply
Why are the tractors any different from cars? If I buy a car, I can do anything aftermarket to it I want. If the car is in warranty, those mods do not allow the manufacturer to not continue to support it (well established case law), and the EPA doesn't care once it's been sold (individual states like CA might have issue, but those are with the owner, not the manufacturer, if it's been modified).

This is all well-settled in the automotive world, why is JD 'different'?

[+] towndrunk|6 years ago|reply
"Having the DRM in place allows Deere to reduce manufacturing expense and increase platform flexibility"

Sounds like it's right out of the sales brochure.

[+] cellularmitosis|6 years ago|reply
> Years ago, farmers found a hack where they could put a resister in-line between the diesel temperature sensor and the ECU and increase their horsepower. The hack spread like wildfire.

And no wonder. Inducing artificial market segmentation by selling software-crippled devices is hugely unpopular with consumers.

I find it ironic that the unlock ended up being a resistor, just like with the Promise IDE controller / RAID controller from long ago -- another example of a company trying to save costs by designing one product and shipping it as two products (with one of them software-crippled). That instance was also hugely unpopular with consumers, and that resistor hack also spread like wildfire.

[+] beauzero|6 years ago|reply
I am for "right to repair" but one thing that has been left out of this narrative/discussion, in this article, and elsewhere is that when making payments there are insurance and/or warranty riders on these contracts when John Deere is providing the financing. They do this because they want the equipment repaired in a manner that meets JD's engineering specs. On the flip side I have seen certified JD mechanics, at a dealership, break off something as simple as the BlueDef/urea tank on a tractor because they didn't know how to fix it, forcing the tractor to remain in the shop while parts were reordered. In return they lent a similar tractor out at no charge because hay was already on the ground and rain was coming. This works well when the dealership is literally 6 miles down the road...not so good when its 60 or 160.
[+] ZWoz|6 years ago|reply
Sorry for being naive, I am not american. Can you tell, why those farmers aren't buying tractors from other companies? Those news always contain Deere name, I don't see similar critique against say Valtra or Belarus.
[+] throwayEngineer|6 years ago|reply
My only concern about right to repair, is that it would make security significantly harder.

A user would need access to low level components, and this also means hackers.

[+] chicob|6 years ago|reply
They do trust their machines, and want them serviced the way they see fit.

But they also want to protect their business with lockout strategies.

[+] Trisell|6 years ago|reply
Outside of the large corporate farms I think you are going to see an increase in farmers continuing to refurbish older tractors that are pre computers and then begin to retrofit those tractors with third party systems that won’t give them complete vendor lock in. A good example is Welker Farms. They run Big Bud tractors from the 70s refurbish them every decade or so. And have added in gps guidance and other things as 3rd party mods. Also they have a great YouTube channel[1].

1 https://www.youtube.com/WelkerFarmsInc?uid=tKUW8LJK2Ev8hUy9Z...

[+] thrower123|6 years ago|reply
That's the thing. This big iron equipment doesn't just quit working and fall apart after a few years. It's expensive enough that you rebuild engines, weld up parts that break, redo seals in the transmission, etc, and keep it going for decades.

I've driven Cat D6 bulldozers that were older than I was when I was in college, and they are still going, a decade later.

Particularly the stuff that is built for heavy usage has to be used hard, patched together with limited repair facilities in remote places, and handled by inexpert operators.

[+] cheeze|6 years ago|reply
Very cool. Thanks for sharing!
[+] VonGuard|6 years ago|reply
This is a HUGE problem. If John Deere were to go out of business tomorrow, a huge swath of our world's farmers would be unable to produce anything thanks to tractors turning off and not working properly. Remember that old game you like with online validation for single player mode? Remember how it stopped working when the servers went offline. There's a DMCA fair use exception to allow you to circumvent that DRM thanks to the EFF and the MADE, but there is no such fair use allowance for tractors....
[+] module0000|6 years ago|reply
This is stranger than fiction. I would have laughed 15 years ago if someone suggested DRM and electronic licensing would ever be applied to a tractor.
[+] jayesobj|6 years ago|reply
Tractors are behemoths of modern machinery. I have relatives in the tractor industry, as well as relatives who are farming, and this has been coming for a long time.

Tractors are ridiculously expensive. I was talking with a relative who sells them, and some of them cost more than pretty nice homes in the city we live in (as in, we live in a large metro area, and they can easily cost more than a very large, attractive home).

These things aren't just tilling dirt like you might have in the 20s either, or like you might with a garden in your backyard. There's all sorts of modern planting and harvesting methods, and tractors are sort of the engine that drives a lot of this machinery (which is very large). The technology involved can be complex, and it's often tied to aerial surveillance, soil monitoring etc.

The intellectual property problems associated with Deere and other manufacturers go beyond DRM per se. Deere over the last couple of decades has tried to force smaller sellers to abandon other manufacturers. I.e., "as of X date, if you continue to carry equipment from other manufacturers, we will no longer supply you with Deere equipment." This is extraordinarily anticompetitive when you consider that these pieces of equipment are extremely expensive, and that the dealers are geographically very sparse. So, it's hard on the farmers because if the dealer does become Deere-exclusive they might have to travel far to find alternatives, and it's hard on the dealers, because they are forced to put their eggs in one basket even when the buyers might want (or need) choice.

I've seen families split apart actually in cases where one part of the family is on the dealer or farmer side, and the other is on the Deere side.

Deere really has become anticompetitive in many ways, not just with DRM. If there ever was a case for antitrust enforcement in my opinion, it would probably be with Deere.

[+] Someone1234|6 years ago|reply
This comment might apply to cars 15 years from now.

Tesla is likely the closest to "car as a service" but it has been coming along for a few years across the entire auto industry.

[+] zAy0LfpBZLC8mAC|6 years ago|reply
What I am wondering: Has that changed what you laugh about now? Like, what people warn about our future now?

As far as I am concerned, this is exactly what I expected, and I am seriously surprised anyone could be surprised by it. Like, I was not necessarily thinking specifically about tractors 15 years ago, but I think it was just obvious that DRM would be used to gain control over devices that are run by software, and obviously pretty much all devices sooner or later would be run by software, and as such, of course, tractors would be, too, sooner or later.

[+] colechristensen|6 years ago|reply
You wouldn't had you been in the market for a tractor 15 years ago. Unfixable black box electronics has been a part of farm machinery for quite a while now.
[+] EADGBE|6 years ago|reply
Most wouldn't have even known what these meant.
[+] donatj|6 years ago|reply
The real problem I see for modestly sized farms's is they are massively underserved by modern tractors. They are over complicated and over priced. Most of the farmers I know still use tractors from the 1950s-1970s as their primary workhorses because they're simple and reliable. No one builds tractors like that anymore, in part due to the shrinking demands and in part due to regulation.

Why would I pay $50k+ for a new tractor that does way more than I really need, breaks down often and I can't service when I can get an old but just as useful tractor for $3-5k.

The companies that have sprung up to build parts for these ancient tractors is absolutely fascinating. Outside of perhaps some of the larger cast pieces, you can replace almost everything with new parts.

[+] snazz|6 years ago|reply
As a Minnesotan (but not a farmer), I’m extremely exited to see so much progress with Right-to-Repair legislation (see [0]), especially since it should benefit consumers nation- or even world-wide. If one US state passes the bill, we're unlikely to tech companies create a “Minnesota Edition” device with repair manuals only accessible to Minnesota residents. More likely, compliant businesses will offer this information freely and benefit everyone.

[0]: http://www.startribune.com/right-to-repair-bill-appears-head...

Also: https://states.repair.org/states/minnesota/ and https://minnesota.cbslocal.com/2019/04/24/minnesota-could-be...

[+] toomuchtodo|6 years ago|reply
Related:

https://www.vice.com/en_us/article/xykkkd/why-american-farme... (Why American Farmers Are Hacking Their Tractors With Ukrainian Firmware)

https://tractorhacking.github.io/

[+] chicob|6 years ago|reply
"The project is through California Polytechnic State University’s Capstone I/II class and sponsored by iFixit. Material on this site is protected from DMCA takedown by a DMCA exemption granted by the US Copyright Office."

Yes.

[+] jahlove|6 years ago|reply
The Vice News video on this problem is really good.
[+] olivermarks|6 years ago|reply
https://www.ft.com/content/ff8abbc2-7302-11e9-bf5c-6eeb83756... Good Rana Faroohar piece that touches on this:

'concentration of power in agribusiness has been a bigger and certainly a longer-term problem for American farmers than China. As a few companies gained control of key areas of the food supply chain, spending on research and development fell, input costs rose, and margins for individual farms went down. The CAP report also documents small farmers being forced into opaque contracts and held up by ridiculous rules, such as those forbidding them to repair their machinery without permission from John Deere or other large manufacturers'

[+] yason|6 years ago|reply
If you can't fix or tinker with it then it's not yours, and if it isn't yours it's not worth "buying" it but rather renting. Does JD lease their equipment? Or do they hope to?

On another take, I can imagine old, repairable tractors going up in value at some point. You can traditionally keep those going for decades.

[+] jmpman|6 years ago|reply
I worked in another industry with an effective monopoly in a subset of the market. When setting our prices, we evaluated behavioral game theory, and determined that we could claim 60% of the gains produced by our technology innovations without upsetting our customer. As we planned for that financial model, we realized that GMO seeds had a similar ability to extract fractions of their productivity gains. We planned to investigate just what fraction they were extracting, and expected it to be a much higher percentage, as Monsanto doesn’t need to worry about upsetting a single customer, they could extract 90% of the gains, and any farmer who didn’t settle for those remaining 10% would be our competed by their peers. Does anyone know how much GMO seeds cost relative to their standard cousins, and how much the cost of growing each and the productivity of each type? The Tractor companies are simply following the seed companies models.
[+] ltbarcly3|6 years ago|reply
Please don't take this comment as "there is nothing wrong" and don't take it as "there's nothing to talk about here". Clearly this is a problem that needs to be discussed and brought to people's attention. This is a response to people taking this article and interpreting it as though there is some injustice being done to farmers and that we need some sort of government intervention:

How is it a monopoly? There are like 8 or 9 different major tractor brands to choose from. The word is out on the street (or fields?), and I've seen articles like this for well over 5 years now.

There's a simple solution for farmers that don't want the costs (and benefits presumably) of these restrictive deals: don't buy a tractor that has these restrictive terms of service.

[+] ergothus|6 years ago|reply
I agree that what we are seeing is not really a monopoly. The issue is better defined as "industry realities prevent effective use of voting with their wallets".

> There's a simple solution for farmers that don't want the costs (and benefits presumably) of these restrictive deals: don't buy a tractor that has these restrictive terms of service.

...and lose compatibility with a large number of add on equipment and related software. Much like the AAA games industry moving towards micro-transactions, your ability to avoid suppliers that require that is limited and you are the one that ends up losing out.

How do we solve these issues? No idea. But expecting farmers (in this case) to take the hit themselves in the hopes that enough of their peers do the same to create a big enough financial incentive for vendors to change their ways is unlikely to succeed.

[+] qntty|6 years ago|reply
The meaning of monopoly here is that JD has a monopoly on the repair of JD tractors. That is, there cannot be competitors if they require you to use official repair places. It doesn't mean that JD repair centers have a monopoly on the repair of all tractors, or that JD has a monopoly on the market for tractors themselves. It's not meant to imply that it would legally be considered a monopoly.
[+] toss1|6 years ago|reply
Been long outraged at this kind of lock-in problem, wherever it is found. My first thought on reading this kind of article is "what a great opportunity for a startup".

Then, I immediately realize that there are likely no VCs that would fund such a thing.

It seems that every (ok, a vast majority) new business models that gets funded either start with or soon add some kin of lock-in even when completely unnecessary. they tout it as a "cloud" feature, but in reality it is just a DRM lockup.

The real problem is VCs and founders failing to truly compete on features, and instead trying to compete on network effects and lock-in to build an extractive business model -- just lock 'em in and charge the highest rent/rates you can.

[+] PorterDuff|6 years ago|reply
I can't think of why this would be unique to farmers, perhaps aside from a push towards autopilot systems.

Mining equipment, road building, all of that hyper-specialized stuff for slicing and dicing trees, I would think they all have this issue. Perhaps it's the greater prevalence of owner-operators.

I've probably bought the newest car I ever will (which is now 15 years old), so it would be nice to steer clear of the dealer-only craziness and the inevitable spying on you that new vehicles are going to accrue. I can just imagine how ticked I'd be if the tech juggernaut was messing with my income in a bad way.

[+] ngneer|6 years ago|reply
Information asymmetry. I would humbly posit that this is one of the biggest challenges that the information security community has to tackle on the face of the planet, and it is not just a technological one. Farmers are at the mercy of equipment manufacturers, who are centralizing control. A model with distributed control is more robust in the long run, and should be an option for consumers. Are there any competitive open source tractors out there?
[+] Circuits|6 years ago|reply
It must not be that huge of a problem because farmers are continuing to purchase the most up-to-date tractors with all the wing-dings, bells and whistles they can afford. The guidance consoles are not tied into the machine and don't care how old the equipment is, so why again do you need that brand new $200k tractor? Perhaps this will be a wake up call. Stop buying new equipment and fix your already existing, already purchased, old equipment.
[+] loons2|6 years ago|reply
I'm not a farmer, but I wouldn't even buy a John Deere lawn mower for exactly this reason. The tractor I did buy is a Branson. The engine comes from the same factory that Cummins engines come from (matter of fact, some JD engines come from the Kukje factory) and everything is built with durability in mind. Yes, the dealer is 135 miles away, but since I'm not really depending on the machine to make a living, I can live with that.
[+] hippich|6 years ago|reply
I got a small old grey-market tractor made by Mitsubishi. Most of the wiring is shot, only ignition, sparkplugs and battery-to-starter is working. The rest is destroyed by someone previously. (alternator is probably also dead). And it works awesomely! Just gotta charge the battery once in a while in the garage. That is tractor.

What is sold by JD - is semi-authonomous sophisticated machines with equally sophisticated service network, not a tractor :P