Oct 11, 2018

Future of Farming Grounded in Technology

When he founded Appareo in 2003, Barry Batcheller set out to solve problems through engineering and ingenuity.

“Clients would come to us with a problem, and we designed a solution to solve the problem, and then we’d go out and produce the product,” Barry remarks.

Over the years, the company has grown to become a leader in designing, developing and manufacturing innovative electronic and software solutions for aviation and agricultural equipment manufacturers. Often, their solutions today involve networking objects that are embedded with electronics and software to exchange data with each other.         

The Fargo-based, family-owned company employs more than 200 people across three locations, including an in-house manufacturing facility.

“We have grown the business organically and have not chosen to take on outside investors, which limits the growth,” Barry notes. “We want to make sure to keep the growth controllable, because what can happen is you outgrow your ability to manage.”

Since David Batcheller, who joined Appareo in 2005, became president and CEO last year, the company has shifted focus to leveraging its resources to produce new businesses. One example is a partnership with AGCO for a joint venture called Intelligent Agricultural Solutions, which researches and develops technologies to help producers get the most out of their equipment.

Barry Batcheller

Barry Batcheller

David Batcheller

David Batcheller

The father and son team recently sat down with AgViews to share their insights on the future of farming and the latest in precision agriculture.

What has been the biggest advancement in ag technology in the last five years?

B: I would say it’s been the translation into precision farming that is bringing a new level of productivity to farmers.

The advancements in agriculture that have happened over the last 50 years – plus additional advancements – will be required to feed the predicted global population of about 9.6 billion by 2050. If we continue at the level of productivity we have today, we’d fall short in feeding the planet by about 50 percent. So we need increasing advancements in agriculture if we’re going to feed this planet.

D: Precision protein is going to be an emerging part of agriculture. The poultry industry, for example, has refined making chicken to where producers can go from chick to chicken with shocking speed. I think we’re going to see, in pork and even beef production, more drive toward precision production to cater to the public’s interest in high-quality, low-cost meat protein.

B: You have an increasing population with an increasing need for protein. Pushing against that, you have food crops being used for livestock and energy, such as ethanol. You have environmental concerns pushing back on the use of chemicals – herbicides, pesticides and fertilizers – to improve plant yields. You have people pushing back against some of the scientific advances.

D: Urban sprawl eats potential farmland.

B: All of these dynamics are in play, and the bottom line is if we’re going to feed a hungry planet, productivity has to go up dramatically, and to do that, technologies are going to be brought to bear. One that will be implemented is artificial intelligence and robotics in agriculture. For example, if you place a corn kernel in the ground at the right orientation, the right depth and the best distance from its neighbor to maximize absorption of nutrients, you improve yield.

D: We’re continuing to drive toward a level of precision farming where machines can give individual plants what they need based on information from sensors. We’re a long way from what’s possible in precision farming.

With all of this technology and information stored in the cloud, how susceptible is agriculture to cyber threats?

B: Today, the issue is primarily personal information. Farmers don’t want other people to know their formulas and finances and things like that.

In the future, it will become more severe because computational resources will move to the cloud, bandwidth of communications will increase, and the ability to pump information rapidly and inexpensively from the field to the cloud will continue to increase. The World Wide Web will be replaced over the next decade by a massive artificial intelligence engine that serves the needs of people tapping into that engine. At that point, it will be important that there be high security for the information that’s transferred to and from a moving piece of equipment, because the possibility to highjack that link and create havoc is certainly there.     

When it comes to global ag technology, is the U.S. a leader or a follower?

D: I would absolutely consider the U.S. a global leader in agricultural technology.

  • In the world of biotechnology, the development of new hybrids, the leverage of genetics to improve production and profitability, the United States has been a clear leader for a long time.
  • The world’s three largest equipment manufacturers are all headquartered in the United States and continue to put out new precision agriculture and equipment innovations.
  • By area of land, our country continues to be more productive than other countries.
  • A lot of the after-market innovations are coming from the United States.

I think we’re well positioned to remain a leader in ag technology if we continue to push.

What are some of your more popular products?

D: On the Intelligent Ag side of the business, we make a popular monitoring system for air drills called Recon Wireless Blockage and Flow Monitor. If you seed soybeans or plant wheat, canola or barley, and you have a monitoring system, there’s a reasonable probability that you’re running our monitor.

For people who buy and use AGCO equipment, things like RoGators, TerraGators, Massey Ferguson, Gleaner combines or Challenger tractors, we do the telematics products for those machines. AGCO launched a new combine last year, called the IDEAL combine. We developed all of the automation and sensors for that.

We also developed an aftermarket section control product for John Deere Air Carts called Engage Zone Control. It communicates with an air seeder’s GPS mapping system to boost yield and reduce inputs. A lot of growers are benefiting from it.

How does Appareo manage how quickly technologies seem to become obsolete?

D: Mobile telephone products are driving the availability of a lot of the core componentry that’s available for use in agricultural applications, and it is changing pretty quickly. The way we combat some of that is to focus on building creative, high-value products for our customers in a sometimes unconventional way.          

What advantages does an independent company like Appareo have over larger manufacturers?

D: We and others have done a nice job of building new businesses and opportunities around getting more out of a piece of equipment you have rather than replacing that piece of equipment. When those trends really start to take, then the manufacturers look to incorporate that capability onto the machine from the factory. There’s a lot of innovation coming in the aftermarket, and rather than being a little bolt-on capability, it’s getting deeper into the machine.

Why are so many start-up companies bought up by bigger players?

B: Our national culture has conditioned people to believe that is the right way or the only way to grow a business. Many people start businesses to make a lot of money, and then they bring in investors who put capital into those businesses with an intent of turning that money into a lot more money. When the business is successful and growing, that desire to make money drives the sale of the business.

To avoid that, what people need to do is build the business one brick at a time with the expectation that it’s a multi-decade operation you’re going to commit your life to, and it’s going to be a multi-generational business that’s passed down to children.

On the other side, it can be hard for large businesses to innovate. Often in publicly traded businesses, research and development capital is scarce, and Wall Street expectations control what you can invest in, so research capital is applied to things people are confident will be successful. People within these businesses are not incented to take large risks and possibly fail. It’s better for their careers if they set out for a less ambitious vision and succeed. That mindset promotes incremental rather than exponential growth.

Because these businesses need to deliver a good return to the bottom line, some of these larger businesses accumulate a lot of cash, but they can’t take a lot of risk with the income they have, so they grow their technology and product line somewhat through acquisition.  

What has kept you with Bell Bank since you launched Appareo 15 years ago?

B: It’s the personal relationships we’ve developed with the team at Bell. We see them more as partners than lenders. 

D: The permanence and the staying power of the relationship with have with Bell is really important to us. Our business is really complicated, and working with somebody who understands our business makes it easy to have conversations with our lender without having to spend a lot of time helping somebody understand the context of our need.