Layoffs at John Deere blow up investment thesis on food shortages; US farmland to see liquidation

Venture Capital and Private Equity firms poured tens of billions of dollars into shares of farm equipment makers, fertilizer companies, and even indoor vertical farms and cropland. Conventional wisdom was that these were very safe investments that would yield outsized returns as the world struggled to feed itself over coming decades.

That investment thesis has now collapsed, amid plunging global food prices and soaring farm productivity. The ag sector of the developing world produced record crops, and did so without the expensive equipment produced by major Western farm equipment makers, such as John Deere and Case New Holland.

As VC and PE firms are now seeing double-digit annual declines in cash flows from their investments into the agriculture theme, we should expect them to sell their positions, and return to tech sector investment.

Resources and links:

Deere Announces More Layoffs

John Deere announces more Midwest layoffs

John Deere announces another round of layoffs, this time of 287 workers in Quad Cities

Bill Gates Portfolio: 7 Best Stocks to Buy Now

Barrons, World Hunger Is on the Rise. These Companies Have Solutions.

Politico, The world food crisis is about to get worse

McKinsey, A reflection on global food security challenges amid the war in Ukraine and the early impact of climate change

The World Is Headed for a Food Security Crisis. Here’s How We Can Avert It

Who Will Feed China?: Wake-Up Call for a Small Planet (Worldwatch Environmental Alert)

Bill Gates Increases His Stake in Deere to More than 10%

Investment firms are buying more farmland

Reuters, Investment funds stocking up on US farmland in safe-haven bet

Average Chinese national now eats more protein than an American: UN food agency

China factory sourcing website:

What does vertical farming mean to investors?

The vertical farming boom is over (for now). What went wrong?

U.S. Agricultural Land Values and Cropland Cash Rents Reach Record Levels Amid Falling Commodity Prices

Land Report: Bill Gates nation’s largest private owner of farmland

[hadi]

John Deere don't allow farmers to repair their own equipment, the Chinese send spare-parts with their equipment.

[barnabusdoyle]

It’s going to be epic to see John Deere equipment be replaced with Chinese equipment because John Deere got too greedy. Good bye John Deere.

[jaz_akbar]

I learn something new every time, and there is something satisfying about how he ends his videos. No call to like and subscribe, no promo for Nord VPN, just pure facts.

[Trueye-slmr]

The world need more affordable food. US problems are not the world's problems

[Dono-da-Blaze]

I invest in a workers' cooperative that fights for agrarian reform in Brazil. They produce organic agroforestry food and they are investing in Chinese agricultural equipment. The arrogance of the power holders in the "West" is accelerating their downfall.

[ВесельчакУ-ъш]

I've heard that in Russia tractors are 3x cheaper than in the US. Modern American plants are afraid of competition; they needs tariffs to survive.

[StephenYuan]

The hubris of Western investors; thinking the rest of the world couldn't figure out how to grow more food.

[john]

Also, China has an ally in Russia which is a huge food supplier. And China's farm equipment and technology will rapidly build agricultural resources for the global south. This will make developing countries food-independent and decrease their need for food imports.

[AretiSpyropoulos]

We already grow nuff food for 11B people. We don't need more food we need better distribution and better food. We also need to let countries grow food to feed themselves instead of forcing them to grow for the export and western market needs, Think cocoa coffee and avocados for example. IMF and WB have a big hand in this disgusting western agroeconomic criminality.

[nancytai]

All cotton harvests in Xinjiang used John Deere equipment while the West accused Xinjiang of force labor! John Deere farm equipment are very expensive so China built her own. Deere thinks it will make huge profits forever!

[nextechsolutions]

Even if the John Deere tractors were cost competitive with those made in China they wouldn’t sell for long. Because John Deere engineers their products to lock out the layman Farmer from performing anything beyond routine maintenance.

[YangJi]

Hi Kevin, Not only China have60% of the world's grain reserve, China also no longer import seed for its major crop products. China had been investing a lot in agriculture technology. Now, China has its own seed technology IP ecosystem and had been exporting its seed to other countries.

[sckchui]

And tractors are only a small piece of the agriculture puzzle. Farming drones have been a gamechanger, and China is making the best drones in the world. China has also been working on salt- and drought-tolerant crops, which can be grown on land that was previously unsuitable for agriculture. China has done a huge amount of work on desert greening, restoring formerly degraded land back into productive agriculture. They're even successfully farming ocean crabs in the salt plateaus of western China, deep inland; live seafood in Xinjiang, believe it or not. It's China solving the world's food problem, not John Deere.

[skyw]

Big thanks to you Kevin. You always brighten my day with such awesome news.

[JoMe]

Kevin, your pronunciation of 陽朔 was fairly accurate at the end. It's really not a biggie. Even if you've pronounced it wrong, it won't reduce the value of your video a bit. But I thought to drop you a line to let you know. I really appreciate your effort. Myself have struggled much of my life with English. I totally understand the pain and hardship of learning a foreign language.

[liuyizhi]

As the issue is agriculture: have y'all being aware that at the current BRICS meeting in Kazan, Putin proposed the creation of a BRICS-based grain exchange? According to him "The bourse would protect members of the group from outside interference and excessive market volatility". The article is in Russia-based RT and for me the most interesting excerpt from it is "The platform would also allow member countries to trade grain directly and reduce reliance on Western-dominated pricing systems that currently set benchmark prices at bourses such as Chicago and Paris." Bingo!

[davidlazarus]

Chinese harvesting equipment is smaller and they work in teams and several will harvest a crop at the same time. Plus being smaller they can be moved around rural roads on an articulated trailers together. Add in 5g and automatic harvesting and you can see why they have had a record set of harvests this year.

[brianniziol]

John Derre is in for a big suprise. While North American markets will remain strong for the short term because of tariffs, the global south will reject their high-priced machines. It is a death spiral. With increased production driven by new producers, prices will fall. At almost half a million dollars, harvesters will have to last a lot longer than than they do now to keep the farmers' heads above water. In Canada, a lot of them will be wiped out. The carbon tax on fuel rising fertilizer seed and herbicide prices combined with falling grain prices increases their overhead to a level where there are little to no profits. Fact is when you are losing money every time you fire up your tractor and you're over 50 like most farmers where I live, you may want to sell out while you still own your farm and retire to a easy job. It does not look good for agriculture in the West. There will be turmoil before we adjust to this new reality.

[random]

China is the #1 grain producer in the world. It is not surprising that there is a plethora of farming equipment produced by China.

[rameshgill]

As always, an unbiased evaluation .
I do salute you, sir .
Truth is a rarity in this age of universal deceit .