Thank you President Nelson and good morning.
I'm honored to join some of the best minds in the business in discussing
the winding path toward long-term agricultural prosperity in our country.
The theme of this year's Summit, "Framing Agriculture's
Future" really hits the nail on the head. That's because we
all have a responsibility to engage in ongoing dialogue, offering creative
options and forward-thinking views on the future of agribusiness, if rural
America is to not only survive, but to prosper.
A prosperous rural America requires both leadership and investment, which
is the topic of my talk this morning. It's a topic of obvious importance
to John Deere and to everyone in this room. But it's also significant
to the entire country. The challenges faced around the globe from increased
global competition in food, fiber and fuel markets require major strategic
investments in rural America's future by bold leaders.
Just like the rest of the U.S., John Deere derives much from rural America.
Virtually all of you are familiar with our products, business and heritage,
and you know that our links to rural America run deep. Rural communities
have sustained our company from its founding 169 years ago to the present
day. That won't change in the future.
Nowhere else in the world do we manufacture and sell more products than
in rural America. It's where so many of our dealers, suppliers, and customers,
all vital partners in our company's success, operate their businesses
and farms. And it is rural America where so many John Deere employees,
our most important resource, work and live, raise their families, and
give back to their own communities.
Any company that has operated in rural America for as long as John Deere
— and, frankly, there aren't many — will have experienced
a great deal of change over the years. And I think we've been leaders
driving some of that change, too.
For much of the 19th century, our company prospered by manufacturing
what customers in that time valued, needed and wanted to pay for. Back
then it was horse-drawn plows and farm implements.
Then in 1918, Deere's Board of Directors agreed to purchase a gas-powered
tractor manufacturer and entered the tractor business. It was a risky
move, as the technology was yet unproven. In fact, William Butterworth,
Deere's chief executive officer at the time, was opposed to manufacturing
tractors. He felt the company was wasting stockholders' money in
what he termed "an awfully expensive enterprise which will get us
nowhere in the end." Not exactly the forward thinking Deere is known
for today!
In the end, the pro-tractor views prevailed and the company, still under
the leadership of Mr. Butterworth, purchased the Waterloo Gasoline Engine
Company. In hindsight, the decision proved to be well worth the risk.
Tractors indeed greatly improved farmer productivity, while also enhancing
Deere's manufacturing capabilities, and yes, generating a return for our
investors.
I mention this history to highlight the ongoing evolution of John Deere's
business as a provider of innovative technologies and solutions in agriculture.
Innovation is a core value for our company. It is essential to the prosperity
of rural America, and it is essential to producers around the world.
I would suggest to you that the challenges facing rural communities require,
from all of us here today, a level of innovative thinking, risk-taking,
and leadership, that is no less important or potentially worthwhile than
in those earlier times.
As we know, rural America has experienced significant change over the
past several decades. Yet there are strong links between the health of
the rural U.S. economy, U.S. agriculture's vitality and sustained U.S.
economic prosperity.
And as you know so well, U.S. farmers and ranchers contribute directly
and substantially to U.S. economic growth. They are critical to the development
of our renewable, natural resource base. They provide a secure, abundant,
and affordable supply of food, fiber and fuel. In doing so, they literally
feed and fuel the U.S. And, with an abundance of product far more than
what can be absorbed by the U.S. today, they feed and fuel much of the
rest of the world.
Considered in this light, rural development must be more than just a
concern for rural communities. Rural development must be a strategic national
objective, one that supports a global goal of economic prosperity.
Increasing competition, rapid advances in technology, and volatile natural
resource markets, are just some of the key drivers of today's global economy.
These drivers provide the challenge, and the opportunity, for us in the
public and private sectors to build on the enormous contributions of U.S.
agriculture and rural America to strengthen the strategic national interest,
indeed to strengthen the global economy.
John Deere has much to contribute to this undertaking: Sound business
practices. Innovative technologies. Quality products and solutions. Financial
and human capital. And a strong commitment to enhance a prosperous rural
economy.
I'd like to highlight just some of the things that John Deere brings
to the table — specifically, entrepreneurial development, industrial
innovation and technology deployment.
Entrepreneurial Development
Entrepreneurial development is extremely important to the prosperity
of rural communities. We know this firsthand through the John Deere dealer
organization. Our U.S. ag equipment dealers include roughly 700 owner
groups operating in approximately 1,400 locations. These dealers are independently
owned businesses, and most are located in rural areas. John Deere dealers
are our primary partners in providing John Deere equipment, parts and
services to our customers.
With more than $4 billion in assets, our U.S. ag dealers last year generated
more than $14 billion in revenues in rural America. They employ more than
26,000 workers with a combined payroll of more than $750 million. They paid more than $22 million in local sales and property taxes last
year, and each year spend more than $65 million in advertising, sales
promotion, and professional services.
These dealers are true engines of rural economic growth!
To help them excel, John Deere invests heavily with them in dealer development
and business management. We work together to enable them to provide superior
sales and service support. And we show them how to compete more effectively,
improve asset utilization, and become stronger, better-performing businesses.
A crucial part of their, and our, success is employee training. Our dealers
spend more than $15 million on employee training each year, so that we
are assured of having the skilled workforce needed to provide equipment
repair, service, sales and business management.
John Deere has entered into teaching-training partnerships with 16 rural
community colleges and six state universities to offer two- and four-year
degrees in various disciplines that develop dealer management and rural
entrepreneurial talent.
In all these ways, our dealers exemplify our commitment to entrepreneurial
development in rural communities. As their businesses continue to excel,
these John Deere dealers will be well positioned to evaluate and invest
in new opportunities that can contribute to a prospering rural America.
Industrial Innovation
Industrial innovation is another important driver of rural economic growth,
and this is exemplified by the expanding ag-energy sector.
We believe ag-based energy can play a huge role in helping rural America
prosper. While the links between renewable energy and rural development
are nothing new, the value proposition for ag-based energy has changed
dramatically, as it relates to national security, environmental stewardship,
global economic well-being and global trade leadership.
We know that agriculture-based energy production provides opportunities
to create new jobs, increase the tax base, and diversify the local economy.
It offers important new markets to commodity producers, which improves
their own profitability and, in turn, further stimulates rural development.
It provides reasons for people to stay in or even move to these communities,
thereby helping to stabilize local economies.
Ethanol is an obvious example of this key trend. And we believe that
biodiesel and cellulosic biomass-based energy also can provide significant
growth potential for rural communities. In fact, a two-percent biodiesel
blend is now the preferred factory fill for diesel-powered John Deere
equipment made in the U.S. To really succeed, these ag-based energy industries
must have access to capital, further R & D resources, distribution
infrastructure, quality standards, and a highly-trained workforce.
John Deere is also quite excited about the potential for wind power.
In 2004, wind power generated about 7,000 megawatts of electricity. Experts
predict this could reach more than 100,000 megawatts by 2020, enough to
power approximately 30 million U.S. households.
Our company has looked carefully at how we can best help our rural customers
unlock this potential. Last year, we created a new business unit to provide
project development, debt financing, and other services to those interested
in harvesting wind power.
John Deere's involvement in wind energy means we can partner with farmers,
landowners and developers to evaluate potential projects, and provide
capital and business know-how to bring viable projects on line. Over time,
these partners can gain ownership of the project's assets and the resulting
economic benefits.
For generations, the world's most productive farmers have used John Deere
equipment to provide food and fiber to the world. Now these same farmers
can help meet the country's growing demand for energy. This will help
strengthen the rural economy on which our core business is based and advance
our goal of helping our customers improve their profitability and productivity.
One last point on energy, John Deere recently joined with other private
sector partners in the "25 by '25" initiative, which calls for
renewables to reach 25 percent of total U.S. energy consumption by the
year 2025. This is a bold new initiative.
The role of this coalition is to educate business and community leaders,
policymakers and the public on the potential from renewables, the steps
necessary to achieve the "25 by '25" goal, and the benefits
to rural communities from a growing renewables sector.
Technology Deployment
A third way John Deere is driving economic growth in rural America is
through technology development. We believe that the development and deployment
of information technologies is essential to fully capture the benefits
of economic development in rural communities.
In an increasingly "flat world," rural access to information
technology is essential to educate our youth to compete globally, and
to develop the skilled workforce on which prospering rural communities,
and rural businesses, will depend.
And we are just now beginning to see the potential for telecommunications
and broadband technologies to enable rural communities to fully develop
value-added business opportunities.
John Deere is identifying new opportunities for producer customers and
their business partners to add value across the food, feed, fiber, and
energy supply chain. We've built a business upon years of experience in
global positioning, sensors, communications, and geographical information
systems.
New technology-based services can make producers more productive and
efficient, and create new opportunities for them. We see great potential
for creating value in rural communities. First, by enabling more effective
management of crop genetics and environmental conditions. Also, by improving
quality, reducing variability and cost, and providing transparency across
the supply chain. And finally, by providing new, integrated risk management
tools to producers and users of agricultural raw materials.
These services can benefit a broad range of rural enterprises: producers
of all kinds, crop consultants and other ag professionals, cooperatives,
aggregators, retailers, crop insurance agents and many others.
The vitality of these enterprises, and the information infrastructure
needed to support them, are critically important to rural development.
In conclusion, I hope this overview gives you a sense of John Deere's
commitment to the rural communities in which our customers, dealers and
employees work and live. But we're only a small part of the solution.
Let me reiterate: A vibrant U.S. economy is of strategic national importance
and critical to the welfare of the world. As the 21st century U.S. economy
evolves, the contributions from American agriculture and rural communities
will be critical to the national prosperity and security of the U.S. and
indeed the world in which we play such a vital role.
Maximizing the benefits of rural development, for rural communities and
for the U.S. economy, will require commitment, innovation, investment
and leadership from all of us: farmers, ranchers, large and small businesses,
national and local governments, academia, civic and public interest groups.
Each of us brings something to the table, and each of us has an important
role to play.
Together, we can debate and find agreement on the needs and priorities
of rural communities. We can further integrate rural development within
the context of agriculture policy, and in doing so, feed a still hungry
world, and contribute to the spread of prosperity around the globe.
And finally, I want to commend the Illinois Farm Bureau for sponsoring
this important forum where thoughtful dialogue can become the basis for
appropriate public policy and programs that will support the prosperity
of rural America for years to come.
Thank you.
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