Will Deere, SpaceX (Starlink), BIS, And OFAC Permit SATCOM Service To Farmers In Cuba Who Use Authorized Deere Products?
/Since 2017, Deere & Company has delivered approximately US$1 million in equipment from the United States to the Republic of Cuba. The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and the Bureau of Industry and Security (BIS) of the United States Department of Commerce has approved these transactions.
If Deere & Company makes operational globally the Starlink service, will the company, the Biden-Harris Administration (2021- ), and the government of the Republic of Cuba authorize the service for equipment exported to the Republic of Cuba?
“John Deere Announces Strategic Partnership with SpaceX to Expand Rural Connectivity to Farmers through Satellite Communications
MOLINE, Illinois (January 16, 2024) — Deere & Company (NYSE: DE) announced it has entered into an agreement with SpaceX to provide cutting-edge satellite communications (SATCOM) service to farmers. Utilizing the industry-leading Starlink network, this solution will allow farmers facing rural connectivity challenges to fully leverage precision agriculture technologies. This partnership, an industry first, will enable John Deere customers to be more productive, profitable, and sustainable in their operations as they continue to provide food, fuel, and fiber for their communities and a growing global population.
“The value of connectivity to farmers is broader than any single task or action. Connectivity unlocks vast opportunities that were previously limited or unavailable,” said Aaron Wetzel, Vice President of Production and Precision Ag Production Systems at John Deere. “For example, throughout the year, farmers must complete tasks within extremely short windows of time. This requires executing incredibly precise production steps while coordinating between machines and managing machine performance. Each of these areas are enhanced through connectivity, making the entire operation more efficient, effective, and profitable.”
The SATCOM solution will connect both new and existing machines through satellite internet service and ruggedized satellite terminals. This will fully enable technologies such as autonomy, real-time data sharing, remote diagnostics, enhanced self-repair solutions, and machine-to-machine communication, all of which help farmers work more efficiently while minimizing downtime.
“John Deere has led the agriculture equipment industry for more than two decades with satellite-based precision guidance technology,” said Jahmy Hindman, Senior Vice President & Chief Technology Officer at John Deere. “Now, we are bringing satellite communications service to the farm at scale so farmers with cellular coverage challenges can maximize the value of connectivity to their operations. The SATCOM solution unlocks the John Deere tech stack so every farmer can fully utilize their current precision agriculture technology in addition to the new innovative solutions they will deploy in the future. We initiated this process with a fierce focus on delivering value to our customers, and this partnership ensures we have a solution that meets their needs today and in the future.”
John Deere’s SATCOM solution will leverage SpaceX’s Starlink satellite internet constellation. To activate this solution, John Deere dealers will install a ruggedized Starlink terminal on compatible machines, along with a 4G LTE JDLink modem to connect the machine to the John Deere Operations Center. The SATCOM solution will initially be available through a limited release in the United States and Brazil starting in the second half of 2024.
About Deere & Company
Deere & Company (www.JohnDeere.com) is a global leader in the delivery of agricultural, construction, and forestry equipment. We help our customers push the boundaries of what’s possible in ways that are more productive and sustainable to help life leap forward. Our technology-enabled products including John Deere Autonomous 8R Tractor, See & Spray™, and E-Power Backhoe are just some of the ways we help meet the world's increasing need for food, shelter, and infrastructure. Deere & Company also provides financial services through John Deere Financial.”
Cuba Background Data
OBAMA-BIDEN ADMINISTRATION INITIATIVES EXPORTS CONTINUE TO INCREASE- In 2015 and in 2016, the OFAC and BIS expanded the list of products and services authorized for export from the United States and from third countries to the Republic of Cuba. The Trump-Pence Administration (2017-2021) did not demonstrably interfere with the Obama-Biden Administration (2009-2017) initiatives relating to product exports, but did relating to service exports. The Obama-Biden Administration focus was upon products (non-durable, durable, and consumable) to entities not affiliated with the government of the Republic of Cuba, while the government of the Republic of Cuba generally prohibited these exports and when permitted substantially restricted their activities. There was one United States company with two hotel management contracts, United States airlines servicing United States-Republic of Cuba routes, a company with a power generation contract, and two United States companies with agricultural equipment distribution centers.
In 2017, Deere & Company (2023 revenues approximately US$61.3 billion) established a distribution center in the Republic of Cuba, joining San Juan, Puerto Rico-based RIMCO, the Republic of Cuba distributor for Irving, Texas-based Caterpillar Inc. (2023 revenues US$66.5 billion) established the same year. At the time, neither Deere & Company nor Caterpillar issued media releases or posted information on their respective Internet sites.
Since November 2017, Deere & Company delivered more than US$800,000.00 in agricultural equipment to the Republic of Cuba for use at its distribution center. Antioch, Tennessee-based Wirtgen America, Inc., a subsidiary of Windhagen, Germany-based Wirtgen Group (2020 revenues approximately US$3 billion), a construction equipment machinery subsidiary (acquired in 2017) of Deere & Company has also delivered products to the Republic of Cuba. RIMCO continues to deliver equipment for use at its distribution center in the Republic of Cuba, including excavators, backhoes, graders, scrapers, bulldozers, railway fixtures, and signaling equipment, valued at more than US$4 million since December 2018. John Deere Financial Services was to provide payment terms/financing for the exports, primarily Series 5000 (price range US$25,000.00 to US$80,000.00) with a limited quantity of Series 7000 (price range US$219,000.00 to US$280,000.00). According to the company, several hundred tractors, parts and accessories may be exported from the United States to the Republic of Cuba during the next four years, with the first deliveries (for testing and evaluation) scheduled for mid-November 2017. The potential value of the several hundred products exported from the United States to the Republic of Cuba that would be financed could range from US$9 million to US$30 million. John Deere Financial Services has not commented as to whether the product sales goals have been achieved or if there have been issues relating to the receipt of payments. Caterpillar has not disclosed if the company has provided payment terms for its products exported to the Republic of Cuba.
Links To Related Analyses
John Deere Could Provide US$30 Million In Financing For U.S. Exports To Cuba November 03, 2017
Competition From Donations And Long Term Government Financing Are Hurdles To John Deere And Caterpillar February 27, 2018
Liebherr Of Austria, Womy of Germany, Peinemann Of The Netherlands, Bouygues Of France Link For Hotel Construction Equipment To Cuba. Competition For Caterpillar And Deere. April 27, 2021
Belarus And Cuba: Trucks, Harvesters, Loaders, Motorcycles, Tractors. Financing Always An Issue. Donations From India's Sonalika. Caterpillar, Deere Delivered US$1+ Million In Product Since 2017 October 11, 2022
Will Caterpillar And Deere Disclose Use Of Payment Terms And Financing For Exports To Cuba? January 29, 2021
Related Article
The Wall Street Journal
New York, New York
15 January 2024
John Deere, Meet Elon Musk: SpaceX Satellites to Link Farm Giant’s Equipment
Farm machinery maker hires SpaceX’s Starlink service to provide satellite internet connections for tractors, harvesters and crop sprayers in remote areas
By Bob Tita and Micah Maidenberg
Deere said it would tap SpaceX’s satellite fleet to propel the tractor maker’s digital farming push and help automate planting and harvesting in remote locations.
The world’s largest farm machinery manufacturer signed a deal with SpaceX’s Starlink business to connect tractors, seed planters, crop sprayers and other equipment in areas that lack adequate internet service, allowing them to use Deere’s digital products.
“This takes us a step closer to ubiquitous connectivity anywhere in the world,” said Jahmy Hindman, Deere’s chief technology officer. “The biggest opportunity for us is to expose existing technologies to more customers.”
Illinois-based Deere has been investing billions of dollars in building out computer-assisted services for farmers, including software that allows herbicide sprayers to distinguish crops from weeds and driverless tractors to plow fields.
The agreement shows the growing influence of Starlink, a division of Elon Musk’s SpaceX that uses satellites blasted off by the company to provide high-speed internet. Starlink’s impact stretches from the war in Ukraine to connecting natural disaster-struck communities, relying on the world’s biggest satellite fleet, with nearly 5,300 working satellites in orbit. Hawthorne, Calif.-based SpaceX didn’t respond to requests for comment. Starlink noted the deal with Deere in a post on X, and said the service is ideal for rural locations.
Deere tested satellites for about eight months before settling on Starlink. The company chose Starlink in part because of the speed at which its low-orbiting satellites transmit signals, Deere’s Hindman said. SpaceX’s ability to build satellites and launch them with its own rockets makes it easier for Starlink to expand its fleet than some of its competitors, Hindman said. “That’s a unique distinction in the satellite industry,” he said.
Deere, which sells around 60% of high-horsepower tractors used in the U.S. and Canada, wants to generate 10% of its annual revenue by the end of the decade from software service fees. The company reported $55.6 billion in equipment sales in its most recent fiscal year. Deere’s digital farming offerings enable farmers to monitor equipment remotely in their fields, troubleshoot problems without hauling tractors to repair shops and receive real-time data on soil, seeds and planting. Many farmers rely on wireless signals from land-based towers to use these digital services.
But about 30% of the acres farmed in the U.S. lack sufficient Wi-Fi service, according to Deere. Elsewhere in the world, the wireless deficit is even bigger. In Brazil, one of the world’s largest producers of soybeans, sugar cane, fruit and other farm commodities, more than 70% of the acres farmed lack adequate connectivity.
JC Schemper, who owns a Nebraska-based combining business, said his fleet of combines, grain carts and trucks is susceptible to the vagaries of rural cell service as it harvests wheat on farms stretching from Texas to Montana. Two of Schemper’s combines were outfitted with Starlink antennas in the summer as part of Deere’s testing program. “We never had any problems in the areas we went to,” Schemper said. “With the satellite, you’re always connected whether you’re at the bottom of a hill or the top of a hill or 50 miles away.”
Deere said Starlink service will debut in Brazil and unconnected parts of the U.S. later this year, with more countries to follow. The company added that the SpaceX-made antennas, which dealers will install on top of vehicle cabs, will be customized for dusty, rugged conditions.
Farmers’ costs for the pizza-box-size antennas and software service haven’t been determined yet, Deere said. Farmers that have adequate land-based cellular service gain access to data, monitoring services and software when they buy Deere equipment. The company is working toward charging software fees based on farmers’ usage of the programs and updating the software without requiring farmers to buy new equipment.
The Deere deal is a boost for Starlink which, like rivals, needs customers to pay for internet capacity while satellites fly over remote regions and oceans. Otherwise, satellites may not be used to their full potential, analysts say. Starlink and other satellite operators are also hunting for subscribers outside of densely populated areas where internet service derived from ground infrastructure, such as fiber-optic cable, costs less than satellite service.
At a recent SpaceX event, Musk described Starlink as supplemental to terrestrial internet service, not something that would replace it. “Starlink does really well for, like, low population density areas,” he said, according to a video of the talk SpaceX posted to X. “But it is really not going to be competitive in high-density cities.”
Starlink said in a recent report it had more than 2.3 million customers, covering households and businesses that range from containerships to smaller airlines. Revenue at Starlink jumped to $1.4 billion for 2022 from $222 million the year prior, The Wall Street Journal has reported.
Starlink beat out satellite operator Intelsat for the Deere contract, according to people familiar with the matter. Intelsat, which recently won an agreement to provide satellite internet for hundreds of American Airlines regional jets, has also been competing with Starlink to provide a similar service to some United Airlines planes, according to people familiar with the discussions.
Some SpaceX investors say Starlink is the primary driver of the company’s valuation because demand for internet service is larger than the market for rocket launches. The company was recently valued at $180 billion, according to people familiar with the matter. That valuation, reported earlier by Bloomberg, was up from a mid-2023 valuation of $150 billion.
