We gotta fight for our right to repair
Although it may lack the youthful enthusiasm of earlier protests, the ongoing effort to secure the right for farmers to have some choice in their equipment service options is gaining momentum. It is also meeting with resistance from the whole of the heavy equipment industry and their affiliated lobbyists. The effort is generally referred to as Right to Repair, and it seems there are new developments every day as more voices join the discussion, and more pressure is directed at farm equipment manufacturers to change the way they do business. Now is the time to make your voice heard.
The current industry business model is to build equipment that is almost entirely computer controlled, use proprietary software and diagnostic tools to run and service this equipment, and only make these digital tools available to authorized dealers. This forces farmers to be reliant on those dealers to provide necessary repair and service. This can, and does, cause very real problems for farmers, especially in the parts of the country growing the bulk of our small grains and pulses, where it may be literally hundreds of miles to the nearest dealer.
We have probably all heard of at least one of the many class action lawsuits filed in recent months naming John Deere as a defendant. As of this writing, there are no less than 10 suits filed in several states including Alabama, Tennessee, Illinois, North Dakota, and Minnesota. They all allege the same things, stating that John Deere has essentially monopolized the market for repair and maintenance services for their equipment by making their proprietary diagnostic software and repair tools only available to dealership service departments and not available to farmers or independent service providers. The plaintiffs claim violations of the Sherman Antitrust Act and seek damages and injunctive relief based on these violations.
The first of these complaints, filed by Forest River Farms in Forest River, North Dakota, alleges that “Deere’s monopolization of the Deere Repair Services Market allows Deere and the Dealerships to charge and collect supra-competitive prices for its services every time a piece of equipment requires the Software to diagnose or complete a repair. Consequently, Plaintiff and Class members have paid millions of dollars more for the repair services than they would have paid in a competitive market.” They also claim John Deere has been “misleading the public regarding how easy it is for farmers or independent repair shops to perform repairs.”
These claims were all echoed in a 43-page complaint filed with the Federal Trade Commission in March by the National Farmers Union. Joining the complaint were the state Farmers Union chapters from Iowa, Missouri, Montana, Nebraska, Ohio, and Wisconsin, the U.S. Public Interest Research Group, Farm Action, Illinois Public Interest Research Group, and the Digital Right to Repair Coalition. National Farmers Union President Rob Larew said in a statement regarding the filing, “Manufacturers have far too much control over what farmers are allowed to do with their own equipment. These restrictions are costly in terms of time and money. The Federal Trade Commission should take action to ensure that farmers and independent mechanics have the freedom to fix their equipment in a timely and cost-effective way.”
The FTC was already beginning to take a close look at the issues raised in the complaint. Shortly after President Biden issued an executive order last July that directed federal agencies to ramp up antitrust efforts and encourage competition, FTC commissioners voted unanimously to begin examining whether repair restrictions violate antitrust laws and constitute unfair practices.
Like so many of the problems we face in agriculture and our food systems, the situation outlined in all these complaints is rooted in consolidation. We all know we have fewer dealers for our farm equipment needs than we used to, and even fewer “mom and pop” dealers, as most of these were acquired by larger chains. As part of their complaint to the FTC, the U.S. Public Interest Research Group and Farmers Union compiled some very illuminating information about the degree of industry consolidation. John Deere controls 53% of the country’s large tractor market, and more than 60% of the combine market. They have encouraged dealership consolidation and have been very successful in those efforts.
In 1996, John Deere had roughly 3400 dealerships. By 2007, that number was beginning to drop significantly, to about 2900. The latest numbers show less than 1400 dealer locations exist, and 82% of those are part of a large chain with seven or more locations. The average Deere chain has eight locations, with the largest chain having an almost unbelievable 67 locations. In 2011, 24 Deere dealers had ten or more farm equipment stores. By 2018, that number was 61. There is now one Deere dealership chain for every 12,018 farms and every 5.3 million acres of farmland in the United States. The result of that consolidation has been fewer options for farmers, higher costs, and longer wait times for repairs.
But what about all the other manufacturers? Can’t we just buy a tractor that isn’t green? John Deere is not alone or unique in their business model. They just have the largest market share, and therefore are the obvious focus of most of the attention, and lawsuits. A farmer can choose red, or blue, or even orange equipment and still likely be impacted by the problems outlined in the complaints. All the major manufacturers use similar proprietary digital tools and software, and only make those tools available through their authorized service. They have also promoted similar consolidation of their dealer networks. As of 2018, 53% of Case IH stores, 32% of AGCO stores, 21% of New Holland’s stores, and 13% of Kubota’s stores are owned by dealers who operate at least five stores. It is impossible to disconnect this industry consolidation from the consolidation of our farms and agribusiness in general.
To further compound this issue for farmers, fully 95% of the roughly 3000 dealers, Deere and the others, service equipment only from the one manufacturer they represent. This is by design, and these repair restrictions are written into the dealer contracts. This makes it difficult, or impossible, to have your equipment serviced by the closest dealer if that dealer doesn’t sell your favorite color tractor. This lack of good options has led some farmers to choose to avoid modern equipment altogether, opting for older machines without the computer controls and the miles of wire to make it all work. This has dramatically increased the prices for older equipment, which again impacts a farm's ability to remain profitable.
So, John Deere’s gain is a loss for farmers, even if they don’t own Deere equipment. And, that gain is substantial. According to the Farmers Union complaint, “Deere’s control over the repair market is the backbone of its financial success,” stating that “sales of its repair services are three to six times more profitable than its sales of equipment. And despite the COVID-19 pandemic’s effect on financial markets and supply chains, Deere is currently on pace for its best year ever: As of August 20, Deere projected its 2021 profits to be in the range of $5.7 to $5.9 billion, which would far exceed its previous high of $3.5 billion in 2013.”
There might be nowhere that the impacts of this consolidation are felt more than a state like Montana. The state has some absolutely huge farms, and a lot of farmland. There are more than 58 million acres, the second highest of any state. Despite this fact, the state has only 19 John Deere dealers controlled by just three chains. A tractor disabled in a field can be literally hours away from the nearest dealer able to send personnel to initiate a diagnosis and subsequent repair. The Agricultural Right to Repair Act, introduced not surprisingly by Senator Jon Tester of Montana, hopes to tackle this problem at the federal level.
The legislation would require that all tools necessary to diagnose, repair, or maintain the equipment be made available to farmers or independent service providers. It would also ensure that when a manufacturer chooses to no longer make the tools or parts necessary to repair any equipment that the relevant patents and copyrights are placed in the public domain. The bill would also further empower the FTC to take action against violators and give the commission the regulatory authority to accomplish the bill’s objectives. States have also been busy drafting potential legislation with similar goals. Already in 2022, 26 states have filed some legislation aimed at making these tools more widely available.
As one might expect, the response from the industry and trade groups has been swift and multifaceted. The Equipment Dealers Association, the manufacturers themselves, and other interested parties immediately claimed that they are, in many cases, already making the tools available for sale to any who wish to purchase them. These statements are, at the very least, missing important context and seem almost custom-engineered to mislead. They also seem unified in not referring to any of the legislation as Right to Repair, preferring to use terms like “Illegal Tampering legislation” and raising the concern of farmers modifying emission controls and otherwise “tampering” with their equipment. They are also, as expected, lobbying behind the scenes to kill these bills before they get any traction, and they are having success. Of the 26 state bills mentioned earlier, the Equipment Dealers Association brags “13 states have either pulled their bills or opted to let them die in committee” and that “More states appear to be leaning that way.” It is almost as if the industry has more political influence than farmers.
If it seems I have chosen a side in this debate, it is because I have. The reasons for this are rooted in my own experience. I do not farm in a manner that requires the sort of large and complicated machinery most impacted by this discussion. My “newest” tractor rolled off the line ten years before I was born (so it is really old). Even though I am not personally impacted by the question at hand, I know and have worked with farmers who are. And they all, really without exception, believe that wider availability of these service tools would be a good thing. I want the outcome that benefits farmers.
Secondly, I have a fair amount of professional experience related to this exact issue. I spent the first nearly 30 years of my working life fixing machines, with several of those years spent working for a farm equipment dealer servicing exactly the type of the equipment that is at the center of these complaints. I can say, in fact, that the industry fully understands that the non-availability and proprietary nature of these software tools essentially eliminates all competition and forces farmers to utilize the services of the dealer, and only the services of the dealer. They also fully understand the impacts that consolidation has had, and in some cases are willing to wield it like a weapon against their customers.
The farmers do not have the option to say no to outrageous service charges, poor outcomes, and sometimes crippling downtime because in many cases the dealer in question is the “only game in town,” and the dealers know it. Farmers will be charged for all the time related to a given service visit on the farm, including the travel time. When that travel time could be hours, usually billed at the shop service rate, a farmer might generate a bill for a few hundred dollars before anyone touches the tractor. It is not at all uncommon for such service calls to require multiple trips for parts or other needed items, all of this billed to the farmer. The lack of competition has also encouraged dealers to cut costs by stocking fewer parts and staffing their service departments with less expensive (i.e. less experienced) technicians. This results in an even greater likelihood of more downtime for the farmer.
Lastly, I believe that more independent service providers would result in healthier rural economies and more opportunities to circulate money within a community. The industry argues that only their “highly trained” technicians have the technical prowess to understand and service these complicated systems, and they can be almost absurdly complicated at times. My experience is that the training is not always as extensive as one might hope. I also know that some of the most experienced and capable technicians in farm country have left the dealer system to work independently. These types of independent operations often have the flexibility to bill for services based on the situation, their actual costs, and the influence of competition rather than just executing a rigid corporate formula designed in an environment void of competition. Again, these things would all likely benefit farmers, who are plenty smart enough, and apart from the necessary software tools, otherwise equipped to make repairs on their own.
The larger issue of Right to Repair is about more than just farm equipment. The idea and related activism apply to any number of things we use and ultimately send to their permanent home in a landfill. Aside from heavy farm equipment, much of the discussion centers around tech items like cell phones and laptops, but automobile services offer a promising solution.
Legislation enacted decades ago maintained our ability to choose from independent providers for automobile services. When car manufacturers began including electronic systems in their designs, and states began imposing emission limits, legislators pretty quickly figured out that proprietary systems would be problematic and would limit options for consumers. They passed legislation to help solve the problem and created mandates for consistency in systems and access to necessary tools. This enabled the independent automotive service shops that most of us probably choose to use for any non-warranty repairs.
Legislators acted again to protect your options for auto service when Massachusetts passed an automotive Right to Repair law in 2012 that led to a National Memorandum of Understanding between the Auto Alliance (manufacturers) and several aftermarket trade associations. Why not apply this model to everything we buy and use? I don’t generally trust legislators to actually craft solutions, but with enough input from all of us legislation might result in a holistic fix.
For now, we need more immediate action on our part to secure the necessary legislative change as it relates to farm equipment. The Agriculture Right to Repair Act currently has only two sponsors in the Senate, and it seems the Equipment Dealers Association and others are having great success killing most of the bills at the state level. Make a call, or send some emails, first to your senators and then to your state lawmakers and let them know that farmers care about this issue. Farmers are too seldom top of mind for our elected representatives, so let’s rattle their cage a little on this one. Make your farmer voice heard.
Tom Manley is the Partnership Director at MOSES. He and his wife own a 40-acre homestead farm near Spring Valley, Wisconsin.
Issue: May 2022
By: Tom Manley