Harvesting New Revenue: The Service Revolution in Agriculture

Population is growing, and with it the demand for food. That is why agriculture plays an important role even in times of digitalization - also in Germany: In terms of revenue and number of jobs, the agricultural industry is one of the strongest sectors of the economy in this country.

According to the Federal Statistical Office, more than half a million people in around 260,000 farms produce agricultural goods worth more than 50 billion euros. The number of farms and employees has been falling for years. On the other hand, the volume of goods produced is increasing.  

The reason: agricultural businesses are growing and becoming more efficient. Employees are able to cultivate ever larger areas. Among others, the manufacturers of agricultural technology are contributing to this with their products: They supply the equipment that helps agricultural businesses become more efficient and effective. 

The Hans Böckler Foundation's working paper "Industry analysis of agricultural technology" already stated in 2017: Agricultural equipment and machinery are becoming ever larger, more complex and more intelligent. This also increases the need for integrated solutions, such as real-time measurement of tank contents, and the demand for digital business models for linking data.  

A Bitkom study on the digitalization of agriculture found that 87 percent of farms are open to this development. They would share their data if it enabled them, for example, to detect and rectify damage to operating resources at an early stage. 

Digitalization has arrived at the farmland. This development and the increasing technologization of agricultural machinery mean that services are becoming more important for suppliers of the machines and for farm operators for different reasons: 

• Manufacturers can expand their after-sales and service offerings around agricultural machinery spare parts, maintenance and customer training. By selling spare parts and various additional services after the sale of their agricultural machinery, they generate additional revenue and differentiate themselves from the competition. 
• On the other hand, additional services and high service quality are becoming important factors for farmers when making purchasing decisions. After all, when machines are continuously in use during the harvesting season, every breakdown results in high costs. Good service is therefore priceless. 

A look at the 2022 annual report of CEMA, the association of the agricultural machinery industry in Europe, shows how important the spare parts business already is for the industry. According to this report, the production of tractors accounts for the largest share of total European agricultural machinery production at 22 percent - closely followed by the production of machine parts at 18 percent. 

Modern agricultural technology provides valuable data and takes a lot of work off the hands of agricultural professionals on large and small farms in Germany. For manufacturers, they open up new business areas and the opportunity to strengthen customer loyalty and generate more sales with additional services. 

However, the ever stronger and smarter machines also pose challenges for those involved in agriculture: 

• Increasingly complex machines make spare part identification more difficult. 
• The harvest season must be taken into account when planning maintenance and servicing. 
• Spare parts inventories at manufacturers must be optimally planned. 

Operators of agricultural machinery must adapt their maintenance strategy. The more complex and varied their harvesting machines are, the more complex maintenance and servicing become. Special machines in particular pose challenges for service technicians in agricultural businesses when they look for special spare parts. 

In addition, farm owners are under time pressure: Since farming is seasonal, repairs and maintenance must be planned precisely. During the harvest season, the machines must run reliably. Any breakdown means loss of yield and must be avoided or kept as short as possible.  

Manufacturers of agricultural machinery are therefore faced with the task of being as accessible as possible during the peak season in order to be able to help quickly. They also have to coordinate their spare parts logistics in such a way that there are no bottlenecks on the one hand and no excess stocks on the other. 

Harvest guarantees are a trend in agriculture: Suppliers of agricultural machinery guarantee their customers that they can provide spare parts or replacement machines at short notice and thus safeguard the harvest.  

To implement this, however, manufacturers of agricultural machinery need a solution to network their spare parts and service information on machines and equipment. If, in addition to customers, dealers are also to be supplied with information and spare parts and the services are to be offered beyond Germany, the use of an information system for agricultural machinery spare parts will help.  

CLAAS, the manufacturer of agricultural machinery, relies on a digital spare parts catalog system for this purpose. Customers of the company and dealers worldwide can use the system online and offline around the clock to find information or order spare parts.  

The data is up-to-date and available in the local language for specific machines. User-friendly search functions make it easy to find the right parts. 

Read how CLAAS has modernized its after-sales service with digital spare parts catalogs.  

With a production value of over 11 billion euros, Germany leads European production of agricultural machinery. If they succeed in expanding their service and spare parts business, suppliers of agricultural technology in the Federal Republic can expand this position and leverage new sales potential.