Small Is Beautiful for John Deere

Deere & Co. has grown into the world’s largest farm equipment maker by churning out the mammoth 500-horsepower tractors and 12-row harvesters that work the 3,000-acre corn and soybean farms that dot America’s prairies. But it’s small farmers such as S. Pichandi of Kelur, India, who could well determine the Moline (Ill.) manufacturer’s prospects in the years ahead. Pichandi says he would rather use a 52-horsepower Mahindra & Mahindra tractor at his six-acre rice paddy. “I am told that John Deere tractors are good to use during harvest time but not in the initial stage of farming—the vehicle gets stuck in the slush,” says Pichandi, who has bought three Mahindras in four years. His latest cost 647,000 rupees ($13,463), more than twice his annual farming income.

Deere hopes to replicate its success in North America by rolling out a record number of new products overseas—including lighter-weight tractors in India. Chief Executive Officer Samuel R. Allen wants to double sales, to $50 billion, by 2018, something he can achieve only if Deere’s construction machines and iconic green-and-yellow farm tools turn more soil in emerging markets including India, China, Russia, and Brazil. Deere has made a greater push beyond the huge and expensive gear popular among U.S. farmers. “Our strength as we look at our global expansion is also our Achilles’ heel,” admits Allen. “We could still stay with this very strong presence in our traditional market. But if we don’t go into other areas, 10 years from now … it’ll be a smaller part of the agricultural equipment market—that’s not acceptable.”