What changed in this filing

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Item 1. Business

2022-02-25 compared with 2021-03-01 · 192 added, 91 removed, 188 unchanged (60% of the section changed)

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We are a leading manufacturer and distributor of agricultural equipment and related replacement parts throughout the world.

Our purpose is to provide farmer-focused solutions to sustainably feed our world.

We sell a full range of agricultural equipment, including tractors, combines, self-propelled sprayers, hay tools, forage equipment, seeding and tillage equipment, implements, and grain storage and protein production systems.

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We distribute most of our products through approximately 3,200 independent dealers and distributors in approximately 140 countries.

We also provide retail and wholesale financing through our finance joint ventures with Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., which we refer to as “Rabobank.”

We also provide retail and wholesale financing through our finance joint ventures with Coöperatieve Rabobank U.A., which we refer to as “Rabobank.”

The following table sets forth a description of the Company’s more significant products and their percentage of net sales:

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Product Product Description 2021 (1)

2020 2019 (1)

Tractors • High horsepower tractors (140 to 650 horsepower);

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and egg production systems and broiler production equipment 10 % 10 % 11 %

Hay Tools and Forage Equipment, Implements & Other Equipment • Round and rectangular balers, loader wagons, self-propelled windrowers, forage harvesters, disc mowers, spreaders, rakes, tedders, and mower conditioners;

Hay Tools and Forage Equipment, Planters, Implements & Other Equipment • Round and rectangular balers, loader wagons, self-propelled windrowers, forage harvesters, disc mowers, spreaders, rakes, tedders, and mower conditioners;

used for the harvesting and packaging of vegetative feeds used in the cattle, dairy, horse and renewable fuel industries 12 % 11 % 10 %

• Planters and other planting equipment (including retrofit equipment);

used to plant seeds and apply fertilizer in the field, typically used for row crops, including planting technologies that cover the areas of monitoring and measurement, liquid control and delivery, meter accuracy and seed delivery

• Implements, including disc harrows, which cut through crop residue, leveling seed beds and mixing chemicals with the soils;

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and drills, which are primarily used for small grain seeding

• Planters and other planting equipment;

• Other equipment, including loaders;

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Precision Agriculture

We offer smart solutions to the farmer to optimize farming performance, while improving ease of use.

Our strategy is based upon an open approach to data management leveraging existing solutions offered by partnering with industry leaders and while integrating our products and innovation.

We provide essential added value to dealers and service providers that helps farmers improve uptime, machine and yield optimization, mixed fleet optimization and decision support, with critical data privacy choices and convenient mobile tools that offer access to data and information.

These products ultimately result in reduced waste and increased profitability for the farmer.

Our precision agriculture solutions are based on connectivity, automation and digitalization and include satellite-based steering, field data collection, product self-adjustment, yield-mapping and telemetry-based fleet management systems.

We offer solutions to the farmer to optimize farming performance, while improving ease of use.

We provide telemetry-based fleet management tools, including remote monitoring and diagnostics, which help farmers improve uptime, machine and yield optimization, mixed fleet optimization and decision support, with critical data privacy choices and convenient mobile tools that offer access to data and information.

These products ultimately result in reduced waste and increased profitability for the farmer as well as help to enable sustainable farming.

In addition, our precision agriculture solutions are based on connectivity, automation and digitalization and include satellite-based steering, field data collection, product self-adjustment and yield-mapping.

Our Precision Planting ® brand provides retrofit solutions to upgrade farmer's existing equipment to improve their planting, liquid application and harvest operations, resulting in yield and cost optimization.

Our Fuse ® and other precision agriculture solutions support our products, brands and the aftermarket with a comprehensive and customizable suite of solutions, enabling farmers to make individual, data-based decisions in order to reduce costs and maximize efficiency, yields and profitability.

A significant number of these technologies are developed by third parties and are integrated into our products.

These technologies are both developed internally or sourced from third parties and integrated into our products.

We believe that these products and related devices are highly valued by professional farmers globally and are integral to the current and future growth of our equipment sales and revenues.

Market Conditions

Demand for agricultural equipment is cyclical, influenced by, among other things, farm income, farm land values, weather conditions, the demand for agricultural commodities, commodity and protein prices and general economic conditions, as well as government policies and subsidies.

During 2020, the COVID-19 pandemic had minimal impact on global crop production.

Most farm operations, which generally have been deemed essential, operated at normal levels.

However, the consumption of grain for food, fuel and livestock feed was negatively impacted by the economic constraints caused by the pandemic in the first half of 2020.

During the second half of 2020, grain consumption started to recover, consistent with improving economic activities and increased grain exports to China, thus reducing forecasts for ending grain inventories, and raising soft commodity prices.

Consequently, global industry demand for farm equipment was mixed during 2020 but improved in the second half of the year across major markets.

Farm income, which is a function of commodity and protein prices, crop yields, and government support, will continue to be a key factor in the level of industry demand.

Demand for agricultural equipment is cyclical, influenced by, among other things, farm income, farm land values, crop yields, weather conditions, the demand for agricultural commodities, commodity and protein prices and general economic conditions, and government policies and subsidies.

The COVID-19 pandemic and other economic factors continue to create volatility in the global economy, including employment disruptions, supply chain constraints and logistics interruptions.

Elevated agricultural commodity prices have supported favorable farm economics resulting in farmers upgrading and replacing aging fleets.

These improved conditions generated growth in industry equipment demand across all the major equipment markets in 2021.

Future demand for agricultural equipment will be influenced by the factors noted above.

Despite global supply chain and logistics disruptions, farmer economics are healthy and continue to bolster market demand.

2021 Compared to 2020 Financial Highlights

Net income attributable to AGCO Corporation and subsidiaries for 2021 was $897.0 million, or $11.85 per diluted share, compared to $427.1 million, or $5.65 per diluted share for 2020.

Net sales for 2020 were approximately $9,149.7 million, or 1.2% higher than 2019, primarily due to increased sales volumes in our South American region, partially offset by the negative impact of currency translation.

Net sales were impacted by reduced production volumes caused by component availability and other impacts of the COVID-19 pandemic in the first half of 2020, but recovered in the second half of the year resulting from more normalized production and improved industry demand.

Net sales for 2021 were approximately $11,138.3 million, or 21.7% higher than 2020, primarily due to improved market demand.

Net sales were impacted by extended COVID-related production shutdowns in both Europe and South America during the first half of 2020.

Income from operations was $1,001.4 million in 2021 compared to $599.7 million in 2020.

The increase in income from operations during 2020 was primarily the result of improved margins which benefited from positive pricing impacts, a favorable sales mix and cost control initiatives as compared to prior year.

In addition, our 2019 income from operations included approximately $176.6 million of non-cash goodwill and other intangible asset impairment charges recorded during the fourth quarter of 2019 related to our grain storage and protein production systems operations in our Europe/Middle East region.

The increase in income from operations in 2021 was primarily the result of improved margins, which benefited from positive pricing impacts and a favorable sales mix that offset substantial inflationary cost pressures.

Net income per diluted share was also favorably impacted by the reversal of valuation allowances previously established against our deferred tax assets in both the United States and Brazil during 2021.

See “Financial Highlights” under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for additional information.

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Our dealers are responsible for retail sales of equipment to end users and after-sales service and support.

Our distributors may sell our product through networks of dealers supported by the distributors, and our distributors also may directly market our products and provide customer service support.

Our distributors may sell our product through networks of dealers supported by the distributors, and our distributors also may directly market our products

and provide customer service support.

Our sales are not dependent on any specific dealer, distributor or group of dealers.

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Our dealers generally have sales territories for which they are responsible.

We believe that our ability to offer our dealers a full product line of agricultural equipment and related replacement parts, as well as our ongoing dealer training and support programs focusing on business and inventory management, sales, marketing, warranty and servicing matters and products, helps ensure the vitality and increase the competitiveness of our dealer network.

We believe that our ability to offer our dealers a full product line of agricultural equipment and related replacement parts, as well as our digital tools to support the dealer's sales, marketing, warranty and servicing efforts, helps ensure the vitality and increase the competitiveness of our dealer network.

We also maintain dealer advisory groups to obtain dealer feedback on our operations.

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Refer to Item 2, “Properties,” for a listing of our principal manufacturing locations.

Our AGCO Power engines division produces diesel engines, gears and generating sets.

Our AGCO Power division produces diesel engines, gears and generating sets.

The diesel engines are manufactured for use in a portion of our tractors, combines and sprayers, and also are sold to third parties.

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We also assist in the development of these products or component parts based upon our own design requirements.

Our past experience with outside suppliers generally has been favorable.

Our past experience with outside suppliers generally has been favorable, although in 2021, we experienced supply chain disruptions for several key components such as the global semiconductor shortage.

Intellectual Property

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We make significant expenditures for engineering and applied research to improve the quality and performance of our products, to develop new products and to comply with government safety and engine emissions regulations.

Wholesale Financing

Wholesale Financing, Sales Terms and Accounts Receivable Sales Agreement

Primarily in the United States and Canada, we engage in the standard industry practice of providing dealers with floor plan payment terms for their inventories of farm equipment for extended periods, generally through our AGCO Finance joint ventures.

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Payment terms vary by market and product, with fixed payment schedules on all sales.

When sales of installation services occur, fixed payment schedules may include upfront deposits, progress payments and final payment upon customer acceptance.

When we are responsible for installation services, fixed payment schedules may include upfront deposits, progress payments and final payment upon customer acceptance.

We have accounts receivable sales agreements that permit transferring, on an ongoing basis, a majority of our wholesale receivables in North America, Europe and Brazil to our AGCO Finance joint ventures in the United States, Canada, Europe and Brazil.

Upon transfer, the wholesale receivables maintain standard payment terms, including required regular principal payments on amounts outstanding and interest charges at market rates.

Qualified dealers may obtain additional

financing through our U.S., Canadian, European and Brazilian finance joint ventures at the joint ventures’ discretion.

Qualified dealers may obtain additional financing through our U.S., Canadian, European and Brazilian finance joint ventures at the joint ventures’ discretion.

In addition, our AGCO Finance joint ventures may provide wholesale financing directly to dealers in Europe, Brazil and Australia.

We also sell certain trade receivables under factoring arrangements to other third-party financial institutions around the world, and we account for the sale of such receivables as off-balance sheet transactions.

Retail Financing

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We believe that any expense or liability we may incur in connection with noncompliance with laws or regulations or the cleanup of any of our properties will not have a materially adverse effect on us.

The engines manufactured by our AGCO Power engine division, which specializes in the manufacturing of non-road engines in the 75 to 600 horsepower range, currently comply with emissions standards and related requirements set by European, Brazilian and U.S.

The engines manufactured by our AGCO Power division, which specializes in the manufacturing of non-road engines in the 75 to 600 horsepower range, currently comply with emissions standards and related requirements set by European, Brazilian and U.S.

regulatory authorities, including both the United States Environmental Protection Agency and various state authorities.

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In some markets, such as the United States, we must obtain governmental environmental approvals in order to import our products, and these approvals can be difficult or time-consuming to obtain or may not be obtainable at all.

For example, our AGCO Power engine division and our engine suppliers are subject to air quality standards, and production at our facilities could be impaired if AGCO Power and these suppliers are unable to timely respond to any changes in environmental laws and regulations affecting engine emissions, including the emissions of greenhouse gases (“GHG”).

For example, our AGCO Power division and our engine suppliers are subject to air quality standards, and production at our facilities and sales of our products could be impaired if AGCO Power and these suppliers are unable to timely respond to any changes in environmental laws and regulations affecting engine emissions, including the emissions of greenhouse gases (“GHG”).

Compliance with environmental and safety regulations has added, and will continue to add, to the cost of our products and increase the capital-intensive nature of our business.

Climate change, as a result of emissions of GHG, is a significant topic of discussion and may generate U.S.

and other regulatory responses.

It is impracticable to predict with any certainty the impact on our business of climate change or the regulatory responses to it, although we recognize that they could be significant.

The most direct impacts are likely to be an increase in energy costs, which would increase our operating costs (through increased utility and transportation costs) and an increase in the costs of the products we purchase from others.

In addition, increased energy costs for our customers could impact demand for our equipment.

It is too soon for us to predict with any certainty the ultimate impact of additional regulation, either directionally or quantitatively, on our overall business, results of operations or financial condition.

For additional information regarding our product development plans, see the “Sustainability” section below.

Cybersecurity

As part of its risk oversight role, our Audit Committee oversees cyber risk, information security and technology risk, including management’s actions to identify, assess, mitigate and remediate material cybersecurity issues and risks.

The Audit Committee receives two formal reports during each fiscal year from our Chief Information Security Officer as well as our Chief Information Officer on our technology and cyber risk profile, enterprise cybersecurity program and key enterprise cybersecurity activities.

During 2022, we plan to establish a Cybersecurity Council comprised of members of our senior management team who will be regularly briefed on cybersecurity matters and provide input to our overall approach to cybersecurity.

Our formal cybersecurity program is structured and governed around the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework, as well as other global standards and best practices.

We have a cybersecurity incident response plan in place that provides a documented framework for handling high severity security incidents and includes facilitated coordination across multiple functions of the Company.

We invest in threat intelligence and are active participants in industry and government forums to strive to improve our overall capabilities with respect to cybersecurity.

We routinely perform reviews of threat intelligence and vulnerability management capabilities, while performing simulations and drills at both technical and management levels.

We incorporate external expertise in all aspects of our program utilizing best practice guidance from third-party cybersecurity advisors to provide objective assessments of our capabilities.

We maintain a cyber and internet security and privacy liability insurance coverage.

We also ensure that we have policies and practices in place to address data privacy regulations.

Our cybersecurity program is reviewed and assessed by external information security specialists or by our internal audit group at least annually, with formal reporting of such assessments provided to the Audit Committee.

Last, we conduct annual cybersecurity awareness training for employees and targeted training for high-risk functions of the Company.

We also conduct phishing exercises and correlated education with our employees.

Regulation and Government Policy

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Sustainability

Corporate sustainability is a core business imperative that underlies our strategy to build a more valuable enterprise through long-term economic, social and environmental sustainability in support of our key stakeholders and communities.

Our products span the entire crop cycle, from seeding to storage.

We support our farmer customers with high-quality, smart tools and exceptional customer experience to grow their operations profitably and sustainably.

Corporate sustainability is a core business imperative that underpins our strategy to build a more valuable enterprise through long-term economic, social and environmental sustainability initiatives in support of our key stakeholders and communities.

This aligns with our purpose to provide farmer-focused solutions to sustainably feed our world.

We see opportunities in every aspect of our agricultural value chain to address many of today’s most significant challenges, including food security, farmer livelihood and resource efficiency.

We currently are prioritizing the following four sustainability imperatives.

Advancing Soil Health and Soil-Carbon Sequestration

Improving soil health using practices such as cover crops, no-till farming and managing soil compaction all contribute positively to mitigate climate change.

Sequestering carbon into agricultural soils and boosting crop yields is a natural positive outcome for both the farmer and the environment.

We are committed to developing solutions to map, measure and implement good soil health practices.

We are also applying our engineering expertise to develop innovative solutions to position agriculture and our farmers to as part of the solution to climate change.

Over the past several years, we have invested in a thriving network of demonstration farms and initiatives to dive into topics that matter most to farmers, and to test and demonstrate the latest technologies that demonstrate core agronomy principles.

We plan to expand these initiatives towards more sustainability trials including crop covering, herbicide reduction by mechanical weed control and variable rate nitrogen fertilization.

We also have new products that feature precision agriculture solutions from Fuse ® and Precision Planting that support soil health and the reduction of the use of chemical inputs.

Our Fuse ® solutions help to deliver connectivity across our entire fleet to enable and accelerate precision agriculture;

specifically, by optimizing nutrient and pest control use efficiency, as well as managing compaction and machine optimization to favorably impact yield and the environment.

AGCO succeeds when our farmers succeed, and ensuring the sustainability of farmers’ operations is essential to their long-term productivity.

We are committed to accelerating progress in integrating sustainability into the design, manufacturing and distribution of smart agricultural solutions across all of our brands and geographical regions.

There are many ways we can contribute to sustainability in agriculture, as well as inside our own operations, as further highlighted below.

Farming is deeply vulnerable to the effects of climate change, which can include extreme weather events such as drought in some regions and flooding in others, rising average temperatures, and other challenges.

Climate change affects where we work and live, fueled by GHGs, particularly carbon dioxide.

Farmers can play a vital role in the critical challenge of

reducing GHGs.

More than a fifth of the world’s emissions come from the food sector, and almost a third of the world’s energy usage is attributable to agriculture and the food industries.

Climate Change

Climate change is a significant topic of discussion and will generate regulatory responses in the U.S.

and around the world.

It is impracticable to predict with any certainty the impact on our business of climate change or the regulatory responses to it, although we recognize that they are likely to be significant.

During 2021, we assessed climate risks related to AGCO by conducting our first scenario analysis based on guidance set forth in the recommendations from the Task Force on Climate-Related Financial Disclosures (“TCFD”), as well as other published frameworks.

We believe the TCFD recommended disclosures are an important component in our sustainability program efforts, given the increasing focus by our shareholders, our executive leadership and employees, as well as our customers on climate change and its impacts.

We therefore have begun to incorporate the framework into our sustainability program and are working towards addressing the recommendations within the framework that most materially impacts us, while increasing our preparedness for potential physical and transitional impacts associated with climate change risks.

In order to enhance our sustainability efforts, we began benchmarking ourselves against our industry peers, by gathering stakeholders and subject matter experts across various functions within our company, in order to compile a list of potential and prioritized climate change risks and opportunities.

We then conducted a scenario analysis using two scenarios to qualitatively and quantitatively assess the strategic and financial impacts of such risks, as well as their potential likelihood.

After risks and opportunities were ranked with respect to risk exposure, we held further discussions with subject matter experts within our company to determine preparedness and mitigation steps for such prioritized risks, as well as strategies with respect to potential business opportunities.

Risks identified included, but were not limited to, market demand for our products, technological innovation (i.e.

lower carbon, energy efficient solutions), reputation, and government policy and legal constraints.

Identified possible opportunities ranged from resource efficiency, energy source alternatives, development of new products and services, development of new emerging markets and partnerships and resilience planning.

We anticipate climate-related physical risks affecting our customers to drive the highest impacts to our future business, including ultimate potential impact to our revenue growth and business operations overall.

With our farmer-first strategy, we aim to drive success in partnership with our farmer customers, given they are affected first hand by climate change impacts.

The agricultural industry is currently responsible for a large proportion of global GHG emissions.

Farmers can potentially play a pivotal role in reducing agricultural greenhouse gas emissions through carbon sequestration.

In pursuit of identified potential opportunities, our existing and future investments in precision agricultural technologies, on-site renewable energy, energy efficient projects, as well as research and development (“R&D”) activities focused on automation, robotics, electrification and future alternative fuels provide significant prospects to capitalize on climate-related opportunities.

We currently spend approximately 4% of our net sales with respect to R&D activities, and we are prioritizing and advancing those projects that target these specific areas as further discussed below.

We believe the objectives resulting from our 2021 assessment provide us with a better understanding on how to position AGCO to build resilience to changing climate conditions, but to emerge as a strong partner to our customers and stakeholders in creating future value for our business and farmer customers, while also contributing towards global efforts to combat climate-related impacts.

Please also refer to “Environmental Risks” within Item 1A, “Risk Factors” for further information.

We also publish further reporting on our corporate website at www.agcocorp.com under the heading “Our Commitment” with respect to climate risks and other sustainability program efforts.

Decarbonizing our Operations and Products

We are committed to reducing CO 2 emissions across our manufacturing sites worldwide to limit our impact to climate change.

Smart manufacturing uses advanced technology to increase productivity while reducing energy waste and cost.

Our initial priorities will focus on using cleaner sources of energy and reducing consumption by improving operational efficiencies.

The goal of our research and development efforts with respect to engines is to be a pioneer for the farmers of today and tomorrow by designing lower emission and more fuel-efficient engines.

We continue to invest substantial resources in research and development activities to create and deploy advanced technologies as well as to significantly enhance existing traditional technologies with continual improvements in vehicle engine and transmission efficiencies.

Our research efforts also include alternative fuel solutions as well as the acceleration of electrification, natural gas, hybrid technology and fuel cell alternatives.

Our current product offerings of tractors and implements reduce fossil fuel consumption and GHG emissions compared to equipment of the past.

The most direct and immediate way to support farmers in reducing GHGs is to provide equipment that is more fuel efficient, or that provides alternative routes to low or zero-emission farming.

Our aspiration is zero carbon emissions.

Solutions are being developed to provide an all-electric tractor, which is in the advanced pilot stage and targeted for commercial launch in the next few years.

This tractor has the potential to be especially useful in the livestock, specialty crop and municipality applications.

Our engineering teams also are developing a prototype tractor powered by carbon-free, hydrogen-based fuel cell technology as well as experimenting and researching tractors that run on biomethane and natural gas, which are carbon-neutral or reduced emission fuels.

Our product development has been focused on reducing tractor fuel

consumption without compromising performance, such as through the efficiency of the our continuously variable transmissions (“CVT”s).

We also are researching ways to limit the emission of nitrogen oxides (“NOx”), gases that at high levels can be harmful to the environment and human health.

We are committed in the near term to improve the efficiency of vehicles that rely on internal combustion engines.

Our engines are Tier 4 compliant in the United States, and Stage V compliant in Europe.

We were one of the first in our industry to adopt Selective Catalytic Reduction (“SCR”) technology.

SCR systems are highly efficient at treating the engine-out exhaust, significantly reducing NO X emissions, as well as carbon release.

We are piloting a fully electric Fendt ® tractor that has current potential in livestock, greenhouse farming and specialty crops as well as municipality applications.

We look to further advance this technology to develop battery powered equipment in other agricultural applications to enable our customers to reduce the CO 2 footprint in their production processes.

Lastly, We plan to grow our remanufacturing business with respect to engines and other components in order to avoid energy use and emissions, to eliminate waste and to conserve raw materials.

We intend to complete a climate risk assessment in 2021 that will encompass our global operations and markets that we believe will inform a set of climate actionable goals to ensure our business is both financially resilient and optimal for growth during the transition to a low carbon economy.

We also are in the process of reviewing various components of our business in order to identify measurable sustainability metrics for which we can establish future improvement goals.

Elevating Employee Health, Safety and Well-Being

Safety is a priority at AGCO, and we want to ensure that all of our workplaces protect the health and safety of our employees, as well as prevent long-term occupational health risks.

We conduct occupational risk assessments regularly, leveraging our long-term shop floor experience, and are committed to achieving zero work-related fatalities across our global operations.

We are embedding a new enterprise-wide model to advance our culture of health and safety, built upon the success of our current health and safety program that was launched in 2014.

Our goal is to raise productivity and lower accident incident rates in the countries in which we operate.

Prioritizing Animal Welfare in Food Production

We are committed to a culture that supports animal welfare, and we intend to leverage technology in order to drive innovation for animal-based food production that ensures the care, nutrition, health and welfare of farm animals.

We also intend on being a leader in promoting awareness of the advances in modern animal agriculture, demonstrating how innovations are helping farmers to care for their animals, while also helping to reduce the environmental impact of animal agricultural operations.

Digital innovation is at the forefront of modern animal agriculture, and our platform for protein operations helps farmers monitor their livestock including feed, watering, animal weight, ventilation, cooling, heating and lighting data.

Our AGCO engines are Tier 4 compliant in the United States and Stage V compliant in Europe.

We were one of the first in our industry to adopt Selective Catalytic Reduction (“SCR”) technology SCR systems are highly efficient at treating engine-out exhaust and significantly reduce NOx emissions as well as carbon release.

Building a more circular economy is a win-win for farmers and the environment.

It saves farmers money by repurposing and extending the life cycle of their existing equipment, but also reduces the use of precious resources and raw materials in manufacturing.

The reuse of manufactured items is a cornerstone of sustainability.

We have been active in helping move farms towards a circular economy, through our remanufactured product lines.

Remanufacturing promotes resource-preserving practices with energy, emission and waste savings.

Across our brands many of our components in our tractors, from electronics to engines to hydraulics, are available as remanufactured items with warranties.

We are committed to achieving highly sustainable manufacturing operations by working to increase the use of renewable electricity through regional and market-specific opportunities, such as green supply contracts.

We have on-site solar photovoltaic systems at a number of our facilities and are adding them to other locations.

We also are increasing the use of biodiesel in our processes, applying energy and heat recovery technologies, and using biomass-based heating solutions, among other efforts.

We also are integrating sustainability into the way we manage our procurement processes.

We are working closely with suppliers to assess and advance joint sustainability efforts through the use of sustainability audits and sharing practices.

We encourage innovation and collaborative efforts by hosting workshops that focus on the topic of sustainability with our suppliers and have also established a supplier sustainability and resiliency awards program.

Advancing Soil Health and Soil-carbon Sequestration

Everything we do revolves around what we can do for farmers, and we are committed to be an innovation leader in sustainable agriculture.

Improving soil health using practices such as cover crops, no-till farming, controlled traffic farming, residue management and managing soil compaction all contribute positively to mitigating climate change.

Sequestering carbon into agricultural soils and boosting crop yields is a natural positive outcome for both the farmer and the environment.

We aim to provide smart products that allow for reduced inputs while supporting carbon sequestration.

Over the past several years we have invested in both demonstration farms and agronomy research to test and demonstrate the latest technologies that support core agronomy principles.

We are expanding these initiatives towards more sustainability trials including crop covering, herbicide reduction by mechanical weed control and variable rate nitrogen fertilization.

We have new products that feature precision agriculture solutions sold through our FUSE ® and Precision Planting ® brands that support soil health and reduction of the use of chemical inputs.

Our FUSE ® solutions help to deliver connectivity across an entire fleet of equipment to enable and accelerate precision agriculture;

specifically, by optimizing nutrient and pest control use efficiency, as well as managing compaction and machine optimization to favorably impact yields and the environment.

Our Precision Planting ® technologies address all elements of the planting cycle with products with products that optimize soil preparation, seed placement, fertilization and weeding.

Precision Planting ® products help to minimize soil disturbance and maximize germination, while optimizing feed and fertilizer rates.

Farmers are able to monitor soil conditions in real time, including levels of carbon, organic matter and moisture, as well as integrate satellite data and advance soil modeling tools to make informed and better planting decisions.

Smarter interconnected equipment and the ability to gather, analyze and leverage data enables farming sustainability and improved profitability.

Our FUSE ® technologies allow for integration of data coming in from sensors on our equipment which can be integrated into networks that monitor how the equipment is functioning as well as crop and field conditions.

Changing climate, legal requirements and labor shortages are significant challenges for farmers worldwide.

Our FendtONE ® solution provides software tools for planning and optimizing farm work processes.

On-board diagnostics provide insights into equipment performance, so that managers can adjust the equipment and processes in real time to optimize workflow and correct problems.

Animal Welfare in Food Production

As farmers look for ways to productively raise more animals to meet rising global demands for animal protein, they also want to ensure they are raising healthy animals and doing more to protect animal welfare.

AGCO actively participates in efforts to advance industry standards and academic research in animal welfare.

We offer a range of products that help farmers monitor, control and accurately report environmental conditions around animals, facilitating practices that reduce stress, discomfort and disease, and promoting good nutrition and normal animal behavior.

Our products include aviary climate-control, housing, biosecurity, feeding and watering systems aimed at protecting animal welfare for poultry and egg production farms.

These systems provide hens and chicks the freedom of movement along with automated watering, feeding, egg collection, ventilation and cleaning capabilities.

We also recently acquired a company that develops and manufactures a robot that moves throughout the barn measuring temperature, air quality, light and noise, enlisting artificial intelligence to spot potential health, welfare and other problems.

Digitalization of the farm not only provides valuable insight to inform product and service evolution to the farmer, but it also provides food transparencies that consumers care about.

We are enhancing our strategy to design, engineer and manufacture industry-leading protein solutions, building upon and further developing our advanced aviary systems, precision-feeding systems and organic sheds.

For additional information on our sustainability efforts and reporting, refer to the “Corporate Social Responsibility” section on our website located under “Investors.”

The foundation to our approach to animal welfare seeks to align with the five domains of animal welfare, covering nutrition, environment, health, behavior and the mental and emotional state of the animal.

We continue to develop our future strategies around the design, engineering and manufacturing of industry-leading protein solutions, building upon our advanced aviary systems, precision-feeding systems and organic sheds.

Our People and our Communities

We foster a culture centered around a simple, clear purpose:

farmer-focused solutions to sustainably feed our world.

Our goal is for every AGCO employee to feel connected to that purpose, as well as to each other, and to act in accordance with our core values of transparency, respect, accountability, integrity and team spirit.

We believe that working at AGCO should feel rewarding, meaningful, supportive and safe – and that if it does, the results will translate to positive outcomes for farmers, our planet and our success.

As a farmer-focused, purpose-driven company, we keenly feel the value of community, and we look for ways to contribute to the many communities in which we operate.

We launched the AGCO Agriculture Foundation (“AAF”) during 2018, as a reaffirmation of our dedication to support farmers as they strive to feed the world.

The AAF also demonstrates our support of specific United Nations Sustainable Development Goals aimed at preventing and relieving global hunger, and providing farmer-centric support to farming communities.

AAF supports non-profit organizations with projects that contribute to zero hunger, help to build agricultural infrastructure, and provide development programs for farmers and their farming communities.

We believe that a successful sustainability strategy is possible only if supported by sound corporate governance.

We are working to further integrate sustainability oversight across our organization as well as management processes and systems.

During 2021, we established a sustainability council, which is an executive-level group charged with driving implementation of sustainability policies and initiatives across significant businesses, locations and functions.

The council monitors sustainability-related operational risks, opportunities and progress and assists with the removal of any barriers of integrating sustainability into our business.

The council is supported by a global sustainability core team who ensure implementation of the council’s decisions and who execute initiatives and programs.

“Green leaders” within the core team champion sustainability, drive knowledge and encourage the sharing of best practices throughout the business, providing expertise to sustainability workstreams and day-to-day operations.

Employee Health, Safety and Well-Being

Safety is a top priority at AGCO, and we want to ensure that all of our workplaces protect the health and safety of our employees, as well as prevent long-term occupational health risks.

We conduct occupational risk assessments regularly, leveraging our long-term shop floor experience, and are targeting improvement in our accident incident rates in our facilities.

During 2021, we refreshed and started to embed a new enterprise-wide model to advance our culture of health and safety, built upon the success of our current health and safety program that was launched in 2014.

For additional information on our sustainability efforts and reporting, refer to the “Sustainability” section on our website located under “Our Commitment.”

Human Capital

We have approximately 23,300 employees worldwide, who are guided by our Company’s clear purpose – Farmer-focused solutions to sustainably feed our world.

We are committed to fostering a diverse and inclusive workplace that attracts

and retains exceptional talent.

Through ongoing talent development, comprehensive compensation and benefits, and a focus on health, safety and employee well-being, we strive to help our employees in all aspects of their lives so they can do their best work.

Employees are further guided by our global Code of Conduct, which builds on the foundation of our embedded core values:

Integrity, Trust, Respect, Team Spirit and Accountability.

We are committed to fostering a diverse and inclusive workplace that attracts and retains exceptional talent.

While fluctuations may occur within our workforce from time to time, we manage and track our attrition rates, while also ensuring that key positions critical to our performance our appropriately staffed.

We also maintain a global and anonymous reporting mechanism for the receipt, retention and treatment of complaints or concerns regarding accounting or other possible violations of our global Code of Conduct.

While fluctuations may occur within our workforce from time to time, we track and attempt to manage our attrition rates, while also ensuring that key positions critical to our performance our appropriately staffed.

We also analyze employee departure data so that we can continually improve upon the employee experience.

During 2020, our employee turnover rate related to voluntary terminations was approximately 5.3%.

During 2021, our employee turnover rate related to voluntary terminations was approximately 7.7% as compared to 5.3% in 2020.

Unions, Collective Bargaining Agreements and Work Councils

Of our 21,400 employees worldwide, approximately 4,730 are located in the United States and Canada.

A majority of our employees at our manufacturing facilities, in the aggregate, are represented by collective bargaining agreements and union contracts with terms that expire on varying dates.

Of our worldwide employees, approximately 5,000 are located in the United States and Canada.

Many of our global manufacturing employees, and some other employees, are represented by unions and works councils, and a significant number of our employees are subject to collective bargaining agreements that typically are for terms of three to five years and are renegotiated in connection with renewals.

We currently do not expect any significant difficulties in renewing these agreements.

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To facilitate talent attraction and retention, we strive to make AGCO an inclusive and safe workplace, with opportunities for our employees to grow and develop in their careers, supported by strong compensation, benefits and health and wellness programs, and by platforms that build connections between our employees and their communities.

Over the past year, our employees have completed online and instructor-led courses across a broad range of categories – leadership, inclusion and diversity, professional skills, technical competencies and compliance.

Over the past year, our employees have completed online, self-directed instructor-led courses across a broad range of categories – leadership, inclusion and diversity, professional skills, technical competencies and compliance.

Compliance training includes education in AGCO's culture and values and compliance with our global Code of Conduct, which, in turn, includes compliance with anti-bribery/corruption laws and policies, compliance with data privacy and cybersecurity protocols, conflicts of interest, discrimination and workplace harassment policies and sexual harassment policies.

We are deeply committed to identifying and developing the next generation of top-tier leadership with a special focus on diverse and technologically innovative talent.

We conduct annual in-depth talent and succession reviews with our senior leadership team that focuses on accelerating talent development, strengthening succession pipelines, and advancing diversity representation for our most critical roles.

We conduct annual in-depth talent and succession reviews with our senior leadership team that focus on accelerating talent development, strengthening succession pipelines, and advancing diversity representation for our most critical roles.

This analysis will be reviewed by our Board's Talent and Compensation Committee in 2022.

Furthermore, we have a performance management process that includes annual goal setting, mid-year reviews and annual performance appraisals.

Both employees and managers play an active part in our performance management process, promoting a culture of accountability that fosters employee development.

We regularly review surveys of market rates for jobs to ensure our compensation practices are competitive.

We continue to strive to offer a variety of working arrangements, including flexible schedules, telecommuting and job sharing, to help employees manage work and life balance.

We are committed to providing total rewards that are market-competitive and performance-based, driving innovation and operational excellence.

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Health, Wellness and Safety

We are also committed to the health, safety and wellness of our employees.

For instance, in the United States, we provide our employees and their families with flexible and convenient health and wellness programs, including competitive benefits arrangements.

In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees, as well as the communities in which we operate, of which comply with government regulations.

This includes having our employees work from home when possible and implementing additional safety measures for employees continuing critical on-site work.

We are also committed to the health, safety and wellness of our employees, striving to “work safe, every day, every way.” As previously discussed, our health and safety program focuses on risk reduction and safety management systems that promote preventative measures.

In addition, in response to the COVID-19 pandemic, we have implemented and continue to implement significant changes that we have determined were in the best interest of our employees, as well as the communities in which we operate, and which comply with government regulations.

Safety protocols continue to be in place for employees who are required to work onsite, including partitioning screens in factories and enhanced cleaning and sanitation practices.

For employees that can work from home, we have deployed new technologies to strengthen virtual connectivity across the globe.

We believe that our employees’ unique and diverse capabilities positively impact our success.

While during 2021 we faced numerous external and internal challenges in light of the global pandemic, we were able to effectively advance our Diversity, Equity and Inclusion (“DE&I”) initiatives.

We demonstrated our commitment in this regard by creating the role of global director of DE&I.

This role’s exclusive responsibility is to serve as the catalyst that drives our progressive DE&I footprint and best-in-class performance.

During 2021, we also developed and implemented training resources to ensure consistency in inclusion awareness and anti-bias principles from our executive team to the shop floor.

Our commitment to diversity and inclusion starts at the top with a highly skilled and diverse board.

Three of our 13 board members are women.

Three of our ten board members are women.

Women represent approximately 12% of our full-time executive positions at the senior vice president and vice president levels, and approximately 18% of our overall full-time management-level employees.

We have been nationally recognized in the United States as a female-friendly employer of choice.

We are committed to increasing the percentage of female representation in our full time management-level employee group and our overall global employee base, as well as to further initiatives for compensation equity, employee engagement, development and inclusion.

We believe that incorporating DE&I initiatives into our everyday business practices enhances innovation and enables diversity of thought.

Building upon our core values, our employees value learning from different perspectives and welcome the opportunity to work with those of diverse backgrounds.

Through our global TRAIT (our diversity and inclusion initiative), employees take part in robust training, such as creating an inclusive environment and cultural training.

We also provide our employees with resource groups such as AGCO’s Global Women’s Network, and AGCO’s Black Employee Network, to support a broader understanding of experiences as well as to drive awareness aimed to combat unconscious bias.

Through our TRAIT initiatives, we encourage employees to become involved in their communities, contributing time and talent for the improvement of the communities in which they live and work.

Through our global DE&I initiatives, employees take part in robust training, such as creating an inclusive environment and cultural training.

We also provide our employees with employee resource groups (“ERG's”), such as AGCO’s Global Women’s Network and AGCO’s Black Employee Network, to help foster a diverse and inclusive workplace as well as provide for the growth and development of underrepresented groups.

Through our DE&I initiatives, we encourage employees to become involved in their communities, contributing time and talent for the improvement of the communities in which they live and work.

During 2021, we initiated a global employee engagement and experience survey for our office employees to establish an employee engagement baseline and seek feedback on the employee experience.

Sixty-two percent of this workforce participated in the survey.

This survey will recur on an annual basis and will include all of our employees in 2022.

Human Rights Policy

We are committed to respecting human rights in all aspects of our global operations under our global Human Rights Policy.

We believe that we have a responsibility to ensure that human rights are understood and observed in every region in which we operate.

We strive to foster safe, inclusive and respectful workplaces wherever we do business, including prohibiting human trafficking, slavery, child labor or any other form of forced or involuntary labor.

Our commitment to human rights also includes improving agricultural prosperity and supporting marginalized farmers and vulnerable populations in developing countries where our activities contribute to addressing adverse human rights impacts.

Through our AGCO Agriculture Foundation, as well as our brand and regional engagement activities, we support a variety of non-profit organizations and local community-based groups.

Available Information

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Item 1. Business