I recently had the opportunity to take a deeper dive into the 2015 CropLife 100 retailers report in CropLife® magazine, an annual analysis of the state of agricultural retailing in the U.S.
Readers of the report might be lulled into thinking that precision ag is a modest part of our industry. After all, in a $30.5 billion U.S. consumable crop input industry, fertilizer is $14.6 billion (48%), crop protection is $10.1 billion (33%), and seed is $4.3 billion (14%). Custom application is the remaining $1.5 billion. Recent reports from ag equipment manufacturers have shown declines in sales of tractors, combines, and other equipment, but U.S. ag equipment sales are still perhaps $20 to $30 billion annually.
So where are sales of “precision agriculture?” This illustrates a challenge we face with this emerging sector. At turning points in an industry, particularly with an emerging sector like precision agriculture, traditional industry metrics typically fail us. They dramatically underestimate sales and market impact as they tend to stay “nested” in traditional metrics.
For example, a portion of revenue from custom application could clearly be counted as precision ag, as application equipment contains many precision ag technology components. What about grid soil sampling with the latest precision ag technology? The related revenue typically gets counted as fertilizer or custom application sales.
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This is precisely why you should attend the PrecisionAg® Vision ConferenceSM, Oct. 18-20 in Glendale, AZ. Simply put, the economic impact of precision agriculture is an order of magnitude greater than the direct financial impact. In other words, our ability to directly count the financial impact of precision agriculture in dollars of sales revenue is far less than the economic impact of the sector.
Most studies on the size of the precision ag market rely estimating precision ag sales as a percentage of total revenues. Depending on what assumptions are used, precision ag revenue could range from as little as $500 million to as much as $3 billion. At a rough midpoint of $1.5 billion, precision agriculture’s direct revenue is perhaps 2% to 3% of total U.S. ag inputs and equipment sales, not a huge percentage of the market.
But, of course this analysis misses the whole point of precision ag! There is not one single element of inputs or equipment which will not be impacted by the development of precision agriculture. In a $60 billion total market for inputs and equipment, it’s not an exaggeration to project that literally tens of billions of dollars of sales could be directly impacted by precision ag and its development.
Given this, what other meeting could be more important to your business? This conference will focus on a number of key questions:
- How is precision ag likely to change the industry? Which of dozens of scenarios are most likely to unfold?
- Who will drive this change? Will channel players, chemical suppliers, seed suppliers, equipment suppliers, or non-aligned players such as software players, peer networks, Silicon Valley technology firms drive the biggest change in the industry? Who will be “driving this truck”? Who will get “run over” by this truck?
- What can we learn from other industries about the collection and management of data? Agriculture is not alone in its struggle to manage and extract value from its vast stores of data. What can the experiences of industries such as oil and gas and healthcare teach us?
- Which enabling technologies are most likely to transform the industry? Who’s in the lead? Who’s behind? How will they catch up?
- When will this happen? Which changes will impact the next few years? Which changes are further off? What could change that timeline?
Please join us in Phoenix in October to dig deeply into how this critical sector will change your business in the coming years!