Precision Agriculture And The Economy

The theme of this issue is “Precision Around The World.” It seems a bit coincidental that we are discussing international precision agriculture efforts at the same time there is global economic upheaval. With so much news about a turbulent economy, one can not help but wonder how recent events would impact precision agriculture innovation worldwide.

Before plunging into some thoughts about global precision agriculture, I did want to share an interesting bit of analysis, which maybe is not too surprising given the recent economic picture. A good friend of mine, who is also a client from a Texas cooperative, recently shared some analysis he had performed on possible production scenarios for the 2009 growing season. He was particularly interested in a grower’s probability of being profitable for different crops (corn, cotton, soybeans, sorghum, wheat, and rice) given recent trends in spending and earnings. As part of his analysis, he entered realistic costs for seed, fuel, materials, etc. in addition to labor, rent, and depreciable items. He then entered the expected revenue for each crop based on average yield projections.

What he found was that growers in his region of Texas could barely make a profit with corn, make some profit with sorghum, and make the most profit with rice about half the time (one out of two years). In other words, a grower had a 50-50 chance of making a profit in any given year for three out of the six analyzed crops. If he increased the probability of being profitable (or lowering risk) to three-quarters of the time (three out of four years), then only rice was profitable. While the remaining crops (cotton and soybeans) could be profitable at unacceptable low probabilities (high risk), wheat was never profitable.

The lesson learned from my friend’s analysis is that with increasing costs, tightening credit accessibility, and variable revenues due to economic instability, we may have reached a point in certain geographies of this country where crop production is just barely viable.

Negative Factors

And how does this affect precision agriculture? I believe the economic turbulence affects precision agriculture in both negative and positive ways.

On the negative side, when production becomes marginally profitable, growers, especially those reliant on bank loans, shift into a cost-cutting mentality. The first cut is always information services, even at a time when such services would be invaluable.

The gut logic is that information will not fuel any equipment or protect any crops from pests. Information is simply seen as unnecessary expenditure in tough economic times. In many instances, this cost-cutting mentality is dictated by lenders. Besides outright rejection, there will also be some entrenchment. Even growers who were “early adopters” of precision agriculture innovations tend to dig in their heels and not try new ideas. They become more conservative because taking chances on something new costs money even if there is a likelihood of positive payoff. Proven, cost-effective technologies become the rule of the day, while innovations tend to be put off until better times.

Positive Perspective

Now there are positive ways that a turbulent economy helps precision agriculture.

I see two long-term driving forces that are favorable to precision agriculture, even in trying economic times. First, people have to eat. The increasing demand for food by a growing world population will support a global agriculture industry. While our traditional production practices will be challenged by a changing economic world, new ones will arise and be empowered by technologies like precision agriculture. Starting first at a few locations with small numbers of growers, these new production systems will contribute to establishing new, stable local economies. During this trial and error period, a tremendous amount of experimentation will take place, with the most successful production systems taking root in different geographies. In short order, profitable approaches will be copied and stable and local economies would scale up and impact regional and national systems.

The second driving force is regulation. Many traditional production practices have been at odds with urbanization and the environment. In order to bring about a balance, state and federal agencies will apply financial resources to guide growers towards more socially acceptable practices. In uncertain times like today, regulation will be viewed by many as the easiest solution for providing stability. As production practices become more regulated, precision agriculture can provide the required monitoring and management tools. It can also help automate the submission of information demanded by regulation.

Underlying this discussion about precision agriculture in a turbulent economy is the need for innovation. This need is why the “Precision Around The World” theme is particularly important today. Because of the sheer number of new ideas being tried in different crop production systems and geographies, innovation becomes our best safeguard in economically troubled times. In some sense, innovation over a large area in just a brief period of time is equivalent to innovation occurring over a very long time in just one location. We all benefit in the short term when many individuals in different places are engaged in a creative activity like precision agriculture. Let us learn from each other, so that this difficult economic period we are experiencing today will be short-lived and be the start of a better future.

Editor’s note: This article first appeared in the Winter 2008 issue of PrecisionAg Special Reports.

Leave a Reply

Business Management Stories
GPS, Guidance
Business ManagementPromoting Precision Agricultural Innovation in a Risk Averse Marketplace
April 24, 2017
As precision agriculture consultants we constantly are being asked our opinions on where to invest, and how to strategically invest Read More
Business ManagementBionic Leaves: Future Source of Endless Fertilizer?
April 21, 2017
*Article Notes: This monthly column takes some crazy sounding ideas and applies them to the field of Ag Tech. The Read More
Ag Retailer and Grower WinField United
Business ManagementMirror Mirror on the Wall, Who is the Most Trusted Ag Advisor of Them All?
April 4, 2017
Who is the most trusted ag advisor of them all? It’s a question I think we’ve all heard before, mind you Read More
Erich Eller ForeFront Ag Solutions with Ag Eagle-drone
Business ManagementForeFront Ag Solutions: Going Beyond The Averages
March 22, 2017
He’s flying essentially solo these days with business support from his wife Jennifer, but Erich Eller has big dreams for Read More
Trending Articles
GPS, Guidance
Business ManagementPromoting Precision Agricultural Innovation in a Risk Averse Marketplace
April 24, 2017
As precision agriculture consultants we constantly are being asked our opinions on where to invest, and how to strategically invest Read More
Data ManagementInnovation Series Highlights: The Weather Company’s Rob Berglund on Cognitive Computing
April 19, 2017
Rob Berglund, global director of sales, energy and agriculture at The Weather Company, discusses IBM’s Watson and applications for advanced analytics that will fundamentally change Read More
Corn close up
Data ManagementFarmers Business Network Releases State of the Industry Style Report
April 17, 2017
Farmer’s Business Network (FBN) released today its “The Voice of the Farmer”, a special research report on the state of Read More
Soybean Closeup
Ag Tech GlobalPrecision Agriculture Helps Brazilian Farmers Top 90-Bushel Soybean Yield
April 5, 2017
In the 2016/2017 harvest, the Mato Grossense Institute of Economics (IMEA) estimated that the largest soybean state in Brazil will Read More
Grower Retaile iPad
ProfessionalsField Scouting Apps Boost Efficiency, Speed
March 31, 2017
Scouting is one of the most critical services that ag retailers and consultants can offer their grower-customers. The need for Read More
Bruce Rasa corn AgVoice app
Data ManagementVoice-To-Data Tool Shows Promise For Scouting
March 24, 2017
See it, speak it, record it. No pens, no paper, no lost information. In a nutshell that’s what Bruce Rasa Read More
Latest News
Simplot Truck on Wilcox Farm
Ag Tech GlobalSimplot Taps Spensa to Power Advisor Platform
April 28, 2017
J.R. Simplot Co. announced it has entered into a partnership with Spensa Technologies Inc., an agriculture services company based in Read More
BASF Maglis Grower Tablet
Ag Tech GlobalBASF Fortifies Digital Farming Offer with ZedX Acquisit…
April 27, 2017
BASF has signed an agreement to acquire US-based company ZedX, a leader in the development of digital agricultural intelligence. The Read More
Sentera
DronesSentera Announces May Release of Multispectral Double 4…
April 27, 2017
Sentera announced the release of its Multispectral Double 4K Sensor, offering five precise spectral bands: blue, green, red, red edge, Read More
Data Science tablet
Data ManagementHow to Address the Challenges of Data Science in Agricu…
April 26, 2017
Recently, Joe Byrum wrote an excellent article on the state of machine learning in agriculture. In it, Joe highlighted one Read More
Industry NewsFrom PrecisionAg with Love: Thanks, President Trump! (O…
April 26, 2017
Without getting too far into the weeds, I think it’s safe to say that today America feels more divided than Read More
Purdue Online Course
ProfessionalsPurdue University’s Online Precision Ag Course Re…
April 25, 2017
An online course offered by Purdue University’s Agronomy e-Learning Academy, Precision Agriculture, has received the 2017 Digital Education Excellence in Read More
Nuffield Scholarship
Ag Tech GlobalNuffield: Promoting the Diffusion of Knowledge of Preci…
April 24, 2017
Recently, I had the opportunity to meet John Stevenson, a 2016 Nuffield Australia Scholarship winner.  As part of the scholarship, John Read More
GPS, Guidance
Business ManagementPromoting Precision Agricultural Innovation in a Risk A…
April 24, 2017
As precision agriculture consultants we constantly are being asked our opinions on where to invest, and how to strategically invest Read More
Case IH Autonomous concept vehicle
ProfessionalsOpinion: What the Heck is A.I. Going to do for Agricult…
April 24, 2017
Let’s pause from the daily toils of ag for a minute and start thinking about the future. In a very Read More
Imagery ipad
Imagery/SensingNew Opportunities with In-season Imagery?
April 24, 2017
When I think about precision agriculture my usual thoughts are around the continuous learning about the variability in a field. Read More
Data ManagementNew Partnership: Farmers Edge, Allied Cooperative Link …
April 24, 2017
Farmers Edge announced it has partnered with Allied Cooperative, a provider of agronomy, feed, grain, and equipment services to growers Read More
Retailer Grower Tractor
ProfessionalsAg Attorney: Sorry Right to Repair Advocates, But You&#…
April 21, 2017
(via AgLaw.us) This recent article on Motherboard is getting a lot of press: “Why American Farmers are Hacking Their Tractors Read More
ProfessionalsAgFunder: Clean Seed’s Wireless Smart Seeder is Set to …
April 21, 2017
(Via AgFunderNews.com) Heard of Clean Seed Capital Group? No? You will very soon because this Canadian company has been quietly Read More
Business ManagementBionic Leaves: Future Source of Endless Fertilizer?
April 21, 2017
*Article Notes: This monthly column takes some crazy sounding ideas and applies them to the field of Ag Tech. The Read More
Sentera software
Decision Support SoftwareSentera Launching Field-Edge Plant Population Analysis …
April 20, 2017
Sentera is excited to announce the launch of its closed beta for field-edge Plant Population Analysis, available through its AgVault Read More
Data ManagementFarm Market iD Launches Sales & Marketing Platform
April 20, 2017
Following Farm Market iD’s February 2017 introduction of FieldVision, its mobile data-delivery platform, the company announced today its newest online Read More
Data ManagementInnovation Series Highlights: The Weather Company’…
April 19, 2017
Rob Berglund, global director of sales, energy and agriculture at The Weather Company, discusses IBM’s Watson and applications for advanced analytics that will fundamentally change Read More
Data ManagementInnovation Series Highlights: EFC Systems & 5 Facto…
April 19, 2017
Ernie Chappell of EFC Systems discusses five factors impacting the ag retail industry, the competitive advantages of enhanced customer engagement Read More