Precision Powers Profit

Show me the money. That was the challenge many crop producers issued to providers of precision agriculture technology in the 1990s.

Most farmers weren’t about to be sucked in by new bells and whistles they felt didn’t hold any real value for their operation. The phrase, from the Tom Cruise movie “Jerry Maguire” that was popular at the time, seemed fitting for a new technology that many felt was too expensive, too complex and simply, well, too new.

My, how times have changed.

In a substantial research effort concluded earlier this year, more than eight of 10 soybean, corn, wheat, and cotton growers who use precision technology in their farming operation say using precision technology has clearly made them more profitable. The research was initiated by the PrecisionAg Institute and carried out by dmrkynetec (formerly known as Doane Marketing Research).

The research, compiled from hundreds of in-depth one-on-one grower interviews during the past three months, is designed to create a comprehensive benchmark of precision technology adoption among row crop growers in the U.S.

Of those surveyed who indicated enhanced profitability, the mean savings per acre across different cropping systems ranged from $5.29 per acre to $9.44 per acre depending on the crop: corn, cotton, soybeans, or wheat. Additional findings also serve to clearly outline the gains that adopters have reaped and the resistance put up by those who’ve yet to embrace precision:

1. The more you use, the more you profit. Growers who use more precision agriculture technology — in particular, those using GPS, electronic controller-driven application, and yield monitors — reported greater profitability than those who’ve limited their adoption. In other words, if they use all three of those tools, they were more profitable than those using just one or two.

2. Cost and complexity are barriers. In the first-ever national survey of growers who have not yet adopted precision agriculture technology, survey respondents overwhelmingly cited start-up costs as their principle barrier to using the technology. A distant second was that the technology was “too complex.”

Knowing More Has Value

One equipment provider close to the field suggested that the cost and complexity responses may be a little difficult to unbundle. “Non-adopters are using cost as an excuse, I think,” he said. “It’s natural that they wouldn’t want to admit that they find the technology ‘too complex.'”

Either way, knowing more about how adopters and non-adopters of precision agriculture feel about the technology should help all involved — equipment marketers, crop input dealers — in improving the success of those already using it and helping others join that profitable crowd.

“The research is providing insight into the real economic and technological opportunities and challenges related to precision technology products and methods,” says Paul Schrimpf, PrecisionAg Institute manager and group editor of CropLife Media Group. “Our hope was to test theories, challenge conventional thought, and get to the bottom of issues that have been puzzling the market for years.”

Schrimpf says that the Institute will be taking these results and finding ways to validate the data that are close-up and personal in the form of focus groups featuring both adopters and non-adopters.

“A big riddle for growers and dealers has been the return on investment piece of precision technology adoption,” explains Schrimpf. Indeed, it’s the question that growers have asked crop input dealers and equipment providers since early adopters began to catch the bug from the innovators in the late 1990s.

“Now there’s a window of opportunity to better express the value of precision agriculture, and the research may help more growers and crop input dealers make better-informed decisions about adding new technology,” says Schrimpf.

Input Costs Increase, Too

So what is new these days in crop production, as some seek out a place to auger out the 2007 crop (no small challenge for some)? What’s different this year as growers study their harvest data and get set to make some planting decisions for 2008?

It seems most everything is different, at least in the near term. The rising tide of commodity prices (at this writing, wheat and soybeans are north of $9 and corn near $3.50) offers mixed blessings as it raises input costs alongside. With land rents up, making the most of every acre will be crucial to be assured of making the most of those higher prices. Then there is the price and complexity of input decisions.

Increased costs for trait-stacked seed are making the precise placement and care of that seed an overarching issue. Cotton growers are dealing with a bag of seed costing $200 to $400 depending on the traits inside. And in the Corn Belt, Dow and Monsanto announced last month that they are marketing “SuperStack,” seed that combines Herculex and YieldGard traits as well as others. Seed costs will rise as numbers of traits increase. Precision planting is likely to become a requirement and not a luxury.

Add to this mix the higher cost of fertilizer, increasing concern for food safety, and greater environmental scrutiny, and there are a lot of reasons for using smarter technology for planting, input application, harvest, and tracking yields.

“Precision makes a lot of sense as a way to assure society that we are taking care of our resources even as we produce more to meet demand for feed and fuel,” explains Schrimpf. “PrecisionAg adoption doesn’t only make growers more profitable, it also can also keep them from getting on the wrong side of public opinion.”

In the coming month, the new PrecisionAg Institute, with a mission of education and advocacy for precision agriculture, will be working to state some of the research results in a clear manner designed to encourage more to adopt the technology. Information will be provided through ads at PrecisionAg WORKS.

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