Precision Agriculture 2016: Half Full Or Half Empty?

Precision Agriculture 2016: Half Full Or Half Empty?

Usually, as the calendar is about to turn from one year to the next, market watchers often sum up the results from the previous 12 months using some kind of sound bite or catchphrase. Also popular is ascribing a single word to the year.


For 2015, the single word that probably best sums up agricultural fortunes is “uncertainty.” Coming off the high-water mark years between 2010 and 2014 — where commodity prices remained at near record levels and nationwide combined grower income climbed over the $100 billion threshold —  2015 was a much different kind of agricultural year. Despite excessive rains and many lost crops in states such as Indiana and Illinois, the overall harvest numbers weren’t that bleak. This kept major crop commodity futures from moving much off their current levels (around $3.50 per bushel for corn and just under $9 per bushel for soybeans). As a result of this, grower income is projected to take a serious dip in 2015, down almost 50% to just over $50 billion.

Going into the 2016 growing season, the single word that best describes the mood among agricultural professionals right now would be “fear.” Many market analysts are saying that growers are being told by their financial advisers and bank loan officers that they will need to cut between $50 and $100 per acre off their current budgets to make a profit in the new year. “The agricultural bubble will still be deflating in 2016,” said one market analyst at a recent industry roundtable event. This analyst went on to add that in this kind of tight margins environment, virtually every crop input and service normally utilized by growers to boost their yields during the past few growing seasons “will be scrutinized like never before.” In particular, smaller use products such as micronutrients and fungicides applied as a preventive measure could see some significant sales pullbacks.

Naturally, this kind of “everything is on the table for discussion” mind-set among growers begs a simple question — what about precision agriculture growth in 2016? On the surface of it, the agricultural glass for the category would definitely seem to be half empty. However, a deeper dive into market trends tells a somewhat different story.

Since the agricultural market began its latest “boom cycle” back in 2009, growers have spent much of their time and money chasing bigger yields. Heck, when corn was selling for more than $7 per bushel and soybeans was in the high teens, price wise, it made sense (and cents) to try to get as much out of every acre of crops as possible. Seed producers have pointed out that the top yield potential of an acre of corn today is approximately 600 bushels because of improved seed genetics. Nationwide, the average bushel per rate today is closer to 200, with some growers occasionally topping 300 bushels per acre.

According to many market insiders, one of the only ways growers can continue to coax more yield from their crops will be through the use of precision agriculture. “Technology will only become more prevalent in agriculture during 2016 if growers want to keep chasing higher yields,” says Ron Milby, seed division manager for GROWMARK.

In addition, as growers strive to employ sustainable agricultural practices on their farms, precision agricultural technologies can also aid in this effort, as well as provide an “electronic paper trail” for observers and industry critics to see for themselves.

In these cases, it would appear the agricultural glass for precision ag in 2016 is half full. It will be interesting to see which of these two scenarios ends up winning out.