Why All the Hype about Precision Ag?

Business-savvy producers often ask themselves, “Yes, but does it pay?” More often than not, these same producers pose this very question in response to a stellar presentation on the features and benefits of a precision ag (PA) technology offering.

In October 2016, the USDA Economic Research Service published a report titled, “Farm Profits and Adoption of Precision Agriculture.” This report focused on three technologies associated with precision ag:  1) GPS mapping (soil characteristics and yield monitoring), 2) Guidance systems and 3) Variable rate technology. Although the report uses Midwest corn producer data, the results are still applicable to anyone using precision ag technologies.

Here’s the bottom line: “All three technologies have small positive impacts on both net returns (including overhead expenses) and operating profits for a U.S. corn farm of average size:

• GPS mapping shows the largest estimated impact among PA technologies, with an increase in operating profit of almost 3 percent on corn farms. The impact of mapping on net returns is almost 2 percent.
• Guidance systems raise operating profit on corn farms by an estimated 2.5 percent and net returns by 1.5 percent.
• Variable-rate technology (VRT) raises both operating profit and net returns on corn farms by an estimated 1.1 percent.”1

Many producers have already adopted and are actively using guidance systems, and it’s pretty simple to calculate the return on investment once the increased efficiencies are documented. In the West, GPS mapping of soil characteristics is becoming more commonplace. However, the diversity of crops and harvest methods in the West present ongoing challenges in the yield mapping arena.

GPS mapping of soil characteristics and variable rate technology often go hand-in-hand, and the combined returns to operating profit for a U.S. corn grower trends towards an increase of 4.1 percent. It’s not great, but it is respectable. For a Northern Illinois corn grower, utilizing these two technologies would have returned an average of nearly $16 per acre for each year during the years 2010-2015.2  Now, consider what a 4.1 percent increase in operating profits might mean with some of the higher value crops we raise in the West. Are you leaving dollars in the field?

The answer to the question, “Yes, but does it pay?” depends on the precision ag technology offering chosen and the specific situation in which it is employed. It is often said the definition of insanity is doing the same thing over and over and expecting different results. If you are looking for different results, you must be willing to do things differently. Start today!

- Michael Larkin, Precision Information Manager

References:

1. Schimmelpfennig, David, October 2016. Farm Profits and Adoption of Precision Agriculture, A report summary from the Economic Research Service. USDA.
2. Schnitkey, Gary, February 2017. Revenue and Costs for Corn, Soybeans, Wheat, and Double-Crop Soybeans, Actual for 2010 through 2015, Projected 2016 and 2017. Department of Agriculture and Consumer Economics. University of Illinois.