Adoption and Economics of Precision Agriculture Technologies

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Adoption and Economics of Precision Agriculture
Technologies
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True or False?
Precision farming will never pay because the
equipment and data are too expensive. Precision
farming information and technology will make my
farm more profitable.
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Adoption Trends
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Technology Adoption
Source Lowenberg-DeBoer, 1997
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Technology Adoption?
Source Lowenberg-DeBoer, 1997
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Source Lowenberg-DeBoer, 1997
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Precision Agricultural Services Dealership Survey

• L.D. Whipker J. T. Akridge
• Purdue University Crop Life magazine
• 447 respondents from 41 states
• 69-Midwest, 15-South,
• 9-West, 6 Northeast

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Precision Services Used
Midwest dealers use more precision services than
other states 69.2 vs. 43.1
Whipker Akridge, 2003
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Precision Services Offered
Midwest dealers offer significantly more
precision services except satellite imagery.
Whipker Akridge, 2003
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Soil Sampling Methods
Whipker Akridge, 2003
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Variable Rate Applications
Midwest has generally greater than twice the
adoption rate of variable rate application
compared to other states.
Whipker Akridge, 2003
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Precision Services Profitability
Whipker Akridge, 2003
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Dealer Estimate of Total Market Area Using
Precision Services
Whipker Akridge, 2003
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Summary of first 15 years

• Technology has developed rapidly, but is still
  limiting in some respects
• Scientific basis for explaining and responding to
  variability lags behind expectations
• Economics and adoption have not met expectations

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Profitability of Precision Agriculture Techniques
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Economic Analyses of Published Studies

• Results are mixed
• 25 clearly profitable
• 25 clearly unprofitable
• 50 partially
• Depends on analysis assumptions

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Farm Journal Study

• Compared three strategies
• conventional
• manual site-specific
• automated site-specific
• IL farm, corn and soybeans
• three years

Source Finck, C. 1998.
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Farm Journal Results

• SSM for corn returned 19/ac
• Manual SSM had slightly less yield but higher
  profit than automated SSM
• Owner/operator paid high attention to details

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Profitability in SSM Studies
Swinton and Lownberg-DeBoer, 1998, J. Prod.
Agric. 11(4)439-446
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Profit Analysis Questions

• What techniques are being examined?
• Do you charge yield mapping costs against VRT
  practice?
• How do you determine the profitability of yield
  mapping?

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Analysis techniques

• Choose comparable practices to contrast
• Determine the source of return for site-specific
  management (reduced inputs, improved yield, etc.)

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Profitability comparisons

• Should use partial budget technique
• Include sampling and equipment costs
• Annualize data that has multi-year utility

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Non-SSM Profit Opportunities

• On-farm research
• Improved competitiveness for capital and land
• Improved management of associated operations
• Risk management strategies
• Reduction in equipment and labor

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Expanded Scope of PA

• Not just variable rate fertilization today!
• Emphasis on improving efficiencies of all types
• Machine productivity
• Logistics

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References

• http//www.silsoe.cranfield.ac.uk/CPF/papers/Spyri
  don_Fountas/Spyridon_Fountas.pdf
• Lowneberg-DeBoer, J. Bumpy road to adoption of
  precision agriculture, Purdue Agricultural
  Economics Report, Nov. 1997
• Sinton and Lownenberg-Deboer. 1998. Evaluating
  the profitability of site-specific farming. J.
  Prod. Agric. 11439-446
• Finck, C. 1998. Precision can pay its way. Farm
  Journal
• Whipker, L.D. J. T. Akridge. 2003 Precision
  Agricultural Services Dealership Survey Results.
  Staff Paper No. 3-10. Purdue University
  CropLife magazine.