The Real Return of Investment (ROI) on Precision Agriculture

By Maria Onofrio

Tue, 17 Jul 2018

PRECISION AG’S RETURN ON INVESTMENT

The biggest factor that has made growers hesitant of investing in expensive new technologies for the farm is whether this investment is paying back.

On this topic, what is important to bear in mind is that what is profitable to a farmer may not be profitable to another. There is no “one-size fits all” technology, and it is a subjective exercise that moulds into the specific needs of each farmer.

“Crop specificity is really just where it begins though, because just as important are issues of scale. Someone who has 100 acres of a certain crop won’t necessarily be able to use a drone in the same way as someone who has 1,000 acres, even if we’re talking about the exact same crop in the exact same climate” says Young Kim, CEO of Digital Harvest.

DETERMINING ROI OF NEW TECHNOLOGIES IN AGRICULTURE FOR THE LONG RUN

“ROI really doesn’t become attractive unless you start thinking about the unmanned systems as just a part of a solution, not the solution in and of itself,” Kim mentioned. “It takes an investment of time and money from the growers and from the vendors to see how the info gathered from a drone can connect to other things that are happening on their farm. Growers need that info to provide context and create a correlation, and then you get to cause and effect. That’s when the ROI becomes significant.”

According to Bruce Erickson, Purdue University Department of Agronomy, with some precision ag technologies, the return on the investment can be relatively easy to quantify, and in some others not so easy.

“I have farmers who tell me they can pretty much pay off section control on a sprayer within a year [or between three and five years],” says Erickson. “They pretty much pay for themselves with a sizable farming operation.”

“If you collect yield monitor information; if you do grid soil sampling; if you’re doing remote sensing imagery — there’s no economic payback to that until it drives a decision that provides more revenue for your farm,” he says. “And that additional revenue has to pay for the cost of collecting and analysing all of this additional information. So that’s how the profit will have to be made. We’ll have to either be getting more yield in various parts of the field or saving on input costs. We’re going to have to be more efficient all over the field, or it’s not going to be worth doing.”

Another study conducted by Dr. John P. Fulton at Auburn University indicated that auto-swath technology could result in a 4.3% average savings on input costs for a farm with a payback of around two years. If the savings due to GPS guidance were included, the total cost savings could be in the 20 to 30% range.


To address these challenges, we have developed AG40 workshop, a programme designed around bringing key stakeholders from throughout US agriculture together to tackle the most issues in relation to the stability of the market. To find out how this will be achieved, and whether you can be involved in this, follow the link here and below:

www.challenge.org/ag40


ABOUT AG40

Challenge Advisory is bringing together AG40, a unique workshop where organisations will have the ability to network amongst each other for precise and profitable resolutions across the entire industry. There will be panel discussions and workshop sessions designed to create partnerships and profitable business development, helping to find cross-specialism solutions to current sectoral challenges.

Join Challenge Advisory and all our stakeholders for education, interoperability and investment relating to the latest technology in digital agriculture – click here to find out more:

www.challenge.org/ag40

 


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Maria Onofrio

monofrio@challenge.org

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