The question does sound off, because if you are selling precision agriculture tools and services the answer will most likely be; the ROI over time with increased productivity in capital and labour will be positive. Personally, I believe that the gains from precision ag or ag-tech tools and services are positive, but that depends primarily on the practitioner and his goals.
Farming is not a clean-cut pixel and click kind of profession. It is complex, dynamic, and most importantly requires people. A multispectral camera or sensor may provide additional information to make more informed decisions, but a farmer knows his land. He understands what the plant needs. So, when we try to develop precision ag tech we must try and understand the question; What does the farmer need?
More gadgets? I don’t think so. More information? Maybe, but what kind and how often? The wealth of information current technology provides on a daily basis is overwhelming to say the least. David Pannell is Professor of Agricultural and Resource Economics at the University of Western Australia and Director of the Centre for Environmental Economics and Policy. He has written 7 books and over 200 journal articles on the subject. He says: “Managing a farm can be blindingly complex. In deciding on the best mix of farm enterprises and management practices, the diversity and extent of relevant information is enormous. The choice of farm strategy may be influenced by the farmer’s knowledge of: scientific issues (biological and/or physical), machinery, economic/commercial factors, political events, legal constraints, historical trends, climate/weather, environmental issues, personal circumstances and any number of practical considerations. Even if a farmer had a complete grasp of all relevant information, the problem of combining it and appropriately weighing it all up for decision making would be very substantial indeed. A thorough and detailed analysis would certainly be beyond the capability of any single human mind.”
From a business standpoint, the income statement and balance sheet do not lie (unless you have shady accountants) but for the most part it will reflect that increase in current expenses and depending on your circumstances the tech purchased as an “asset” will likely depreciate quickly to zero. If buying a new tractor – a critical component of any farming operation – can be amortized over 10-15 years. How much would modern tech gadgets such as drones, water sensors, and other monitoring technologies can add to a farming business balance sheet?
Would spending money on technology today immediately make you a better farmer? I would venture and say no, but it may improve your decision skills. However, if your decisions will be solely or mostly based on algorithmic data outputs then farming as we know it will soon disappear.
I am an advocate of precision agriculture tech, with the caveat that we do not make it the center of the farming operation and pretend that it is the holy grail to productivity. A business case can and should be made for technology adoption in agriculture. A very interesting segment is tech that can help us reduce the environmental impact of excess fertilizer water run-offs in streams and aquifers and help us reduce the use of water.
At AIDC we cultivated sugar beets on 300 acres. The local sugar market in Egypt was hungry for supply. Recognizing the unsustainable practices of cane sugar farming for the production of sugar, incentives where placed to encourage farmers to increase sugar beet farming acreage to meet demand and save on the massive amounts of water used in cane sugar farming. The beets farmed had to meet government standards for soluble sugar content and the market prices and support incentives where placed to promote extensive sugar beet production. This was a suitable test bed for dipping our toes in the precision ag pool. We had a baseline for the land’s productivity and we wanted to evaluate the “benefits” of adopting precision agriculture tools in our beet operation. Over the course of the growing season I evaluated the use of drones, water sensors, satellite monitoring systems, precision irrigation tools.
One common problem that kept coming up was the disconnect between my agricultural production data (harvest tonnage, etc.) and financial data. When I started out, I looked at our financial account tree (general ledger) and was amazed at how current ERP systems don’t fully understand how farming works?!
So, it was one of the very first problems we ventured to solve. One of the problems of not having the right information readily available in context is that a farmer can mistakenly take a decision that may impact his season. As a farm manager I wanted to know how much will it cost me? Dollars per acre, how much will I have to spend to use precision ag-tech, and what is the increase in production (revenue) over the sugar beet harvest for that growing year.
This data set and guide if anything will at least help you peer into the thought process and execution of implementing precision ag tech in your farm. I will share some of the production data and some slightly modified financial data for demonstration purposes along with the spread sheets and models created to evaluate the project.