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Return on Investment

December 14, 2013
By: Ben Potter, AgWeb.com Social Media and Innovation Editor google + 
wide view of tech in tractor
How quickly does precision pay? It depends on what you install and how you use it.  

A closer look at technology’s potential payback

Precision ag has many benefits on the farm, but adoption is far from universal. According to the results of an October 2013 AgWeb survey, only about 20% of the 1,600 farmer respondents were using precision ag technology throughout their operation, and 25% say they aren’t using it at all.

Still, many farmers such as Brian Watkins are not only putting precision ag to the test; they are calculating the approximate value each technology brings to the farm.

Watkins, a sixth-generation Ohio farmer, uses several precision technologies in his operation and

deci­ded to see what value each component brought to the table. He wanted to make sure his six-figure component was a smart one. There were initial investments, such as an auto-steer setup, software, new clutches on his planters and variable-rate ready applicators, but he also factored in recurring costs such as consulting, soil testing, internal maintenance and more.

"We evaluated each area separately when we were deciding to invest in them," Watkins says. "We try to evaluate all of our investments in this manner. We are not done learning, which means we are not done making mistakes, but at least now we can justify the expense."

Watkins says farming smaller fields with odd shapes and numerous waterways amplified the benefits of reduced overlap. In total, the precision decisions tallied up a return of 145%.

Terry Kastens, a professor at Kansas State University, says the precision ag experience is highly personal.

"Everybody knows that some aspects of precision ag pay today, and so those aspects are adopted very quickly," he says. "The ROI [return on investment] in other aspects of precision ag is not nearly so clear."

Yield monitors versus yield mapping technology is a prime example, he says.

"Everybody has a yield monitor and gets the implicit benefits of observing yield in real time across their fields," he says. "But, hardly anyone is doing anything meaningful with the data. That takes some number crunching and understanding what you wish to change based on the data you collect."

Some technologies are slow to adopt because they are expensive, difficult to learn or completely different than current practices, Kastens adds.

Mike Gomes, director of strategic business development with Topcon Precision Agriculture, says education and training are ever-present challenges when adopting new technology.

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FEATURED IN: Farm Journal - Mid-December 2013



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