Evaluate the Payback for Precision

February 24, 2010 06:00 PM

Charles Johnson, Farm Journal National Editor
How can you be certain precision technology turns a profit on your farm? Making that call could be a little easier now that the University of Tennessee has developed the Cotton Precision Agriculture Investment Decision Aid (CPAIDA).
"We developed it to determine break-even on different ag technology investments,” says Dan Mooney, University of Tennessee ag economist. "As production costs increase, commodity prices are stagnating. Precision farming is one method used to reduce costs. But increases in precision farming are constrained by uncertainty about profitability.”
With upfront precision farming investments running from $5,000 to $25,000, it's vital to make the right call. With the new evaluation tool, you plug in your desired variable rate technology equipment. The program then reports your costs spread across all your acreage options, including crops in addition to cotton.
It provides a "what-if” scenario, Mooney says, and tells what yields are needed in order to pay for the technology. That's different from the data some manufacturers provide.
"Manufacturers a lot of times only look at cost of the equipment. They're not looking at the information-gathering costs,” Mooney says.
Those costs include aerial or satellite imaging, soil sampling, yield monitoring, GPS signal subscription and custom mapping.
"You can get cost analysis per year or per acre for those costs, a profitability summary, a figure on net return per acre and the rate of return on investment. You can change equipment, the prices and farm characteristics,” Mooney says.
Find the CPAIDA program at http://economics.ag.utk.edu/cpaida.html.

You can e-mail Charles Johnson at cjohnson@farmjournal.com.

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