Technology Is … A Return On Investment
Create a long-term strategy that pays
In the quest to grow the most profitable crop, technology tools can offer a double-edged benefit — solving problems and helping to measure the gains made.
A Farm Journal study shows most farmers (66%) expect new technology to pay for itself in three years, and 22% expect payback in the first year.
“A technology may take a few years to pay off, but we want to see some benefits right away,” says Brian Scott, a farmer from Delphi, Ind.
Before adopting a new technology, assess your expectations and how you’ll track its impact on your farm. Define the outcomes of using the technology so you can measure its success and return on the investment.
TECHNOLOGY AS A MEASURING STICK
As simple as it sounds, you can’t improve what you don’t measure. That’s particularly true with on-farm technologies, says Shay Foulk, an Illinois farmer and farm business consultant with Ag View Solutions. As such, it’s important to find the metrics most important to you. He highlights four ways to measure success with technology:
- Yield
- Timeliness in the field (planting date, spray windows, etc.)
- Efficiency (with inputs, labor and time)
- Dollars saved
“We are all guilty of wanting to see a return quickly, but we need to step back and think about how it’ll impact us long-term,” Foulk says. “Decisions should be mapped out and numbers put to them.”
On one end of the spectrum, variable-rate and auto-swath technologies can provide a fast recovery of the investments made.
“On average, it’s 4% on some of those technologies’ savings to the farmer in terms of inputs used, but we see easily 7% to 10%, and depending on the field size and shape it can be in the 30% savings, as far as inputs,” says John Fulton, precision agriculture specialist for Ohio State University Extension.
MEASURE ACCURACY
Fulton also says there is value in how technology can record and track agronomic performance.
“Technology can be used to ‘verify’ accurate competition of field operations and input placement,” he says. “Though not measurable in dollars, there’s value in knowing crop and marketing plans are on track versus not knowing.”
Longer-term analysis aided by technology and data collection can illuminate how investments in concepts such as soil health have added to the bottom line.
“Just because you are not seeing immediate payback, doesn’t mean you won’t see future benefits,” Foulk says. “For example, many people who start doing strip-till or using cover crops won’t stick with it beyond three years if they don’t see the benefits.”
Foulk says some technologies can uncover opportunities that may be lost by the time you are in the combine.
“With remote sensing, there’s value in seeing the in-season progress, and when you can correlate that back to yield, it will tell you something,” he says. “For example, we have a field that was planted half on April 9 and half on April 11. All season there’s been tremendous difference in aerial imagery, so we can’t wait to see if there’s a difference on the yield map.”
When evaluating technology advantages, determine how it can also improve your work-life balance.
“If you are running a profitable farming operation, it’s OK if a technology has a negative ROI if it improves your quality of life,” he says. “It’s how you define success — and it doesn’t have to always be about money.”
Hold Technology Accountable
Illinois farmer and farm business consultant Shay Foulk gives these insights on how every farm can find its best path forward with maximizing technology.
- Make an informed decision. “Know the dollars you are investing,” he says.
- Have a plan. “Set an expectation for its return on investment and how you will measure that,” Foulk says.
- Set timelines. “Know when you expect to reach certain milestones,” he says.
- Know your next step. “If a technology doesn’t perform as expected or meet the return on investment you outlined, have a plan in place for how you will handle that,” Foulk says.
- Let it inform your next decision. “Use your experiences to have information for the next time you go to make a decision on technology improvements,” he says.
Hear from Brian Scott on how he uses technology to improve his on-farm conservation efforts.