Precision Technology and Profitability . . .

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Research by Mike Castle, Brad Lubben, Joe Luck and Taro Mieno of the University of Nebraska-Lincoln shows the adoption of precision technology on farms is associated with profitability, but the researchers couldn’t definitively answer whether precision technology adoption led to increased profitability.  The researchers sought to answer the question of whether the adoption of technology drives increased profitability, or whether increased profitability drives technology adoption.  Using survey data gathered from members of the Nebraska Farm Business, Inc. (NFBI), estimates of adoption rates for various precision technologies since the 1990s were developed.  Technologies examined included global positioning system (GPS) guidance, automated section control, telematics, yield monitors, site-specific soil sampling, variable rate application of inputs, and crop imagery.

Figure 1 shows the adoption rates of various technologies by NFBI producers.  The researchers found yield monitors (YM), grid soil sampling (GSS), GPS-based guidance and auto-steer (AS) have been widely adopted with 70 percent or more of the NFBI members surveyed saying they have adopted the technology.   Over one-half of the NFBI members surveyed said they use GPS-based automatic section control (ASC) and variable-rate application of fertilizers and seed.  Only small percentages of producers have adopted the remaining technologies.  The adoption rates for NFBI producers are substantially higher than those reported in a USDA ARMS survey.  The researchers attribute the higher adoption rates to the fact producers in the NFBI program are more concentrated in crop production and are likely to be more progressive and management-oriented than average crop producers.

 

tech and profit

Source:  Precision Agriculture Adoption and Profitability, Cornhusker Economics, June 21, 2017

The researchers’ initial analysis found the adoption of technology was associated with higher net farm income. However, association alone does not prove causation.  A more in-depth analysis showed positive effects on net farm income of technology adoption, but the results were not conclusive enough to determine definitively whether the adoption of precision technology had a positive effect on net farm income.  The analysis also showed the profitability of technology adoption increases over time as producers’ experiences with the technologies mature.

The research concluded the overall economic impact of technology adoption remains unclear.  Clearly more research is warranted to study the economics surrounding the use of precision technology.   Experience in the field would suggest there are benefits of technology, or their adoption would not rise over time.  Further research will help illuminate these benefits.  For more information on the research, Click Here.

 

Jay RempeJay Rempe is the senior economist for Nebraska Farm Bureau. Rempe’s background in agricultural economics, years of experience in advocating at the state capitol, and firm grasp of issues allow him to quantify the fiscal impact of a regulatory proposal, and provide in-depth examination of key issues affecting Nebraska’s farmers and ranchers.