The State Of Precision Agriculture 2011
The 15th CropLife/Purdue survey finds that technologies are diverging as the industry matures.
June 2, 2011
The precision agriculture marketplace remains a dynamic, ever-evolving sector of the agriculture world. While some technologies have stayed fairly constant in their adoption rates, others have grown substantially in the past few years.
After a year off, CropLife® magazine and Purdue University's Center for Food and Agricultural Business took another look at precision agriculture technology adoption by retail crop input agricultural dealerships across the U.S. This survey was first conducted 16 years ago, when precision technologies were just entering the market with exciting, groundbreaking opportunities to take agriculture to new levels. After 16 years, the biggest change that has occurred is that many of these methods of serving the agricultural community and growing crops have become so common place that they aren't thought of as unique any more. However, the rapid improvements in technologies and how they're implemented into everyday business continues to grow.
In 2009, the economy was struggling and some of the impact of that was somewhat seen in the survey results. But this year's agricultural economy is booming, certainly on the crops side, and the future growth that survey respondents see in many technology areas reflects this. Also, since many of today's precision technologies are related to cost savings as much or more than production increases, the cost of inputs related to the cost of the technology remains a primary driver.
As in previous years, a questionnaire was sent to 2,500 CropLife dealership readers to "take the pulse of the industry" with respect to precision technologies. Questions were asked about precision technologies used in the dealership as well as precision services offered to customers. Dealerships were also asked how profitable these services were compared to traditional custom application.
How Dealers Are Using Precision Technology
As in the past few years, the most commonly used precision technology within the dealership were GPS guidance systems. Use of manual systems (i.e., lightbars) dominated in years past, but autoguidance systems have been rapidly catching up. Autoguidance use continues to increase, but this is the first year to see a decrease in manual systems. Since the two systems have complementary functionality but with autoguidance offering more, this is a natural progression in adoption. Manual control guidance systems dropped from a high of 79% of survey respondents in 2009 to 66% in 2011. At the same time, use of automatic control/autosteer for fertilizer/chemical application increased from 53% of the respondents in 2009 to almost two-thirds of the dealerships who responded in 2011 (64%). Approximately the same number of respondents used both types of manual and automatic control guidance systems within their dealership as two years ago (47% compared to 49% in 2009); a third used only one type of guidance system and 22% of the dealerships didn't use either type of guidance system.
One surprising result of asking dealerships how they use precision technologies within their dealership was that the dealerships who said they were offering precision agronomic services for customers (such as soil sampling with GPS, GIS field mapping, etc.) dropped from 65% down to 58%. The drop in service offerings did not correspond to a similar drop in specific services in a later question, suggesting that as technologies become more integrated into business, dealerships don't specifically market them as "precision" or even consider them in a separate category anymore — it's more an understanding that that is how it's done.
A technology that's been available commercially for just the last few years (but a new survey question) is whether or not dealerships used a GPS-enabled sprayer boom section or nozzle control. Almost four out of 10 respondents indicated they were (39%).
Various diagnostic tools were asked about: Soil electrical conductivity mapping, other soil sensors for mapping, mounted on a pickup, applicator or tractor (such as a pH sensor), chlorophyll/greenness sensors mounted on a pickup, applicator or tractor (like Crop Circle, GreenSeeker, Yara N-Sensor, etc.). Of the three types of sensors, the most common one used was soil electrical conductivity sensors, used by 13% of the respondents. Chlorophyll sensors were used by 4% while other soil sensors mounted on equipment were used by less than 3% of the respondents. There was little change from 2009 on these latter two types of tools.
Other uses of precision technology included satellite imagery for internal use within the dealership (31% of the dealerships), fieldmapping with GIS for legal, billing or insurance purposes (30%), GPS to manage vehicle logistics, tracking location of vehicles and guiding vehicles to the next site (16%). Telemetry to send field information to the home office from the field continues to hover well below 10% of the dealerships responding.
Only 15% of the respondents said they were not using any of these precision technologies in their businesses. Figure 2 shows the trends in the use of these technologies since 2003. The biggest growth in technology has been in GPS guidance systems, with the growth much more prominent this year for autosteer/control. Since 2005 when GPS guidance systems with automatic control really started taking off, use has increase almost 10-fold — from 6% of the respondents in 2005 to almost two-thirds this year (64%).
The other areas have shown a slow but steady growth, with the exception of GPS guidance with manual control/lightbar and precision services offerings, both of which have declined this year.
The precision services that dealerships have offered their customers have remained relatively stable over the past few years with minor fluctuations each year, likely due in part to different annual samples of survey respondents. This year, several precision service offerings showed some decline, with both soil sampling with GPS and field mapping with GIS declining for the second time in a row. This may reflect increasing options for dealerships to contract these services to other providers so the service no longer is directly within the dealership. Or it may reflect the difficulty that some dealerships have experienced in accurately capturing field nutrient variability with grid or zone approaches, and subsequently demonstrating the value to their customers from variable-rate nutrient applications.
Dealers are expecting to add more precision services in the next three years, with modest growth expected through 2014 for all precision services.
Precision application service offerings remained relatively stable from 2009 to 2011. However, reflecting improvements in technology and information, variable seeding rates with GPS has continued to finally grow at a quicker pace since 2007, increasing from 6% of the respondents offering the service in 2007 to 23% in 2011. Part of what might be driving this is that it is much more common for new planters to come equipped with variable-rate technology.
All precision service offerings are expected to continue to grow over the next three years, but both controller-driven single-nutrient application and multi-nutrient application are slowing down while variable seeding with GPS is expected to be picked up by another 50% of dealerships over the next three years.
Despite the ups and downs of the economy the past few years, the profitability of precision agricultural services remains fairly constant over time. As in 2009, 43% of the respondents felt that overall, they were either covering their fixed and variable costs for their total precision package or they were making a profit. Despite that, none of the components of a precision technology package can come close to the profitability of a traditional custom application service, where over 70% of the respondents said their dealership was at least covering fixed and variable costs or they were making a profit.
Soil sampling with GPS and controller-driven single nutrient application were the next highest components in terms of profitability, with almost half saying they were at least breaking even with the services.
Compared to 2009, when the economy was beginning to falter there is an expectation for more investment in precision technology in 2011. Thirty-nine percent of the respondents expected to invest more than $25,000 in precision technologies in 2011, compared to only 32% in 2009. Approximately 20% did not intend to invest anything in precision technology. This is consistent with some other data that suggests approximately 1/5 of the dealerships are not getting involved with precision technology at all — whether it's because of their size or their location or some other reason.
With the current high demand for agricultural products, dealerships are continuing to increase their investment in precision technologies. However, some of it appears to be becoming status quo for the basic service offerings and technologies as the improved information and data becomes integrated into everyday business decisions for growers and dealers alike.
Linda Whipker is a marketing consultant in Raleigh, NC. Bruce Erickson is director of cropping systems management, Department of Agricultural Economics, Purdue University, West Lafayette, IN.