Responding To A Changing Market

The verdict is in — more corn in 2007 was good for everybody in the ag retail business. In particular, precision agriculture recorded some truly impressive numbers. As a result, there was nothing unlucky about the 13th annual Precision Ag Survey.

The impact of more corn acreage and higher fertilizer prices can be seen in this year’s adoption of precision technology in dealerships. Service offerings of both single-nutrient and multi-nutrient controller-driven application is up. Not surprisingly, more dealers report they are earning a profit on these two services relative to all other precision offerings.

This spring, CropLife magazine and Purdue University’s Center for Food and Agricultural Business conducted a survey of retail crop input dealers for the 13th consecutive year to see which precision technologies were being used by dealers, what type of precision services they were expecting to offer in the future, and how precision programs continue to evolve. 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. 

How Are Dealers Using Precision Technology?

This year showed continued growth in the use of precision technologies within the dealership. The most commonly used precision technology were GPS guidance systems with manual control/lightbar at 73% of respondents (see Fig.1), followed by precision technologies being used to provide services to growers (61%). Similar to last year, the third most-common use of precision technology within the dealership was the use of GPS guidance systems with automatic control/automatic steering for fertilizer/chemical application, used by 37% of the responding dealerships. Almost one-third (31%) used both types of GPS guidance systems (manual and autosteer) while 22% of the dealerships didn’t use either type of guidance system.

For the second year in a row, we asked dealers if they were using sensors: soil sensors for mapping mounted on a pick-up truck, applicator, or tractor (examples: pH soil sensor, chlorophyll/greenness sensor) and on-the-go sensors (such as Crop Circle, Greenseeker, Yara N-Sensor). Four percent of the dealerships used at least one type of sensor this year compared to 1.7% of the respondents last year. Soil sensors mounted on the equipment were used by 3.3% of the respondents and on-the-go sensors were used by 2.6%.

The biggest growth in technology has been in GPS guidance systems with auto boom control/autosteer. In 2004, only 5% of the dealerships were using autocontrol/autosteer technology. Last year, 27% were using the technology. By 2008, 37% of the dealerships were using autocontrol/autosteer (a seven-fold increase in four years). Other growth areas this year were field mapping with GIS for legal/billing and insurance purposes and satellite/aerial imagery for internal use — both growing from just under 20% last year to over one-quarter of the dealerships this year. The use of other precision technologies has more or less leveled off from 2005 to 2008.

Precision Ag Service Offerings

The precision services that dealerships offer 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, all precision service offerings — except for field mapping with GIS — were at the highest level, showing slight increases over previous peaks. (Note that the 2007 results showed a reduction in most service offerings, though we expect that this may have been due to the sample of dealerships reporting instead of a real decline in the U.S.) Dealers are expecting to add more precision services in the next two years, with continued growth expected through 2010 for all precision services. The biggest growth expected is in satellite imagery, with 36% of the dealerships expecting to be offering the service by 2010, up from 26% in 2008.

Precision application services continued to grow in 2008, with both controller-driven multiple-nutrient application and single-nutrient application growing quickly this year, reflecting last year’s prediction by respondents that higher fertilizer prices and corn acreage would result in more demand for precision application. For the first time, over half of the dealerships (56%) said they offered controller-driven single-nutrient application, with almost two-thirds (64%) expecting to offer it by 2010. One-third of the respondents said their dealership offered controller-driven multi-nutrient application.

Unexpectedly, variable-rate seeding with GPS more than doubled this year from 6% of dealerships offering the service in 2007 to 15% in 2008. One-quarter of the respondents expected to be offering the service by 2010.

Profitability Of Precision Ag Service Offerings

Fig. 2 shows the different types of variable-rate application services dealerships expect to offer by the fall of 2008. Over half of the respondents (52%) indicated they were currently offering controller-driven single-nutrient application of fertilizer, up from 40% in 2007. Almost as many were offering controller-driven application of lime (45%, up from 33% in 2007). Controller-driven multiple-nutrient application of fertilizer is also increasing, with almost one-third indicating they were offering that service in 2008, up from 24% in 2007.

We also asked dealerships how profitable they felt their precision service offerings were. For each precision component, the percentage of respondents who said the service was generating a profit (covering both fixed and variable costs) from 2003-08. This year, 43% of the respondents felt that their total precision package was profitable, similar to last year’s 44%. The most profitable precision service continued to be controller-driven multi-nutrient application, with 49% of the respondents saying that it generated a profit for them. But 47% said that controller-driven single-nutrient variable-rate application was generating a profit this year as well, up from 36% last year.

Expected Investment In Precision Technologies In 2008

Given the current market conditions, one question we had for dealers was how much more they would be investing in precision technology this year. Almost one-quarter of the respondents (23%) said their dealerships would be investing more than $25,000 in precision/site-specific technology in 2008 (Fig. 3). More than half (53%) said their dealership would be investing under $25,000. Only one-quarter of the respondents (24%) said they wouldn’t be investing anything in 2008.

Summary

With another big corn crop expected and continued pressure on fertilizer prices, use of precision technology will likely increase again in 2009. Growers — and dealerships — continue to look for strategies to successfully manage through this unprecedented time.

Leave a Reply

Precision Ag Stories

Precision AgPrecision Agriculture: Finding The Payback
September 6, 2014
Profitability in precision ag is not about any one technology, but the result of employing technology in a total system approach that is agronomically sound. Read More
Precision AgUAS: The S Stands For Smart, Service And Sensors
May 1, 2014
The only thing occuring more rapidly than the technologies’ evolution is the clamoring to implement UAS into agriculture as soon as possible. Read More
Precision AgAg Retail: 3 Tech Trends To Watch In 2014
April 1, 2014
It's been a busy first quarter of technology developments in 2014. Here are some of the highlights, and things to watch in the months ahead. Read More
Valley Variable Rate Irrigation
Precision AgMaximizing Returns From Water Inputs
March 3, 2014
Irrigation manufacturers have developed some vital new technologies to fine-tune irrigation and save growers money, water, energy and labor. Read More

Trending Articles

Equipment2014 Product Of The Year Voting
September 19, 2014
Many new products were introduced to the ag retail marketplace this year. From this group, CropLife IRON and its consulting partners have selected five finalists for the Product of the Year award. Please cast your vote today to help us determine the winner. Read More
FertilizerFall Fertility 2014: Forecasting Fertilizer Use
September 7, 2014
Great crops this year have tapped the soil, and fall work is definitely called for, but how challenging will that get? Read More
CropLife 100CHS To Build $3 Billion Fertilizer Plant In North Dakota
September 5, 2014
The fertilizer plant in Spiritwood will be the single largest investment in CHS history, as well as the single largest private investment project ever undertaken in North Dakota. Read More
EquipmentNew Holland Acquires Miller-St. Nazianz
September 3, 2014
The assets of Miller acquired as part of the transaction will become part of New Holland Agriculture, a CNH Industrial brand, building on a successful four-year partnership between the two companies. Read More
CropLife 100Pinnacle Acquires East Kansas Chemical
September 2, 2014
Ranked 82nd on the CropLife 100, East Kansas Chemical will operate as part of Pinnacle's Performance Agriculture brand. Read More
MAGIE 2014 ShowStopper
EquipmentJohn Deere Again Wins MAGIE ShowStopper Award
August 25, 2014
For the second consecutive year, John Deere was honored at the Midwest AG Industries Exposition (MAGIE) for its new R4045 sprayer. Read More

Latest News

MicronutrientsVerdesian Acquires Micronutrient Supplier
September 30, 2014
Verdesian Life Sciences has acquired QC Corp., a producer and supplier of granular and dry micronutrients and ferrous sulfate products. Read More
Eric SfiligojHearing From Young Ag Voices
September 30, 2014
Potential future leaders in ag retail had the chance to shine at the recent Mid America CropLife Association meeting. Read More
Crop InputsSyngenta Appoints New Chief Operating Officer
September 29, 2014
Jon Parr will succeed retiring COO John Atkin at the end of the year. Read More
CropLife 100South Dakota Wheat Growers To Add Grain-Agronomy Facili…
September 26, 2014
Planned to be constructed in Kennebec, the facility will be located along the soon-to-be rehabilitated line of heavy-rail service from Chamberlain to Presho. Read More
CropLife 100GROWMARK Announces Vice President Appointments
September 25, 2014
Two individuals have been appointed Vice President positions on the GROWMARK executive team. Read More
FertilizerFertilizer Industry Organizations Join Global Alliance …
September 25, 2014
The Fertilizer Institute, the International Plant Nutrition Institute and the International Fertilizer Industry Association are encouraging the industry to promote the proper use of fertilizer products to minimize their environmental impact. Read More
Precision AgARA Organized Precision Forum Hits Capitol Hill
September 24, 2014
The Coalition for the Advancement of Precision Agriculture (CAPA) hosted its inaugural Precision Ag Forum, Sept. 18, in Washington, D.C. Read More
FertilizerFactors To Consider When Placing Fertilizer With Seed
September 24, 2014
The type of crop, fertilizer source, row spacing and soil environment all affect how much fertilizer can be safely applied with seed. Read More
FertilizerSidedressing Manure Into Corn Has Promising Results
September 24, 2014
Applying manure to growing crops can boost yields, reduce nutrient losses and give livestock producers another window of time to apply manure to farm fields. Read More
FertilizerWhen To Sample Manure For Analysis
September 24, 2014
Because the goal is to collect a sample that represents the manure actually being applied, the best time to sample is during loading or field application. Here's why. Read More
Syngenta
Seed/BiotechSyngenta Faces Second Lawsuit Over Agrisure Viptera Cor…
September 23, 2014
A second company has sued Syngenta AG over sales of genetically modified corn seed not approved by China. Read More
StewardshipCover Crops Field Guide For Farmers Expanded
September 23, 2014
Farmers interested in planting cover crops to improve soil health now have an updated and expanded resource in the second edition of the Midwest Cover Crops Field Guide. Read More
HerbicidesArysta LifeScience Launches Contest For Wheat Growers
September 23, 2014
The Flush after Flush Photo Finish contest encourages farmers across the U.S. to participate through Instagram or Twitter using the hashtag #FlushAfterFlush. Read More
FertilizerCF Industries Confirms Merger Of Equals Discussions Wit…
September 23, 2014
CF Industries Holdings, Inc. has confirmed that it is in preliminary discussions with Yara International regarding a potential merger of equals transaction. Read More
StewardshipProgram To Examine Ag-Related Practices, Policies To Pr…
September 22, 2014
A panel discussion on October 14 will include a significant discussion on key issues and solutions related to all aspects of harmful algal blooms. Read More
Eric SfiligojIt’s Product Of The Year Voting Season
September 22, 2014
Readers of CropLife IRON will choose 2014’s best new product over the next month. Read More
Palmer pigweed in soybean stubble
HerbicidesValent To Discontinue Gangster Herbicide
September 22, 2014
Valent will discontinue Gangster Herbicide after the 2015 growing season as growers can now deploy Fierce XLT herbicide in soybeans. Read More
Equipment2014 Product Of The Year Voting
September 19, 2014
Many new products were introduced to the ag retail marketplace this year. From this group, CropLife IRON and its consulting partners have selected five finalists for the Product of the Year award. Please cast your vote today to help us determine the winner. Read More