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 AgGoogle Glass: New Tool For Ag
October 8, 2014
New wearable smart technologies such as Google Glass show potential to greatly impact how we accomplish the business of feeding the world. Read More
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
Top 100 Articles
CropLife 100Pinnacle Agriculture Acquires Minnesota Retailer
April 14, 2015
Pinnacle Agriculture Holdings, LLC, ranked No. 6 on the CropLife 100,  has successfully acquired Liebl Ag, LLC in Ada, MN.  Read More
CropLife 100CHS, Aurora Cooperative Complete Fertilizer Storage, Grain Shuttle Loading Facility
April 13, 2015
CHS Inc., the nation’s leading cooperative and ranked No. 5 on the CropLife 100, and Aurora Cooperative (ranked No. 21) Read More
CropLife 100GROWMARK Acquires Missouri Refined Fuels Terminal
April 2, 2015
Bloomington, IL-based GROWMARK and Magellan Pipeline Co. have entered into an agreement in which GROWMARK will acquire the refined fuels Read More
CropLife 100Wilbur-Ellis Acquires South Dakota Retailer
April 2, 2015
Wilbur-Ellis Co.’s Agribusiness Division, a recognized leader in precision agriculture technology and the distribution and marketing of plant protection, seed Read More
CropLife 100The McGregor Co. Closes Smith-Kem Acquisition
April 2, 2015
The McGregor Co. — ranked No. 16 on the CropLife 100 list of largest U.S. ag retailers — has completed Read More
CropLife 100BRANDT Commemorates National Ag Day
March 20, 2015
The Illinois agriculture community gathered at BRANDT global headquarters on March 18 to celebrate National Ag Day behind this year's theme Sustaining Future Generations. Read More
Latest News
Industry NewsCHS Insurance Names New Director Of Sales
April 17, 2015
Bryan Lewis has been named director of sales for CHS Insurance, the nation’s largest agribusiness insurance broker and full-service insurance Read More
Mature Waterhemp in Corn
HerbicidesGenetic Literacy Project: There’s No Such Thing A…
April 17, 2015
Read the latest “analysis” on GMOs from Consumer Reports and you’ll “learn” that glyphosate, the chemical developed by Monsanto (its Read More
HerbicidesNew Resistance To 2,4-D Discovered In Australia
April 17, 2015
In a world-first case of herbicide resistance, researchers have confirmed that sowthistle weed in the south east of South Australia Read More
ManagementNews From RTP Company Visits and Growers Buying Older S…
April 16, 2015
Paul Schrimpf and Eric Sfiligoj discuss recent trips to the Research Triangle Park area and market seed sales trends. Read More
soybean field
StewardshipNew ASABE Standard Establishes Framework For Sustainabl…
April 16, 2015
The American Society of Agricultural and Biological Engineers (ASABE) has initiated a project to develop a new standard to establish Read More
MicronutrientsSouthern States: An Inside Look At Our Tissue Sampling …
April 15, 2015
Remember learning about the food pyramid in school? The nutritional diagram recommends the proper amount of nutrients you need on Read More
Industry NewsArysta Adds New U.S. Fungicides Marketing Manager
April 15, 2015
Arysta LifeScience North America recently hired Deneen Sebastian as its Marketing Manager for U.S. Row Crops, Fungicides. Most recently, Sebastian Read More
FungicidesVerdesian Launches Phosphite-Based Cereal Fungicide
April 14, 2015
A new, phosphite-based fungicide designed for improved suppression of deoxynivalenol (DON) in wheat and barley infected by Fusarium head blight Read More
Mature Waterhemp in Corn
HerbicidesSURVEY: Close To 90% Of Growers Battle Weed Resistance
April 14, 2015
Herbicide resistance management continues to be a priority for corn and soybean growers, and they’re working together more effectively to Read More
CropLife 100Pinnacle Agriculture Acquires Minnesota Retailer
April 14, 2015
Pinnacle Agriculture Holdings, LLC, ranked No. 6 on the CropLife 100,  has successfully acquired Liebl Ag, LLC in Ada, MN.  Read More
StewardshipFMC Corp. Joins Sustainable Agriculture Alliance
April 14, 2015
FMC Corp. has joined Field to Market: The Alliance for Sustainable Agriculture, a multi-stakeholder initiative working to define, measure and Read More
Industry NewsArysta Adds Two To Goëmar Sales Team
April 14, 2015
Arysta LifeScience North America recently announced two new additions to the Goëmar sales team: Steve Kelly, Technical Service Manager – Read More
Valley Variable Rate Irrigation
Precision AgVariable Rate Irrigation Gains Followers
April 14, 2015
Irrigation systems have had the ability to apply different amounts of water throughout a field for decades, using timers that Read More
CropLife 100CHS, Aurora Cooperative Complete Fertilizer Storage, Gr…
April 13, 2015
CHS Inc., the nation’s leading cooperative and ranked No. 5 on the CropLife 100, and Aurora Cooperative (ranked No. 21) Read More
Soybean field
Industry NewsThree Ag Co-ops Poised For Possible Merger
April 13, 2015
Following months of study and preparations, the Board of Directors for United Farmers Coop (UFC), Farmers Elevator Cooperative (FEC) and Read More
Eric SfiligojAgriculture Braces For More Belt-Tightening
April 13, 2015
Spring is in full bloom across the U.S. and ag retailers and their grower-customers are busily getting into high gear. Read More
ManagementPollinator Health and Washington, DC
April 9, 2015
CropLife America’s Kellie Bray speaks with CropLife Editor Eric Sfiligoj regarding bee health and proposed Beltway regulations. Read More
InsecticidesValent Takes On MGK Insecticide Portfolio
April 9, 2015
As of April 1, Valent U.S.A. Corp. became the exclusive provider of the MGK crop protection line of insect control Read More