For as much that has been written about precision agriculture (PA), it's still hard to tell exactly what its place is in crop production. One benchmark is the annual dealer survey conducted by CropLife magazine and Purdue University's Center for Food and Agricultural Business.
“It's the pulse of the market,” says Purdue University's Jay Akridge. And that pulse is steady and slowly getting stronger.
“PA usage among dealers definitely bounced back a little bit in 2002,” Akridge reports. “It seemed a year earlier that usage had peaked and they were waiting for something new.”
It's clear that Midwest co-ops remain the heavy users of PA technology. According to the study, 80% of the co-ops and regional/national organizations offer at least one PA service such as grid sampling, field mapping or variable rate application. Only 56% of local independents said that they offer at least one service.
The most common PA service offered is soil sampling with GPS, according to the survey. Nearly 45% of the dealers responding said they offer the service now, and by 2004 that number is expected to reach 50%. “Dealers are putting their heavier investments in low-capital PA methods,” Akridge says.
Most of the dealers providing soil sampling with GPS use grid sampling rather than sampling by soil type. Ten percent of the dealers offer both. Co-ops and national organizations are most likely to offer GPS soil sampling, and local independents are less likely to offer that same service.
The second most common PA service offered by dealers is field mapping with GIS. It lags behind GPS soil sampling by just a few percentage points at 41%. The industry estimate is that it too will hit close to 50% within the next few years.
Following the top two on the list are agronomic recommendations based on GPS data (34% offer the service) and yield monitor data analysis (24% offer it). All these services are significantly more common in the Midwest than in other parts of the U.S., according to the report.
Less than 10% of the dealers who completed the survey said they offered variable rate seeding, either with or without GPS, last year.
Variable rate application, however, has almost caught up with traditional application services. Of the 81% of the dealerships that offered custom application, almost two-thirds expected to offer some type of variable rate application service by the end of 2002, according to the survey.
The prices dealers charge for PA services vary widely. The survey suggests several reasons for the price spread, including customer willingness to pay, competitive price response and uncertainty about the actual cost of providing the service. Even after dropping the top and bottom 10% of the price range, there's a gulf between the high and low prices for each service. Some of this gulf is the result of dealers who “subsidize” the price of services through product margins. Other dealers offer the services as a package and aren't able to break down individual services on a per-acre basis.
With price spreads that big, it isn't surprising that the survey also reveals a large variation in PA profitability for dealerships. The most profitable service appears to be controller-driven, multi-nutrient variable rate application, with 43% of dealers who offer the service reporting it generates a profit.
|1.||Soil sampling with GPS||45%|
|2.||Field mapping with GIS||41%|
|3.||Agronomic recommendations based on GPS data||34%|
|4.||Yield monitor data analysis||24%|
Roughly 50% of the dealers reported that GPS soil sampling and single-nutrient, controller-driven application covered fixed and variable costs and in many cases actually generated a profit.
In total, more than a third of the dealers reported that their PA services generate a profit, and another third said they were at least covering their fixed and variable costs.
Perhaps the biggest impact of the PA services is an expanded customer base, according to the survey. More than 25% of the dealers said their numbers increased by at least 5%, and another 33% said their numbers increased, but less than 5%.
Because most farmers use dealers at least in part for PA technology, the study makes a strong argument for shopping around. The PA industry continues to expand, steadily but slowly, and the price you pay for those services will likely become more consistent in time. But, for now, it pays to compare the services provided, the quality of those services, and prices before you decide where to go for PA technology.