Assessing the economic future of precision farming in the UK

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Precision farming technologies that were considered almost ‘space-age’ at the start of the decade (e.g. GPS auto-steering, drones etc.) have now become commonplace. Whilst many of these technologies undoubtedly have potential, there is little information on how their application improves on-farm financial performance.

To assess the cost-benefit of precision agriculture, we have used Andersons’ Loam Farm model to trial precision farming on its wheat enterprise (300 Ha). Loam Farm is a notional business, based in the East of England, which has been running since 1991 and tracks the fortunes of combinable cropping farms. It comprises 600 hectares in a simple rotation of milling wheat, oilseed rape, feed wheat and spring beans, and is based on real-life data. The financial performance for Loam Farm as a whole (i.e. all enterprises) is shown in Figure 1 for 2017 under the status quo and precision agriculture scenarios. The precision agriculture techniques applied included soil mapping and GPS auto-steering whilst variable rate application was also built-in to the equipment used.

Performance was assessed by dividing the wheat enterprise into a series of 10×10 metre grids where seeding and application rates were varied in accordance with land capacity and needs. This meant that in some areas, input application increased and lowered in underperforming areas whilst the poorest land (3% approx.) was not cropped. By applying precision farming techniques, average wheat yield improved by 1.3%; the gross margin increased by 2.0% across the whole farm. Overhead costs rose slightly (0.3%) as the cost of the precision farming technology (£10,000) eclipsed the savings, particularly in labour, brought about by auto-steering. Overall, by applying precision farming techniques on the wheat enterprise Loam Farm boosted its profitability by around £8,400. Thus, indicating a payback in Year 2.

 

 

Figure 1 – Precision Agriculture applied to Loam Farm’s Wheat Enterprise*

£ per Hectare (unless stated) Status Quo Precision Agriculture
Wheat yield (t/Ha)  9.05 9.17
Output  1,163 1,171
Variable costs  394 387
Gross margin 769 784
Overheads  414 415
Rent and finance 243 243
Drawings 77 77
Production margin  35 49

* Trial on wheat enterprise, results shown for whole farm.
Source: The Andersons Centre

per Hectare (unless stated) Status Quo Precision Agriculture
Wheat yield (t/Ha)                          9.05                9.17
Output 1,163 1,171
Variable costs 394 387
Gross margin 769 784
Overheads 414 415
Rent and finance 243 243
Drawings 77 77
Production margin 35 49
* Trial on wheat enterprise, results shown for whole farm.
Source: The Andersons Centre

Michael Haverty, The Andersons Centre
Michael Haverty, Senior Agricultural Economist at The Andersons Centre

By its very nature, the cost-benefit of precision farming will vary from farm-to-farm. Some farms may achieve greater savings whilst for others, the overall benefit will be marginal. It is apparent that there is greater scope for precision farming to generate a return on larger farms. Indeed, for many users it is a key means to effectively manage scale. Once the data are captured on a farm management information system (FMIS) it remains easily accessible for analysis. A farm manager may be able to retain the key information for a small number of fields for the past few seasons in his/her memory. But as farm size rises, and insights from longer-term analysis are required, this will no longer suffice. A farmer’s ability to manage a larger business can be significantly enhanced by precision farming. However, farmers need to be careful in ensuring that the time spent on analysing and managing their precision farming systems is utilised effectively. It is easy to become engulfed in a torrent of data which can end-up inhibiting decision-making.

One would expect the uptake of precision farming to continue to advance. However, for companies offering precision farming products, it is vital that they show in realistic terms what return farmers could generate from investing in such technology.

The Andersons Centre has many years’ experience in conducting economic assessments at the farm, supply-chain and industry level. We are eager to support agri-tech businesses in conducting similar assessments for their products and services. For further information, please visit www.theandersonscentre.co.uk or contact Michael Haverty ([email protected]).

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