Many times we’ve discussed the four major leverage points for improving bottom-line profitability. They are: marketing, machinery cost/acre, labor cost/acre and agronomic management.
* For example, marketing your crop in the top third of the marketing range as opposed to mid-range can affect bottom-line profitability by up to $150/acre. I recall an Illinois study done a number of years ago that revealed 80% of the bushels were marketed in the bottom 20% of the price range.
* We also see the combined machinery and labor cost/acre vary by $250.
* As I’ve always indicated, what you pay for inputs such as seed, fertilizer and chemicals are the smallest “rabbits to chase,” yet producers spend about 75% of their winter hours chasing that rabbit.
* The fourth leverage point is agronomic management. That includes seed selection, tillage, drainage, compaction, irrigation, weed control, timely planting and harvest and a whole litany of other areas. In this and the next issue we’ll look more closely at this area.
Precision farming has not caught on as quickly as I’d anticipated, but a wealth of information shows that, when done correctly, it can increase revenue and lower costs.
Precision farming is really more than variable-rate technology or variable-rate application. It involves things like the right seed selection, micronutrient analysis and application as well as variable-rate seed, fertilizer and chemical application.
Does it pay? Yes. Dan Frieberg of Premier Crop Systems provided the chart ABOVE that shows 10 years of actual data on four of his clients that have used his system. The county-average yield increase was 2.3 bu./acre. The average of the four growers using precision-farming practices was a 4.8-bu./acre increase – more than twice the yield increase.
The variance on the top producer, who had a 7.1-bu./acre annual increase, compared to the county average of 2.3, or $312/acre difference over 10 years, assuming $6.50 corn, or $31/acre/year.
We like to see $100/acre profit, on average, in well-run operations. This does not consider the increased profit in lower costs, which I believe is significant. I am aware of one producer producing corn with 0.65 lb. nitrogen (N)/bushel of corn produced; half of the former guideline of 1.2 lbs. N/bushel corn produced.
Environmental issues will also encourage more use of precision farming. The value chain will demand that you use nutrients, water and land more efficiently.
Consumers will want to know more about the products they buy. And retailers, such as Walmart, will start requiring it of its suppliers.
With increased costs, turbulence and uncertainty, precision-farming practices will be even more important in the future.