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Farmers Need an ROI for Precision-Ag Adoption to Grow

A new report by the USDA shows that only 25% of U.S. farms leverage precision-ag technologies. But in states like California, Iowa and Nebraska, drought, labor and other challenges have spurred innovation.

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AgTech. Precision ag. Farm tech.

Call it what you want, but we need more of it if we’re going to meet the challenge of feeding nearly 10 billion people by 2050.

Unfortunately, a new report by the U.S. Department of ’s National Agricultural Statistics Service shows we still have a way to go in terms of precision-agriculture adoption on our farms.

In its Farm Computer Usage and Ownership Report released last month, the USDA asked farmers about the utilization of precision-agriculture practices for the first time, finding that only 25% of U.S. farmers are using precision-ag technologies to manage crops or livestock. For the report, the USDA in June 2021 polled farmers from more than 15,000 agricultural operations of all sizes, asking, “In the last 12 months, did this farm or ranch use precision-agriculture practices to manage crops or livestock?”

The USDA defines “precision ag” as the use of “global positioning (GPS) guidance systems, GPS yield monitoring and soil mapping, variable rate input applications, use of drones for scouting fields or monitoring livestock, electronic tagging, precision feeding, robotic milking, etc.”

The fact that only a quarter of our farms are using precision-ag technology is a surprise given the amount of technology out there, not to mention the money being invested in the AgTech space in recent years.

Ever since Monsanto’s acquisition of Climate Corp. in 2013, the AgTech industry has been a hot one for investors. According to AgFunder’s latest Farm Tech Investment Report, farm-tech investing soared to $7.9 billion in 2020, up 41% from the previous year.

Related: A Mysterious Maine Farm Got a $1.2 Million PPP Loan

Where precision ag is picking up

The need for data-driven efficiencies in the ag industry has only escalated in recent years thanks to drought, dwindling resources (such as arable land, energy and water) and rising labor costs.

Today, we need technology more than ever to help improve production and on-farm efficiencies and combat soaring operational costs.

But maybe we’re not as far off as we think.

Take a closer look at commercial agriculture here in drought-plagued California, where two-thirds of the country’s fruit and nuts are produced, and you’ll see we’re making great strides on the precision-ag front.

In fact, while only a quarter of our nation’s farmers surveyed use precision-ag technologies, 39% of California farmers rely on precision ag. And that number is surely higher in specialty-crop production, where we see technology at work every day, particularly during the current harvest season, where automated harvesters, GPS-guided tractors and IoT-powered technologies are working all over the Central Valley for some of the largest growers in the world.

Farmers seeking ROI from technology

Considered by many outsiders to be a traditional, old-school industry, California agriculture  which produces 400 commodities  is quickly becoming a hub for AgTech innovation and sustainable farming.

But while precision ag is picking up traction in some markets, it’s falling off in areas where water and labor issues, for example, aren’t as much of a challenge.

So what does it take for an AgTech startup to make the leap from Silicon Valley incubators to the fields of San Joaquin Valley ag operators?

The answer is simple: ROI. Farmers have to see a quick return on investment if they’re going to bring on new technology to their farms. If a precision-ag solution doesn’t solve a problem, in today’s age of rising input costs and market volatility, adoption won’t follow.

That much was made clear in the USDA’s recent survey, where only four states saw precision-ag adoption on more than half its farms: Iowa (52% adoption), Nebraska (51%), North Dakota (54%) and South Dakota (53%), all major corn or wheat producers that rely heavily on state-of-the-art, GPS-equipped combines.

Here in California, where our primary focus is specialty crops, the combines are far and few in between. In fact, our most expensive input here is oftentimes manual labor, which means our precision-ag technologies should be geared toward cutting back on labor and other costly inputs. 

And we need precision-ag solutions that work for large-scale farms as well as smaller family and mid-sized farms. As we’ve seen in previous precision-ag studies released by the USDA, larger farms (over 2,900 acres) with more resources often have twice the adoption rate of smaller farms.

Related: 5 Ways European Entrepreneurs Are Using Food Technologies During Covid-19

What we look for in precision ag

When our company is looking to partner with or invest in precision-ag technologies, those companies have to not only help farms of all sizes improve production, but also drive down the costs of those previously mentioned inputs. Their technology also has to fit within our mission to provide sustainable, soil-first solutions to our farmers. 

That was the case with our recent investment in AgSoilworks, a precision-ag-development company that has patented a deep-ripping technology that maximizes the soil health of new developments. The technology ensures fewer ripping passes in the field (cutting back fuel and labor costs) and improves soil water-holding capacity (using less water and freeing up nutrients that have been locked in the soil due to poor soil management).

In the end, our company, and agriculture as a whole, needs to bring on new technologies that are going to help us grow more sustainably and profitably.

Drones and automated equipment are always fun to see on the farm, but are also very expensive in most cases. So if it doesn’t pencil out for the grower, it doesn’t pencil out for our company.

That said, if precision ag can boost production and efficiencies and improve the sustainability of our soils and crop production, it would be a mistake not to give that technology a long look.

Because if we can continue to grow more with every acre of available farmland, in a more sustainable and affordable way, everyone from the grower to the consumer will benefit long term.

Related: Building New Ecosystems: The Food Tech Revolution Is Here

Brian Maxted

Written By

Entrepreneur Leadership Network Contributor

Brian Maxted is CEO of The Holloway Group, which has been providing sustainable, naturally-occurring soil amendments to California growers since 1932. He is also a former vice president for EIG Global Energy Partners.