1. Site-Specific Management & Demand for Knowledge Based Agricultural Services Jess Lowenberg-DeBoer Site-Specific Management Center Purdue University www.purdue.edu/ssmc

2. Questions: Who is using site-specific management? Which precision agriculture technologies are showing themselves to be profitable? Implications of site-specific management for demand for knowledge based agricultural services?

3. Some Definitions: Site-specific management – is the old idea of doing the right thing, at the right place, at the right time. Precision agriculture – uses electronic information technology to make site- specific management commercially viable in mechanized agriculture.

4. Three More Definitions: Embodied Knowledge Technology – Science incorporated into physical inputs (e.g. seed, fertilizer, chemicals) in such a way that minimal decision making by the user is required. Bt corn and glyphosate resistant soybeans are good examples. Knowledge Based Agriculture – requires data gathering and analysis to adapt decisions to local conditions. Precision agriculture and integrated pest management (IPM) are examples. Also called “Smart Farming”. Knowledge Based Services – when a user out-sources data management, analysis and recommendation development for knowledge based agriculture.

5. Yield monitors: Precision Farming’s “killer application” According to the USDA about 34% of U.S. corn acreage was harvested with a combine equiped with yield monitor in 2001. It was about 25% of soybean acreage. Only about a third of these combines were equiped with GPS.

6. U.S. Acreage Harvested with a Yield Monitor Equipped Combine Source: Daberkow et al, 2002

7. Yield Monitor Use Highest on Larger Farms in the Corn Belt USDA researchers showed that 60% of U.S. farms using precision agriculture are in the Corn Belt. In a 1999 survey, Ohio researchers found that only 6% of all farmers use yield monitors, but over 50% of farms with gross sales over $1 million. In general, larger farms are more likely to use yield monitors, but the likelihood of adoption peaks at about 1600 acres.

8. Yield Monitor Use in Europe United Kingdom400 Denmark400 Germany150 Sweden150 France 50 Holland 6 Belgium 5 Source: Stafford, 2000

9. Yield Monitor Use in Latin America Argentina 560 Brazil100 Uruguay 12 Chile 4 Las Rosas, Cordoba, Argentina l< 33 qq/ha l33-56 qq/ha l56-66 qq/ha l66-76 qq/ha l> 76 qq/ha Source: M. Bragachini, INTA Manfredi, Argentina, 2002, Jose Molin, USP, Brazil, 2002

10. Yield Monitors in the Rest of the World Australia, 800 monitors used for the 2000 harvest, 500 of those in Western Australia In South Africa, 15 monitors used in 2000, mainly in the corn growing area. No yield monitors used commercially in other parts of Africa, Eastern Europe, or Asia Monitors being developed for other crops, including cotton, sugar cane, potatoes, sugar beets, tomatoes and grapes. About 8% of U.S. potato acreage is yield monitored.

11. Precision Farming Services in the U.S. In 2002 variable rate application service offerings seem to be growing again. 50% of all fertilizer retailers nationwide offered soil sampling with GPS in 2002, mostly 2.5 acre grids. This compares with 45% in 1999. 43% of all dealers offered computer controlled variable rate application services in 2002, compared to 38% in 1999. Over 50% of all dealerships in the Midwest offer these services, and 60% to 70% of cooperatives and regional/national chain outlets offer the services.

12. Increasing Percentage of U.S. Ag Retailers Providing Variable Rate

13. Growing Use of Precision Ag Tools by Dealers to Provide Traditional Services From fall 1999 to spring 2002 use of GPS guidance by custom applicators grew from about 5% to almost 44%. Growth was especially strong in the Midwest where over half of custom applicators use GPS guidance Source: Akridge and Whipker, 2000, Whipker & Akridge, 2001 & 2002

14. Farm Level Adoption of VRT in the U.S. Widespread use of VRT on some higher value crops, but in bulk commodities farmers try it on a small proportion of crop area. Overall about 10% of sugar beet and potato acreage received VRT fertilizer in 2000. About 40% of sugar beet acreage in Minnesota and North Dakota received VRT nitrogen in 1999 About 11% of U.S. corn acres received VRT fertilizer in 2000. About 6% of soybean acres and 4% of cotton acres received VRT fertilizer. 1% to 3% of corn, soybean and cotton acres received VRT seed or pesticide in 2000.

15. Percent of Acreage Ever Intensively Soil Tested Source: Daberkow et al, 2002

16. VRT Worldwide lWorldwide experimentation with VRA, but relatively little commercial use outside of U.S. and Canada lIn Argentina and Australia, VRA constrained by high cost of soil testing lIn Western Europe VRA seems driven by environmental concern and regulation. Because of limits on overall N use, commericial use of the greeness sensor is growing.

17. Remote Sensing About 5% of corn acres and 4% of soybean acres were managed using some kind of remotely sensed image in 2000. This could be either satellite or aerial photograph. Ag retailers are struggling with how to market this service. In the 2002 Purdue survey of ag retailers, remote sensing was the least profitable of precision ag services offered.

18. More Rapid Adoption of Biotech º Transgenics have been marketed as a classic embodied knowledge technology. New science marketed in a very traditional package.

19. Economic Studies of Precision Agriculture Focus on variable rate fertilizer “Stand alone” systems with one or two inputs Usually had variable rate application equipment with whole field recommendations Most studies on bulk commodities because this is the “mass market” sought by manufacturers and retailers

20. Many Articles and Websites Report Profitability of Precision Agriculture Lambert and Lowenberg-DeBoer reviewed 108 articles reporting economic results related to precision ag. Some 63% reported profits. (http://mollisol.agry.purdue.edu/SSMC/) Many of these studies omit important costs including: soil testing, data analysis, training. Other studies overstate yield benefits and/or cost savings.

21. Variable Rate Profitability in Nine U.S. Studies with Standardized Budget Methods Grid Site-years Crop Inputs __ acres_ Profitable Higher Value Crops: Sugar Beets N 2.75 100% Extensive Dryland Crops: Wheat, Barley N,P,K soil type 20% Wheat N 3.0 0 Wheat, BarleyP,K soil type 0 Corn and Soybeans: CornP,K 3.0 42% CornP,K soil type50% Corn, SoybeanP,K 2.5 83% Irrigated CornN 0.7550% CornP,K 2.550% Corn, interpolatedP,K 2.1 100% Corn, grid averageP,K 2.1 0 _______________________________________________________ Source: Swinton & Lowenberg-DeBoer, JPA, 1998.

22. Variable Rate Lime Seems Consistently Profitable the Eastern Cornbelt Annual Net Returns to pH Management in Indiana

23. Profitability of Yield Monitors Profitability depends on: Use in diagnosing problems such as pests, drainage, tillage, fertility and Improving input decisions (e.g. hybrid, varieties, herbicides)

24. Yield Monitor Profit Example? A 2000 acre grain farm Purchases a yield monitor and GPS for about $7000 Uses yield data to choose better corn hybrids and soybean varieties. Improves average yields by 1 bushel/acre Almost pays for yield monitor first year

25. Whole Farm Information Systems Benefits Diagnosing crop production problems Improving field logistics Supervising employees in the field Managing production risk Marketing differentiated products Providing “traceback” for food safety Documenting environmental compliance

26. Farm Journal Soil Density Trials Example of Technology Testing Source: Farm Journal, July/August, 2001, p. 16.

27. The Pace of Technology has Quickened – On-Farm Testing With Yield Monitors Provides Timely Information With Less Interference with Farm Operations Source: Farm Journal, July/August, 2001, p. 18.

28. Background Image Courtesy of Emerge As-applied maps can be a useful tool in documenting safety & environmental stewardship. This is a map of herbicide Application on the Davis Purdue Ag Center Yellow – Poast Plus – 6/27/00 Green – Roundup Ultra – 6/28/00 Blue – Poast Plus – 6/28/00 Orange – Basis Gold – 6/28/00

29. EXAMPLE OF AS-APPLIED MAPPING Manure Application Map As-applied maps can be developed for manure as well as any other crop input. These maps can document that nutrient management plans are being followed. Manure can be applied at a variable rate, but because it is not a standardized product it is hard to know what is being applied. “No-Apply” Zone -86.9330-86.9328-86.9326-86.9324-86.9322-86.9320-86.9318 Longitude 40.4172 40.4174 L a t i t u d e -86.9330-86.9328-86.9326-86.9324-86.9322-86.9320-86.9318 Longitude 4 0. 41 7 2 40.4174 L a t i t u d e 0 gal/a 1000 gal/a 2000 gal/a 3000 gal/a 4000 gal/a 5000 gal/a 6000 gal/a 7000 gal/a

30. Precision Farming Profitability: Chapters: 1 - Information Technology Profits 2 - Choosing Better Hybrids and Varieties 3 - Making Drainage Decisions 4 - Managing Soil Fertility 5 - Increasing Cost Effectiveness of Weed Control Plus Technical Reference Section Edited by J. Lowenberg-DeBoer and K. Erickson Published by Purdue University Agricultural Research Programs with support from Case New Holland, Dec., 2000. Excellence in Communication Award, Agronomy Society of America, 2001

31. Budget templates can help guide analysis of common precision ag practices. Template for yield monitoring for hybrid and variety choice Source: Precision Farming Profitability, Lowenberg- DeBoer and Erickson, 2000

32. Why Does Precision Agriculture Hold Opportunities for Crop Advisors? Economies of Scale – in some cases the skills, hardware and software that one producer would use for his operation, could be used equally effectively on a much larger acreage. Producer lifestyle choice – most US farmers chose that occupation because of the active, outdoor lifestyle it offers. They did not become farmers to sit in front of a computer.

33. Convenience Farming? “Convenience Agriculture” is the opposite of Smart Farming or Knowledge Based Agriculture. (See Sept., 2002 USDA Outlook: www.ers.usda.gov/publications/agoutlook/sep200 2/ao294i.pdf) www.ers.usda.gov/publications/agoutlook/sep200 2/ao294i.pdf Convenience agriculture economizes on management time.

34. Management Time in Agriculture Management time is expensive - The average compensation for U.S. managers in 2001 was $60,000/year and experienced managers can earn much more. Ag. management time may be more expensive than average – because many producers chose agriculture for the active, outdoor lifestyle. They did not become farmers to spend hours in front of a computer.

35. Compare Precision Ag to Adoption of Hybrid Corn

36. Projected Precision Agriculture Adoption with & without Knowledge Based Services Maturing Precision Ag requires: a)Technical improvements – soil sensors, higher resolution satellites, etc. b)Analysis tools – better algorithms and software c)Retraining a generation of agricultural scientists

37. Take Home Message èThe economics of precision agriculture are site specific. èUse of precision agriculture technology is growing throughout the world. èPrecision agriculture adoption has been slower than expected, in part because of the management time required. èManagement time in agriculture may be more expensive than in other parts of the economy. èKnowledge based services are the key to reducing the cost of precision agriculture management time.

38. Developing Precision Agriculture & Knowledge Based Services Requires: ULower cost data gathering – sensors, high resolution remote sensing, etc. UBetter analysis tools – improved algorithms in user friendly software. UKnowledge based service packages – make precision ag as easy for the producer as herbicide resistant soybeans UEntrepreneurship – Marketing knowledge services to producers who have better things to do with their time.

39. Questions? Jess Lowenberg-DeBoer Site-Specific Management Center Purdue University Website: www.purdue.edu/ssmc