Farmer Case Studies on the Economics of PA Technologies
| Date: 20 Jun 2008
Dr Matthew McCallum, McCallum Agribusiness Consulting, Laura SA 5480
Take home messages
• PA technology returned growers an average of $18/ha annually in this study
• Agronomic advisers have an important role to play in helping farmers adopt a successful VRT program
Introduction
There has been a rapid adoption of Global Positioning Systems (GPS) guidance and autosteer in South Australia in the last five years. It is estimated that 30% of broadacre crops in SA are now sown and/or sprayed using GPS technology. However, other PA technologies such as yield mapping and variable rate are less common with <1% of adoption across cropping regions in SA. One of the major reasons for this is the lack of evidence that the investment in variable rate technology (VRT) can provide sound financial returns to farmers. The aim of this study was to quantify the economic benefits of PA on six farms across SA. The PA technology evaluated included yield mapping and VRT, as well as GPS guidance and autosteer. It is hoped this information will provide farmers and advisers valuable background information in deciding whether an investment in PA will improve individual farm profitability.
Methods
Six farmers were interviewed from different cropping regions of SA and with varying levels of PA experience (Table 1). Information was collected on
• Area of cropping program, crops grown, crop yields, gross margins, rainfall, soil types
• Variable input costs (fuel, fertiliser, seed, pesticides, machinery, labour) per ha
• GPS equipment purchases and purpose
• Evidence that PA is working on their farm in regard to less overlap, VRT etc
• Other benefits of PA e.g. conducting own agronomic experiments
This information was collated, analysed and a case study written on each individual farmer.
Table 1. Location, rainfall, farm size, and PA experience
Farmer
|
Location
|
Rainfall (mm)
|
Farm operation (ha)
|
Years of PA experience
|
1
|
Waikerie
|
250
|
3000
|
7
|
2
|
Crystal Brook
|
400
|
1600
|
8
|
3
|
Yeelana
|
425
|
2700
|
2
|
4
|
Snowtown
|
400
|
2340
|
10
|
5
|
Buckleboo
|
300
|
4475
|
5
|
6
|
Stockport
|
475
|
1200
|
10
|
Economic analysis
A relatively simple economic approach was used in this study. The total cost and annual benefit of GPS equipment for each farming operation was calculated and expressed as a total and in $/ha. From this, a “payback period” was determined which is the time taken for the equipment to “pay for itself”. The payback period is a function of the annual benefit relative to the initial cost of the GPS equipment and the time taken for the benefit to be instigated. After this payback period, income generated from the GPS equipment becomes profit. The quicker the payback period, the better the investment. The total cost of equipment for each farmer was simply calculated from the original purchase price (gst exclusive). Savings on input costs were based on reduced overlap using GPS equipment. This was calculated using the farmers’ figures on the individual paddock area that was sprayed, fertilised etc before and after GPS equipment was used. Savings using VRT were calculated from comparing variable rate fertiliser application with a previous “blanket” rate of fertiliser used before PA was employed. Production increases from VRT were calculated from higher yields achieved by increasing fertiliser rates on low fertility areas of paddocks. On-farm trial data was used for this purpose. Production increases from inter row sowing were estimated using trial data. Actual farmer data on grain prices and input costs was used in the majority of calculations. Estimates were used when this was unavailable.
Results and Discussion
Costs and Benefits
The costs and benefits from PA in this study are summarised below (Tables 2 and 3). For all cases the annual benefit from cost savings and increased production was enough to cover the cost of guidance and autosteer equipment within three years on average (range of 1-5 years). The payback period for yield monitoring and VRT equipment was longer, some seven years on average (range of 1-10 years). This is mainly because of two reasons. Firstly, the initial high price of yield monitoring in the mid to late 90’s before the equipment became standard on most modern harvesters less than 10 years old. Secondly, for most farmers it was some years before a VRT program was implemented because farmers were not confident to go full VRT until they had evidence it would work. The first step in gaining confidence was targeted soil testing which revealed that varying rates of P fertiliser was a viable option because low yielding areas were high in P, and high yielding areas were low or adequate in soil P. Some of the farmers were reducing their overall fertiliser input using VRT, while others were increasing production on low P areas within paddocks e.g. sand dunes. Involvement with organisations such as SPAA and PIRSA was important in verifying potential returns from PA. Farmers looking to adopt PA in the future are better positioned to make VRT pay within 2-3 years because of access to lower cost equipment (yield monitor, VRT equipment) and more information on the likely financial returns.
Table 2. Summary of costs and benefits of GPS equipment
Farmer
|
Capital invested in PA ($/ha)
|
Annual benefit ($/ha)
|
Payback period (years)
|
|
Yield monitor and VRT equipment
|
Autosteer and guidance
|
|||
1
|
23
|
11
|
1
|
4-5
|
2
|
62
|
13
|
10
|
1-5
|
3
|
27
|
21
|
-
|
1-2
|
4
|
15
|
15
|
6
|
1
|
5
|
12
|
10
|
-
|
5
|
6
|
62
|
37
|
9
|
3
|
Average
|
34
|
18
|
7
|
3
|
Table 3. Breakdown of GPS benefits
Farmer
|
Annual benefit ($/ha)
|
|||
|
Savings in overlap
|
Fertiliser savings using VRT
|
Increased production using VRT
|
Other production increases*
|
1
|
4
|
-
|
7
|
-
|
2
|
5
|
5
|
-
|
3
|
3
|
3
|
-
|
-
|
18
|
4
|
5
|
10
|
-
|
-
|
5
|
2
|
-
|
-
|
-
|
6
|
10
|
9
|
8
|
18
|
Average
|
5
|
8
|
7
|
13
|
* inter row sowing, reduced soil compaction
Other major benefits of PA
The reduction in fatigue was highly rated as a benefit of guidance and autosteer amongst all six farmers. The ability to conduct your own agronomic experiments was an important benefit for two farmers, which has the capacity to lead to better whole-paddock or whole-farm decisions that increase profit.
Management time spent by farmers on PA
Most of the farmers interviewed spent 3-7 days per year organising yield and variable rate maps. Most used basic software supplied by manufacturers and machinery dealers. Although the software was basic, it is fair to say the level of computer and GPS literacy amongst these farmers was high. This may be a significant barrier for further adoption of VRT. Some farmers used the advice of a PA or agronomic consultant in preparing variable rate maps. In contrast, guidance and autosteer take very little training and on-going management.
Concluding remarks
PA technology offers farmers opportunities to increase their profitability if they make a sound investment in the equipment required. An initial simple feasibility study is an important first step. In regard to VRT, farmers today are well-placed to take advantage of the knowledge gained from the growers in this study who have been the early adopters of PA technology. Also, the cost of PA equipment has become rapidly more affordable in the last five years which will enhance the profitability of adopting PA for many farmers.
Acknowledgments
Funding provided by SAGIT, and the co-operation from the farmers is gratefully acknowledged. Dr Kathryn McCormick provided valuable comments on the report.
Contact details
0438 895 167
matthewmcag@bigpond.com
Was this page helpful?
YOUR FEEDBACK