Cost/Return Analysis of Precision Agriculture on Oklahoma Farms Aaron Witt April 25, 2001

What Matters Most to a Farmer’s Business?

Making a Business Successful Takes… High Prices for Commodities Low Prices for Inputs –T–This is where the Economics takes place Maximum Output (or Yields) –T–This is where Precision Ag comes in to play

Maximum Outputs (or yields) People have used precision agriculture forever Developing more advanced technologies –Better Hybrids –Soil Sampling –Satellites –Better equipment On-the-go sensing equipment

High Prices for Commodities In 1997, 5,300,000 Acres of wheat were harvested with a 32.0 bushel average. –Average price of $3.21 In 1998, 5,100,000 Acres of wheat were harvested with a 39.0 bushel average. –Average price of $2.57 –Average farm size both years was 410 acres

Low Prices for Inputs Tractors, Combines –Getting very expensive Equipment –Continue to get larger and more expensive Irrigation –Not needed in some of Oklahoma but big in panhandle –Natural gas is terribly expensive Fertilizers –In 1998, a total of 959,543 tons sold Farmers are forced to find the cheapest combination and it isn’t easy

Lower Prices for Precision Ag Equipment Now very expensive –Add several thousand dollars to existing equipment for sensors or variable rate applicators Prices must come down for today’s average farmer to even be remotely interested

How Do We Get Farmer’s Interested? Education –Future farming will not survive if all farmers aren’t educated. Some will lag behind. Economics –A major point. Common sense vs. intellectual. Environment –The biggest selling point in some areas. Save stress to the environment because only nutrients that are needed will be applied. Hopefully no waste.

What Does The Future Hold? Continued research and progress Better crops and improved varieties Better understanding for technology Work Smarter, Not Harder

How Do We Get Farmer’s Interested? (con’t) What When Where How All of these questions are answered with precision ag equipment.

Possible Future Problems… Supply & Demand –World population will continue to grow –Beginning of million bushels of wheat in storage Production of 1,182,000,000 bushels of wheat As a result, wheat prices were very low If only a 1% increase in yields…11,820,000 bushels That may be coming with variety improvement

Good Thoughts… Chances are tomorrow’s farm will be valued for its information base, as well as its productivity base- a reality spawned by agriculture’s part of the information age. Precision technology tools should be utilized to make better decisions, save dollars, and make your farm more profitable.-John Engles

Conclusion Farmers do not have the time to soil sample at a three meter resolution. Realistically, farmers today probably won’t go for precision ag equipment unless price is substantially lower. If this is to really get going, co-ops, commercial chemical applicators, and large farms (several thousand acres) need to be the first ones to be introduced to the ideas.