Economic Feasibility of Auto Guidance in the Midwest M.S. Thesis Agricultural Economics Purdue University Matt Watson

Why Study Auto Guidance  Currently used in Australia, Arizona, California  Manufacturers see vast potential in Midwest market  Midwest producers have uncertainty about returns on auto guidance technology

Objectives of this Analysis  Determine if Auto Guidance is economically feasible on a base farm at or below 2000 acres  Test whether skip and overlap will be a major part of the benefits of auto guidance Determine if light bar guidance can provide these benefits at a lower costDetermine if light bar guidance can provide these benefits at a lower cost

Objectives of this Analysis  Examine auto guidance and expansion with the same basic set of equipment  Explore spatial sensitive practices, like controlled traffic, and analyze the effects on feasibility of auto guidance

John Deere- AutoTrac System  Introduced in 2002 with tracked tractors  2003-Opened market with wheeled tractors  Utilize GreenStar system and Starfire System Only requires addition of AutoTrac key card and steering control unitOnly requires addition of AutoTrac key card and steering control unit  Provides own differential correction service SF2 with accuracy of +/- 4 inches  Recommended Uses TillageTillage SprayingSpraying Seeding OperationsSeeding Operations  Listed Benefits Optimize machine efficiencyOptimize machine efficiency Reduce operator fatigueReduce operator fatigue Increase yieldsIncrease yields

IntegriNautics-AutoFarm System  Aftermarket system available for all major manufacturers  Offers RTK system with base station One time cost, no recurring subscription costsOne time cost, no recurring subscription costs 5 mile coverage area with mobile station (must be in line of site)5 mile coverage area with mobile station (must be in line of site) 7 mile coverage area with fixed station (must be in line of site)7 mile coverage area with fixed station (must be in line of site) +/- 1 inch accuracy+/- 1 inch accuracy  Major uses listed are Reducing operating costsReducing operating costs Reducing capital investmentReducing capital investment Running in night and fogRunning in night and fog Broadening labor poolBroadening labor pool  Kit includes base station, cab box and monitor, GPS antenna, and all needed cables  Optional data logger for mapping and surveying

Trimble-AgGPS Autopilot  Available as two systems  DGPS with +/- 6 inch accuracy  Recommended uses TillageTillage Broad acre air seedingBroad acre air seeding Application of fertilizer and insecticideApplication of fertilizer and insecticide  RTK with +/- 1 inch accuracy  Available on Case, CAT, John Deere  Wheeled or Tracked

Beeline Navigation-Arro system  Available for all major manufacturers  OEM with AGCO tractors  Can come in three accuracy levels DGPS with +/- 4 inDGPS with +/- 4 in Base station at decimeter accuracyBase station at decimeter accuracy Base station at centimeter accuracyBase station at centimeter accuracy  Mobile or fixed base station Offers fastest setup time on base stationOffers fastest setup time on base station

Methodology of Model  Annualize technology cost using sinking fund approach with 3 years  Deterministic model uses 7 year average yields and December cash prices for central Indiana from  Risk model uses empirical distribution from the same years  Use planter as limiting factor for farm size Using 12 row planter and probability of days worked in central regionUsing 12 row planter and probability of days worked in central region

Revenues generated by yields and harvest price Base Farm Farm Budget Revenues Guidance Farm Budget Technology Costs Revenues Guidance Benefits How the Model Works

Guidance Benefits in Model  Inputs-Chemicals, Fuel, Labor Use overlap for reductionsUse overlap for reductions  Increase in field speeds Auto guidance 20%Auto guidance 20% Light bar guidance 13%Light bar guidance 13%  Increase work day length Base-14 hoursBase-14 hours Light bar-18 hoursLight bar-18 hours Auto guidance-20 hoursAuto guidance-20 hours

Controlled Traffic  Use Randall Reeder data from The Ohio State University to quantify compaction into 2 levels: 10 ton and 20 ton  Indiana distributions in first two stages represent compaction at that level  Each acre has a percentage with traffic (use compacted yield) and a percentage without traffic (use adjusted yields)  Additional fuel benefits by alleviating compaction

Controlled Traffic DGPS Auto Guidance RTK Auto Guidance Light Bar Guidance Tramline Percent of field with traffic 20%15%30%50% Fuel Reductions 50%50%30%20%

Setup of Model  Stage I- Technology adoption without expansion  Stage II-Technology adoption with expansion  Stage III-Technology adoption with controlled traffic on original farm size  Sensitivity on interest rates, technology costs, and light bar acres

Technology and Time Needed- Stage I

Technology Cost-Stage I

Results-Stage I

Expansion Acres-Stage II

Technology Cost-Stage II

Results-Stage II

Controlled Traffic Yields-Stage III

Results on Highly Compacted Soils-Stage III

Sensitivity  Model shows little change to increasing interest rates, especially in stages II and III  Lowering technology costs changes profitability Stage I-Allowed DGPS auto guidance to be more profitable than base caseStage I-Allowed DGPS auto guidance to be more profitable than base case Stage II-Allowed RTK auto guidance to be more profitable base caseStage II-Allowed RTK auto guidance to be more profitable base case Stage III- RTK auto guidance provided greater average returns than DGPS auto guidance in highly compacted soilsStage III- RTK auto guidance provided greater average returns than DGPS auto guidance in highly compacted soils

Sensitivity  Holding light bar acres constant and including replacement costs dropped light bar guidance below RTK auto guidance dropped light bar guidance below RTK auto guidance  Important when production includes mechanical cultivation, side dress nitrogen, planting with high accuracy

Conclusions  Auto guidance reduces field time on the fixed size 2000 acre farm, but it is not the most profitable guidance option: Light bar guidance can provide almost the same benefits at a lower costLight bar guidance can provide almost the same benefits at a lower cost Profitable when investment costs are reduced by one halfProfitable when investment costs are reduced by one half

Conclusions  DGPS auto guidance is profitable for expansion with the same equipment Spreading technology cost over more acresSpreading technology cost over more acres Provides higher returns over light bar guidance when spreading machinery replacement costs over more acresProvides higher returns over light bar guidance when spreading machinery replacement costs over more acres RTK auto guidance is profitable when technology costs are reduced by one halfRTK auto guidance is profitable when technology costs are reduced by one half

Conclusions  Soils that are highly susceptible to compaction make DGPS and RTK systems profitable Reducing technology costs makes the RTK system provide greater returns than the DGPS systemReducing technology costs makes the RTK system provide greater returns than the DGPS system  Continuous corn growers increase returns of DGPS auto guidance for moderate levels of compaction More response to compactionMore response to compaction More field operationsMore field operations

Areas of Further Research  Driver fatigue  Value of time  Wage and labor pool  Strip tillage  Side dress nitrogen  Contour farming  Environmental benefits

Questions?