Economics of Precision Farming

Transcription

1 Economics of Precision Farming Marvin Batte VanBuren Professor Emeritus, OSU Research Professor, University of Kentucky Florian Diekmann Assistant Professor University Libraries, OSU

2 What is Precision Farming? A suite of technologies that allow: Capture of data at an appropriate scale and time Interpretation and analysis of that data Implementation of a management response at an appropriate scale and time. Source: National Research Council

3 Precision farming technology components include: Global Positioning System technologies Yield Monitoring devices Grid or zone soil sampling Georeferenced scouting for weeds/pests/disease Variable rate fertilizer application Variable rate herbicide application Variable rate planting Auto guidance or assisted guidance

4 Organization of my remarks: 1. Summarize results for the 2010 precision farming survey regarding adoption 2. Discuss an econometric model of precision farming adoption and evaluation by adopters 3. Speculate a bit on the future of this emerging technology.

5 Results of the 2010 Precision Farming Survey Statewide survey, $50,000 + gross sales Mailed Questionnaire 3,000 contacts 40.4% Effective response rate Larger farms were over-sampled to provide more observations of larger farms. All analyses are weighted using Census of Agriculture numbers to return estimates that are representative of the Ohio farm business population. These analyses are restricted to the corn belt region of Ohio (42 counties).

6 Sample descriptive statistics by Adopter and Non-adoper farmers Item All farms Adopters Nonadopters Percent of sample Farm size (cropped acres) Gross farm sales (%) $50,000-$99, $100,000-$499, $500,000-$999, $1,000, Livestock Sales as Percent of Gross Income Work off-farm (%) Age of Respondent College degree or more

7 Percent of Ohio farmers who had adopted various precision farming components, February Percent Component adopting Satellite GPS receiver 36.1 Precision Guidance 32.7 Yield Monitor 31.0 Georeferenced grid soil sampling 29.1 Variable Rate Application of Lime 24.7 Variable Rate Application of Potassium 24.1 Variable Rate Application of Phosphorus 23.5 Variable Rate Application of Nitrogen 7.1 Variable Rate Application of Manure 2.3 Percent who have adopted one or more of above 45.3

8 Percent of Ohio farmers who had adopted various precision farming components, 2007and Component Percent adopting Satellite GPS receiver Precision Guidance Yield Monitor Georeferenced grid soil sampling Variable Rate Application of Lime Variable Rate Application of Potassium Variable Rate Application of Phosphorus Variable Rate Application of Nitrogen Variable Rate Application of Manure Percent who have adopted one or more of above

9 Adoption of various precision farming components by farm sales class. $50, , ,000 - Over Measure 99, , ,999 $1,000,000 Adoption Percent Satellite GPS receiver Precision Guidance Yield Monitor Georeferenced grid soil sampling Variable Rate Application of Lime Variable Rate Application of Potassium Variable Rate Application of Phosphorus Variable Rate Application of Nitrogen Variable Rate Application of Manure Percent who have adopted one / more of above

10 Net Benefits of the Total PF System For your farm situation, are the total benefits of the overall precision farming system greater than the total costs of this system? (Circle ONE answer only) 1. Yes, Benefits are significantly greater than Costs 2. Yes, Benefits are slightly greater than Costs 3. Benefits and Costs are about equal 4. No, Costs are slightly greater than Benefits 5. No, Costs are significantly greater than Benefits

11 Net Benefits of the Total PF System, 2010

12 Net Benefits of the Total PF System, 2007 vs. 2010

13 Net Benefits of the Precision Farming 80 System by Survey Year Costs Exceed Benefits Costs, Benefits Equal Benefits Exceed Costs

14 Net Benefits of the Total PF System, by Farm Gross Sales Class, 2010

15 Net Benefits of the Total PF System by level of operator education

16 Summary Observations Simple, turn-key technologies are adopted more quickly. Large farmers are adopting more quickly Spreading of fixed costs of investment, knowledge development Small farmers are adopting VRT methods, but often contract out the entire process. Small farmers typically are pleased with the benefit / costs of the PF system. Over time, farmers have indicated higher Benefit/Cost. Is this learning or technology improvement?

17 Part II Econometric model of PF adoption and evaluation A double-hurdle model Phase 1 what explains PF adoption Phase 2 For those who have adopted, what explains satisfaction with the PF system A variant of the Heckman sample selection model was tested. Phase 1 binomial probit model Phase 2 - An ordered probit model Correlation of error terms for the two models is not significantly different than zero.

18 Sample statistics for dependent and independent variables Variable Mean Std.Dev. Min Max N USE_PF PF_EVAL Operator Age Post High School Education (=1) Operator works part-time away from the farm (=1) Operator works full-time away from the farm (=1) Cropped acres (1000 acres) LIVE_PCT COM_USER (=1) USE_GPS (=1) USE_YM (=1) YM*GPS (=1) GRID SAMPLING (=1) ZONE SAMPLING (=1) VRT_PK (=1) LIGHTBAR (=1) AUTOSTEER (=1)

19 A binomial probit model of the probability of adoption of precision farming technologies Variable Estimated Coefficient P[ Z >z] Marginal Effects P[ Z >z] Constant * * Operator Age *** *** Post High School Education (=1) * * Operator works part-time away from the farm (=1) Operator works full-time away from the farm (=1) *** *** Cropped acres (1000 acres) *** *** Percentage of gross revenue from livestock *** *** Computer user (=1) *** *** Log-likelihood function Restricted log-likelihood Chi-squared *** Prediction success: Percent of adopters correcly predicted 81.3 Percent of non-adopters correcly predicted 71.4 Overall correct prediction success 77.4 * One, two and three asterisks indicate significance at the 0.10, 0.05, and 0.01 probability levels, respectively.

20 Net Benefits of the Total PF System,

21 Ordered Probit model of net benefits of the overall PF system Estimated coefficient Costs exceed benefits Marginal effects Benefits Costs somewhat equal exceed benefits costs Benefits substantially exceed costs Variable P[ Z >z Constant *** Cropped acres (1000 acres) ** USE_GPS (=1) USE_YM (=1) *** YM*GPS (=1) *** GRID SAMPLING (=1) ** ZONE SAMPLING (=1) VRT_PK (=1) ** LIGHTBAR (=1) AUTOSTEER (=1) Threshold parameters for index Mu(1) *** Mu(2) *** Log-likelihood function Restricted log-likelihood Chi-squared *** * One, two and three asterisks indicate significance at the 0.10, 0.05, and 0.01 probability levels,

22 Part III: What does the future hold for Precision Farming developments and adoption?

23 What are the motivations for precision farming technology adoption? 1. To more precisely regulate agricultural inputs to maximize farm profitability from production or to facilitate meeting environmental compliance goals / regulations 2. To further allow substitution of capital for relatively expensive labor and management 3. To allow expansion of farm business size or to facilitate new production opportunities

24 VRT applications will continue to expand over time fertilizers, lime seed planting rate and variety VRT is data intensive and requires specialized analytical skills Currently much of this is contracted to special service providers. On-the-go soil sampling sensors will facilitate adoption of VRT

25 Auto guidance Has been adopted very rapidly by large farmers This technology is an important tool of precision farming But also is a technological change that continues trends of substitution of capital for labor and expansion of farm business sizes. allows operation at higher speeds and longer hours with less operator fatigue. allows operators with less experience / skill. allows operation in low light conditions, effectively extending the day. Two machines can be controlled by one operator to work together in the field. New methods of global positioning will facilitate. Computer vision, radar, and other sensing technologies may be important.

26 Supervised autonomous (robotic) machines Further enables substitution of capital for labor. This technology may reverse many trends of past century Previously, capital was substituted for labor using increasing larger machines. But, robotic tractors may be smaller, without operator amenities -- May be lower cost to own and operate. Farmer ownership/operation of machines may change. Issues of liability will need to be addressed. This technology may allow for significant changes in production practices. Strip intercropping has important agronomic benefits, but is difficult to implement using large equipment. Controlled traffic systems / reduced soil compaction more feasible. Intelligent spraying Intelligent mechanical weed control

27 The tractor of the future??? Spirit robotic tractor demonstration - Automation Research Group in Minneapolis, Minnesota

28 Last word from farmers what emerging technologies do they think will be most Important? Technology N Mean a Precision placement of seeds On-the-to sensors for machinery (VRT of nutrients) Integrated software for managing PF data PF technology designed for small farms Precision guidance for implements Ultra-precise tillage technology Nano-sensor soil implants Tracking technology for grazing livestock Robotic machinery a Responses ranged from 1=Not Important to 4=Important