Editor’s Column: ROI on ag tech is about more than dollars and cents

Editor’s Column: ROI on ag tech is about more than dollars and cents

As a farmer, you face many challenges — pests, drought, increased input costs, market volatility, labour shortages, inclement weather, logistical issues and climate change, to name a few. For the most part, these challenges are out of your control and, therefore, hard or impossible to manage.

This is where the value of smart ag comes in. According to Joy Agnew, grain storage expert and associate vice-president of applied research at Alberta’s Olds College, it’s not about doing things automatically, rather, technology and data help producers make evidence-based decisions to manage risk. That’s what smart ag and smart tech are all about, Agnew told Farming Smarter 2020 conference attendees last December.

The majority of ag technology developments happened 20 to 40 years ago. What we’ve seen over the last 10 years is the advancement of those technologies. For example, precision soil sampling and variable-rate fertilizer applications were happening in the 1990s, and now we’re developing and advancing new ways and tools to make use of those technologies from decades ago.

If you look at the image below from Agnew’s presentation, you’ll see an evolution of ag technologies — where we have been, where we are and where we’re going. For example, the first row starts with yield monitoring, which many of you have done in the past and are currently doing. Jump one column over and you’ll see yield mapping as a tool, which many of you are using. And five to 10 years out, you may be mapping yield as well as soil quality characteristics and protein content.

We’re closer than you think to the implementation of some of these technologies on your farms, says Agnew.

In fact, there are three technologies at the early adopter stage showing great promise, she says, and are currently undergoing technology validation and evaluation at the Olds College Smart Farm.

The first is optical spot spray technology. The unit looks for and sprays weeds in the field. This is the green-on-brown technology suitable for pre-seed, pre-harvest and post-harvest chemical applications. In addition to the overall bene- fits of the technology, other factors being considered at the Smart Farm are chemical use reduction, the effects of travel velocity and weed pressure.

Another commercially available technology at the early adopter stage being assessed is on-combine near-infrared spectroscopy. Grain protein and moisture content is being measured and plotted in real time. One of the possible uses is to map and segregate the areas of a field producing high- and low-protein-content grain, which would provide different marketing opportunities for those two grain batches.

The third promising technology at the early adopter stage Smart Farm researchers are looking at is in-bin drying sensors, which help producers understand drying rates in real time to gauge how many days or hours of fan operation are needed to reach the stage or condition they’d like to store their grain at.

Assigning a value is challenge

For Agnew, assigning a value to ag technologies like the ones mentioned above is a huge challenge. “Most on-farm decisions boil down to dollars and cents. Farmers want to know the return on investment, and they tie value almost exclusively to that dollar value, which makes a lot of sense.”

However, tying dollars and cents to every decision or technology is problematic.

For a farmer trying to decide to adopt in-bin monitoring technologies, as you can see from the image below, it’s easy to assign dollar values to some factors, such as cost of drying grain, cost of cables and monitoring tech, etc., when trying to measure the ROI of ag technologies. However, for other less tangible benefits like the availability of propane or heating fuel, the value of peace of mind or overall risk of spoilage, assigning a dollar value is difficult.

And even if we can define a measurable value that can be calculated or converted to a return on investment, spatial and temporal variability make it hard to nail down a strong ROI value, Agnew says. For example, assessing the ROI of variable-rate seeding on any one field in one year doesn’t provide a good sense of the true ROI because it’s going to change from year to year and field to field. Therefore, ROI needs to be a range of values.

“The value of a technology or practice needs to be broader than just dollars and cents, if possible,” says Agnew. For example, payback periods of three to seven years. “Ideally ROI is only a portion of what’s used to determine the value of a technology. The value of technology includes dollars and cents, but also some of those non-tangible things like peace of mind or the benefits of increasing soil health over a long period of time or other less tangible benefits of adopting a technology or practice.”

I’d be interested to know if this changes your perspective on how to calculate the value of technology or a practice you’re considering for your farm. Please drop me a line at [email protected].

Have a safe and happy planting season,

Kari

About the author

Editor

Kari Belanger

Kari Belanger has been a writer and editor since graduating from the University of Calgary with a B.Sc. in Biology and a BA in English Literature in 1996. For more than twenty years, she has worked in many different industries and media, including newspapers and trade publications. For the past decade she has worked exclusively in the agriculture industry, leading a number of publications as editor. Kari has a particular passion for grower-focused publications and a deep respect for Canadian farmers and the work they do. Her keen interest in agronomy and love of writing have led to her long-term commitment to support, strengthen and participate in the industry.

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