USDA releases report on adoption, profitability of precision agriculture practices

In October, USDA Economic Research Service releases its latest study on the adoption, use and portability of precision ag.

USDA's Agricultural Resource Management Survey shows that precision ag technologies were used on roughly 30 to 50% of U.S. corn and soybean acres in 2010-12.

This study, Farm Profits and Adoption of Precision Agriculture, uses national data on U.S. field crop production between 1996 and 2013 (the latest available) from the Agricultural Resource Management Survey (ARMS) of field crop producers, jointly administered by USDA's National Agricultural Statistics Service (NASS) and ERS.

The data implies that larger farms are more likely to adopt these technologies. Yield mapping is used on about 40% of U.S. corn and soybean acres, GPS soil maps on about 30%, guidance on over 50 percent, and VRT on 28-34% of acres. The largest corn farms, over 2,900 acres, have double the precision ag adoption rates of all farms: 70-80% of large farms use mapping, about 80% use guidance systems, and 30-40% use VRT.

The survey data allow examination of detailed field-level production and financial information for a large sample of farms. Use of three technologies-information mapping, guidance systems, and VRT-is examined for each farm. An econometric model is estimated that controls for selection bias since large corn farms tend to be both more profitable and early technology adopters

The study found interesting results regarding labor costs and farm size. Hired labor costs are 60 to 70% lower with any of the three precision technologies on small corn farms (140-400 acres), while hired labor costs are higher on large farms that have adopted precision mapping and guidance. The additional use of hired labor on larger farms may be for information management and field operation specialists that can help implement the technologies.

Larger farms have higher expenses for other inputs that these specialists can help control using precision ag. Custom service expenses are higher with mapping and guidance on both large and small corn farms under all three technologies. However, custom operation costs are five times larger, in percentage terms, on small farms than on large farms.

All three technologies have small positive impacts on both net returns (including overhead expenses) and operating profits for a U.S. corn farm of average size. GPS mapping shows the largest estimated impact among PA technologies, with an increase in operating profit of almost 3% on corn farms. The impact of mapping on net returns is almost 2%. Guidance systems raise operating profit on corn farms by an estimated 2.5% and net returns by 1.5%.

Variable-rate technology (VRT) raises both operating profit and net returns on corn farms by an estimated 1.1%. Corn and soybeans have had higher shares of acreage using yield mapping than other crops, but use of yield maps has increased for peanuts, rice, and spring wheat as well.

Click here for the full report from USDA.