Make The Most of Technology When Margins Are Slim
It can be difficult to justify the cost of technology when commodity prices are low. However, experts say it’s actually the best time to invest.
“When crop prices are low, farmers tend to freeze all spending – even on technology,” says Guillermo Perez-Iturbe, marketing director, Trimble Agriculture. “However, that can be a slippery slope. At the end of the day, farmers need ways to trim costs but not lose out on yield potential. Technology like variable rate can help.”
Technology Done Right
Gordon Miller is the first to admit that technology can be a huge investment – in both money and time. Yet, with over a hundred irregular-shape fields to manage, the Illinois grower knew he had to take a proactive approach to maximize inputs.
“When margins are tight, it’s absolutely necessary that I reduce costs, while increasing revenue on those fields, which range from 2 to 107 acres,” says Miller, whose farming operation is in a corn-soybean rotation. “Technology done right does that.”
Doing it right meant developing a plan that afforded him the latitude of easing into investing.
“We didn’t go out and spend a gazillion dollars all at once,” says Miller, who farms with his brother, Gary, and neighbor Bill Pollitt. “We knew what technology we wanted to adopt and how we wanted to implement it and invested over time.”
Starting in 2002, Miller began building a technology portfolio. His first purchase was a yield monitor. Yield mapping soon followed.
For Miller, investing in these tools also involves carving out time to actually use the data being generated.
“I managed a grain elevator for 43 years,” he says. “I learned that in a lot of situations farmers left their data on a stick and didn’t do anything with it. Doing something with it takes time, but I firmly believe if I’m going to invest in the technology, I’m going to get the full benefit from it.”
With more than 17 years of yield history, that insight has helped drive input purchases.
For example, Miller is able to map and compare the performance of different seed varieties throughout his fields and improve seed selection. During harvest, he can view, map, and record crop yield and moisture data in real-time to instantly understand how well the crop performed.
Because Miller strip tills his corn, he also felt it was necessary to lay the corn row on the same spot it was two years prior in his corn and soybean rotation. An investment in RTK guidance allowed him to do that.
Next came automatic row shutoffs. Today, the technology is not only on the planter but all of the application equipment.
With all of the pieces in place, from there he invested in variable-rate technology.
“Because of how irregularly shaped our fields are, variable rate pays dividends,” he says, noting that about $110 to $130 is spent per acre on his fertility program for corn. “We would not be in business today without it.”
When margins are tight, the technologies that allow farmers to gain the most are those that control costs, says Devon Liss, program manager, Trimble Agriculture.
“With farming income generally down, it’s tough for a farmer to try a new technology to improve his operation,” he says. “Yet, there are three areas I believe could really impact his bottom line – one of which doesn’t require a huge investment.”
1. Application control. “With section control, you can really dial in on the inputs you’re putting on a field to avoid waste,” Liss says. “The same applies to variable-rate technology because you’re giving your crop only what it needs.”
2. Data management solutions. “Investing in software solutions to manage your data is relatively cheap,” Liss says. “If you’re willing to get through the learning curve to bring all of your data together, you’re going to see things that help you make better decisions.”
3. Workflow efficiency. “The last few years I’ve spent a lot of time talking to farmers about the problems they face. Overall, the most common thing they tell me is that the hardest part of their job is getting all of the work done,” he says. “Some of these integrated solutions could begin to help you optimize workflows.”
For example, it might be something as simple as syncing guidance lines and boundaries among all of an operation’s different displays and managing the guidance lines to make sure the right ones are on the display. “In the end, they are becoming more efficient and they don’t have to put as much labor into it,” Liss says.
Gaining those efficiencies in one area lets them redirect their time to another area.
Truly Disruptive Technology
Of the myriad technologies adopted, Miller says the one technology that has truly been disruptive on his farm is Trimble Ag Software, which offers integrated mapping and financial accounting.
“I’ve been using this software since 2011, and I like it because I don’t have to do anything except click a mouse to get the information I need. It’s a seamless system,” he says. “For example, I write my own prescriptions using this technology and send them to the tractor. When I download a planting map, I track all of the varieties I use. That information also goes into the accounting system as an expense for that field, which allows me to track not only individual fields but the individual grids within that field.”
This information has also allowed him to more closely analyze which fields are losing money and also find alternatives.
“Based on the profitability maps that are generated, I’ve actually taken ground out of production and planted a deer habitat in its place. While I still may be losing the rent paid to the landlord, it’s better than the $675 I was losing per acre,” he says.
“Many farmers have been farming their land for a long time and know which areas of a field don’t perform well,” Liss says. “But when they see it in the data, it’s much easier to make those hard decisions on whether or not they should take it out of production.”
Knowing his cost of production has also helped Miller be a better marketer. “Because margins are so tight, you have to watch everything,” he says. “All of this technology we’re employing helps me get to my breakeven number more easily. If the market offers an opportunity, I’m confident when we make sales because I know what my margins are.”
At the end of the year, the information has become an invaluable leveraging tool.
“I make my lender’s job so much easier by providing him with the data he wants like accrual and cashflow statements, budget projections, and different scenarios,” Miller says. “Because he doesn’t have to spend as much time going over my records, I expect to be able to leverage that and incrementally lower my costs.”
Money and time aside, both Miller and Liss say investing in technology also has to have one key component.
“In conversation after conversation, what I continually hear from farmers is that their tolerance for learning how to use a new technology is low because time is a premium,” Liss says. “For example, they know they need to get the spraying done before the wind comes up later that afternoon. Because the work has to get done, they are not willing to put any extra time into the process, and technology forces them to do that. We have to make it easy.”
READ MORE: 20 Strategies That Farmers Can Use In 2020
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