Research Accomplishment Reports 2009

The Economics of Precision Agricultural Machinery Management

C. Dillon
Department of Agricultural Economics

 

Non-Technical Summary

This research is needed to provide further economic assessment of precision agriculture machinery management, including economics, in a multidisciplinary analysis. Ultimately, this research aims at providing the missing element of the analysis of the economic performance of precision agriculture machinery regarding both profitability and risk management in a whole farm setting.

2009 Project Description

When evaluating the opportunities for precision agriculture machinery management potential, several factors are important to include. Specifically, the importance of the consideration of interactive effects, economic substitution possibilities, competition for resource allocation across alternative enterprises and the decision-makers attitude towards risk has been identified in preliminary research output. A refereed presented publication beginning the assessment of precision machinery management technology adoption provides evidence of initial research developments on this project. Another presented paper focusing upon variable rate irrigation production economics and several new crop profiles also represent outputs from this experiment station project for the year.

2009 Impact

The economic impact of the research results of this year includes the development of an analytical tool for assessing the economic potential of alternative auto-steer technologies with respect to increasing expected farm net returns and decreasing variability of farm net returns. A whole farm economic model was used to provide a detailed assessment of the potential benefits of auto-steer technology adoption for a hypothetical commercial grain farm in Kentucky.

This model thereby allows for interactive effects of exploiting production management substation. Two scenarios were investigated including 1) the addition of a bolt-on auto-steer system with a sub-meter receiver on a self-propelled sprayer and 2) the addition of an integral valve auto-steer system with a RTK GPS receiver on a tractor. It was determined, for all risk levels, that both auto-steer scenarios were profitable and reduced the variability of expected net returns (with coefficient of variation dropping from 11.47 to 11.28 and 11.26 respectively for the two scenarios under high risk aversion); hence auto-steer could be utilized in managing risk as well as enhancing net returns (by 1.2% and 2.3% respectively for the two scenarios under risk neutrality) for the conditions investigated.

Another area of accomplishment is regarding updates which were performed for the University of Kentucky Cooperative Extension Service and the New Crops Opportunity Center for several new crop enterprises: grain sorghum, sunflowers, dry beans and specialty soybeans. Specifically, the Marketing and Market Outlook sections of the crop profiles were updated as well as the Economic Considerations. The economic data was updated to reflect current economic conditions as well as new net returns per acre.

2009 Publications

Shockley, J.M., C.R. Dillon and T. Stombaugh. Auto-steer navigation profitability and its influence on management practices: A whole farm analysis. Page 751 to 757 in Proceedings of the 7th European Federation for Information Technology in Agriculture, Food and the Environment. J. Stafford, ed. Wageningen, Netherlands. July 6-8, 2009.