Will the higher costs of technology advancements separate the “haves” and “have-nots” of agriculture producers? This was a question asked by a young producer at the annual agricultural finance conference held at the University of Tennessee at Martin; I am often asked this question during webinars and at young farmer and rancher meetings.
The answer is a blunt “yes and no.” When a producer considers implementing technology, such as robotics, GPS, data systems, or drones into their farm operation, several factors must be considered in the process.
First, do you and the people that are on your team have the experience and the skill base to properly utilize the technology productively?
Next, are your land, labor, equipment, and livestock resources compatible for the use of the technology? Some land resources and livestock facilities are much more adaptable to technology than others.
What type of marketing advantage or efficiencies can the technology provide? For example, in the dairy industry, robotics are becoming more popular. Many think that this technology is being implemented to replace labor. While that is true, the better managers also utilize the information supplied by the system to provide customized nutrition, breeding, and animal health not only to the whole herd, but to individual cows.
In addition to reducing labor costs and providing information to better manage livestock, new technology can enable producers to quantify profitability by production unit. For example, technology and the information that it provides was used by a producer to measure profitability by field sections. After doing a partial budget analysis to determine the true cost or benefit of the rented acreage, the farmer declined to rent 3,000 acres of leased ground. This cost-benefit decision allowed the producer to farm less land more efficiently and improve the bottom line profit by $300,000.
On the other side, some producers have resorted to low-tech or utilizing used equipment, which often has lower overhead costs. In some cases, the mechanical talents and skill base of a team to improvise and repair equipment have led to sustainable profits. Some producers have gone the organic route and are concentrating on soil health with the latest agronomic practices in combination with used equipment.
One booming technology trend in the future will be linking consumer demands to production practices. To spur your thinking, many of the future consumers will purchase personalized customer experiences rather than products. This may be one of the factors that creates a division between the profitable and not so profitable producers in the future. Changes in consumer preferences combined with technology could be a major disruptor.
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