Why Precision Farming Should Start in the Office

We’ve been hearing about precision farming for quite a number of years now. It’s common practice
among early adopters. It’s getting a lot of face time in the media. It is a strategic decision that should
elevate a farm’s production efficiencies to new heights not seen before.

Proponents say that variable rate is not a treatment, but a management practice. They would be correct.

I’ve watched in awe the business men and women who recognize the benefits of increasing their
acumen in a certain aspect of their farm. One of those is precision farming/variable rate and it is
awesome. In fact, I believe that in the future VR will be the second greatest determining factor affecting
gross margins, second only to marketing of course.

But what is more awesome is seeing those farms that have taken precision farming into the offices and
applied it to financial management practices. Think about this: it was early December 2013, right after
the largest harvest in almost forever, as commodity prices were already on a crazy carpet for a ride
down the trading charts. I was in a conversation with an aggressive 30-something farmer when he said,
“I’m looking forward to $8.50 canola and $4 wheat, because I know I can still make money at those
prices and a lot of guys can’t. That’s going to create opportunity for me.”

You’ll recall Issue #3 of Growing Farm Profits Weekly on Cost of Production? Well, this guy knows his
costs on everything, right down to the penny per acre. THAT is precision farming!

Now imagine how easy it is for this farmer to make the decision on if he should invest in variable rate
right now or not, considering he knows his costs to the penny across his whole farm. He can quickly and
accurately calculate the projected benefit against the capital cost to invest in the technology. He isn’t
making decisions on emotion. He isn’t making decisions on pride (being the first guy in town to VR his
whole farm.) He’s making decisions on an expectation of profit. And trust me, his net worth statement
shows that he’s made several profitable decisions.

Direct Questions

Your farm requires excellence in 3 areas: production, marketing, financial management. Are you
focusing heavily on one or two areas to the detriment of the others?

Are you meticulous where your skills and interest lie, and improvident elsewhere?
Would decisions be easier to make if you knew exactly your financial position at all times?

From the Home Quarter

It’s been said time and time again that “you can’t manage what you don’t control.” Precision farming,
whether it’s in the field or in the office, is all about taking full control; it’s about collecting and using
data. It is projected that when under full VR, your farm can reasonably expect to gain ~$35/ac in a
combination of costs savings and increased yields once the practice has been in place for a number of
years. How long will it take to achieve a $35/ac benefit from implementing precision farming in the
office? I’d say pretty quick, depending on how committed you are to it. Plus, the capital investment will
be a lot less too.