Row crop farmers from the Midwest have mixed feelings about investing in agtech products, according to a new report from Farmers Business Network.
Agriculture technology solutions have to be user-friendly and a worthwhile investment for farmers to take the plunge, farmers told FBN in a recent survey.
The Voice of the Farmer Report captures the perspective of farmers and the issues that concern them the most. It uses both candid anecdotes from farmers and an analysis of actual farm data collected from millions of acres across the US to present its findings.
One corn grower from a plains state said: “I’m tired of paying for technology that doesn’t pay me back.”
Farmers complain about the time it takes to pour over the mountains of data they’re getting off the farm from their technologies. They also said that having too much data in siloes was causing headaches.
The tricky financial climate, where commodity prices are low and the cost of inputs seems to be rising, made the tech investment even harder, farmers told FBN.
Against this backdrop, a farmer from Minnesota said that each dollar spent undergoes a little more scrutiny than it might in other circumstances. Another farmer explained that he needs to see a return on his investment, meaning he will examine how many dollars he could get back for every dollar that he spends on technology.
Optimistic Farmers
There was some optimism about technology, however. The report describes new innovations in farming technology as a potential equalizer, giving farmers of all different sizes access to highly detailed and insightful data. As data and other agtech solutions boost efficiency, profitability may also increase, and competition will help drive profitability, the report concludes.
Based on some of the candid quotes included in the report, many farmers clearly see the potential benefits of adopting agtech:
“What to put where is always the biggest challenge. Making the right decisions, are we putting the right hybrid on the right acre and investing in the right technologies; variable rate, variable hybrids, new application technologies? It’s having the information to make those decisions and make them pay. We get one shot every year, so it’s important to make it count,” remarked one Iowa farmer.
“We changed our mindset a lot over the last five years in terms of using our data to farm versus our intuition. We have a lot of advisors around us; agronomists, local coops, that will help you do things the way they’ve done it. But a lot of that is opinions. We’ve really been able to use our data to make better decisions and manage it within certain areas, manage it, analyze it, benchmark it, and be able to find profitability. To find cost savings, or become more efficient and improving our practices, whether that’s land or buying decisions,” commented a fellow producer in Iowa.
Which Agtech?
When it comes to specific technologies, drones and optical recognition are of particular interest, according to the report. Finding new solutions for spot spraying, on-farm grain storage, and grain management solutions also featured as areas of tech demand.
Something else they’d like to see more of? Training and education, particularly in winter months when a change in the pace of daily operation allows them more time to spend indoors.
“Technology is a big thing. Everything is different from year-to-year. It’s so much more management and education in the winter, and more schooling and learning how to do things and what’s out there, and learning how to cut costs with precision and stuff,” explained a North Dakota operator.
Of course, the influx of new technologies also drives consolidation and competition. As one farmer from Illinois commented, as more farmers adopt the same technologies, they once again find themselves on the same playing field hunting for the next new innovation to give them an edge.
Other Challenges
Finding feasible, affordable, and worthwhile tech solutions will be particularly crucial for farmers given many challenges that they face. The report highlights four primary concerns among farmers.
1. Many farmers agree that the current industry climate creates a precarious situation for farm profits. Although farmers reported record high crop yields last year, low commodity prices and high input costs translated into minimal profits for many farmers. FBN attributes the high input prices in part to the lack of freely available pricing comparison information for inputs. Its input procurement service has sought to address this, using member-generated information about input prices to create more transparency in the process. Notably, the report concluded that the larger the farm is, the less it tends to pay for critical input products. Offsetting this, however, is the tendency for larger farms to net smaller profit margins due to the difficulties that come with trying to optimize every single acre. Some of the farmers surveyed said:
- “I think cost reduction is probably the number one thing everyone is thinking about.”
- “The overriding trend is that it’s going to be difficult to turn a profit. It’s going to affect farmers’ buying habits and decisions in a significant way.”
- “Crop inputs have been going up at a frantic pace, and they’re extremely slow coming down.”
2. Increasing amount of consolidation in the industry is constraining many farmers’ endeavors. This includes not only the mega-mergers between the large agriculture products providers but consolidation among farming operations, too. According to the report, farms are consolidating and not always because they want to. Instead, financial pressures, or uncertainty regarding whether the next generation wants to take over the farm, have led some farmers to sell to larger operations.
- “We’re getting down to three companies that are going to control most of the seeds and the chemicals. Lack of competition could be something that’s going to affect us in the future.”
- “If you aren’t growing, you’re dying.”
3. Concerns about succession. The need to pass the farm onto the next generation is a rapidly impending predicament considering that 66% of US farmers are over the age of 55. The lack of an attractive profit paradigm can make returning to the family farm business unattractive for many young folks. The report notes that many farmers lack a succession plan or have yet to identify someone who is ready to take over the farm business upon his or her death.
- “Any time you start as a farmer, it’s extremely expensive. You need a lot of capital to begin farming. I could never have quit my day job and just become a farmer. It’s probably one of the most expensive things you could do. I’m probably the only new farmer in my county in the last 30 years.”
4. Farmers are concerned about health care. The cost of health care can cut deep into a farm family’s pocketbook. Considering the high risks and safety issues associated with farming, health care is hardly optional. Other aspects of operating a family-owned business prove stressful for farmers, especially when it comes to the need to maintain an off-farm job to help supplement unpredictable or dwindling farm income.
- “The average farm family pays 15 to 25 thousand a year. It’s not because of the Affordable Care Act. The insurance premiums and cost of care have gone up precipitously for over two decades. This has been an issue since probably the ‘80s. We spend double per capita. We have perverse incentives of quantity over quality of care.”
Although it underscored the seriousness of these concerns, the report also cast an optimistic light on the current state of the American farmer. For many people involved with food production, farming is a way of life—not just a means to a paycheck. This creates an incentive for farmers to fight through difficult profit paradigms, to maintain or grow the business even if it’s not clear whether their children plan on taking it over upon their death, and to even place their bets on new technologies.
