Who pays for precision farming?

The use of precision farming, in the broadest sense of the word, is booming. But much remains to be done. The manufacturers are eager to offer practical sensors, software and machines. The only question is: who is going to pay for that?

More and more dairy farmers, arable farmers and contractors are tired of sitting on their hands. They invest in 'precision farming'. An abused container term, but every step towards more precision is 1 in the right direction. Manufacturers are full of conviction and offer all kinds of systems. Users sometimes take for granted that these have not always been proven in practice, or lack a scientific basis. They are forced to do their own research and pay grumbling tuition fees.

New service providers
This also applies to payroll companies. A shrinking farm population is putting pressure on contractors and margins are also under severe pressure. If you want to survive, you have to grow and distinguish yourself. An entirely new category of agricultural service providers has emerged: the drone workers. Why should a contractor have barns full of machines? That idea is outdated. Drone pilots and agricultural ICT specialists also work for wages.

The large entrepreneurs aim to 'unburden' customers. Anyone who milks 400 cows or grows 150 hectares of ware potatoes does not always feel like meddling in the harvest of roughage or the grubbing up of their product. Smart electronics, sensors and machines help turn this picture around. NIRS sensors, for example, which measure levels in the manure and fertilize exactly on the basis of NPK. The same sensor on the chopper tells you how many kilograms of dry matter enters the silage.

Investment costs
Such a sensor is far from cheap. And then we haven't even mentioned the RTK GPS systems that are an obligation, the necessary software and, last but not least, a diversity of licenses that are needed to make it all talk. Make no mistake, those costs alone run into the thousands of euros. Not a disaster, provided you can calculate those costs in the price. Why should a harvester with yield measurement or slurry tanker with NIRS sensor not cost a few euros more?

Healthy margins
With potatoes and onions of €0,20, and milk prices well above €0,35 per kilo, agricultural entrepreneurs have the healthy margin they deem essential. This means that customers immediately have the 'sustainable chain' that you read about in every press release or interview. The contractor can also bring his rates to a realistic level, making it possible to invest in the future.

A rosy scenario that, realistically, unfortunately does not become a reality. Food is and will remain cheap; also in the future. Contractors have the ball in their hands. When RTK GPS was introduced, no one changed the rates. This for fear of the customer reaction.

Next came the seed drill on the latest flexible VF tires. They are much more expensive and wear out faster. An air pressure exchange system on it and equipment to apply fertilizers in the row; preferably site specific. All those extras in the same rate. That's not even talking about the costs for fuel and personnel. The farmer also does not get paid with free potatoes for €0,03, he judges harshly and realistically.

Cherish contractors
The contracting sector is undergoing a major restructuring, partly due to rising costs and low earnings. Farmers sometimes drive machines that make the contractor jealous. Bought in expensive years to cut taxes. A contractor who knows his trade is becoming a rarity. Cherish them! This is sometimes forgotten when grass, maize, potatoes and grain have to be removed after 3 weeks of rain and all customers want to harvest at the same time. Patience and realism are increasingly hard to find. The farming industry hardened. That is also a frequently heard reason for quitting.

Contractors realize this all too well: a super-deluxe fertilizer spreader on the latest tire technology may cost more. Grant the margin and in the long run it will come back to you. From the bottom and your business relationship. That is now the sustainable sector that the periphery is talking about.

Niels van der Boom

Niels van der Boom is a senior market specialist for arable crops at DCA Market Intelligence. He mainly makes analyses and market updates about the potato market. In columns he shares his sharp view on the arable sector and technology.

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.