Back to Contents6.4.1 An Economic Assessment of Precision Agriculture and Decision Aids
Investigators: Carl Dillon, Steve Isaacs, Ron Fleming and Gregg Ibendahl
An economic analysis that addresses the potential value of precision agriculture technology to Kentucky producers is essential. In particular, economic analysis assessing the costs and benefits of specific precision agriculture technologies in order to provide insights concerning the impact on profitability. The primary role of the economic component of this project is support of sub-objectives 6.2.1, 6.2.2, and 6.3.1. Specifically, this objective involves evaluating profitability of alternative precision agriculture technologies and production practices as well as determining costs of implementation. This research will give agricultural producers needed decision aids, as well as information, in helping them make decisions regarding precision agriculture. The economic assessment will be accomplished as follows. Data provide by the cooperating research projects (yield maps, GPS input application maps and additional physical and economic data) will be integrated through the use of GIS software (e.g., ArcView, SSToolbox, etc.) To create profit maps. These profit maps will show net returns over specified costs across space. This interface will aid development of advanced enterprise budgeting techniques on a cell by cell basis including the consideration of production and marketing costs that vary with yield. Furthermore, complexities such as fixed and variable costs associated with machinery operations will be considered. Economic comparisons to determine relative profitability of actual strip design plots or field experiments involved in sub-objectives 6.2.1, 6.2.2, and 6.3.1 will be undertaken as available to investigate relative economic performance of different alternative precision agriculture production practices or compare conventional agricultural production to precision agriculture.
Related, but secondary, to the primary focus of this investigation is identification of factors that limit the adoption and use of precision agriculture in Kentucky. Insights into this important issue will be provided via focus-group discussions with adopters and non-adopters of precision agriculture technology, equipment dealers, input suppliers, consultants and other relevant experts. Results of this work will be weighed against similar studies reported in the extant literature. Within this research program, potential focus upon the following issues that are key to the long run feasibility of precision agriculture: 1) assessing producer and agribusiness attitudes toward precision agriculture in Kentucky, 2) determining limitations and constraints toward adoption of precision agriculture, 3) determining information proprietorship: who owns the information and what do they do with it?, 4) evaluating land tenure issues in precision agriculture: how does precision agriculture information affect land values and leasing arrangements? 5) evaluation of owning versus custom hiring of precision agriculture technologies, and 6) assessment of precision agriculture adoption and use relative to farm size.
The third area of economic investigation will focus on the relationship between precision agriculture and environmental quality indicators. Specifically, the simulation model OPUS will be used to assess the impact on deep leaching of nutrients of different precision technologies. This information will be combined in an economic optimization framework (using GAMS) to choose least cost (profit maximizing) precision technologies that jointly minimize environmental impact. Procedurely, OPUS simulations of nitrogen leaching, which are typically "field scale", will be conducted by field cell and then aggregated up to the field level. In this way this work can be extended (using the SWAT simulation model) to the watershed -level.
The work plan for this portion of the project includes the following elements: 1) initial programming and testing of input/output interface for base conditions as well as identification of physical experiments available for economic analysis (Year 1); 2) expansion of interface to include consideration of variable rate inputs, data collection and initial production cost accounting and estimation (Year 2); and 3) release of computer decision aid in assessing costs of precision agriculture (Year 2) and 4) finalize economic feasibility assessment, interpretation and written results (Year 3).
Deliverables will include: 1) a computerized decision aid to assess the cost of selected precision agriculture technologies; 2) profit maps to determine how input and output variability affect spatial variability of net returns; 3) framework for future analysis; 4) fact sheets as a decision aid to producers and 5) refereed journal articles, popular journal articles or staff papers.