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The ‘precise’ in precision agriculture

Making cost-of-production decisions is possible using available software

In the world of precision agriculture, each new growing season seems to bring a fresh batch of brand new technologies, complete with upgrades to existing systems. No question, it can be a challenge just to keep up with the variety and capability of some of these innovations, let alone figuring out which might have the best fit for your farm.

Last fall, a story in Country Guide explored a situation outlined in a web article that had been published in the U.S. earlier in the spring discussing the merits of a so-called break-even price calculator for corn.

One key limitation was that the corn price (US$3.69 at the time) was never linked to yield. It could have been $3.69 at 150 bu./ac. or 250 bu./ac.

It created an impression that the optimum yield would be the same, no matter how the cost of producing those bushels compares to the dollars that growers can generate from their sale.

Then Greg Stewart, agronomy lead with Maizex Seeds, went even further, wondering whether it might be possible to create a map of break-even pricing in fields, especially for those areas where it might cost double the field average to grow a bushel of crop, or even more.

Stewart then questioned whether precision maps could be created that might send a clear message to the grower about their break-evens in different parts of the field.

It’s certainly possible using any number of software packages to develop profitability-and-loss maps. An agronomist or certified crop adviser (CCA) can produce those maps easily enough using any variables a grower might want to input. But is there a case to be made for precise break-even maps?

“I’m suggesting that in a variable-rate world, where you’re now going to adjust the seed cost input across the landscape and you’re going to adjust maybe nitrogen, maybe variable-rate potash, now the break-even maps become even more intriguing,” says Stewart. “If you have a sandy knoll, and we pull seed costs back and drop populations by 6,000 seeds per acre, and we think yield is marginal there, we pull back our nitrogen by 25 per cent. As well, since it’s always been a low-yielding area, the soil test on potash is quite high because it hasn’t had as much removal over the years.”

The question is: How do you put the entire package together, and how do you know you’re doing it in the way that provides the best financial return?

Then it gets even more complicated, because variables like lime also enter the equation, even though the lime should really be applied to the production cost of the several years worth of crops that it can be expected to help.

“All I’m suggesting,” says Stewart, “is that if you have all of these variable factors — three or four inputs and your yield — it’d be nice to say, ‘Okay, after all of that precision ag variable-rate work, what is our break-even cost on that knoll?’ That’s a map that I’d find intriguing.”

Maybe it already exists

There are those who maintain that such mapping precision already exists, although not by that name. Karon Cowan asserts that profitability maps are every bit as useful — and are helping many farmers who are running SMS Advance or Trimble Ag Solutions (FarmWorks) or any of the software packages that provide such number-crunching capabilities.

“There are a lot of farms that are taking their various maps — and if you have a yield map, you can do this,” says Cowan, who operates AgTech GIS in Embro, Ont. “At the very least, show yourself your revenue map — even if you don’t have all of your costs mappable, then you certainly have your revenue mappable.”

The programs that are available today will ask an operator (i.e. the farmer, agronomist or certified crop adviser) to use tools they likely already have. If they’re logging their yield data, they already have a revenue-map creation tool, says Cowan, and lots of growers are experimenting with these capabilities. Manipulating the maps to see where those less-productive areas in a field are located is a simple matter of inputting a yield map, then layering costs and creating an equation that provides the grower with a revenue map or profitability-and-loss (P&L) map.

The capability to map and manage areas of a field — from a profit-and-loss perspective — is now possible with available mapping software.
photo: File

Corn planting map

The mapping program allows the input of a hybrid or hybrids, and it’s possible, says Cowan, to input the planting patterns — i.e. if a grower planted a lower-cost hybrid around the headland of the field. From there, they can input the other hybrid or hybrids according to planting densities or row configurations.

“As a precursor to any of this profit mapping, you have to be logging some data, period. And the most important is the yield map,” she says. “It is the least-expensive precision ag technology to adopt, and I believe it gets you the most results for two reasons: this is your revenue map, but it also shows you the spatial distribution of where the profit or loss is coming from.”

On the headlands, sometimes there can be some decent yields, but it’s not going to be land that’s under higher management specifications, be they planting densities, elite hybrids or as comprehensive a fertility program in other parts of the field. In one of her customer’s field maps, it’s very easy to see where their production issues lie, and it has to do with soil types and topography. (He has two gravel ridges where after years of tillage, much of the soil from the knolls migrated into the hollows below.) That means his yields are better in those hollows.

Still, this is a known production issue. He has yields below 125 bu./ac., and sometimes as low as 65 or 75 bu./ac., that show up as red areas on the maps. They’re always poor and that’s unlikely to change without some type of longer-term management strategy. But there are a lot of good areas of the field, where yields are well into the 200 bu./ac. realm, even though the overall field average ran 167 bu./ac. in 2015.

“All a grower has to do, whether they have a mapping program that’s doing this or someone’s producing a paper map for them, is take these ranges, multiply by the price of corn and there’s the rough difference in revenue across a field,” says Cowan.

That’s the lowest entry level, and growers can — and often do — create their own increments within their fields and on their maps. If they want, they can segregate their yields in 50-bushel segments. They can calculate costs according to the entire operation or on a field-by-field scale. And if they like to run some “what-if” scenarios at different prices, they can input corn at a current level or factor in something higher or lower. The operator sets the equation using any or all variables available.

“All I do is set up a basic equation that says, ‘yield times the price of corn equals revenue less cost of the product on any layers that have applied variable or flat-rate data,’” says Cowan. “It just requires some desire to do it, the software that can do it, and having your numbers in order.”

If the grower has some added costs, all it takes is the input of a longer equation to make room for the added variables, which is a step that most software allows. The price of fertilizer, the cost of the land, the cost of crop protection — even the cost of hiring a custom applicator for the fertilizer — all can be input into the software.

The key, says Cowan, is to set up the equation beforehand. That turns the basic revenue map into a profit map. And it will pinpoint the specific financials on a specific section of a field, including gravelly knolls or gullies.

The SMS Advance system has a prompt feature, which asks the operator to input specific numbers such as different price points for the crop revenue to do “what-if” scenarios. Or you can detail every product automatically for the season using the built-in financial tracking part of the program, which comes with a detailed profit-and-loss reporting and mapping feature.

“You can get as detailed as you require, depending on what numbers you have available to you,” says Cowan. “It works like a calculator. The more detail you have, the clearer the picture will be.”

Call it what it is

Measuring things from a break-even perspective is something Tony Balkwill tries to avoid, because there are too many layers. He agrees with Cowan about the ease with which a grower can determine revenue or profitability maps using available technology. However, Balkwill believes farming according to “break-even” management doesn’t take into account some of the on-farm variations that might be overlooked, mostly because it’s a moving target.

Differences in farming practices, soil types, rotations, fertility programs and seeding rates are too complex. But most of all, Balkwill points to marketing prowess as a factor that differs from farm-to-farm. Some growers are better at selling their crops or at purchasing inputs, or at handling risk, or dealing with the discomfort level associated with that risk.

The term Balkwill prefers to focus on is a “profitability by zone” map.

“If a farmer is a poor manager, and has inflated land rent or equipment costs, and I’m farming with a horse and buggy, well then my cost of production is comparatively low,” notes Balkwill, who operates NithField Advanced Agronomy. “Cost of production shouldn’t even be in the discussion when you’re looking at the profitability of variable-rate applications by zone.”

At the same time, it’s possible to extrapolate a map of zones to show a grower those areas where they might consider taking corn out of production, or at least planting an inexpensive cover. Balkwill cites one field where a grower had a 30-foot length along the outside of a field rimmed by a woodlot. All told, it turned out to be four or five acres that the grower was spending upwards of $2,000 to $3,000 on for seed and inputs, and likely lost much of that investment.

“It became more cost-efficient to plant that four- or five-acre perimeter to a ryegrass variety instead of corn,” says Balkwill, echoing many of the same statements as Stewart. “If we’re variable-rate farming that field, and if we’ve designed that farm to have multiple zones and doing different practices based on that zone’s potential, then that zone has its own economic balance sheet. And that changes every year, just with the crop and the marketing and the input purchasing.”

Right rung, right ladder

Is it possible that growers are becoming too fixated on one form of precision ag versus another?

Balkwill believes it is, and he suggests a hierarchy or “order of operations” should be brought into play. It’s not just a matter of climbing the rungs in the right order: for some, it’s finding the right ladder to begin with.

“Think of the ladder and precision agronomy as all of the rungs, and if you start at the top, that’s a heck of a leap,” he explains. “It’s one after another, and you don’t just put more rungs in the ladder, either, where a farmer’s trading up for a variable-rate planter but doesn’t have site fertility figured out on his land. You need to build that foundation of ladder rungs before you get to where yours fits in.”

With that hierarchy, a grower can expand on other facets to improve production by incremental steps. It’s easier to enhance 20 production factors by one per cent each than one aspect by 20 per cent. The former approach is far more attainable and there’s a synergy or cumulative effect of those one per cent increments added together.

Unfortunately, adds Balkwill, it’s more difficult to bring poor or marginal zones up to medium or higher productivity levels. That’s counterintuitive because farmers usually think in terms of farming fence-row to fence-row, and taking land out of production to save money can be a hard sell.

But try telling that to the numbers. In such a case, the math is bound to put up a pretty stiff argument.

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CG Production Editor

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