Issue link: http://read.uberflip.com/i/1303072
WWW.POTATOGROWER.COM 29 Always read and follow label instructions. ® ™ Trademarks of Vive Crop Protection Inc. It's easy to get excellent disease and insect control with AZteroid® FC 3.3 and Midac® FC because they mix perfectly, eliminating plugged screens or tips and lowering worker contact. Learn more about clean nozzles at vivecrop.com/potatoes WHO CARES THAT IT DOESN'T CLOG SPRAY NOZZLES? ASK THE ONE WHO UNCLOGS THEM. (where half were better and half were worse), and those at the 70th percentile or higher. Among the findings: • Precision ag tech users generally averaged 2.5 to 3 bushels per acre more than non-users on land of similar quality based on rent value. • Precision ag users generally averaged lower variable costs per acre than non-users. • Precision ag users generally had greater returns over variable costs ranging from $19 per acre among those in the 30th percentile, to $10 per acre among those at the median, to $6 per acre among those in the 70th percentile. As further evidence that utilization of precision ag technology will boost land values, early this year, the Agricultural Data Coalition polled farmers to learn 1) the current extent of precision ag use among farmers; and 2) where farmers thought future advances might bring them. Among findings, 58 percent already think an extensive database on how their land has been monitored and spoon-fed just what's needed for maximum profitability will increase their land value compared to similar land without such data to show potential buyers. A common measure of land value is tied to what's called the capitalization rate, or "cap" rate, derived by dividing average rent value (less property taxes) by the asking price. Going back to our chart, I compared increased returns over variable costs by those aggressively using those four elements of precision ag to those who didn't use any of them. Next, I estimated the 43-bushel-per-acre ground in the 30th percentile (with a net rent value of $164 in the FINBIN data) to be worth $4,750 per acre. I estimated the median yield of 50 bushels per acre with net rent value of $188 per acre to be worth $5,400 and the 54-bushel-per-acre ground commanding net rent of $225 per acre to be worth $6,500 per acre. Finally, I added the boost in returns over variable costs among those aggressively using precision ag technology to the FINBIN net rent value and re-calculate the capitalization rates accordingly. Finally, I re-evaluated the value of the land to the aggressive precision ag user using the improved capitalization rates. The lines in green tell the story: That $4,750 land in the 30th percentile is actually worth $556 more to a precision ag whiz. That same land is also worth bidding an extra $12.91 an acre just to rent it. At the median level, precision ag adds $281 to the value of the $5,400 land for the precision ag whiz, and raises the bid to rent it by $5.61 per acre. Among the high performers in the 70th percentile among both groups (precision ag users and non-users), the precision ag advantage raised the value of the $6,500 land by $159 per acre, and raises its value as rental ground by $2.95 per acre. CONCLUSIONS: The evidence that precision ag makes land more productive and profitable clearly translates into higher rent and market values for farmland to aggressive users of precision ag. The fact that less than 30 percent of the soybean producers participating in the 2019 FINBIN program met my definition as "aggressive users" of precision ag tech is important. Why? It means they also have a significant competitive advantage. Dan Manternach is president of Perfect Fit Presentations LLC. He specializes in speaking to agricultural groups about a variety of topics. Learn more at www.perfectfitpresentations.com.