Potato Grower

28 POTATO GROWER | NOVEMBER 2020 Precision ag technology boosts land values for users What It's Really Worth Diggin' In Diggin' In PRECISION AG | By Dan Manternach & the Iowa Chapter of the American Society of Farm Managers and Rural Appraisers Precision agriculture technology began in the early 1990s with widespread use of yield monitors in combines that would generate maps of fields based on the grain flow into the hopper as the machine moved up and down the fields. Early adopters of precision ag technology were often described as being on the bleeding edge of adoption because the costs so often exceeded any measurable increase in profitability. That's no longer the case. In fact, Forbes ran a 2019 feature with the headline, "By Raising Productivity, Ag Tech Boosts the Value of Farmland." In that article, Bill Lapp, president of Omaha, Neb.-based Advanced Economic Solutions, said, "Widespread adoption of technologies that have increased output per acre, as well as reducing production costs, have been the primary catalyst for rising land values in the U.S. and globally." The technology has advanced so far that actual field data from farmers participating in the FINBIN program headquartered at the University of Minnesota can now be sorted into those aggressively using precision ag tech and those who don't, and then compared for differences in yields, income, variable costs, fixed costs and returns. FINBIN covers all major farm crop and livestock enterprises; here, I chose soybeans for example purposes. First, I defined "aggressive users" of precision ag tech as those FINBIN participants utilizing four specific PA technologies: data from yield monitors the prior season to guide variable rate planters, variable rate fertilizer applicators, variable rate chemical application and auto-steer guidance technology. Then, I compared FINBIN participants using those four technologies in their soybean production to a separate sort of FINBIN participants who didn't use any of them in their 2019 soybean production. The chart below uses 2019 data from FINBIN benchmark reports for soybeans among all 12 participating states (Minnesota, Illinois, Wisconsin, Michigan, Missouri, Nebraska, North Dakota, South Dakota, Ohio, South Carolina, Pennsylvania and Utah). I did not use the benchmark report for all 2,087 participating producers submitting their data for the 2019 soybean crop. They were sorted into two groups. The data is derived only from 581 of those participants we sorted out as aggressive users of precision ag and compares it to the same metrics among the remaining 1,506 participants who used none of those four listed technologies. While the FINBIN benchmarks data into separate percentiles in 10-point increments, I chose just three for both groups I sorted out: Those in the 30th percentile or lower, those at the median 30th percentile Median 70th percentile Avg 2019 FINBIN Yield/Acre 43 50 54 Net rent value (less property tax) $164 $188 $225 Current estimate of land value $4,750 $5,400 $6,500 Implied cap rate 3.453% 3.481% 3.462% Avg boost in return over var. costs $19 $10 $6 Net rent plus precision ag advant. in return over variable costs $183 $198 $231 Adjusted implied cap rate 3.857% 3.663% 3.546% Land Value to aggressive user of precision ag technology $5,306 $5,681 $6,659 Precision Ag boost to land value $556 $281 $159 Precision Ag boost to rent value $12.91 $5.61 $2.95 FINBIN ORIGINAL 2019 SOYBEAN BENCHMARK DATA BY LINE ITEM

• Cover