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A whole-farm investment analysis of some precision agriculture technologies

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  • Knight, Brad
  • Malcolm, Bill

Abstract

This study used information about a farm in the Victorian Mallee during the period 1998 – 2005 to analyse the profitability of investing in Precision Agriculture and Site-Specific Crop Management technology and farming systems. Two equipment guidance systems were evaluated. Both guidance systems earned more than 8 percent real return p.a. on the extra capital invested. A Real-Time Kinetic (RTK) guidance system with a precision of 2 cm and a capital cost of $50,000 was less profitable than a Sub-Metre guidance system with 20 cm accuracy and costing $20,000. Producers investing in RTK guidance technology would be well-paid to also adopt supporting management practices that enhance crop gross margins or provide other benefits. The capital cost of GPS technology has to be spread over sufficient hectares. Investment in Zone Management technologies to fine-tune applications of nitrogen within paddocks did not meet the required return on capital of 8 percent p.a. With the spatial variability on this farm, 1670 hectares of crop were required for the investment to break-even with alternative uses of the capital. Alternatively, with 900 hectares cropped on this case study farm, spatial variation of at least 2.5 t/ha in yield across paddocks was required to justify the investment in the Zone Management technology.

Suggested Citation

  • Knight, Brad & Malcolm, Bill, 2009. "A whole-farm investment analysis of some precision agriculture technologies," AFBM Journal, Australasian Farm Business Management Network, vol. 6(1), pages 1-14, October.
    • Handle: RePEc:ags:afbmau:121470
    DOI: 10.22004/ag.econ.121470
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    References listed on IDEAS

    as
    1. David J. Pannell, 2006. "Flat Earth Economics: The Far-reaching Consequences of Flat Payoff Functions in Economic Decision Making," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(4), pages 553-566.
    2. Michael D. Weiss, 1996. "Precision Farming and Spatial Economic Analysis: Research Challenges and Opportunities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(5), pages 1275-1280.
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    Cited by:

    1. Georgios I. Papakonstantinou & Nikolaos Voulgarakis & Georgia Terzidou & Lampros Fotos & Elisavet Giamouri & Vasileios G. Papatsiros, 2024. "Precision Livestock Farming Technology: Applications and Challenges of Animal Welfare and Climate Change," Agriculture, MDPI, vol. 14(4), pages 1-17, April.

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