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Innovation in Precision Agriculture
For agricultural producers in the U.S., low commodity prices present considerable challenges. The price of corn and soybeans has halved since 2012, due in part to strong harvests over the last three years. For many farmers, this means that prices have dropped below the cost of production.
There is an urgent need for producers to reduce costs and increase yields. For manufacturers and retailers of agricultural equipment, this presents challenges as well as opportunities.
Precision agriculture tools to optimize production
The last few years have seen significant developments in the area of precision agriculture. Initially focusing on the use of GPS technology, precision agriculture now encompasses a wide range of equipment and tools that can help producers operate more effectively. For example, sophisticated field maps enable producers to assess nutrient levels and determine how much fertilizer to use in different parts of the field — enabling them to use less fertilizer while also improving the overall performance of the field.
Such innovations offer clear benefits to producers struggling to create a profit margin in the current pricing climate — and, in fact, up to half of U.S. farmers are already using some precision agriculture techniques. However, equipment manufacturers and retailers still have plenty of work to do in order to help their customers realize the benefits of these developments.
The right amount of crop data
Manufacturers are now competing with each other to demonstrate their ability to best meet producers’ needs — in particular, by helping producers understand and make best use of data and in developing appropriate input parameters tailored to each producer’s requirements. Providing the right level of data is a delicate balance: some producers have said they are confused about the type of data they actually need, while others argue that there is too much data and complexity to make meaningful decisions.
At the same time, equipment and input manufacturers tend to be protective of their own data and analysis — and tend to operate in silos. This creates additional challenges for agricultural retailers that are trying to package these services, products and software to help producers make a profit in this low-commodity-price environment.
Producers are looking to manufacturers and retailers of precision agriculture equipment for guidance on how to meet their financial and production goals. The best way to make this happen is for the industry to adopt a more collaborative approach.
Going forward, providers of goods and services to the agricultural industry will need to work together to help producers remain viable and sustainable. By collaborating more effectively, manufacturers and retailers will be better placed to help producers find the right data points, equipment and tools that will enable them to reduce costs and maximize yields.
About the Author
Leroy Startz is a director in ING Capital’s Food, Beverage & Branded Products Group. Raised on a grain, cotton and cattle operation on the coastal prairies of Texas, Startz has over 35 years of experience in agribusinesses lending, corporate banking, deal structuring, capital markets. He has worked with companies including Bank of America, Credit Agricole, John Deere Financial and Wells Fargo in the agribusiness space.
About ING Capital LLC
ING Capital LLC is a financial services firm offering a full array of wholesale financial lending products and advisory services to its corporate and institutional clients. ING Capital LLC is an indirect U.S. subsidiary of ING Bank NV, part of ING Group (NYSE: ING), a global financial institution of Dutch origin. The purpose of ING Bank is empowering people to stay a step ahead in life and in business.
The Food & Agri Group of ING Capital LLC, located in Dallas and New York, with affiliates from ING Bank in Sao Paulo, offers corporate finance solutions with specialist multi-sector coverage, including food, beverage, agribusiness, consumer branded products, and restaurants. The group serves a broad mix of clients — public, private, corporate and cooperatives — adding value as a lender with strong industry focus and expertise.