5 Ways Digital Tech Powers Farms
Updated: Mar 16, 2020
The buzz around digital tools has been rampant for years; some seeing significant returns from it, others finding the tools challenging to obtain an ROI from. The reality is that effective use of digital tools takes a mindset that sees a systematic approach to the tools vs. a silo’d product approach. Part of it in my experience is an uncertainty of where to look for the value or how to unlock the value.
What I want to cover is 5 areas for farmers to look for value in the utilization of digital tools. Some of these are available in abundance today, others are just beginning to show opportunity.
1. Increased Revenue
This is one of the simplest ways to obtain value from digital tools. Using tools like imagery with enhanced analytics like Crop Health Change notifications from Farmers Edge, farmers can catch potential yield limiters like cutworms insuring they are optimizing yield, or getting alerts to the likelihood of response to nitrogen in season enabling a high probability response from additional nitrogen.
This is also the case on the grain marketing side, increasing the dollar per bushel obtained. How? Utilization of tools that enable you to get more per bushel. This can be done through platforms like Combyne (previously FarmLead) or the use of farm management platforms that includes all of your farm data which could allow you to participate in various specialty programs that might be offering more $/bu for your crop.
2. Reduced Costs
Various technologies have enabled cost reduction on the farm, the most significant being autosteer in many instances and growing to include route optimization tools like FirstPass from Verge. On top of this we see many farms shifting to variable rate technology that allows them to reduce fungicide application costs, fertilizer costs, seed costs and others while maintaining or increasing yield. But this can go further. In the future there will be a reduction of costs for the digital enabled farmer when it comes to financing, being able to achieve lower interest rates for purchases whether through banks, input dealers or equipment companies. Speaking of equipment companies, with enhanced telematics devices able to capture information about machine performance there is an ability to reduce down time and decrease maintenance costs across entire fleets on farm.
3. Increased Optionality
Trade offs are every where, and optionality is worth something to most people, especially farmers. Think of an options contract just for starters! Digital tools will enable increased optionality for farmer which is beneficial to managing obligations and being able to get out of binds that inevitably show up in farming. Through digital tools farmers can access an increased number of markets, just like the comments in the increased revenue section, farmers can access new untapped markets – this might include a market for heated canola through online platforms like Combyne or through large food co’s like General Mills or Anheuser Busch who are looking for sustainably sourced grains. Without digital tools tracking and managing to prove practices, those markets might be unattainable.
There is also the ability to have more options when it comes to products. Digital tools can optimize timing of application of products through tools like modelling, but can also show that fungicide A is comparable to fungicide B which can not only save you costs but allow you more freedom of choice in season when supplies might be tight.
4. Reduced Friction
The hassle factor when doing anything, whether in farming or in our personal lives can deter taking action or increase stress levels just thinking about a specific task. One of the major benefits of digital tools is their ability to reduce friction for farmers. This spans across many areas of the business.
a. Insurance – The delay between a weather event wreaking havoc on a field and an adjustor visiting and then receiving payment can be excruciating to bare for farmers. With digital tools in the future we will see the ability to better inform insurance providers of events, more accurately assess the event damage and more speedily get money from the insurance provider to the farm bank account.
b. Crop Inputs – The opportunity to reduce friction here is vast, but one simple thing we are seeing for farmers is the ability to look up crop input pricing online vs. having to phone or visit the local retail. This can save time and effort that can be reallocated to more personal time or enhanced management of the farm.
c. Finance – Getting approval for various loans and financing, or having your financial data correctly and safely stored in one specific place can streamline the time and ease to get the funds in place, whether through farm management tools, or specific farm finance tools. This could go down the line of blockchain opportunity too, but we will save that for another time!
There may be other areas of reduced friction as well when we start thinking about equipment management, grain pricing and more. The opportunities for digital to reduce friction are endless and ever growing, something that we have seen in spades in other industries to date.
Digital tools are going to enable a new array of farm insurance products. This has already begun with various companies, but will progress through parametric insurance that allows a farmer to hedge against high temperature events or cold temperature events for example, becoming ancillary to other insurance products out there currently and further mitigating the downside exposure farms have on their books.
Honourable mention: Relationships, Information Discovery and Networking. Various products and tools have given farmers the ability to more seamlessly connect with each other and experts they require guidance from. This started with forums, evolving to social media and now specific products like AGvisorPRO or AgriLinks.
This was a brief overview, but gives a framework to think about where the value from digital tools will come from. We are seeing it today and all of these specific areas will grow continually as new technology gets deployed and farmers appetite for tech evolves.