Making digital ag profitable

How can I integrate precision ag in my business? When do I ‘do enough technology’ to keep up with the market? How can I convert precision ag into a profit driver for my business?

Agworld general manager Australia / New Zealand / South Africa is asked these questions on a daily basis by agronomists and resellers, and he says they deserve a bit more thought and explanation.

He said the benefit to growers is clear when it comes to technology such as NDVI, variable rate (VR) applications and adopting an integrated farm management system (FMS) amongst many options, but agronomists and resellers who spend a lot of time and effort on supporting these technologies often seem to struggle in seeing the value that digital ag can deliver to their bottom line.

“The Australian reseller product range is traditionally dominated by products that are profitable in their own right; even the lowest margin products still provide a positive margin,” Mr Foley said. “By having staff dedicate time to products in the precision ag sphere without a direct influence on the bottom line, it becomes clear why digital ag products can be seen by some as detrimental to business results.

“For private agronomists and consultants, contracts are usually based on the number of hectares planted per crop type. Agronomy fees are based on regular checking and other services traditionally included in an agronomist’s contract – so how does supporting a grower with their digital ag journey fit in here? Is this something that should be billed separately, should it be part of the standard grower-agronomist agreement, or is this more about ‘helping a client out’?”

Mr Foley said precision ag services can be divided in two distinct categories: services that can billed per hectare, with creating yield maps and providing NDVI imagery as examples, and services that help build client relationships, such as working with a grower to collect his farm data and helping him interpret data sourced from machinery and other sources. “I find that the first example, selling hectare-based services and products, often gets the limelight, but I fully understand why resellers and agronomists can struggle to make a sufficient margin with these services,” he said. “NDVI, for example, used to cost a couple of dollars per hectare, whereas most providers now provide this for free and a similar race to the bottom can be seen for other per-hectare services as well. This can create a situation where a service provider is still expected to provide services without being able to sell the actual product.”

Brooke Sauer, digital ag manager for McGregor Gourley, sees precision ag as an extension of “future” agronomy rather than as a standalone or new farming system, as it is not necessarily about any one piece of technology.“Agronomy is about recommending products and inputs that are going to get the best return per hectare,” she said. “Currently we talk about ROI/ha, yet all operations are carried out on a paddock scale. “Precision ag is essentially agronomy in its true sense. However, it enables the farmer to truly optimise production and achieve the best return on a hectare basis. NDVI, yield maps, soil surveys and elevation data are just tools that allow everyone – including the agronomist – to get the data that may be needed to assess current production per hectare and see opportunities to create more yield or more profit in every hectare.”

Mr Foley said a platform such as Agworld, which lets agronomist, service provider and grower collaborate, can reshape our thinking about precision ag. “When I picture a grower’s kitchen table in 10 years’ time, I am confident that a digital ag advisor will have a seat at this table,” he said. “This advisor is not just someone who sells yield maps and NDVI images to a grower but rather someone who is technologically integrated with the grower and helps him navigate the digital services on offer in the market and assists in discovering value across the datasets through good science and interpretation of data within local conditions.”

Ms Sauer said Agworld is creating the platform that allows all this data to be integrated so that not everyone needs to be a data processing expert. “When the data needed is available easily, conversations between farmer and agronomist will still be on the same theme – what fertilizer and how much – but the data will enable the next question of ‘where and when’,” she said. Mr Foley said for those who are looking to build and maintain solid relationships with growers, it pays to think of digital ag as a relationship-building tool that adds value to the basic foundations of good data for crop varieties and inputs.

“Whether it be to sell core products such as seed, chemical and fertilizer, or to provide agronomy services, tailored digital ag services can give you an edge over your competition by providing more information to enhance conversations that actually add value based on data,” he said. “Because, if it isn’t you at the grower’s kitchen table discussing digital ag products, who is it?”

AS FEATURED IN RURAL BUSINESS