The integration of AI into the Agriculture Industry, better known as “precision agriculture”, has been touted by hundreds of Ag-tech companies within the last decade. But what does this mean for Farmers?

The future of machine learning and software development tailored to farmers has been prioritized for companies such as Pattern Ag, Corteva and John Deere just to name a few. The question is, how can farmers use this to their advantage, and what are the barriers to entry.

For most companies that have developed precision technology, they look at farmers as profit centers. Offering Software as a Service (SaaS) models, companies are able to lease their software and Artificial Intelligence models to farmers for a monthly subscription cost, providing value if the farmer “pays to play”. If farmers are to fully adopt this new wave of technology, they must be sure they are receiving clear benefits that add to their bottom line.

It is easy to conclude why farmers can be weary of AI. The fixed costs of AI technology are still way out of reach for most farmers, and this could cause a digital divide for small to mid-sized operations. Theres also the issue of privacy, as farmers personal information can now be accessed easier than ever. Both big tech companies and governments are heavily invested in AI. Who is able to see this information, and what are their intentions with it?

The questions we need to be asking are as follows: Is it worth paying to gain access to hundreds of innovative data points across their operations ranging from soil sensors, weather forecasting software, and satellite imagery? If so does the technology theoretically pay for itself, by allowing growers to make better decisions on chemical programs, planting, managing their crops, and ultimately harvesting?

Our Take at Farmland Stock Exchange

At Farmland Stock Exchange, we think the answer lies within adopting precision technology, if and only if it can help your operation become more profitable and easier to operate. Here’s why:

With smart irrigation, drone spraying, and the introduction of autonomous tractors, farmers are able to cut down on increasing labor costs, and adding efficiency to their operations. With John Deere’s see and spray Technology, many growers are already using patented computer vision to only spray herbicides in areas of the farm with weed pressure, rather than the whole field. 

In the soil arena, Pattern Ag’s predictive soil analytic program, growers are able to grid test their soil and make better decisions on what seed traits will best succeed in their specific farms. Growers can also access data on how to best attack pathogens such as Corn rootworm, Tar Spot, Cyst Nematodes, and Sudden Death syndrome. 

Innovations such as Amber Agriculture's technology to remotely manage grain bins, and the Grain Weevil, an autonomous robot that helps farmers clean grain bins without getting inside of them, it is safer than ever to manage on farm storage in a much safer way. 

Looking forward, AI in agriculture promises not only to boost productivity, but also make farming practices better for the environment. With higher yields on less acres, using less water and fertilizer farmers add to their bottom line revenue, which is now more important than ever with struggling commodity markets. With the continued adoption of precision Ag, farmers will be able to continue what they have always done. That is, produce more bushels on an ever shrinking landscape of acres.

Creating unique dashboards for farmers to analyze their decisions, and remain competitive is imperative the fast moving world of tech based analytics. These dashboards integrate diverse data points from soil sensors, weather forecasts, and market analytics, providing farmers with a comprehensive tool for real-time decision-making. By offering insights into both their farm's performance and competitive landscape, this enables farmers to not only optimize their operations but also adapt to market shifts and environmental changes quicker than ever.

This equates to a 22.55% growth rate per year, but what is the main driver of this growth? From what we can tell, it is the efficiency gains that come from precision ag. Value add technology, paired with the fact that many Ag-tech companies have extremely high software margins, allows them to reinvest into research and development, and bring better products into the marketplace.

With the burgeoning growth in the precision agriculture industry, an intriguing question arises regarding how farmers will navigate the financial implications of adopting these technologies. Will they continue to subscribe to the ongoing licensing fees associated with Software as a Service (SaaS) models, or will there be a shift towards acquiring technologies outright, thereby adding to their fixed costs? This decision will determine whether they can later buy, sell, or pass these assets onto future generations.

Moving into the week of Thanksgiving, there are still some small amount of acres left to be harvested in the Midwest. Emphasis on small. Rainfall and even snow has covered many of the tillable acres in the corn belt in the last week. Fall tillage and fertilizer application has still been the majority of the activity in field operations. Many farmers pushed hard to get these passes done before the precipitation hit this week.

Markets have been fairly steady for both new crop and old crop corn and soybeans in the last seven days. This is pretty consistent with past years heading into the holiday season. There are not many indicators that are projecting volatility in the near future.