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Precision Agriculture is Cost Effective for Farms of 5,000 Acres

Lux Research

Advanced technologies and systems deliver maximum gains when fully integrated and deployed on large farms, Lux Research says

BOSTON, MA – December 17, 2013 – Precision agriculture is a quantified approach to cultivation that employs sensing, input modulation, and data analytics to enhance the efficiency of agriculture and increased crop yields. While individual tools are not typically cost-effective, and often not relevant for small farms, combining these technologies into integrated solutions for large farms leads to gains – cost savings plus revenue increases – of up to $66.50 per acre for U.S. winter wheat, according to Lux Research.

In the Lux Research study, the best-case scenario assumed wireless-transmitting soil moisture sensors, combined with weather forecasting service and integrated decision support on farms of 5,000 acres. While savings from input costs averaged $24.5 per acre, output gains were $42.0 per acre.

 “The key to effective precision agriculture is legitimate decision support, closing the loop from measurements, through recording and analysis, to seamlessly link on-farm conditions with actionable advice,” said Sara Olson, Lux Research Analyst and the lead author of the report titled, “Every Input Is an Opportunity: How Precision Agriculture Is Redefining the Business of Cultivation.”

Lux Research analysts evaluated the potential of precision agriculture technologies and the opportunities for those looking to make a play in this field. Among their findings:

  • Holistic offerings will drive adoption. Developers with technologies like sensors or drones don't offer complete solutions, creating an opportunity for an integrator that can combine input and output measurements with data analysis, prediction, and true decision support.

  • Emerging markets are different. In developing countries such as India, the high-capital, high-intensity precision agriculture approaches embraced by developed market farmers won’t work. However, strong mobile phone infrastructure and inexpensive devices like laser levelers and tensiometers (moisture sensors) can combine to create a compelling precision agriculture value proposition.

  • Seed companies are playing a large role. Recent deals in the space, like Monsanto’s acquisition of Climate Corporation, demonstrate that seed companies are honing in on the precision agriculture sector. Given how critical crop knowledge and crop-specific algorithms will be to success in this field, seed companies are well positioned to play a larger role.

The report, titled “Every Input Is an Opportunity: How Precision Agriculture Is Redefining the Business of Cultivation,” is part of the Lux Research Agro Innovation Intelligence service.