Most farmers are very aware of new developments in production technology and are focused on the current cost and returns of making an investment. Given an extended outlook for continuing tight margins, cost is often the primary investment consideration. On the other hand, I worry that many are overlooking the consequences of waiting on some of the priority items.
Cloud-based farm management systems are helping growers track field-by-field records with an accuracy few thought possible just a few years ago. More than a half-dozen agribusinesses have all launched commercial applications in the U.S., and several Canadian firms also are joining the fray.
Beyond agronomic advisory services, businesses aim to integrate Quickbooks and other accounting programs with agronomics, so you know profits with precision as well. Until the availability of cheap, cloud-based databanks, compiling all this field data just wasn’t practical.
Several things are driving their timetable. The first are obviously government regulations and compliance audits in order to maintain eligibility for many government farm program benefits.
The regulations relate to the obvious; things from food safety, water quality, conservation compliance, energy use, greenhouse gas emissions, irrigation water use, water quality runoff, pesticide and fertilizer application (amount and timing), just to name a few.
These have been developing issues for years, but USDA-NRCS are standardizing definitions for such terms as sustainability. The ability of technology to capture data and validate it real-time will create the opportunity for true traceability tied to very specific locations. That is going to allow more fact-based regulatory enforcement as well as to allow processors and retailers to target specific market segments such as organic production or low-carbon farming.
Processors and retailers will shift toward using qualified suppliers and pay price differentials based on the market value and profitability of the final product. If commodity margins remain tight, a few extra cents per unit may determine financial success or failure for producers.
We’ve been reiterating this theme for years but the ability to prove and verify regulatory compliance and specific attributes could dramatically alter and define the winners and losers in the marketplace within two to five years. Responding too early costs money without an offsetting return; those who adapt too late may find themselves shut out of specific more lucrative markets. In addition, the activity-based production practice information tied to true activity-based accounting will make it possible to make better decisions based on real and timely information, rather than the aggregated, averaged and gut-feel information that prevails today.
From the consumer-and-business-oriented producer who is truly a strategic manager, this is very likely to be a good thing. For the more traditional and less technologically oriented, it could accelerate their rate of obsolescence.