Impressive ROI for Precision Tech

Impressive ROI for Precision Tech

Ohio farmer calculates 145% returns to tech spending; exclusive look at his spreadsheet.

For nearly 20 years farmers who spent cash on precision technology swore the moves saved money. Trouble was, it was hard to really quantify those savings or returns.

Brian Watkins, a grain and hog farmer in a family operation near Kenton, Ohio, dug through his numbers and discovered the costs resulted in 145% return on investment for precision technology. Watkins agreed to share his spreadsheet analysis exclusively with Farm Futures' readers. Click here to view the spreadsheet.

Watkins' family farms 7,000 acres in a 50-50 corn and soybean rotation.

Watkins admits some of the numbers he used were estimates, but surprisingly, quite a lot is rooted in printed literature from manufacturers.

RUNNING THE NUMBERS: Brian Watkins has done the math on his return-on-investment for precision tech.

Returns to autosteer/swath control focus on a number of variables, including overlaps and skips, the cost of inputs, machinery and labor. He concluded that conventional farming would lead to overlaps 75% of the time and skips 25% of the time. He used a price and yield goal of $12.40 and 58 bu. for soybeans, and $5 and 175 bu. for corn. Initial savings came to $5,579, which isn't much when you consider a total machinery investment of $2.2 million.

Digging deeper, Watkins looked at the literature to determine other improvements from autosteer and swath control. These improvements ranged from 4% to 7%, much of it related to shutting off booms and planters in odd shaped fields, a big factor where he farms. He looked at every field pass, from primary, fall tillage, spring till, fall strip P and fall strip K, spring strip, planting con, planting and spraying (three to five trips), along with harvest.

He weighed yield loss from using no technology, such as over-spraying or double planting. He factored in labor savings and fuel savings resulting in those tools enabling him to become more efficient and operate the machine a little less in each field. Fuel and labor savings came to about $3,000. Those small improvements from using the technology came to a whopping $62,173 savings, or 2% on a $1.5 million input budget.

Overall, net returns to precision technology came to $216,611, or an ROI of 145%.

Even so, that number is a little misleading, Watkins warns.

"It's not like you can just shake the precision tech tree and money comes out," he says. "The system itself doesn't just fall into place. It takes 20 years of learning.

"Once you have evolved the system and make it work, you can make it pay." For more, turn to p. 14 in the September, 2013 issue of Farm Futures.

You can download his spreadsheet as a starting point for your own calculations using the link below.

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