Heading into 2015, many dealers knew it would be difficult to replicate the success they’ve enjoyed in recent years selling precision farming technology. Lower commodity prices are prompting farmers to be more judicious with where they plan to spend their money in the coming year.
Talking recently with a precision farming consultant and recruiter, he notes that some farmers are trimming technology from their budgets, viewing the tools as “luxury” items vs. necessities such as seed and fertilizer. “I’ve had a few farmers tell me that precision is the first expense that they plan to scale back or eliminate, at least until the market rebounds,” he says.
This outlook is echoed by the results of No-Till Farmer’s 7th annual Benchmark Study, as respondents to the 2015 report project a year-over-year reduction in their precision farming investment. According to the survey results, no-tillers plan to spend about $2,600 per farm on average in 2015 on precision farming products, compared to more than $3,400 last year.
While not a precipitous dip, the 2015 projection continues a 5-year decline in precision farming expenditures. In 2013, respondents estimated spending more than $4,100 on precision farming equipment, well below the approximately $6,800 they invested in 2012 and the more than $8,800 they spent in 2011.
Historically, many of the survey respondents are considered early adopters of emerging technologies, so it’s not unreasonable to expect that spending may slow over time to focus more on update or add-on costs, rather than completely new systems.
Still, a potential 70% drop in precision farming investment during a 5-year span would outpace combined declines in equipment spending (40%) and machinery parts/service (20%) during the same timeframe.
So what is the long-term outlook for precision? The good news is that recent reports from financial analysts and market researchers forecast a prosperous future for precision farming technology.
Just last month, global research firm MarketsandMarkets published a report that projects a compound annual growth rate of more than 16% during the next 5 years for the mid- and high-level GPS and precision farming market. The report summary projects an estimated global market value of $3.09 billion by 2020, with the majority of growth coming in North America.
And although overall spending on precision may be declining at the moment, the percentage of no-tillers utilizing advanced precision systems remained largely unchanged year-over-year according to the 2015 No-Till Farmer study.
GPS and tractor auto-steer remained the most commonly used technology with more than 48% of no-tillers utilizing the systems. About 41% of no-tillers plan to use lightbars for GPS guidance this year, a 3% increase over 2014, the largest percentage jump year-over-year.
Rounding out the top five most utilized precision tools in 2015 are yield monitor data analysis at 41%, field mapping at 39% and variable-rate fertilizing at about 32%.