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USA Corn Farm Profits And Adoption Of Precision Agriculture
D. Schimmelpfennig
RRED, Economic Research Service, USDA
Demand for high-yielding, high-profit agricultural production practices is particularly strong among U.S. corn producers. Precision agriculture and its suite of information technologies allow farm operators to fine-tune their production practices and could decrease input costs and increase yields by providing a level of detailed within-field information not previously available. Technologies such as soil and yield mapping using a global positioning system (GPS), GPS tractor guidance systems, and variable rate input-application technologies (VRT) in corn production have been shown to raise profits under some conditions, but aggregate estimates of the impact of these technologies have not been available. Currently, adoption of precision agriculture technologies has occurred on 15 to 30 percent of planted corn acres. The empirical question addressed in this report is whether the use of these technologies is associated with higher operating profits, holding other factors that impact profits constant, and also holding factors that explain if the technologies are adopted or not constant.
The data utilized in this study comes from the 2010 Agricultural Resource Management Survey (ARMS) of corn producers. The ARMS is unique in that it combines detailed field-level operator information with a large sample of corn-farm financial information. The depth and breadth of the ARMS data allows a comprehensive examination of both factors affecting the adoption of these precision agriculture technologies and their impact on operating profit for U.S. corn-farms. Using a treatment-effects model that accounts for information on adoption as well as factors that explain profits, a picture of the impact of a few key precision agriculture technologies on U.S. corn production in 2010 can be seen. The same factors are shown to influence adoption of all three technologies and the impacts on profits are quite similar. None of the three technologies contributes directly to profit, but if adopted, other factors that may be under the farmer’s control are shown to increase operating profit.
D. Schimmelpfennig
Profitability, Sustainability and Adoption
Poster
2014
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