By Danny Klinefelter
DTN Farm Business Adviser
Margins are tight and additional spending is being very carefully scrutinized. But for those farmers who are profitable, I think delaying the implementation of real-time, site-specific business software is very short-sighted. To stay in business over the long haul, it's something you're eventually going to have to do.
Commercial agriculture has steadily moved toward coordinated supply chains with qualified suppliers, and it isn't being driven by government regulations. McDonalds, Kroger, Walmart and Sam's Club, just to name a few of the more recognizable retailers, are telling egg producers that if their layers aren't cage-free in the next few years, they're not going to take their eggs. The egg market is in worse shape than the corn market with producers being forced to tear down facilities and build new ones at a cost of millions of dollars if they want to keep their markets.
In another case, many vegetable producers are having to verify conditions, application rates and specific types/quantities of chemicals by specific site (fields) and date in order to remain a supplier for some of the major processors and retailers. Even some dairies are having to prove they are using non-GMO or organic feeds and have cameras collecting constant images on worker interaction with cows.
Similar practices, and an ability to undergo verification audits, are already being discussed by several major buyers of corn, soybeans and wheat. These often require remote access and real-time information.
It is all consumer driven and fed by social media, but the impact on market access and the ability to capture price premiums is real. Traceability and real-time proof of practices are becoming more common as technology advances.
I was one of two outside consultants on Canada's Top Farmer Study nearly 10 years ago, and even then, 66% of the top 10% of producers were involved in formal relationships with processors or retailers. In the remaining 90%, only 13% of the producers were.
As verification technology continues to advance at an exponential rate, this trend is only going to accelerate. It affects the reliability of quality and attributes of inputs that processors and retailers can count on, which reduces their costs and affects the prices they can charge. It also puts them in a better position to defend against legal liabilities in an increasingly litigious society.
For farmers seeking ways to improve prices, it also puts them in a position to gain market access and to undergo required verification audits. But, it can do much more. Farmers can improve efficiency through differential seeding, fertilizer, chemical and water application rates. They can also know their true costs and levels of production by specific location in order to improve efficiency and make better economic decisions.
John Gladigau, a farmer in South Australia, uses an infrared sight reader ahead of his sprayer to target weeds rather than broadband spraying and has reduced his cost of herbicides by over 90%.
According to two John Deere representatives I heard speak this past summer, there are over 500 agricultural software products currently available, but only a handful are addressing the issues discussed above.
Two that I've seen that operate in a continuous improvement mode are Granular and Trimble Ag Software. They both link integrated site-specific production information, real-time financial reporting and planning software. Whatever decision you make, I would include these two in any options you consider. If you have a unique situation, they are also both good at customizing their software to meet your needs for functionality.
Danny Klinefelter can be reached at Talk@dtn.com
(BAS/AG)
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