During this time of year, many growers will be given a “Return on Investment” (ROI) calculator for reviewing specific equipment, software, or subscription prices with a trusted partner — whether that’s their farm manager or precision agriculture specialist. ROI calculators often are a spreadsheet filled with gray cells and one yellow cell where a particular date is marked to help growers set an expectation: it is on this date that the investment starts to “pay off.” An ROI calculator is a simple and popular sales tool, but it fails to account for significant factors that growers should consider beyond the check they write.
The basic formula for an ROI calculator is to divide the cost savings by the investment. Suppose growers only use an ROI calculator to define ag technology benefits. In that case, they aren’t seeing the whole picture, as technological improvements often enhance efficiencies across day-to-day operations and offer new communication channels. I’ve discovered that simple cost-only ROI calculations fail to account for other factors that growers should seriously consider. Check out five key factors growers should use when evaluating ag technology investments to discern how those technologies affect their operations.
Factor #1 Optimization: Upgrading In-the-Cab Display Creates Opportunities
Optimizing your existing investments in technology is one way to generate ROI year over year. Failing to keep your own technologies current with software and maintenance can result in a lower perceived ROI. Take, for example, one grower I worked with who opted out of updating his John Deere Universal Display. During the last 6 years, he decided against implementing the GreenStar Generation 2, 3 and 4 displays in his tractor cab — he missed out on the incremental gains in product experience and software improvements. While other growers were using their Generation 4 displays to understand the user interface (how the screen looks and what buttons do what), they also learned how to integrate software applications, like John Deere’s Data Sync, which enables seamless communication among multiple tractors and implements.
When it finally came time for this grower to implement that Generation 5 Universal Display, it not only took him more time to become comfortable with the product, but he also missed out on those years of investment optimization on his trade-in displays.
The growers who make less frequent updates to their equipment can be left clamoring to learn everything they may have missed from the incremental updates. While jumping past older displays into the latest model may make sense when you weigh current subscription costs versus the next activation price and its benefits, a grower should always expect a learning curve as they build familiarity with new technology. Currently, manufacturers are creating in-the-cab technology solutions to build a fully autonomous tractor. Growers can strategically choose which steps to take so they understand the height of their next hurdle when they see in-the-cab technology with applications they can’t pass up.
Factor #2 Safety: Spraying Application Technology Can Reduce Risk
Often, improved safety is an underappreciated factor. How often do we forget the “one-time” significant mistakes that cause irreparable harm? These mistakes used to happen more often, but new technologies can help us lower those incidents and should be factored into our ROI calculations.
I hosted customer sprayer clinics to demonstrate SurePoint Ag’s Quick Draw — a sprayer tender system that adjusts pesticide application mixing hands-free. The SurePoint sprayer’s tender controls mixing to create the correct mix according to the agronomist in a closed tote-based system. While demonstrating the sprayer’s automated filling features, a few growers suddenly realized that its principal value wasn’t its improvement to daily operations but its ability to reduce pesticide exposure risk.
Sprayer tender systems completely changed the game for protecting operators during the filling operation; they precisely control the liquid flow and prevent overfills, and decrease exposure to chemicals. If spills or overfills occur, fines can range from $40k to $100K, depending on the state. Further, the impact on human life, should there be a chemical accident, is almost incalculable. A simple ROI calculation often fails to capture the full breadth of risk reduction that happens when using these types of safety-enhancing technologies.
Factor #3 Efficiency: Data Management Software Addresses Labor Challenges
Everyone involved in agriculture understands the critical labor shortage we are facing. The opportunities with autonomous farming are incredibly promising but there are also ways that today’s data management solutions can help optimize the labor force today with minimal investment. I work with a farm manager based on the western side of the state while I’m based on the eastern side. After many virtual and in-person training sessions, we built a program where the information from the tractors was automatically loaded and transferred to the producer’s software for Global G.A.P. The Global G.A.P. program — a certification program for ag production based on the growers’ practices — can take several office staff members' time as they enter and manage their data to deliver to the auditors. By automatically gathering this data, that grower deployed staff time elsewhere, allowing for more accurate and single data entry system management. This investment will continue to pay dividends year over year, particularly as the authority agency that certifies Global G.A.P. builds out its tech infrastructure to integrate with many farm management systems.
In the coming years, we will all be expected to figure out how to work with the person with the right experience for the challenge we face, even if that means they are 100 miles away. Data management through technology solutions that centralize data can almost eliminate that physical distance without sacrificing work quality.
Factor #4 Flexibility: Variable Rate Technology (VRT) Protects Operation from Market Changes
We often don’t calculate the cost of “doing nothing” as one of our choices and the continued barriers they build. Today, ROI calculators can highlight input savings from reduced use of pesticides or reduced passes in the field, but they miss the flexibility factor — the cost of not being able to capitalize when the option of not investing catches up with opportunity.
Many growers experienced the cost of inaction when supply chain shortages caused fertilizer prices to triple in 2022. Growers who used rate controllers for fertilizer management in previous seasons were better prepared for these market changes. Rate controllers that use technology to distribute fertilizer maximize the input budget while minimizing waste. Producers could adjust applications to meet their economic constraints by prioritizing their best working ground. Growers without rate controllers had more exposure to input market volatility because they were “flying blind” without being able to deploy tools to discern where operators could adjust. The combination of historical field data analysis and variable rate application is the one-two punch that any farmer needs to withstand any future instability in the input market.
Factor #5 Growth Rate: Discern ‘Right Time’ to Invest in Technology
Finally, growers need to discern their growth rate and decide if it is the right time to invest. When considering upgrading equipment, growers should look at other areas of their business that will require an investment in the coming year. A trusted partner will help to identify expenses and view price projections, market outlooks and environmental factors.
For those who work with producers, this growth-rate discussion creates space to highlight any possible supply chain shortages to ensure purchase orders will be fulfilled on schedule. Both growers and those in supporting industries will benefit from the grace this planning discussion provides. We can understand business needs to balance progress with technological advancements, and we know there are several reasons why growers may need more time to invest.
This starts by having honest conversations with everyone at the table on what kinds of growth you want to see in your operation. For example, I was preparing to recommend a pause in an upgrade in technology to one my best customers. That was until he let it slip that his daughter had plans to help him farm in the next 12 months. This discussion triggered the start of the succession planning discussion. It also created a need to double the technology on the farm as they doubled their workforce. Succession planning, encouraging the growth of your farm and building a legacy don’t have a button on that ROI software. But I defy you to find a farmer who doesn’t see a lot of ROI when looking over to the tractor next to him and seeing a legacy continue.
ROI calculators are an excellent starting point for growers to start a list of technology investments that could benefit their operations. However, ROI calculators must be used only as a small part of a toolbox of factors well beyond the immediate costs or savings achieved. As growers project incomes and plan investments, they can use the five factors — optimization, safety, efficiency, flexibility and growth — to help determine if it’s time to invest. Then, with a trusted partner, and most likely that ROI calculator, growers can understand what that investment means for their operation.
Erin Hightower
Erin Hightower has been working in farm planning and agronomy for 15 years. As an Agronomist at RDO Equipment Co., she works with team members and growers in the Northwest region, focused on education and training, and conducting field trials. She is a Certified Crop Advisor (CCA) and Certified USDA NRCS Nutrient Management Planner, Certified Conservation Planner, and Comprehensive Nutrient Management Planner.
