Evaluating the Profitability of Site-Specific Farming

Abstract

Site-specific farming (SSF) practices are being adopted at an accelerating rate, but evidence of their profitability has been mixed or missing. This contribution evaluates the profitability of SSF practices by synthesizing quantitative and qualitative research results within the context of the economics of information technology. The profitability results from nine published field research studies on variable rate (VR) fertilizer application are reviewed using partial budgets adjusted to include minimum costs and grid cell areas for each study. Profitability results correlated closely with the gross revenue earning potential of the crop, so VR fertilizer application was unprofitable on wheat (Triticum aestivum L.) and barley (Hordeum vulgare L.), sometimes profitable on corn (Zea mays L.), and profitable on sugarbeet (Beta vulgaris subsp. L. vulgaris). Although the formal published literature has ignored the profitability of yield mapping, production economics and farmer interviews suggest that yield mapping is profitable when it reveals yield patterns that can be managed at acceptable cost and when the information has compensating off-field value. Manageable yield variability includes not only VR input management, but also whole-field improvements such as field drainage, land leveling, windbreaks, and fencing. Off-field value can come from cheaper on-farm experimentation and greater negotiating power with landlords. Farmers and agribusinesses committed to field crop production for the long term should develop SSF capabilities. But because SSF practices are site-specific, their profitability potential too is site-specific. This site specificity extends beyond the farm field to the crop rotation, and the capabilities and opportunities available to the farm or agribusiness manager.