Profitability varies from field to field; revenue mapping system will determine areas to focus on and those to ignore
RIDGETOWN, Ont. — Pumping resources and dollars into sub-par field locations makes little sense. Instead, it’s better to limit input expenditures in those spots or take those areas out of production entirely.
That was David Muth Jr.’s advice at the recent Southwest Agriculture Conference Jan. 4.
“We have to understand the impact variability has our businesses,” said Muth, an Iowa farmer and senior vice-president of AgSolver Inc.
“The reality is we don’t manage our fields like a business. Typically, three to 15 percent of our fields are simply not profitable.”
Most farmers understood that their farms’ productivity varied before the introduction of yield monitors, variable rate input equipment and global positioning systems, but they were unsure of the degree and, more importantly, how to respond.
Some issues can be addressed with soil amendments, drainage and other measures, but others cannot, Muth said.
He said AgSolver’s Profit Zone Management system allows growers to develop the best precision business plan on a field-to-field basis. Instead of focusing on a farm’s overall yield, the system instead emphasizes maximization of revenue over expenditures.
“When you move from a yield map to a business revenue map, the change will amaze you,” he said.
“In Iowa alone, there’s a million acres of farmland that’s just not profitable. That adds up to a billion dollars of misallocated working capital.”
Muth’s process starts with the collection of data, a review of field performance on a foot-by-foot basis and an analysis of the rates of return. In essence, farmers learn which sections of their field make money, which lose money, where input investments should be concentrated and where remedial action may provide a benefit.
Market prices may change the profitability picture, but Muth has confidence in the overall approach of his system. He said there is the added benefit in the United States of the Conservation Reserve Program, which pays farmers to take environmentally sensitive land out of production.
Alternatively, low-producing field sections might be used for biomass production, seeded to pasture or forage or devoted to recreation or other purposes.
The approach should also allow farmers to reduce their environmental footprint.
“It’s the places in the field where we lose money that we also have high nitrate losses,” Muth said.
“This is a way to get out in front of the regulatory hammer.”