How Can New Technology Help Mitigate Decreasing Net Farm Income?

Many of today’s agricultural professionals find that farming is no longer as profitable as it once was. The United States Department of Agriculture released a 2022 forecast for farm sector profits. It was seemingly positive, indicating net farm income should climb by 5.2% in 2022 versus 2021.

 

However, that outlook doesn’t paint the whole picture for all farmers. The COVID-19 pandemic was particularly challenging for the agricultural sector and family farms. Plus, many farmers have dealt with issues such as falling milk prices.

 

Even though rates have since climbed, they remain well below the cost of production for many. Agricultural professionals are also struggling to pay their loans — some feel they have no other option but to declare bankruptcy.

 

There’s no magic or quick fix for these problems. Implementing new technologies could help, though. Here are some thought-provoking examples.

 

Robots May Support More Productive Milking

Milking cows on a dairy farm is generally a labor-intensive and time-consuming process. However, research suggests applying robotic automation to the task could result in significant payoffs. For starters, robots free up time in farmers’ schedules, making it easier for family operations to work efficiently without hiring more outside help.

 

Additional research suggests robotic milking equipment can generate three to five pounds of milk per cow daily if farmers increase milking frequency from two to three times. Automated milking solutions also change the type of labor needed to finish the job.

 

Moreover, they provide increased flexibility regarding when the milking happens. However, milking robots don’t always reduce the labor output required. Whether that occurs typically depends on how many cows the farm has and the milking arrangement used.

 

A study of Irish farmers took a closer look at how those professionals spent their days. The results revealed milking as the most time-consuming job, representing 31% of total labor input. The study also found farmers worked an average of 60 hours per week — February and March were typically their busiest months.

 

The researchers confirmed that pinpointing the most labor-intensive tasks and busiest months created a pathway for finding the best ways to increase efficiency. The options for doing that span beyond robotic milking equipment. However, if farmers use robot milkers to relieve some of their labor burdens, they could achieve more profit potential, too.

 

Smartphone Apps Can Aid Refinancing Decisions

Smartphone apps give people pertinent information at their fingertips. They also cut down or eliminate the physical paperwork typically associated with making applications. Then, applicants can often submit the necessary information sooner, which could mean they get decisions faster.

 

Loan refinancing occurs when someone takes out another loan to pay off an existing one. Some potential associated benefits include better rates and the ability to lock in a fixed interest rate. Many also refinance when they need financial resources to make significant repairs or invest in essential equipment. Thus, it’s an option for farmers who want to purchase farm tools or other assets that could boost their profitability in the short and long term.

 

The right equipment is often essential for helping farmers reach a point of continual profitability. Perhaps someone wants to clear an area of land to increase the available farming area. Tractors are the best choices if trees are more than 5 inches in diameter. Purchasing a newer model could make it easier to get the job done faster, meaning crop planting happens sooner.

 

The ability to research refinancing options and fill out applications through a smartphone app fits the needs of farmers who require up-to-date and accurate information to make the most appropriate decisions. They don’t need to take time out of their busy schedules to make phone calls or in-person appointments. Those may come later in the process, but the initial research can usually happen on one’s own time and through their smartphone.

 

That flexibility can make loan refinancing easier and more appealing. Online information is also convenient for agricultural professionals who are unfamiliar with the available options and feel overwhelmed. Many websites and apps make the content easy to digest and gear toward people without backgrounds in financial services.

 

They also often have live chat features, breaking down the barriers between loan applicants and financial services providers. Then, people can get their questions answered before taking the time to meet at physical locations.

 

Data Analysis Tools Can Result in More Profitable Choices

Farmers no longer have to rely so much on guesswork and experience when making decisions.  They still can, but there are more opportunities to use smart sensors and data analysis tools. Then, people can use collected information to decide what to do to maintain or increase profits.

 

The Agriculture and Horticulture Development Board collected data to determine the most profitable crops to plant during different times of the year. One of the findings was — of all crops suitable for picking with a combine harvester — winter wheat offered the highest gross margin. Potatoes and sugar beets were also among the most profitable crops.

 

Another takeaway was the results changed slightly when people examined yields. Oilseed rape provided the highest net margin per ton for combinable crops. Feed peas and winter wheat took the second and third spots, respectively.

 

Results like these are virtually impossible to get without access to data analysis technology. That’s because such tools can process vast amounts of information much faster than humans can without help. Additionally, they can find trends in the data that people may overlook and never become aware of otherwise.

 

Smart Sensors Give Useful Insights

Agriculture professionals can also increase their potential for better profits by using smart sensors to track and provide real-time information. These low-profile components give farmers the information they need to act quickly and confidently.

 

In one case, researchers created a smart sensor that can predict the amount of nitrogen in the soil up to 12 days in advance. Then, farmers can save money and avoid overfertilization. The innovation works with artificial intelligence and gathers data about weather conditions, soil conductivity and more. Farmers can then use the response to adjust the times they apply fertilizer to get the best results.

 

Another example involved cows on six European farms wearing smart ear tags to track their health. Each ear tag had a wireless radio frequency identification antenna that detected when a cow visited a robotic feeder. It could also tell the exact dose of mineral feed eaten by the animal. Information like this is vital, particularly before and after the cows give birth.

 

Smart sensors can also pick up on any unusual trends associated with an animal’s feeding patterns or behavior. Then, farmers can act faster after getting alerts about a potentially unwell animal. Making prompt decisions is essential, especially when workers must quarantine sick animals from the rest of the herd. However, catching an issue early can help farmers mitigate any lost profits caused by animal illnesses.

 

Technology Supports Profitable Farming

Doing things differently with the help of technology often requires an adjustment period.  However, as these examples show, high-tech help is often a game changer for farmers who want to increase their profits and productivity.

 

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