Precision agriculture (PA) roll-out

Precision-agriculture means using fertiliser+pesticides+water exactly where needed, based on soil and crop conditions detected by satellite or ground sensors. An exec student, Brian Evarts at Cisco, just completed a fascinating and very encouraging project on potential roll-out of PA across a farming sector. PA results in big cuts in these costly inputs, increases in yields and less environmental damage.

In essence, it’s an adoption problem – farmers have to move from being unaware of the opportunity, to being aware, to being informed about how to do it and the commercial benefits from doing so, and then to being active adopters. Each farmer carries an attribute of the acreage that they farm [large farms likely to adopt earlier]. Awareness arises from marketing efforts, farmers become informed by sales efforts, and adopt PA if the ROI is good.

Then … more interesting dynamics kick in. 1. Those adopters reduce costs and increase yields, so supply rises, prices fall, hitting the profitability of late adopters, who therefore get pushed into adopting to stay in business. 2. Unit cost of the PA equipment and installation falls due to experience and scale effects, raising adoption rates further. (See a model + explanatory video on how adoption and experience curve interact for a consumer durable).

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