Economic Feasibility of Auto Guidance in the Midwest

1. Economic Feasibility ofAuto Guidance in the Midwest M.S. Thesis Agricultural Economics Purdue University Matt Watson

2. Why Study Auto Guidance • Currently used in Australia, Arizona, California • Manufacturers see vast potential in Midwest market • Midwest producers have uncertainty about returns on auto guidance technology

3. Objectives of this Analysis • Determine if Auto Guidance is economically feasible on a base farm at or below 2000 acres • Test whether skip and overlap will be a major part of the benefits of auto guidance • Determine if light bar guidance can provide these benefits at a lower cost

4. Objectives of this Analysis • Examine auto guidance and expansion with the same basic set of equipment • Explore spatial sensitive practices, like controlled traffic, and analyze the effects on feasibility of auto guidance

5. John Deere- AutoTrac System • Introduced in 2002 with tracked tractors • 2003-Opened market with wheeled tractors • Utilize GreenStar system and Starfire System • Only requires addition of AutoTrac key card and steering control unit • Provides own differential correction service SF2 with accuracy of +/- 4 inches • Recommended Uses • Tillage • Spraying • Seeding Operations • Listed Benefits • Optimize machine efficiency • Reduce operator fatigue • Increase yields

6. IntegriNautics-AutoFarm System • Aftermarket system available for all major manufacturers • Offers RTK system with base station • One time cost, no recurring subscription costs • 5 mile coverage area with mobile station (must be in line of site) • 7 mile coverage area with fixed station (must be in line of site) • +/- 1 inch accuracy • Major uses listed are • Reducing operating costs • Reducing capital investment • Running in night and fog • Broadening labor pool • Kit includes base station, cab box and monitor, GPS antenna, and all needed cables • Optional data logger for mapping and surveying

7. Trimble-AgGPS Autopilot • Available as two systems • DGPS with +/- 6 inch accuracy • Recommended uses • Tillage • Broad acre air seeding • Application of fertilizer and insecticide • RTK with +/- 1 inch accuracy • Available on Case, CAT, John Deere • Wheeled or Tracked

8. Beeline Navigation-Arro system • Available for all major manufacturers • OEM with AGCO tractors • Can come in three accuracy levels • DGPS with +/- 4 in • Base station at decimeter accuracy • Base station at centimeter accuracy • Mobile or fixed base station • Offers fastest setup time on base station

9. Methodology of Model • Annualize technology cost using sinking fund approach with 3 years • Deterministic model uses 7 year average yields and December cash prices for central Indiana from 1996-2002 • Risk model uses empirical distribution from the same years • Use planter as limiting factor for farm size • Using 12 row planter and probability of days worked in central region

10. How the Model Works

11. Guidance Benefits in Model • Inputs-Chemicals, Fuel, Labor • Use overlap for reductions • Increase in field speeds • Auto guidance 20% • Light bar guidance 13% • Increase work day length • Base-14 hours • Light bar-18 hours • Auto guidance-20 hours

12. Controlled Traffic • Use Randall Reeder data from The Ohio State University to quantify compaction into 2 levels: 10 ton and 20 ton • Indiana distributions in first two stages represent compaction at that level • Each acre has a percentage with traffic (use compacted yield) and a percentage without traffic (use adjusted yields) • Additional fuel benefits by alleviating compaction

13. Controlled Traffic

14. Setup of Model • Stage I- Technology adoption without expansion • Stage II-Technology adoption with expansion • Stage III-Technology adoption with controlled traffic on original farm size • Sensitivity on interest rates, technology costs, and light bar acres

15. Technology and Time Needed- Stage I

16. Technology Cost-Stage I

17. Results-Stage I

18. Expansion Acres-Stage II

19. Technology Cost-Stage II

20. Results-Stage II

21. Controlled Traffic Yields-Stage III

22. Results on Highly Compacted Soils-Stage III

23. Sensitivity • Model shows little change to increasing interest rates, especially in stages II and III • Lowering technology costs changes profitability • Stage I-Allowed DGPS auto guidance to be more profitable than base case • Stage II-Allowed RTK auto guidance to be more profitable base case • Stage III- RTK auto guidance provided greater average returns than DGPS auto guidance in highly compacted soils

24. Sensitivity • Holding light bar acres constant and including replacement costs • dropped light bar guidance below RTK auto guidance • Important when production includes mechanical cultivation, side dress nitrogen, planting with high accuracy

25. Conclusions • Auto guidance reduces field time on the fixed size 2000 acre farm, but it is not the most profitable guidance option: • Light bar guidance can provide almost the same benefits at a lower cost • Profitable when investment costs are reduced by one half

26. Conclusions • DGPS auto guidance is profitable for expansion with the same equipment • Spreading technology cost over more acres • Provides higher returns over light bar guidance when spreading machinery replacement costs over more acres • RTK auto guidance is profitable when technology costs are reduced by one half

27. Conclusions • Soils that are highly susceptible to compaction make DGPS and RTK systems profitable • Reducing technology costs makes the RTK system provide greater returns than the DGPS system • Continuous corn growers increase returns of DGPS auto guidance for moderate levels of compaction • More response to compaction • More field operations

28. Areas of Further Research • Driver fatigue • Value of time • Wage and labor pool • Strip tillage • Side dress nitrogen • Contour farming • Environmental benefits

29. Questions?