Economic Feasibility ofEconomic Feasibility ofAuto GuidanceAuto Guidance in the Midwest in the Midwest

M.S. ThesisM.S. ThesisAgricultural EconomicsAgricultural Economics

Purdue UniversityPurdue UniversityMatt WatsonMatt Watson

Why Study Auto GuidanceWhy Study Auto Guidance

Currently used in Australia, Arizona, Currently used in Australia, Arizona, CaliforniaCalifornia

Manufacturers see vast potential in Manufacturers see vast potential in Midwest marketMidwest market

Midwest producers have uncertainty Midwest producers have uncertainty about returns on auto guidance about returns on auto guidance technologytechnology

Objectives of this AnalysisObjectives of this Analysis

Determine if Auto Guidance is Determine if Auto Guidance is economically feasible on a base farm economically feasible on a base farm at or below 2000 acresat or below 2000 acres

Test whether skip and overlap will be Test whether skip and overlap will be a major part of the benefits of auto a major part of the benefits of auto guidanceguidance• Determine if light bar guidance can Determine if light bar guidance can

provide these benefits at a lower costprovide these benefits at a lower cost

Objectives of this AnalysisObjectives of this Analysis

Examine auto guidance and Examine auto guidance and expansion with the same basic set of expansion with the same basic set of equipmentequipment

Explore spatial sensitive practices, Explore spatial sensitive practices, like controlled traffic, and analyze like controlled traffic, and analyze the effects on feasibility of auto the effects on feasibility of auto guidanceguidance

John Deere- AutoTrac SystemJohn Deere- AutoTrac System Introduced in 2002 with tracked tractorsIntroduced in 2002 with tracked tractors 2003-Opened market with wheeled tractors2003-Opened market with wheeled tractors Utilize GreenStar system and Starfire SystemUtilize GreenStar system and Starfire System

• Only requires addition of AutoTrac key card and steering Only requires addition of AutoTrac key card and steering control unitcontrol unit

Provides own differential correction service SF2 with Provides own differential correction service SF2 with accuracy of +/- 4 inchesaccuracy of +/- 4 inches

Recommended UsesRecommended Uses• TillageTillage• SprayingSpraying• Seeding OperationsSeeding Operations

Listed BenefitsListed Benefits• Optimize machine efficiencyOptimize machine efficiency• Reduce operator fatigueReduce operator fatigue• Increase yieldsIncrease yields

IntegriNautics-AutoFarm SystemIntegriNautics-AutoFarm System

Aftermarket system available for all major manufacturersAftermarket system available for all major manufacturers Offers RTK system with base stationOffers RTK system with base station

• One time cost, no recurring subscription costsOne time cost, no recurring subscription costs• 5 mile coverage area with mobile station (must be in line of 5 mile coverage area with mobile station (must be in line of

site)site)• 7 mile coverage area with fixed station (must be in line of site)7 mile coverage area with fixed station (must be in line of site)• +/- 1 inch accuracy+/- 1 inch accuracy

Major uses listed areMajor uses listed are• Reducing operating costsReducing operating costs• Reducing capital investmentReducing capital investment• Running in night and fogRunning in night and fog• Broadening labor poolBroadening labor pool

Kit includes base station, cab box and monitor, GPS Kit includes base station, cab box and monitor, GPS antenna, and all needed cablesantenna, and all needed cables

Optional data logger for mapping and surveyingOptional data logger for mapping and surveying

Trimble-AgGPS AutopilotTrimble-AgGPS Autopilot

Available as two systemsAvailable as two systems DGPS with +/- 6 inch accuracyDGPS with +/- 6 inch accuracy Recommended usesRecommended uses

• TillageTillage• Broad acre air seedingBroad acre air seeding• Application of fertilizer and insecticideApplication of fertilizer and insecticide

RTK with +/- 1 inch accuracyRTK with +/- 1 inch accuracy Available on Case, CAT, John DeereAvailable on Case, CAT, John Deere Wheeled or Tracked Wheeled or Tracked

Beeline Navigation-Arro systemBeeline Navigation-Arro system

Available for all major manufacturersAvailable for all major manufacturers OEM with AGCO tractorsOEM with AGCO tractors Can come in three accuracy levelsCan come in three accuracy levels

• DGPS with +/- 4 inDGPS with +/- 4 in• Base station at decimeter accuracyBase station at decimeter accuracy• Base station at centimeter accuracyBase station at centimeter accuracy

Mobile or fixed base stationMobile or fixed base station• Offers fastest setup time on base stationOffers fastest setup time on base station

Methodology of ModelMethodology of Model

Annualize technology cost using sinking Annualize technology cost using sinking fund approach with 3 yearsfund approach with 3 years

Deterministic model uses 7 year average Deterministic model uses 7 year average yields and December cash prices for yields and December cash prices for central Indiana from 1996-2002central Indiana from 1996-2002

Risk model uses empirical distribution Risk model uses empirical distribution from the same yearsfrom the same years

Use planter as limiting factor for farm sizeUse planter as limiting factor for farm size• Using 12 row planter and probability of days Using 12 row planter and probability of days

worked in central regionworked in central region

Revenues generated by yields and harvest price

Base Farm Guidance

Farm Budget

Revenues

Farm Budget

Guidance Benefits

Technology Costs

Revenues

How the Model WorksHow the Model Works

Guidance Benefits in ModelGuidance Benefits in Model

Inputs-Chemicals, Fuel, LaborInputs-Chemicals, Fuel, Labor• Use overlap for reductionsUse overlap for reductions

Increase in field speedsIncrease in field speeds• Auto guidance 20%Auto guidance 20%• Light bar guidance 13%Light bar guidance 13%

Increase work day lengthIncrease work day length• Base-14 hoursBase-14 hours• Light bar-18 hoursLight bar-18 hours• Auto guidance-20 hoursAuto guidance-20 hours

Controlled TrafficControlled Traffic

Use Randall Reeder data from The Ohio Use Randall Reeder data from The Ohio State University to quantify compaction State University to quantify compaction into 2 levels: 10 ton and 20 toninto 2 levels: 10 ton and 20 ton

Indiana distributions in first two stages Indiana distributions in first two stages represent compaction at that levelrepresent compaction at that level

Each acre has a percentage with traffic Each acre has a percentage with traffic (use compacted yield) and a percentage (use compacted yield) and a percentage without traffic (use adjusted yields)without traffic (use adjusted yields)

Additional fuel benefits by alleviating Additional fuel benefits by alleviating compactioncompaction

Controlled Traffic Controlled Traffic

DGPS Auto DGPS Auto GuidanceGuidance

RTK Auto RTK Auto GuidanceGuidance

Light Bar Light Bar GuidanceGuidance

TramlineTramline

Percent of Percent of field with field with traffictraffic

20%20% 15%15% 30%30% 50%50%

Fuel Fuel ReductionsReductions

50%50% 50%50% 30%30% 20%20%

Setup of ModelSetup of Model

Stage I- Technology adoption without Stage I- Technology adoption without expansionexpansion

Stage II-Technology adoption with Stage II-Technology adoption with expansionexpansion

Stage III-Technology adoption with Stage III-Technology adoption with controlled traffic on original farm sizecontrolled traffic on original farm size

Sensitivity on interest rates, Sensitivity on interest rates, technology costs, and light bar acrestechnology costs, and light bar acres

Technology and Time Needed- Technology and Time Needed- Stage IStage I

0

100

200

300

400

500

600

Corn Soybeans WholeFarm

Ho

urs

Base Light Bar Auto Guidance

Technology Cost-Stage ITechnology Cost-Stage I

0

2

4

6

8

10

12

Technology Cost Total Cost

$/A

cre

DGPS Auto Guidance RTK Auto Guidance

Light bar

Results-Stage IResults-Stage I

135

140

145

150

155

160

Corn Soybeans Average

$/A

cre

Base DGPS Auto Guidance RTK Auto Guidance Light Bar

Expansion Acres-Stage IIExpansion Acres-Stage II

0

500

1000

1500

2000

2500

3000

3500

Base Light Bar AutoGuidance

Acr

es

0

2

4

6

8

10

12

Total Cost Stage II Total Cost Stage I

$/A

cre

DGPS Auto Guidance RTK Auto Guidance

Light bar

Technology Cost-Stage IITechnology Cost-Stage II

Results-Stage IIResults-Stage II

125

130

135

140

145

150

155

160

Corn Soybeans Average Averagewith

replacemntcost

$/A

cre

Base DGPS Auto Gudiance RTK Auto Guidance Light Bar

Controlled Traffic Yields-Stage IIIControlled Traffic Yields-Stage III

0

50

100

150

200

Corn ModerateCompaction

Corn: HeavyCompaction

Beans:Moderate

Compaction

Beans: HeavyCompaction

bu

/acr

e

Base DGPS Auto GuidanceRTK Auto Guidance Light BarTramline

Results on Highly Compacted Results on Highly Compacted Soils-Stage IIISoils-Stage III

140

150

160

170

180

190

Corn Soybeans Average

$/A

cre

Rev

enu

e

Base DGPS Auto GuidanceRTK Auto Guidance Light BarTramline

SensitivitySensitivity Model shows little change to increasing Model shows little change to increasing

interest rates, especially in stages II and IIIinterest rates, especially in stages II and III Lowering technology costs changes Lowering technology costs changes

profitabilityprofitability• Stage I-Allowed DGPS auto guidance to be Stage I-Allowed DGPS auto guidance to be

more profitable than base casemore profitable than base case• Stage II-Allowed RTK auto guidance to be more Stage II-Allowed RTK auto guidance to be more

profitable base caseprofitable base case• Stage III- RTK auto guidance provided greater Stage III- RTK auto guidance provided greater

average returns than DGPS auto guidance in average returns than DGPS auto guidance in highly compacted soilshighly compacted soils

SensitivitySensitivity

Holding light bar acres constant and Holding light bar acres constant and including replacement costsincluding replacement costs• dropped light bar guidance below RTK dropped light bar guidance below RTK

auto guidanceauto guidance Important when production includes Important when production includes

mechanical cultivation, side dress mechanical cultivation, side dress nitrogen, planting with high accuracy nitrogen, planting with high accuracy

ConclusionsConclusions

Auto guidance reduces field time on Auto guidance reduces field time on the fixed size 2000 acre farm, but it the fixed size 2000 acre farm, but it is not the most profitable guidance is not the most profitable guidance option:option:• Light bar guidance can provide almost Light bar guidance can provide almost

the same benefits at a lower costthe same benefits at a lower cost• Profitable when investment costs are Profitable when investment costs are

reduced by one halfreduced by one half

ConclusionsConclusions

DGPS auto guidance is profitable for DGPS auto guidance is profitable for expansion with the same equipmentexpansion with the same equipment• Spreading technology cost over more Spreading technology cost over more

acresacres• Provides higher returns over light bar Provides higher returns over light bar

guidance when spreading machinery guidance when spreading machinery replacement costs over more acresreplacement costs over more acres

• RTK auto guidance is profitable when RTK auto guidance is profitable when technology costs are reduced by one technology costs are reduced by one halfhalf

ConclusionsConclusions

Soils that are highly susceptible to Soils that are highly susceptible to compaction make DGPS and RTK systems compaction make DGPS and RTK systems profitableprofitable• Reducing technology costs makes the RTK Reducing technology costs makes the RTK

system provide greater returns than the DGPS system provide greater returns than the DGPS systemsystem

Continuous corn growers increase returns Continuous corn growers increase returns of DGPS auto guidance for moderate levels of DGPS auto guidance for moderate levels of compactionof compaction• More response to compactionMore response to compaction• More field operations More field operations

Areas of Further ResearchAreas of Further Research

Driver fatigueDriver fatigue Value of timeValue of time Wage and labor poolWage and labor pool Strip tillageStrip tillage Side dress nitrogenSide dress nitrogen Contour farmingContour farming Environmental benefitsEnvironmental benefits

Questions?Questions?