2023 started with farms in all geographies having major concerns about profitability. In the last 2 years, inflation increased the cost of production significantly, while crop prices didn’t follow the proportional increase, putting a lot of pressure on farm profitability.
Above that,global data shows that 75% of farmers are facing cost hikes, and around 60% expect that the current inflationary environment will increase spending even more in the next 12 to 18 months. Overall macroeconomic environment impacts the cost increases in the most important input areas for all agribusinesses – fertilizers 71%, crop protection products 30%, and labor 17%.
Considering these facts, the biggest concern for all farms is how to ensure profitability in such an unfavorable economic environment.
Overcoming Challenges with Data-Driven Technology
At the end of a farming season, every farmer should be fully aware of the productivity and profitability of his agricultural production. Aiming to be productive, farmers are faced with many factors limiting a farm’s productivity. Available land, the cost of agricultural commodities, challenging weather conditions, problems with market access, poor knowledge, and lack of new technologies all affect the performance of a farm.
While farm productivity is important for maximizing the amount of output that can be generated from available resources, farm profitability is critical for ensuring the financial viability of the farm business. In other words, while high productivity can lead to increased output, it does not necessarily mean that the farm is profitable. Profitability requires a focus on both revenue and costs and the ability to generate enough income to cover all the expenses associated with running the farm business.
Revolutionizing Farm Profitability: The Power of Digital Agriculture
Farmers generally do not have control over the price of their crops in the market, as it is determined by various factors such as supply and demand, weather conditions, and government policies. Therefore, farmers need to focus on two areas where they can have some control in order to maximize their profits:
- securing high yield and crop quality;
- cost savings in terms of efficient input application and efficient farm operations.
By focusing on making better agronomic decisions based on real-time insights in these two areas, farmers can improve their overall profitability even if they are unable to control the price at which their crops are sold.
Global leading offers a wide set of decision-making features that supports farms in making both agronomic and economic decisions and experiencing tangible results like:
- 23% savings on inputs by using our precision agriculture solutions, or
- 10% revenue increase across farms in their cooperative by improving productivity and yield volumes.
AGRIVI farm management software also provides farmers the possibility to plan their profitability per field and compare planned profitability with actual at the end of the season. By doing so, farmers can see which fields are profitable, and which lack behind and easier make decisions about further management for the next season.
Ultimately, by fully utilizing all available functionalities of the platform throughout the seasons, farmers can achieve an average reduction of 5-10% in their total operations costs, as indicated by the internal data.
