Dr Koos Coetzee*
The correct use of new technology can help a farmer become more profitable. However, being an early adopter of new technology holds risks that must be managed.
Sustainable agricultural production takes into account three factors: a business’s profitability, the people dependent on and influenced by the business (including the broader community consisting of the consumers and even upstream and downstream workers), and the impact on the environment.
While the importance of profitability is generally accepted, very little is done beyond the farm gate to increase farmers’ profitability.
The easiest way to achieve this will be to see that farmers receive a fair price for their product.
One prominent UK retail chain insists on a three-party contract with suppliers that includes both the processor and the farmer.
Unfortunately, in most discussion about sustainability, the environmental aspect receives the most attention. Here the media hype is huge and, in many cases, not based on scientific fact. This is especially true of retailers’ insistence on GM-free products.
Sustainable grain production implies that the grain is produced with minimum tillage and minimum use of insecticides and herbicides. This cannot be done without the use of GM seed. Endorsing GM-free products actually encourages the increased use of chemicals!
The fourth factor
At a recent conference in Ireland, Tina Hennessy of the University of Cork explained the importance of the fourth element of sustainability, namely innovation.
Any farmer who keeps on farming exactly as in the past will very soon have to quit farming altogether. This is because the terms of trade for agriculture (the ratio between agricultural input and output prices) weakens constantly. Growing a farming operation horizontally can, through improved economies of scale, maintain farm profitability.
Vertical expansion by forward or rearward integration in the value chain can also help.
There are many examples of farmers who successfully process and market their own products to the retail trade or directly to consumers.
There are also examples of farmers who have successfully created input-processing and input supplier businesses to supply their own and other farmers’ farm requisites.
In addition to these growth strategies, farmers can improve their profitability by applying new technologies. Here, the common wisdom is that the early adopters of new technology benefit the most.
But this is not true. Early adopters pay more for the technology, they do not have access to other users, and they are solely dependent on the supplier for information and advice.
Case histories of early adoption gone wrong
My first experience with the negative effect of being an early adopter came in the 1950s when my father decided to plant a new wonder crop called rhompa grass.
It required very little water, was hardy and frost-resistant, provided highly nutritious food for animals, and grew very quickly. I therefore remember my father’s disappointment when the cows took one bite of the grass, turned away, and promptly started grazing the dry grass outside the land.
New wonder crops will continue to be found. In nearly all cases, these will not result in real production improvement.
Here is another example. In the 1980s, many dairy farmers were sold feeding stations to feed individual rations to their cows. These cubicles can still be found on some farms. They have long been converted to calf pens, however, as farmers soon realised that this feeding system was impractical.
Today, the development of the software and sensors to enable efficient individual feeding of cows has changed this approach to an efficient new technology.
The lesson, in agriculture at least, is it’s better to be part of the early majority than to be an early adopter.
*Dr Koos Coetzee, an agricultural economist at the Milk Producers’ Organisation (MPO). All opinions expressed are his own and do not reflect MPO policy.