Agribusiness isn’t a normal business. What you grow depends on where you live; profit margins depend as much on international markets as local customers; sunshine and rain aren’t events outside the window, but critical resources.
However, one factor doesn’t change whether you’re a running a global enterprise or a family-owned dairy farm rural dairy farmer: technology can make a positive impact on how the the business will perform. difference to how the business performs.
At ICT Strypes we have decades of experience working with the Agricultural supply chain – putting software solutions “in the field”(!) . We call it Smart Farming – not just automating processes with software but looking at each process’s inputs and outputs and seeing how technology doesn’t just automate them but improve them.
Thinking this way changes the conversation around farming technology. Because it sees software for what it really is – not a sunk cost to be amortized, but an investment that returns on payments. And it’s surprisingly easy to see where the wins are.
Let’s introduce some ideas for calculating the ROI of Smart Farming software … because it’s the future of agriculture.
Farming fundamentals: an ROI approach anyone can use
If you’re in farming, it’s likely you already know numbers like liters-per-cow or tons-per-hectare – which is great, because they’re your starting point. Let’s note down a basic process for calculating the ROI of smart farming technology – ready to apply to your own business.
1. Prepare the soil, with a baseline case
Getting to Point B means knowing Point A – so the first step into the future of agriculture is to establish where you are now. For every process in your farm where you’re considering new technology, write down your current performance figures as your base case, giving you a “pre-tech” benchmark for later comparison. Key figures are:
- Cost of inputs versus sale price of outputs. A simple set, but incredibly important. Add up your total cost of creating each saleable product that leaves your operation – whether that’s a liter of milk or a ton of asparagus – and do a basic calculation of what it cost to produce: minutes per day of human effort, cost per kilowatt of electricity, the price you paid for animal feed, and so on.
Many of these figures you’ll know already. But have you ever brought them together to see where your biggest costs are, and divided them up into a specific cost list per output? That’s what makes this worthwhile: you’ll discover costs hiding in old processes, or complications that could be simplified. It may help you see your farm with fresh eyes.
2. Sow your seeds, by defining KPIs
Once you know the base case, it’s time to decide which metrics really matter for smarter farming. Is energy efficiency a bigger factor today than 10 years ago? Are wholesale milk prices still telling the whole story? Are people paid fairly for their skills, and are traditional skills still valuable? Set a few measurable outcomes tied to revenue, cost, or yield. Think about:
- Yield per unit over time, to measure how you’re improving. Of course, your “units” may differ to the farm next door.
- Efficiency of inputs over time, such as fertilizers, feed, even water per unit of output. It’s likely prices have changed since you last measured them.
- Labor hours per task or unit – your people may be working as hard as ever, but can their time be used more effectively? It matters for automation.
- Energy consumption over the year – a key cost for greenhouses or milking sheds: processes cost different amounts of energy at various times of year, and many farms don’t take account of the fluctuations.
- Downtime management – a less common one, but important. Machine repair and replacement doesn’t have to be an unexpected emergency; software can predict future problems so you can mitigate them early.
- Animal health metrics – the IoT (Internet of Things) is especially useful to farmers, with sensors taking simple measures every few minutes or hours and reporting the data to a software application. Irrigation volumes, temperature changes, even the “happiness” of a cow can be measured.
- Land health metrics. Surveying your land was manual work a generation ago, but no more. Satellite and drone data can flag up soil condition and growth issues early to allow targeted intervention.
See what’s different here to “normal” metrics? A lot of these aren’t snapshots, but “trends” taken over time. Because managing change is among the biggest factors in smart farming technology success – and software solutions are an immense help.
3. Forecast yields, by deciding which outcomes could be improved
After you’ve ascertained the state of your farm today; the next step is looking ahead, and seeing where smart farming technology could make the biggest differences. (The beauty of this approach is that you don’t have to do everything all at once; you can start with a single process, and when it’s shining, apply the same thinking elsewhere.) Here are some ideas:
- Adding more IoT sensors. If you’re lacking data for a useful metric, could simply adding the right sensor collect it more accurately? A simple sensor that’s sensitive to 0.5°C instead of 1°C might prevent that slight frost affecting your yields even better.
- Precision fertilization and feeding. Pesticides and nutrients are costly ingredients; what if technology could double their efficiency, by spreading or spraying more precisely to your plants and sheds?
- Adopting new applications. You may have too much data – in which case, could a new app make it make more sense to your staff? Turning raw data into easily-understood graphs and dashboards is a key performance improvement.
4. Tend the field, by tracking numbers over a season or cycle
Once your technology is in place, the real fun starts: tracking its outputs and seeing how much they’ve improved before and after implementation. You’ll often find you have better data to do it with, too; after all, software thrives on good data.
- What made the biggest difference? It may be a single event automated, or a single data point collected. Such learnings can inform and improve other processes later.
- Can external datasets be useful? Today’s software can integrate your local data with other data, like accurate weather forecasts (tailored to your land, not a large region). And every percentage point of accuracy means more productivity.
- Are you innovating, or just automating? Adding sensors and software to an existing process can help, but the biggest gains often come from changing that process entirely. Looking at the numbers will give you (and us) plenty of ideas.
The best part of this: once you start your journey into the world of data, you’ll see it everywhere – external sources to make use of, opportunities for shared understanding, new sensors that gather useful information. Improvement doesn’t have to stop.
5. Harvest your crop, with simple ROI calculations
The data’s in. Crunching the numbers with analysis and aggregation will tell you just how much benefit you’ve gained from smart agriculture technology – factoring in, of course, how much that technology cost you. The calculations are ones any accountant would recognize:
- ROI (%) = (Net gain from tech – cost of tech) / cost of tech x 100
- Payback period (in years) = cost of tech / 1yr financial improvement
- Future opportunity (in €) = ROI from one automated process x total number of processes
You’ll note that in the end, these calculations aren’t complex. Because as with most things in business, the best performance comes from staying as simple as possible. (But no simpler.) And ICT Strypes is here to help you do it.
If you want ROI from Smart Farming, you’re not alone
The best part? With solid experience across the agriculture sector, we can help you identify which farm processes stand to benefit most from technology — and separate quick wins from longer-term investments.
Curious how tech can grow your business potential? At ICT Strypes, we combine deep industry insight with technical excellence — helping agribusinesses apply the right solutions for lasting impact. Let’s explore what smart farming can do for your operations.
Get in touch with our experts today.