Equipment sales for VRA systems are poised for growth, but dealers must learn to speak the language to take advantage.
John Dobberstein, Associate Editor
For now, fertilizer prices have settled into more normal increases and decreases after skyrocketing 2 years ago, giving farmers a little bit of relief.
But there are signs that fertilizer demand will creep up again in 2010. The market could be hotter for potash and phosphates, as farmers foiled by wet weather and high input costs have depleted their stocks and will be “keen to increase applications this year to revitalize soils,” analysts said recently.
One way your customers to combat the up-and-down cycles is the use of variable-rate application (VRA) systems to distribute fertilizers such as lime, nitrogen (N), anhydrous ammonia (NH3), potassium (K) and phosphorus (P) more efficiently across fields, lowering input costs and boosting yields in some cases.
But adoption rates of VRA have been growing at a slow rate and many dealerships are still not prepared to support customers once they invest in variable-rate technology.
There’s also debate about VRA’s profitability, especially with application of N, P and K. North Dakota State Univ. (NDSU) is beginning a 3-year study on this topic, with about 100 farmers expected to participate using their own fields as test plots.
Experts say it’s still a good idea for farmers to investigate the savings potential of VRA systems — and for equipment dealers to be ready to sell and support them.
“Fertilizer prices are coming back down, but they’re still higher than they were 3 years ago,” says Dr. Peter Scharf, a professor and nutrient management specialist at the Univ. of Missouri’s division of plant sciences.
Defining VRA Systems
Variable-rate fertilizer application allows crop producers to apply different rates of fertilizer at various locations across fields. The necessary equipment includes an in-cab computer with a field zone application map, fertilizing equipment capable of changing rates during operation, and a global positioning system (GPS) receiver.
The in-cab computer uses GPS to monitor its position in the field and communicates electronically with the rate controller on the application equipment to change the fertilizer rate as the equipment moves from one zone to the next.
The number of zones in each field is determined by the variability within each field. More uniform field conditions require fewer zones. Zone soil sampling determines the residual nutrients available for the next crop. This information is used with crop yield goals to select the amount of fertilizer to apply in each management zone.
Zone maps are made using a geographic information system (GIS) computer program to combine field variability information to delineate field areas based on productivity levels.
“Several factors contribute to field variability — including topography, soil physical and chemical properties, cropping history, historical cropping patterns and field uses,” says John Nowatzki, an ag machine systems specialist for NDSU Extension.
Fine Print on VRA
There’s no denying that applying fertilizer with a variable rate has the potential to save producers money. But there are limitations and challenges to the practice.
Many farmers have difficulty making a profit from variable application of P and K. “Uniform applications at recommended rates typically support full yield. This is because there is some cushion built into our recommendation systems to take care of the lower-testing areas of the field,” Scharf says.
“Variable-rate P and K will rarely provide a yield advantage, but I think it gives us the potential to save more fertilizer than we currently are, and still protect full yield,” Scharf says.”
Soil testing is a generally accepted way to create base application rates of fertilizer, but that can cause problems with N application because the nutrient’s presence can be extremely variable, depending on factors like weather or the level of organic matter in the soil.
Scharf says research from several universities shows the amount of N needed in a field varies from place to place. “To get it right and not throw your money away, you need to find places where you don’t need as much. To not lose yield, you must know where the N isn’t high and get the fertilizer there,” he says.
The most accurate way to do that, he says, is using crop sensors such as those made by Ag Leader, GreenSeeker or Topcon to map field conditions and apply N more efficiently. “When the sensors see the dark-green crop, a low N rate is applied. When the crop is light green, a higher rate is applied,” Scharf says. In Missouri, over 55 demonstration fields, sensor-based management has increased corn yields by 2 bushels and decreased the N rate by 14 pounds per acre, he notes.
Crop sensors may provide a sales opportunity to the enterprising equipment dealer, but there’s a caveat. “A lot of people don’t want to apply nitrogen after planting. They do their N application, plant corn and go on to their other crops, hoping they can leave the corn alone and not touch it again,” Scharf says. “It’s a big obstacle.”
Varying the rate of NH3 has potential in the market and the practice is growing in the northern Plains, but there are some challenges that make equipment choices very important.
“It’s not that easy to VRA liquid. You really get into some engineering issues,” Scharf says. “You can’t vary your rate by more than a factor of two unless you get into special equipment. That includes NH3.
“And NH3 is only maintained as a liquid with high pressure. As the NH3 is coming out of the tank, the pressure is dropping, it wants to convert to gas, and bubbles may form in the line. It’s hard to get even distribution.”
Low Adoption Rates
The adoption rate of variable-rate systems has increased over the past several years, but it’s been very gradual. One survey of U.S. farmers from 2008 found about 20% were varying lime, P and K, followed by nitrogen (10.7%) and “other nutrients” (5.7%).
The learning curve for VRA seems steepest among farmers who’ve been applying fertilizer one way for a long time. They are not easily convinced that investing in new technology will benefit them or they’re intimidated by the technology. “They’ve been making money the way it is, and they don’t see much more money being saved by doing VRA. And there is some technology involved with variable-rate that is challenging,” Nowatzki admits.
But it’s critical to boost adoption rates of VRA systems during periods of lower input costs so more farmers are using the equipment when they’re being squeezed, says Jack Gerhardt, Trimble’s business segment sales manager for flow and application control.
“There seems to be almost two camps in terms of customers,” Gerhardt says. “There’s the leading-edge camp, which is maybe 20% of customers, that is pushing us to do multiple product control, all in one pass. You’ve got another 80% interested in variable-rate of one product, like seed or fertilizer, and they’re just taking their first steps.”
Gerhardt says Trimble has two platforms to address the needs of these customers. One is “Tru Application Control,” a partnership where Trimble monitors are paired with DICKEY-john monitoring equipment “to deliver variable rate in a sophisticated manner.” The other program is “Field-IQ,” using only the Trimble product line, for simple one-product rate or sectional control.
“The leading driver to adoption of any product is economics and this is no different,” Gerhardt says. “The secondary factor is farmer comfort with the technology. That’s a challenge we have as manufacturers, to make the technology as user friendly as possible.”
Growth in VRA Markets
More and more farmers are investing in equipment that allows them to do their own fertilizer application, rather than renting toolbars at a co-op or waiting for custom applicators to do it. So there’s a good chance that dealers carrying equipment for variable-rate systems will see more farmers and progressive co-ops coming through their doors.
“Two years ago, our business was 80-90% co-ops and 10% farmers. Now it’s 40% farmers,” says Dave Nelson, president of Brokaw Supply Co. in Fort Dodge, Iowa. “The capabilities of fertilizer application equipment are more important to the farmer than ever before.”
The supplier and implement dealer sells liquid and dry fertilizer application equipment from the likes of Blu-Jet, CDS-John Blue, Montag Manufacturing, Kraus and Yetter, and precision ag systems from Raven, Topcon and aNH3. Brokaw also sells Apache self-propelled sprayers.
“Some farmers are leaving their co-ops because they’re not taking care of farmers’ needs,” Nelson says. “And the co-ops that aren’t losing customers are staying on the cutting edge with things like VRA systems.”
Scharf sees the most growth potential for variable rate of N, with less growth with variable application of P and K. Nelson agrees, adding that sectional shutoff technology is “becoming huge in the market” for NH3 application.
Nelson believes crop sensors and on-the-go soil sampling will be the next wave for VRA. High-tech soil samplers being developed would give farmers real-time levels of P, K and N in the soil, rather than using satellite images that have delays measured in hours or days.
“Crop sensors are like strip-till was 4-5 years ago. It’s the wave of the future,” Nelson says.
Blu-Jet, which manufactures a wide variety of fertilizer application tools, is making significant investments in product development to take advantage of growing interest in VRA systems.
The company currently holds a patent on technology for individual row rate control that could come into play with wide-width machines like sprayers, planters and fertilizer toolbars. The company was also among the earliest to release an applicator with individual row shutoff to eliminate overlapping on point rows.
Nick Jensen, Blu-Jet’s chief marketing officer, says demand for VRA sales shift with the price of fertilizer. As the price goes up, farmers notice the equipment pays for itself pretty quickly.
“Customers are asking to be able to apply fertilizer faster, on more acres, and they want to be more efficient with their equipment,” Jensen says. “It seems to me that most growers who are interested in making a profit, or maximizing their profit potential, purchase equipment that will pay for itself — and then some — in the long run.”
The outlook isn’t much different at Trimble, which last year acquired NTech and its GreenSeeker crop-sensing systems. Gerhardt says use of VRA equipment is growing in the western Plains of Canada, cotton-growing regions of the U.S. and in the Chesapeake Bay watershed.
Gerhardt sees a natural progression in precision ag to precision flow and application control, with manufacturers who design and market user-friendly systems winning the most. “That’s what we’re driving toward, making it easy for the producer to operate.”
The Dealers’ Role
With VRA equipment improving and evolving, there will be opportunities for dealerships to sell their share of toolbars, monitors, sensors and computer software. But it’s clear that dealers who understand the nuances of variable-rate application, and have thorough product knowledge, will be far ahead of the pack.
A dealers’ role, Jensen adds, “is to show customers how they can save by having variable-rate technology, and how they can improve their environmental stewardship. They must sell customers a system that is compatible and will work for them.
“Guidance, auto-steer and RTK are getting more popular, and from there it’s not a big jump to go to variable rate,” he says.
Nowatzki agrees that dealers can move things forward with VRA. There’s a big education gap to be filled, which is why NDSU plans to host two precision ag expos in July in North Dakota near Fargo and Dickinson, in conjunction with the NDSU Research Extension
Field Day Tours at those locations. The expos will include educational sessions and manufacturers’ demonstrations of their variable-rate systems.
“With dealers, I recommend they host meetings with customers to demonstrate how to do variable rate,” Nowatzki says. “They should show them how to prepare the maps, how to get them from their desktop computer to the controller on the tractor, how to use the right file format, and how to make sure the equipment is functioning the way it’s supposed to,” Nowatzki says.
Nelson feels strongly that implement dealerships must get beyond the mindset of just selling iron if they want to take advantage of the VRA movement. He believes hiring an agronomist or a salesperson with an agronomy background is crucial.
“The farmer is starving for information on how to better utilize fertility,” Nelson says. “As a fertilizer dealer or equipment supplier, the more I can talk to agronomists and communicate with a farmer’s computer in the tractor, the more we will win — not because of what color the equipment is or what type of knife is being used, but because we’re getting past just selling iron.”
Nelson adds that dealers should become knowledgeable about as many systems as possible, whether it’s Deere, AGCO, Trimble or Topcon.
“Too many times, we’ve contracted out services to dealers who don’t have the manpower to support a farmer’s technology,” he says. “Anybody can sell a toolbar. The guys who are successful are selling the agronomy and precision ag first, then say, ‘Here is the toolbar for it.’ ”
About 20% of Trimble’s dealerships are “quite progressive” and comfortable with selling and supporting VRA, “and the majority are in the process of getting there,” Gerhardt says. “The bar keeps getting raised, as well, so we’ve taken a strong stance on dealer training.
“For some more traditional dealerships who haven’t dedicated at least one person toward this, they’re going to lag behind where the industry is today. There clearly is a demand for this technology.”