Profitability of smart farming technologies – Identification of economic success factors in small-scale agricultural regions

JOHANNES MUNZ1*, RHEINRICH SCHUELE2

1 Institute of Applied Agricultural Science, Nuertingen-Geislingen University, Neckarsteige 6-10, 72622 Nuertingen, Germany

2 Faculty of Agriculture, Economics and Management, Nuertingen-Geislingen University, Neckarsteige 6-10, 72622 Nuertingen, Germany

* Correspondence: johannes.munz@hfwu.de

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Abstract

Digitalization of agriculture shows positive effects on farm profitability but is also considered to be of great importance when it comes to the efficient use of limited resources and countering global problems (e.g. climate change, food security). However, since the introduction of the first precision farming technologies around 1990, high adoption rates could not be observed, especially in areas where small-scale farming is dominant. Until today, farms successfully applying smart farming technologies are mainly larger operations. Therefore, this paper is dedicated to analyze economic success factors, which favor the use of digital technologies in small-scale agricultural areas, but also to highlight the limitations of digitalization in these structures.
For this research, a calculation model has been developed, that enables a holistic view of the farm. Using empirical farm data and with the help of sensitivity analysis, the economic effect of implementing 27 different digital farming technologies is presented. The results show that very small farms (< 20 ha) are at a disadvantage with capitalintensive technologies. Furthermore, it can be shown that the success of implementing digital technologies is largely dependent on external factors (e.g. weather, soil), and is determined by initial conditions (e.g. technologies available on the farm). In summary, it can be stated that farmers in small-structured areas are by no means excluded from digitalization. For very small farms, the joint use of machines or the development of low-cost technologies can be seen as a solution.

Keywords: Smart Farming Technologies, Economics, Small-Scale Agriculture, Case Study, Sensitivity Analysis