A digital transformation in agriculture is underway, expanding the boundaries of smart, efficient, and sustainable farming practices. By adopting precision agriculture and smart technologies, farmers and ranchers can boost yields, lower input costs, and improve sustainability, leading to more resilient (and potentially more profitable) operations.
At Farmer Mac, we’re passionate about supporting a strong and vital rural America, and we take a keen interest in the development of technologies that can help drive economic opportunity. Precision agriculture—the use of advanced digital technologies and practices to monitor, measure, and respond to variability in the field—has the potential to enhance profitability and reduce risks for farm and ranch operations. These technologies and practices are increasingly being adopted to support resilient crop yields, improve efficiency, and boost long-term business viability—and lenders are taking notice. Borrower inquiries on the subject are also on the rise; the 2024 ABA-Farmer Mac Agricultural Lender Survey found 66% of lenders reported borrowers asking about financing for precision technology, up from only 15% in 2023.
While the adoption of precision agriculture is growing, there is still substantial room for expansion. According to the latest biennial “Technology Use” report from USDA’s National Agricultural Statistics Service, only 27% of U.S. farms and ranches in 2023 reported using precision agriculture practices. While precision agriculture isn’t a one-size-fits-all solution and won’t be adopted on every farm, these figures point to the potential for growth and a significant opportunity for further improvements in efficiency, sustainability, and profitability.
The potential environmental benefits are substantial, with reduced chemical runoff and improved water management, but the financial upside is just as important. Precision agriculture allows for more efficient farming and can save farmers up to 20% on fertilizer costs and 20% on water usage by reducing input waste. By helping farmers anticipate risks like disease and drought, make informed planting and pest control decisions, and optimize timing, precision tools help reduce waste and improve cost-efficiency.
Precision agriculture practices, especially those that improve soil health, can boost profitability in less obvious but highly valuable ways. In an era of extreme weather events and rising water costs, improved soil structure can drive yield stability while lowering operating expenses, key to long-term resilience. As regenerative farmer Rick Clark explained in his testimony to Congress in 2022, healthy soil “is the difference of input cost reductions, it is the difference of flooding or drought, it is the difference of wind and water erosion rates and keeping fertility on my land.”
Of course, these outcomes depend on context. Not every practice is the right fit for every farm or farmer—differences in soil type, moisture levels, crop selection, the size and scale of the farm, and the farmer’s risk tolerance all matter. But many operators are discovering that when these practices are tailored to their conditions, they can not only make agriculture more sustainable but also more profitable.
A key driver of this progress is digital connectivity, which enables the “Internet of Things” (IoT), where networks of devices collect and share critical data. IoT sensors track temperature, moisture, nutrient levels, and pest infestations, giving farmers the precise information they need to optimize their operations. For example, soil sensors provide real-time data on soil conditions, allowing farmers to adjust irrigation, manage fertilizer use, and detect early signs of nutrient deficiencies. Healthy soil, smart management, and a connected farm can together form the foundation of a thriving agricultural enterprise.
Despite the potential, challenges remain, including high initial costs, concerns over data ownership, cybersecurity issues, and a lack of industry standards. These technologies often hinge on reliable rural broadband and other critical infrastructure, one of many mission-focused reasons that I’ve led Farmer Mac to strengthen and grow our newer operating segments that support the development of crucial infrastructure for rural America. By doing so, Farmer Mac is helping enable the adoption of these transformative digital tools.
I believe the future of farming is bright, in part because the future of farming is digital. Along with everyone at Farmer Mac, I am excited to support this ongoing transformation.
Learn more about how Farmer Mac is accelerating rural opportunities at FarmerMac.com
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