An Economic Evaluation of Variable Rate Irrigation for Alabama Corn and Soybean Production

Abstract

The variable rate application of production inputs is a method used by row crop producers to save money and resources. However, this technology comes at a substantial investment cost. This includes the capital investment in the physical equipment and the intellectual investment in managing and operating these advanced technologies. We focus our analysis on precision agriculture for irrigation through the adoption of a variable rate irrigation (VRI) system. We establish the useful life of the equipment, salvage value, and total capital investment necessary for adoption. This allows us to determine a fixed cost of adoption and breakeven yield requirement at various commodity prices to cover investment and annual expenses. We further illustrate through a case study of a farm in north Alabama the potential yield gains from the use of a VRI system during 2018-2021. This analysis provides producers with the framework to evaluate the economic feasibility of adopting these technologies for their row crop operation. It further provides the foundation for future analysis of the economic feasibility of adoption of VRI in Alabama.