Technologically savvy and economically sophisticated, the new generation of farmers rely on data, meticulous record keeping, state of the art machinery and equipment, and proper utilization of agri-science models. All of these factors are driving how today’s farmer strives to control crop production and improve profitability. While the new risk profile is most evident in large farm operations worldwide, independent commercial farms are also feeling the pressure to implement precision strategies for more productive, efficient operations. Fundamental change in farm management is underway.
Precision farm management is optimizing crop production based on observing, measuring and responding to variables of field characteristics and environmental influences. Technological convergence, such as remote sensing, mechanization and biotechnology, is fundamentally shifting the way crops are grown by enabling farm operators to monitor precise weather data and analyze agricultural rudiments, such as crop yield, topography of the farmed acreage, organic soil content and treatment requirements. This data enables the farmer to choose the crop varieties that can be optimized for these agronomic conditions. The world’s agriculture industrial complex projects precision agriculture growth of over 13 percent based on the Compound Annual Growth Rate (CAGR) from 2015 to 2020 with a market size reaching $4.5 billion. Global agribusiness is committed to leveraging state of the art technologies and science-based practices to generate sustainable, quality crop production for meeting demands of expanding populations worldwide.
Independent, commercial farm management is embracing the technological advancements of tools, resources and financial analytics to improve site-specific crop production outcomes. Critical data can enhance crop yield and generate more predictive revenue. Farm operations are getting larger as farmers acquire assets and parcels of land, as well as forge lucrative lease agreements to cultivate additional acreage. Investment in technology and machinery challenges the traditional agribusiness model. The advent of leading-edge devices capable of capturing satellite and aerial imagery, land conditions and operational efficiencies has propelled precision farming practices. Drones, as an example, are deployed to inspect owned or leased land tracks dispersed throughout an area and relay valuable reconnaissance data of damage following a severe weather event. Crop yield monitors on GPS-equipped combines can capture topographical conditions and production output for more exacting crop management.
Insurance implications underlying this farm revolution is the emergence of specialty risk exposures within the broader agribusiness sector. Traditional farm and crop insurance programs are no longer adequate or responsive to a farmer’s coverage needs driven by big data and acreage-specific farm intelligence. Agriculture risk models are shifting based on the size and structure of complex, knowledge-based farm operations.
Agribusiness insurance carriers recognize that greater diversity in farming as a business class is driving greater urgency in developing multi-risk product offerings. Collaborative initiatives amongst commercial agribusiness insurance markets are focused on innovating coverage solutions to protect the emergent risk exposures of today’s new generation of farm operations.
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