Average is Over in farming

While Michael Pollan, Mark Bittman, and Alice Waters continue to argue that we need to turn back the clock on technology in agriculture, much of the world is moving in a quite different direction.

Via Tyler Cowen, an excerpt from Missouri farmer Blake Hurst:

Most combines traveling across fields in the Midwest this fall had a GPS receiver located in the front of the cab. Although agriculture has been experimenting with this technology for a decade or so, only now is the industry starting to consider all the uses of this transformative technology. For several years, farmers have had the ability to map yields with global positioning data. Using that information, firms can design “prescriptions” for the farmer, who uses the “scrips” to apply seed and fertilizer in varying amounts across the field. Where the yield maps show soil with a lower yield potential, the prescription calls for fewer seeds and less fertilizer. This use of an individual farmer’s data to design a different program for each square meter in a field spanning hundreds of acres could replace a farmer’s decades of experience with satellites and algorithms. What we have gained in efficiency and by avoiding the overuse of scarce and potentially environmentally damaging inputs, we may be losing in the connections of the farm family to the ancestral place. Precision technology will allow managers to cover more acres more accurately and will likely lead to increasing size and consolidation of farms.

The advantages of cheap and ubiquitous drones to monitor crop conditions and forecast yields will be too valuable to ignore.

Big data on farming will also likely affect the private-public partnership that brings us subsidized crop insurance. In the present system, insurance rates are set to maximize enrollment in the subsidized program, because encouraging participation by producers is seen as a public good. Insurance rates in marginal areas are lower than they would be if prices reflected only actuarial risk. But with access to the data about individual farms, insurance companies will be able to identify the least risky, most productive farms, which will likely buy less costly private insurance. This will end the ability of the present crop insurance programs to spread risk and will increase costs for farmers in more marginal areas, if the government doesn’t increase subsidies further.

If a farmer can manage one machine guiding itself across a field by satellite, applying inputs and measuring outputs, reporting by-the-minute data on yields, oil temperature, and a gazillion other data points, what is to stop that same farmer from managing dozens of machines on farms the size of New Hampshire? Tyler Cowen argues that we’re about to see an even wider disparity in incomes between the 10 to 15 percent of the population that can relate well to computers and the vast majority of us who will deliver services to the computer-savvy class. Farming may be one of the first industries to explore the validity of Cowen’s thesis. All of us involved in agriculture will soon have to decide whether we want to occupy the nostalgic niche providing artisanal beets and heritage pork to Cowen’s 10 percent, or whether we’ll roll the dice on surviving the transition to a data-driven agriculture. Farming will be more efficient, more environmentally responsible, and easier to regulate and measure. But it won’t be the same.

 

Amazon PrimeAir: “The last quarter mile”

NewImage Michael B Sullivansees the implementation of Amazon PrimeAir much the way I do, as the last part of integrated logistics:

Taking as the basis for conversation a world in which both drones and driverless vehicles are technically possible and easy-to-use (I don’t think either are right around the corner), then I think you use both for your delivery.

Forget last-mile delivery, this is more about “last 15ish miles” and “last quarter mile.” You send your driverless big old truck out with hundreds of packages. It has with it a small fleet (maybe 5-10) of drones that handle the last quarter mile of the delivery. Your truck trundles along on big streets that can accommodate it; the drones blitz out with packages and back over short distances, charging up from the big batteries of the truck on a rotation. This allows you to deliver far heavier packages (the drones don’t need a battery capable of delivering X kg over 15km, they need a battery capable of delivering X kg over 0.5km), at overall lower cost (the majority of your trip is via low-energy rolling along roads, not high-energy helicoptering), but with the same convenience of the actual delivery (no giant truck moving along narrow residential streets, no need for some kind of klutzy mechanical linkage between a robotic vehicle and your drop-box at your house). It’s probably less legitimately awful in terms of aviation control, too.

Uber Might Be More Valuable Than Facebook Someday. Here’s Why

Über iPhone app

This is pure speculation – but it is an exciting spec. Not all of this will happen, but possibly other big opportunities will emerge. This is just a sample:

So, step one: Take over taxi industry. Step two: Kill ownership. From there, who knows what could happen in the long term? Uber could start using self-driving cars made by Google (one of its investors) to eliminate the need for human drivers, driving down its costs even more. It could introduce a near-instantaneous delivery service to rival Amazon’s drones. It could roll out a subscription service, akin to Amazon Prime, that would include perks like predictive transportation, so that, for example, when Uber sees an appointment on your Google calendar for a cross-town meeting, it sends a car to your office automatically at the right time. There’s no reason that other companies couldn’t try to do these things, too. But Uber has first-mover advantage, and it’s got most of the kinks – customer interface, payment, fleet management, supply-and-demand considerations – worked out already, making it a prime candidate to beat competitors to new product areas.

The result of Uber’s efforts, in other words, could be the creation of a techno-metropolis, in which people and goods are ferreted around seamlessly and, perhaps, automatically. It would be like something out of a sci-fi movie. And Uber would be standing at the center of it all, collecting a cut of every transaction.

 

The economics of cheap drone delivery

NewImage

Tyler Cowen

Let’s say 30-minute drone delivery to your home were legal, well-run, and, for purposes of argument, free or done at very low cost. You would buy smaller size packages and keep smaller libraries at home and in your office. Bookshelf space would be freed up, you would cook more with freshly ground spices, the physical world would stand a better chance of competing with the rapid-delivery virtual world, and Amazon Kindles would decline in value. Given that the storage costs for goods would fall (more storage by specialists, accompanied by later delivery), expected inflation would more likely be converted into price hikes today. The liquidity premium of money (NB: not currency) would rise and the liquidity premium of goods would fall. Some drug markets would be taken off the streets and the importance of gang “turf” would fall.

Addendum: What do we know about network economies in drone delivery systems? FedEx and UPS and USPS, taken together, dominate the market for physical delivery of parcels to homes. How much room would there be in the market for “lone drone” operators?

 Amazon is developing Amazon PrimeAir .