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Reducing Crop Insurance Fraud, Improving Crop Yields Cited as Benefits

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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A new study examines some of the benefits of using drones in agriculture. (DTN/The Progressive Farmer photo by Jim Patrico)

OMAHA (DTN) -- Farmers can expect to see numerous benefits in several aspects of their operations through the use of drones, a new study shows.

The study, conducted by drone company Measure on behalf of the American Farm Bureau Federation and private analytical firm Informa Economics, found potential benefits from drones used to enhance crop scouting and health monitoring, provide three-dimensional terrain mapping, improve irrigation management and assist in crop damage assessment.

The analysis looked at a number of aspects of production agriculture and how drones could help make operations more efficient.

In particular, the study found drones could help in cutting back on losses from crop insurance fraud.

"For example, if drones were used to estimate crop insurance losses, the government could have saved as much as $70 million in 2005 and $212 million in 2013 by avoiding payouts on fraudulent claims," the report said. "Drones would not necessarily be used to assess the total area for which crop insurance claims were filed, but could account for a substantial portion of this area."

The study estimated the cost of using drones in 2005 and 2013 at $47 million and $44 million, respectively, based on a cost of $3 per acre for using a drone service.

The report said abuse and fraud losses were based on a Government Accountability Office estimate of $117 million for 2005. That accounted for about 4.3% of total crop insurance program costs. "The 4.3% factor was applied to 2013 crop insurance program costs, and abuse and fraud losses were estimated at $212 million," the report said.

"...Drones more accurately evaluate crop insurance claims than physical inspections alone by comprehensively imaging the crop area that has been destroyed by hailstorms, floods, or other extreme weather events. Drones have the advantage of being able to easily survey an entire field, rather than sections of the field like what is standard practice during physical inspections."

Informa Economics also created return-on-investment calculations for efficiency gains created by supplementing current crop damage assessments by claims adjusters with drone imagery. "While drones do enhance adjuster efficiency, the labor cost savings from this efficiency improvement do not necessarily offset the price of drone services," the study found.

When it comes to using drones for crop scouting, the study found the highest returns on investment for corn at about $11.58 per acre. The return was about $2.57 an acre for wheat and $2.28 per acre on soybeans, according to the study.

"The total economic return estimation is highly sensitive to changes in input prices, yield increases and crop prices," the study said. "Accordingly, these broad, national average estimates will likely differ significantly for individual farms with differing input/yield profiles. However, the above figures provide a baseline for assessing potential farmer adoption of drone services..."

In addition, the study found farmers could improve yields in corn, soybeans and wheat in part by using drone technology.

"The results of the research on yield gap differences due to improper management for field crop scouting in corn, soybeans and wheat were used to estimate a potential market of $1.3 billion for using farm management technologies, of which drones have the potential to capture an important share," the report said.

"Drawing from a combination of academic literature and industry interviews, Informa Economics projects that existing yield gaps in corn and wheat crops can be reduced by 2.5% with the efficiencies offered by incorporating drones into precision agriculture systems. Estimated yield improvements for soybeans were slightly less, falling near 2%."

In addition, the use of drones could help farmers determine the need for drainage systems within fields with more accuracy than the use of current GPS technology, the study found. GPS receivers often are mounted to vehicles that drive across entire fields. GPS records elevation changes to build elevation profiles.

Drone operators told Informa Economics during interviews that drones can cut down on time needed to scan fields and generate more data to provide more accurate readings, according to the study.

Read the entire study here: http://tinyurl.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

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Todd Neeley