Producer Willingness to Pay for Precision Application Technology: Implications for Government and the Technology Industry

Abstract

This paper focuses on the willingness to pay (WTP) for precision application/site‐specific management technologies on the part of agricultural producers. We use a contingent valuation survey to elicit WTP for a package of technologies and examine the impact of government subsidies on potential demand. Results suggest that producer WTP is significantly lower than current technology prices, necessitating a 60% government subsidy to induce adoption, on average. Agronomic factors such as soil characteristic variability and soil quality are important determinants of WTP. In addition, how well the technology integrates into current farming practices and equipment also appears important.

Rotational grazing adoption in cattle production under a cost‐share agreement: does uncertainty have a role in conservation technology adoption?

“…2000;Hudson and Hite 2003;Qiam and de Janvry 2003). Cooper and Keim (1996) analysed the government cost-share payment farmers would be willing to accept to adopt BMPs that protect water quality, followed by analysis of adoption intensity.…”

Estimating the demand and willingness-to-pay for cotton yield monitors

“…This result has important implications for vendors of yield monitors in terms of how they market this technology. The estimated price elasticities and demand curves could also have important implications for government if it wishes to consider subsidizing this precision technology for its potential environmental benefits (see Hudson and Hite 2003;Hite et al 2002). Our estimated elasticities and demand curves indicate that, at least in the beginning, a fairly large subsidy is required to induce a substantial increase in the adoption of cotton yield monitors.…”

“…It is also important for agricultural engineers and industry managers to have some idea of potential demand and price elasticities for different groups of users so that they can optimize the costs of production and target marketing efforts. Government agencies may want to know features of the demand for the technology if they are considering a programme to subsidize its purchase for potential environmental benefit (Hubbell et al 2000;Isik et al 2001;Hudson and Hite 2003;Hite et al 2002). Cameron and James (1987) were the first to apply the CV technique to pre-test new market goods.…”

“…To the best of our knowledge, no study has yet estimated price elasticities of demand and WTP values specifically for cotton yield monitors in the southeastern USA. Hudson and Hite (2003) estimated WTP for a package of precision technologies, 1 rather than the demand and WTP for a specific one (such as the yield monitor per se). The geographical scope of their study was also limited to a single state (Mississippi).…”

“…Cameron and James (1987) were the first to apply the CV technique to pre-test new market goods. In an agricultural context, Hubbell et al (2000) used it to examine the potential demand for cotton seed containing the biotechnology trait to control lepidopteran pests (Bacillus thuringiensis, or Bt), and Hudson and Hite (2003) used it to estimate WTP for a package of precision technologies.…”