Unleashing Broadband on Rural America Leads to
Nearly $65 Billion in Economic Benefits Annually, by Megan Nelson,
6/17/19
According to USDA’s “A Case for Rural Broadband,” if access to broadband
and adoption of digital agricultural technologies matched producer demand, U.S.
agriculture would realize benefits amounting to nearly 18% of total U.S. market
production, or $64.5 billion annually, based on 2017 levels. The report,
published by the American Broadband Initiative, analyzes the possible economic
benefits of bringing e-connectivity to the heartland and, more importantly,
what needs to be done to make it happen.
From the way producers
store and ship commodities to the way consumers purchase their food, the
introduction and widespread usage of the household refrigerator has irrevocably
changed the food supply chain system. A similar shift is upon us with the
advent of digital technology and next generation precision agriculture,
resulting in ever-increasing productivity with fewer inputs, better market
access and healthier rural communities. Just as electricity allowed for
refrigeration, to realize the benefits of this new digital technology,
high-speed broadband service must be available everywhere.
Row Crops - The highest rate of adoption for precision
technology used to improve yields and reduce costs is in the already highly
mechanized row crop sector. USDA estimates connected technologies in row crops
could result in a $13.1 billion gross benefit annually from next generation
precision ag. Technology for improved planning, such as microclimate modeling,
yield monitoring and precision seeding, is estimated to have a combined
potential annual gross benefit of $4.2 billion, with $1.1 billion attributable
to access to broadband services. On the production side of new technologies,
the potential is even greater at $6.7 billion in possible benefits derived from
precision agriculture, with $2.5 billion attributable to broadband. With an
average dependence of 34% on broadband services to utilize these new
technologies, the key to unlocking these significant gains is full deployment
and adoption of broadband infrastructure. Figure 1 outlines the potential
benefits for row crop production and planning technology compared to the
potential attributable to broadband with the percent of technology dependent on
broadband.
Specialty Crops - Like row crop growers, specialty crop
farmers could also see major gains with the adoption of new production and
planning technology. Total annual benefits for next generation precision
ag for specialty crops is estimated at $13.3 billion. With a possible increase
of $8.5 billion, market coordination efforts will likely get the biggest boost
from the adoption of digital technologies. Of the new opportunities in market
coordination, direct-to-consumer sales are estimated to post a potential annual
gross benefit of $6.4 billion, with $3.2 billion in potential attributable to
broadband. Specialty crop producers can shorten the supply chain by utilizing
digital platforms. USDA estimates a revenue increase of 50% per unit of apples,
649% per unit of salad mix and 183% per unit of blueberries. Figure 2
illustrates the breakdown of potential financial benefits from next generation
precision ag and the amount attributable to access to broadband services.
Livestock and Dairy - According to the USDA's estimates, the
livestock and dairy sectors are poised to benefit the most from next generation
precision ag, with annual potential gross benefits totaling $20.6 billion. The
majority of estimated benefits come from the production side and are focused on
increased efficiency of animal care. Utilizing Bluetooth technology, animal
wearables transmit general health data directly to the producer, resulting in a
15% reduction in medication per animal, as well as a shortening of the cattle
finishing process by four to six weeks. Technological advances in general
health monitoring alone are estimated to generate $8.8 billion in annual gross
benefits. Unsurprisingly, as poised as producers in the livestock and dairy
sectors are to reap enormous benefits from next generation precision ag, they
are also the most dependent on reliable high-speed broadband to enable new
technological advancements. Figure 3 outlines the potential benefits for
livestock and dairy compared to the potential attributable to broadband along
with the percent of technology dependent on broadband.
Strategies for Action - As
with electricity, the dawn of digital technology has brought an unimaginable
amount of change to every aspect of our lives. Precision agriculture has led to
7.5% fewer people at risk of going hungry in developing countries and an up to
80% reduction in the application of crop protection tools. However, while new
technology is able to inform and improve business decision making, without
widespread adoption of next generation precision agriculture tools and access
to broadband infrastructure, these benefits cannot be realized.
USDA has outlined key
priorities for strategic action planning involving improved broadband
deployment, incentivizing innovative technologies and creating environments for
innovation, strategic funding and communication. To bring broadband services to
even the most remote areas, public and private entities must work closely with
communities to determine specific needs and challenges. Reducing barriers in
federal processes to access government assets is one of the cornerstones of the
American Broadband Initiative and continues to be a focus at the federal level.
The task of actualizing broadband infrastructure relies on funding for
deployment as well as for new innovations that can lead to long-term successes
for the entire sector.
Summary - USDA’s report puts
the hypothesized potential benefits that broadband technology and
infrastructure could bring to rural areas at $64.5 billion
annually. Increasing the availability of broadband to all of rural
America, coupled with increased precision agriculture adoption are estimated to
increase the gross economic benefits to row crop agriculture by 4%, adding up
to $5.9 billion, increasing 19% for specialty crops, or up to $8.6 billion, and
7%, or up to $23 billion, for livestock.
One limitation of the
report is it does not incorporate the implementation costs, which will
inevitably be incurred by rural residents, service providers and/or state and
federal governments. As such, this report should be seen as a tool to
illustrate the potential of broadband technology, rather than the only source
for future investment-related decision-making.
USDA leaves us with
this call to action - spread the word. For the full economic benefits of
high-speed broadband to be realized throughout rural areas, adoption rates of
precision agriculture tools and next generation technology must be much higher.
All potential benefits are estimations based on rigorous research; however,
producers must perform their own cost-benefit analysis to see where these
emerging technologies fit in their operations.
Norb Leahy, Dunwoody
GA Tea Party Leader
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