New UK incentives almost halve the payback period on more environmentally friendly, high-tech sprayers, in a promising example of how the country’s imminent, farm subsidy overhaul will boost green technologies, New Food Finance analysis shows.

On the down side, however, our Chart of the Week above shows that payback periods are still excessive for smaller farm sizes, at 20 months, subsidised, for a 1,000 ha holding, while most systems do not yet apply to a typical UK crop rotation.

Britain is in the midst of a farm subsidy overhaul, after its exit from the European Union, replacing area payments with incentives for environmental actions, now taking shape.

We take the example of payments for precision ag equipment, and drill into payments for use of automated herbicide sprayers.

The UK will pay £43 per hectare for sprayers that recognise weeds within growing crops, and automatically switch on or off individual spray nozzles, to target these, in real time.

Such sprayers can deliver an ongoing cost saving and environmental benefit, as a result of lower herbicide use. The exact saving is hard to estimate, given it depends on factors such as a farmer’s individual propensity to spray, as well as the crop rotation, weed pressure, and size of farm.

Economic analysis is also complicated by –

• The diversity of pricing approaches, from a per acre or per day fee, to a one-off capital cost

• The diversity of systems, from retrofits to integrated sprayers

• The range of technologies, from recognising weeds on bare soil (green on brown) to a more advanced green on green differentiation within the crop

• The limitation of “approved crops”, with some producers limiting their systems to corn, soy and cotton (a typical UK arable rotation is wheat, barley and rape)

• The immaturity of the industry, only just hitting commercial scale, making list prices hard to find

We make some simplified estimates, within the publicly available data, to assume a one-off cost premium of $200k, and a 50% herbicide saving, equivalent to £50 ($65) per hectare per year.

Our chart of the week shows that the UK incentive is effective, almost halving payback periods, but these are still prohibitively high for most farm sizes.

Companies presently developing these systems include:

• Blue River Technology – Acquired by John Deere for $305m

• Carbon Bee – private company

• Exxact Robotics – subsidiary of Exel Industries

• Greeneye Technology – $66m fund-raising to date

• Niqo Robotics – $23m fund-raising to date

• One Smart Spray – JV between Bosch and BASF