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Agricultural Insurance

Precision Agriculture: Understanding and Insuring

Casey Roberts | March 7, 2024

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A drone hovers above farm crops

Dismissing the concept, the need, and the subsequent application of more technology in the world of farms and agriculture is simply mistaken and short-sighted. Let's take a brief look at the development of precision agriculture (PA), how it has grown to date, any particular concerns that may need to be addressed from the insurance side of things, and a bit more.

PA Defined

Here are a few definitions of PA.

  • PA is the science of improving crop yields and assisting management decisions using high technology sensor and analysis tools. (For a good reference source, try
  • PA is a management strategy that gathers, processes, and analyzes temporal, spatial, and individual plant and animal data and combines it with other information to support management decisions according to estimated variability for improved resource-use efficiency, productivity, quality, profitability, and sustainability of agricultural production, according to the International Society of Precision Agriculture.
  • PA, also known as site-specific farming, is a way of managing farms to ensure profitability, efficiency, and sustainability while reducing environmental impact. PA incorporates various technologies, making farming practices more accurate for growing crops and raising livestock, according to the US Department of Agriculture (USDA), Agricultural Research Service.

One will note that, regardless of the source of the definition, the following items are consistently considered in each.

  • It is a collection of data.
  • It utilizes multiple tools.
  • It requires analysis of said data.
  • It is all about improving crops, livestock, and related areas of farming and agricultural production—down to the most miniscule measurement.

The History of PA

According to multiple sources, we can trace the "beginning" of PA to both the US Air Force and John Deere. While they may be viewed by some as pioneers in this area, they were not the sole drivers in the practice of PA.

The Rockwell International group developed one of the first PA applications using a global positioning system (GPS). 1 However, they couldn't have done so without the development by the military of reliable GPS.

GPS first became fully operational in April 1995. 2 It actually can be traced back to efforts by the US Navy and its usage of longitude and latitude in tracking their positions. However, the system did not use three dimensional measurements as GPS does. While the Navy was using what it had developed, the Air Force and Army also had satellite navigation projects underway. These individual efforts were eventually merged into one group effort that would track in three dimensions: longitude, latitude, and altitude. Thus, GPS was developed.

It was at this same time that Rockwell was using its knowledge of military satellites to develop its Vision System, also introduced in 1995. This system created field maps. Rockwell then connected computers to a combine and recorded the volume of the crop harvested and paired that data with locations harvested. That information allowed a farmer to know which plots of land were more productive than others. The rest, as is often said, is history.

John Deere then developed technology by teaming with Stanford University engineers to develop an autonomous tractor controlled by GPS to avoid overlap in field functions. During that time, John Deere was also working on Autotrac, an autonomous tractor. According to John Deere, self-guided systems now farm approximately 60–70 percent of the crop acreage in North America.

Perhaps a map as provided by the US Government Accountability Office (GAO) will assist in an overview.

Use of PA Practices by US Farms, June 2022–June 2023

Source: US GAO summary of data reported in 2023 by the USDA; Map Resources (map) GAO-24-105962.

It is important to note that, according to USDA information available in 2023, only 27 percent of US farms and ranches use PA practices for their livestock or crop management. Simply stated, the smaller the farm operation, then the less likely the operation will utilize PA. It is really a need and function of larger farm operations.

While farm size continues to grow in the United States (the average-sized farm in the United States as of 2022 was 446 acres as opposed to 440 acres in the early 1970s), the number of farms continues to shrink (from some 2,082,440 in 2014 to 2,012,000 in 2021). In some areas and depending on the crop in question, the break-even line for PA seems to be near the 900-acre mark.

How Does PA Work?

If a farm is viewed as a "food factory," then PA is about breaking down each area of that food factory to manage it on a smaller scale but subject to the pricing and production leverage given to a larger farming operation. It allows farmers to break their farms into grids or sections (as small or as large as the farmer may desire) and then to manage each to its highest benefit and production.

In a world where population continues to grow and where farmland is expected to continue to be less and less available, PA is a needed solution for better and more effective farm production.

Pros and Cons of PA

Many of the pros may seem fairly obvious, even to those who may have limited experience in farms and farming practices.

  • An increase in farm profits. By allowing for better management of the farm operator's time, farmers will be able to do more work in the same amount of time available to them. This can lead to an increase in yields from the same amount of acreage and an increase in profit margins.
  • A reduction in inputs. Much of a farm's profits is directly related to how much their input costs are. Inputs include fuel, fertilizer, herbicides, pesticides, seeds, water, and more. By better managing each of these, there is less waste, and less waste leads to greater profits. With some farms having acreage measured in miles, an accurate and precise usage of these inputs over vast areas of land can positively impact a farmer's operation.
  • Benefits to the environment. By minimizing overlap in applications of inputs, the farmer can reduce their carbon footprint as well as the amount of ancillary products that go into the soil. Precise applications minimize the use of unneeded products and the overuse of various inputs.
  • Reduced labor. It's no surprise that farming over the last few years especially has been exceedingly challenged by a lack of solid, reliable labor. For whatever those reasons—and there are many—by using PA in its various applications, the farmer can do more with less. This means with less labor, specifically.

Well, what about the cons?

  • High up-front acquisition costs. Farm machinery costs are not for the faint of heart. Add in additional technologies, and the costs further rise. On the other hand, because there is a substantial increase in the development and production of such machinery, costs will over the long-term be expected to further be reduced due to greater competition and a rush to be "the first and best" of the ag machinery providers.
  • Farm data management and ownership of such. Who owns all of the data that is collected and then used by the farmer? This has been an area of concern for a number of years, but recent developments have begun to minimize some of this concern. Just think—because the data is valuable to both the farmer and the company that allows for its collection—there can be often competing interests as to the ownership of such information. This is an area of ongoing interest to most farmers as well as to the American Farm Bureau Federation, which has been working for a number of years to protect the ownership of data by the farmer.
  • Lack of compatible standards. Will one of the farmer's technologies be compatible with another technology from a different provider? As there is a lack of uniform standards, this could further hamper the ability of machines to communicate and be interoperable. ISOBUS is a protocol to solve this issue and is a communication standard intended to achieve communication between tractors, implements, computers and software, and related devices—even from different manufacturers.

Each of these areas of concern are addressed in more detail in a January 31, 2024, article published by the US GAO titled "Precision Agriculture: Benefits and Challenges for Technology Adoption and Use."

What Does PA Entail?

Let's review a number of these technologies.

  • GPS guidance and autosteer. This is perhaps the best known of PA applications. By relying on communication between the satellite systems and the farmers equipment, the operators can sit in the cabs of their tractors and have precise operation of their equipment, down to the inch. Benefits of this technology include less driver fatigue, improved production and time, and reduced operating costs.
  • Sprayer section controls. The overarching goal of this technology is to reduce the overapplication of various inputs by turning off and on the boom sections of the farmers' sprayers as they travel over previously sprayed ground or crops.
  • Row control on planters and seeders. This essentially acts in a similar manner to sprayer section control but for the application of planting. As seed costs are an integral part of the profit margin, seeding only where needed and not overseeding can be a significant cost saver.
  • Yield monitoring. This is used at harvest to assist in the gathering of data that can later be tied down to each section of the farmer's operation. It essentially will measure the "end result" of the farmer's efforts and will be coordinated back to each area of the farm to see how the past year's inputs match up to prior years and their yields.
  • Remote and in-field sensing. The farm may use "in-field" sensors to make various measurements during the year. Remote sensing is basically the same but is not using "field-based" sensors. These sensors, regardless of the type referred to, may measure items such as field moisture, temperature, soil oxygen, frost temperatures, and the like.
  • Robotics. With a lack of labor being of significant concern to many farming operations as well as an increase in field labor costs, the growth of robotics for many farm functions is growing. Among the uses we are already seeing are robotic weeders, planters, harvesters, soil analysis, and environmental monitoring.
  • Drones. While just coming into their own in the agriculture world, drone usage and the benefits derived from such will only become more important. By having control of the time and length of observation of one's fields or livestock (rather than relying on another's control of the overhead satellite)—the farmer in "real time" will be able to view their farm operation today, review the data tomorrow, and then take immediate action when and where needed—with precise data as provided by their drones or by a drone service.

Insuring PA

Property Insurance

From a property insurance perspective, most farms rely on specific farm property coverage forms. When it comes to farm personal property, the main form used is promulgated by the Insurance Services Office, Inc. (ISO), Farm Property—Farm Personal Property Coverage Form (FP 00 13 04 16).

This form allows the insured to choose between a "scheduled" (Coverage E) approach or an "unscheduled" (Coverage F) (blanket) approach to insuring equipment. While there are benefits to each, most farmers will often take a scheduled approach, as that then allows them to actually see—from an insurance perspective—which items are insured and which are not because they have a list of those items shown on their declarations pages.

When scheduling, it is what you would expect—a list of items described with a value attached to each. This value is essentially a determinant in the costs to insure the specific item as any future loss settlement will be on an actual cash value (ACV) basis as of the value of the item at the time of loss.

The coverage form allows the insured to take care of owned equipment, leased equipment, and equipment that may be rented or borrowed. Of course, a detailed list of items to be insured is a prerequisite for proper insurance. There is also the opportunity to insure smaller items of lesser value or miscellaneous equipment (say less than $3,000 per item) on a blanket basis.

If the farmer chooses an unscheduled approach, there are a few key items to remember.

  • An 80 percent coinsurance will apply and cannot be waived or suspended.
  • There is a lengthy list of "property not covered" addressed in the form that any responsible insurance agent would want to review with their insured.
  • Specifically speaking, irrigation equipment, harvester/thresher combines, and cotton pickers are not eligible for this blanket approach.

Regardless of which insurance approach is taken, it is important to remember that unless otherwise endorsed, any loss will be adjusted on an ACV basis. Finally, one should not solely rely on their understanding of the FP 00 13, as it is used in conjunction with at least two other applicable property insurance forms, both of which will impact coverage: Causes of Loss Form—Farm Property (FP 10 60 04 16) and the Farm Property—Other Farm Provisions Form—Additional Coverages, Conditions, Definitions (FP 00 90 04 16). All three of these forms will need to be reviewed collaboratively for a full understanding of how coverage may or may not apply.

A third option does exist, and that is the Mobile Agricultural Machinery and Equipment Coverage Form (FP 00 30 04 16). This is a fully self-contained form with its own causes of loss. Coverage can be provided on either a blanket or specific basis. When it comes to "property not covered," the list is brief and excludes the following types of items.

  • Aircraft, watercraft, automobiles, motorcycles, snowmobiles, all-terrain vehicles (ATVs), vehicles primarily designed and licensed for road use (except for wagons and trailers designed for farming purposes), and the like.
  • Bulk milk tanks, bulk feed tanks, and bulk bins (as well as a bit more)—these can be insured as part of coverage under the Farm Property—Barns, Outbuildings and Other Farm Structures Coverage Form (FP 00 14 04 16).
  • Cotton pickers, harvester/thresher combines, or ATVs that are not specifically described and declared.
  • Irrigation equipment
  • Contraband, etc.

One advantage in using this coverage form is the availability of the Replacement Cost—Mobile Agricultural Machinery and Equipment (FP 05 21 04 16) endorsement. This endorsement does require 80 percent coinsurance. As long as that requirement is met, then the loss would be paid based on the lesser of the following.

  • The amount actually and necessarily spent to repair or replace that item
  • The limit of insurance shown in the declarations for that item

Failure to meet the 80 percent coinsurance requirement would result in either an ACV loss settlement or a proportional adjustment of the loss.

Regardless of the property coverage form used, unless a "drone" meets the "model or hobby aircraft" exception as shown in the Farm Property—Farm Dwellings, Appurtenant Structures and Household Personal Property Coverage Form (FP 00 12 04 16) (which, if it is being used by the farmers for their farm operation, it will not), then no property coverage would apply.

Liability Insurance

For liability purposes, we'll focus on the Farm Liability Coverage Form (FL 00 20 04 16). This is the primary form used for insuring the liability exposures of most farm operations. Some may choose to utilize a commercial general liability (CGL) coverage form, but for our purposes, the information discussed here would for the most part be applicable if the farmers were using the CGL to insure the farm operation too.

Of primary concern is if the insured's operations meet the definition of "farming" as found in the FL 00 20 04 16 form? Here is that definition:

8. "Farming":

  • a. Means the operation of an agricultural or aquacultural enterprise, and includes the operation of roadside stands, on your farm premises, maintained solely for the sale of farm products produced principally by you. Unless specifically indicated in the Declarations, "farming" does not include:
    • (1) Retail activity other than that described above; or
    • (2) Mechanized processing operations;
  • b. However, "farming" does not include the operation of:
    • (1) Any "agritainment" on your farm premises; or
    • (2) Any retail activity or any mechanized processing operations performed, in whole or in part, for "agritainment."

Insurance Services Office, Inc., Farm Liability Coverage Form (FL 00 20 04 16), © 2015

If the insured's operation meets this definition (and subject to all of the other applicable considerations such as exclusions, conditions, and the like), then coverage should be available for the insured's "farming" operations.

Of course, we should not be surprised to find exclusions that apply to the following.

  • Release or discharge from aircraft (exclusion 2.d.)
  • Aircraft, motor vehicle, motorized bicycle, or tricycle (exclusion 2.e.)

As to the use of the farmer's tractors and other farm-related equipment—autonomous or not and including robotics—there should not be a liability coverage issue. After all, those items are just "farm machinery and equipment" and, as such, will meet the definition of "mobile equipment." The pertinent part of the "mobile equipment" definition that is concerning is:

16. "Mobile equipment" means the following, including any attached machinery or equipment:

  • a. Bulldozers, forklifts and tractors designed for use principally off public roads;
  • Other farm machinery designed for use:
    • (1) Principally off public roads; and
    • (2) As implements for cultivating or harvesting;
  • b. Vehicles while on premises you own or rent;
  • c.Vehicles that travel on crawler treads, except that snowmobiles are "mobile equipment" only while on an "insured location" or any premises you own or rent….

Insurance Services Office, Inc., Farm Liability Coverage Form (FL 00 20 04 16), © 2015

Do not forget that if the insured is hiring a third party to provide "crop dusting" operations (be it from an airplane, helicopter, or drone), then the Coverage for Physical Injury to Crops and Animals Due to Certain Crop Dusting Operations Performed by Licensed Independent Contractor by Aircraft (Limited Crop Dusting Coverage) (FL 04 44 04 16) endorsement is needed.


PA can be an all-encompassing term for multiple approaches to operating a farm or agricultural enterprise. It is about increasing crop yields with no increase in the amount of land available to be farmed. Regardless, the end goal is the same: better management equals better results.

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1 Allison Marsh, "John Deere and the Birth of Precision Agriculture," IEEE Spectrum , February 28, 2018.
2 Berry Baker, "A Position in History: 25 Years of GPS," Airforce Technology, July 21, 2020.