Over the last 50 years, many changes have been introduced to the agriculture industry as a result of new and improved technologies created through research and development (R&D) processes.
These advances have forever changed the face of agriculture and made the farming sector far more efficient than it has ever been. These improvements have come just in the nick of time to meet increasing needs.
The farming and agricultural sector is facing enormous challenges from increasing world population, skyrocketing costs of supplies, shortages in the workforce, and the demands of the green revolution.
Acknowledging these challenges, both public and private sectors alike invested nearly $2 billion into agricultural innovation last year alone, and R&D spends over the last five years have totaled nearly $7 billion.
This discussion will focus on how agricultural R&D has led to some remarkable technology improvements and how it is continuing to advance the effort to keep agriculture abreast with the global need for its services and products.
Technological advances of the past
The following are some of the most important agricultural innovations of the past 50 years, all of which have served to increase efficiency in the food and agricultural industries.
- rotary combine
- genetically-modified plants
- satellite technology
- mobile devices
- usage of Big Data
This essential piece of farm equipment was introduced in 1975, and it has rapidly become a mainstay on most modern farms. Using this twin-rotor system combine, crops can be cut and separated in a single pass over any given field.
Corn, for instance, can have the ears separated from the husks, the kernels can be separated from the ears, and the stalks can be chopped up, all in one highly productive pass. The rotary combine has significantly increased agricultural output and productivity over the last few decades.
The development of the rotary combine was an improvement on previously existing combine harvesters by reducing the number of moving parts, which led to better reliability and easier maintenance.
While domesticated plants and animals have been selectively bred for thousands of years, the advancements in genetics led to recombinant DNA technology in the 1970s. This technology for creating genetically modified organisms (GMOs) has increasingly been put to use in agriculture.
Genetically modified plants such as modified tomatoes were developed that were highly resistant to insects, viruses, and even some of the herbicides used to protect crops. Other crops such as golden rice have been developed with increased nutritional value.
With the increased usage of satellites starting in the 1990s, farmers were able to have a better overhead view of their acreage. This allowed for much better precision in water management, application of fertilizers, and enabling of autonomous tractors.
Increasingly through recent decades, mobile devices have allowed farmers to more easily access critical data that was needed to effectively carry out their daily routines.
It also gave them the ability to stay in constant contact with monitoring sensors and each other, so as to collect and provide mutually beneficial information while on the job. Farmers gained the ability to adapt on the fly to changing weather conditions and sensor reports to sustain progress.
Usage of Big Data
Very recently, farmers have leveraged the ability to use Big Data to support their critical decision-making, enabling them to make better choices resulting in better outcomes.
Analytical programs developed to collect comprehensive data concerning weather monitoring, agronomic modeling, pricing modeling, and other useful data can identify issues through predictive algorithms to alert farmers for their benefit.
Strategic use of this information helped farmers have better harvests and make decisions that benefited their operations, as well as global agricultural productivity and growth.
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Technological advances of the present
Some of the ways that technology has had a major impact on agriculture in the present day include the following.
- vertical farming
- smart farming
- livestock technology
- modern greenhouses
- precision agriculture
- blockchain technology
There are some considerable benefits associated with vertical farming, starting with the fact that vertical stacking of growing shelves takes up far less space during crop and food production.
As much as 70% less water is required to make vertical farming viable, and it is possible to control virtually all aspects of growth, including light, water, and humidity, so that natural resources are all used to the greatest advantage.
Otherwise known as automated farming, this approach automates many of the processes needed in the growing/packaging/transporting cycle so that the entire agricultural process is much more efficient and far less labor-intensive.
It makes use of seeding drones, automatic watering and harvesting, autonomous tractors, and other robotic replacements for traditional farmworkers.
A great deal of attention has been focused recently on improving processes for the livestock industry after it was largely ignored for decades.
Agricultural research and development has addressed better nutrition and genetics and improved digital technology so that tracking and managing livestock can be a far more data-driven process.
That in turn, has led to significant improvements in raising and feeding poultry, dairy cattle, beef cattle, and other livestock.
The big shift in this area has been to convert an industry that was primarily experimental in nature, to one which directly competes with the large-scale cultivation of plant-based farm products.
Advances in greenhouse technology have made it possible to boost this rapidly growing industry to one valued at over $350 billion globally.
Virtually every commercial farm in this country has undergone a transformation, one that has abandoned traditional farming procedures in favor of modern-day digitally-managed precision processes.
Today, every variable involved in crop production is managed to precise levels, including moisture amounts, control of pests and vermin, soil composition, growth rates, and even climate controls.
This kind of precision has enabled farmers to manage their costs more effectively while also raising efficiency and productivity to astonishing levels.
Blockchain is a special type of database that stores information into groups (referred to as blocks) that are then chained together. As new information is entered into the database, new blocks are formed, creating a chronological chain of events.
It is the unique decentralized nature of Blockchain that makes it so useful to the agriculture industry. This permits products and practices to be verified, and it allows for the creation of markets for transparent premium products.
Because Blockchain can track ownership records and provide resistance to tampering, a number of agricultural issues can be solved all in one fell swoop.
Food fraud is no longer an issue, safety recalls can be handled much better, inefficiencies in the food supply chain can be identified, and food traceability has become far easier.
While food traceability is extremely cumbersome using traditional communication methods, the shared data points in Blockchain architecture help to overcome this awkwardness and allow for far better visibility.
How you can save money on agricultural R&D expenses
There is always room for improvement, and the farming and agricultural sector is no exception. As the challenges that the industry is facing continue to grow, the development of new and improved processes to face those challenges needs to continue as well.
Research and development is not cheap. As we illustrated earlier, billions of dollars are spent each year on agricultural advances. However, it is possible for companies to save a significant amount of money on R&D activities by taking advantage of the R&D tax credit.
Every business is different, but the team of specialty tax professionals here at Tri-Merit has identified the following activities that typically qualify agricultural businesses for the R&D tax credit.
- development of new or improved agricultural products or processes
- development of new or improved irrigation or hydroponic systems
- development of new or improved nutrition, yield, and/or disease resistance in crops or livestock through genetic hybridization or other genetic modification
- development of new or improved harvesting, production, or processing systems and/or techniques
- development of new or improved automated processes
We have also found that the IRS typically does not deem the following activities as eligible for the R&D tax credit.
- making minor modifications to livestock diet or feed mixtures without a need for experimentation
- making mere adjustments to production capacity that do not create any uncertainty in how a project will unfold
- improving operations that relate to business considerations and have no technical component
If you believe that your company participates in activities that would qualify for the R&D tax credit, email us at firstname.lastname@example.org or give us a call at (800) 624-1076. We will ensure that your company receives the maximum possible tax saving on your R&D expenditures!
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R&D tax credit | Cost segregation | 179D | 45L | Employee Retention Credit