The Financial Viability of RFID (Radio Frequency Identification) Technology: A case of Sheep Feedlots

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Abstract Agriculture has been confronted with a wide range of challenges and sustainable solutions are required to fulfill the growing demands. Precision Agriculture Technology, such as Radio Frequency Identification (RFID) is paving the way for agricultural producers to fulfill demands by allowing more precise input management. This study aimed to evaluate the financial viability of implementing RFID technology in a South African sheep feedlot. The data used in the study consist of a sample size of 508 sheep that was collected at a sheep feedlot situated in the Western Cape Province of South Africa who has incorporated an RFID system in their operation. The four techniques applied in this study to evaluate investment into such a system were the return on investment, simple payback period, internal rate of return and the net present value. Results show that it will not be worthwhile for sheep feedlots to invest in RFID systems if their only purpose is to identify non-performing lambs after a 14 day feeding period. If RFID data is made part of a feedlot strategic management the investment will be viable. This will allow for more strategic decisions to be made and ensure that feedlots can operate profitably and sustainably.

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