Artificial intelligence is transforming agriculture, including crop production, livestock management, and marketing.
By combining machine learning, robotics, and predictive analytics, farmers can increase crop yields, reduce costs, and realize economic benefits while protecting the environment.
AI in crop production
Please also read
Agricultural machinery sales are strongly tied to U.S. policy
A clearer vision for the future of U.S. tariffs and the possibility of a new CUSMA agreement may provide some market predictability for Canadian agricultural producers.
Farmers with irrigated fields and diverse crop production can use AI-powered precision agriculture tools to monitor soil health, crop growth, and water usage in real-time.
By analyzing satellite imagery, sensor data, and weather forecasts, AI systems can recommend the exact amount of water, fertilizer, or pesticide needed for each field.
This has the potential to reduce waste and reduce resource consumption while increasing yields.
Autonomous machines equipped with sensors can detect crop diseases early and apply treatments precisely, saving time and ensuring higher quality production.
It can also enhance water allocation optimization by integrating weather forecasts and soil moisture data, and AI can help farmers conserve water while maintaining productivity, a key benefit in drought-prone regions.
AI in livestock operations
AI will also revolutionize livestock management.
Farmers can now also use handheld devices and machine learning models to predict sheep pregnancies, monitor cow health, and predict feed requirements.
These innovations reduce veterinary care costs and improve animal welfare.
AI in the market
Beyond the farm, AI is being used to predict market demand and optimize supply chains. This is done by analyzing consumer trends and global trade data.
AI helps farmers decide which crops to plant and when to sell, maximizing profitability. This is particularly important in export-driven agricultural economies.
Are there any tax benefits?
The cost of implementing AI systems into agricultural operations may also have tax benefits.
AI does not have a single cost of capital allowance (CCA) class or tax reporting method. Rather, it spans many areas to consider and discuss with your tax professional.
Purchased software that uses AI or in-house built or customized AI models, such as off-the-shelf AI software, AI plug-ins, or modules added to existing software used in agricultural businesses, falls into either Class 12, which is depreciated at 100 percent, or Class 55, which is depreciated at 55 percent.
Hardware (servers, GPUs, technology infrastructure) can be either Class 50 depreciable at 50 percent or Class 10 depreciable at 30 percent.
Fees for cloud computing, AI usage, and training are typically 100 percent deductible as recurring expenses.
It can be difficult to qualify, but depending on what you’re doing with AI, you may have access to scientific research and experimental development programs.
As AI is increasingly used in our daily lives, the implementation of AI in agriculture is more than just a technology upgrade. It’s a strategic investment.
AI helps farmers stay competitive in the marketplace by reducing costs, increasing yields, and increasing sustainability. As climate and labor challenges intensify, the economic benefits of AI will become even more important for long-term resilience.
Colin Miller is a certified public accountant and a partner in KPMG’s tax practice in Lethbridge. Contact: colinmiller@kpmg.ca. We would like to thank Yvonne Leineke and Shalyn Witdouck of KPMG for their assistance with this article.
