U.S. farm policy that holds farmers financially accountable, coupled with expensive emerging technology, are forcing Craig Hill and other farmers to change how they manage their risks.

The president of the Iowa Farm Bureau Federation, who last week was harvesting corn and soybeans on his 1,750-acre farm in Warren County, Iowa, said more sophisticated agriculture risk management is now imperative to remain competitive. And farmers have to be able to use data-driven analysis of their farm production to improve their profitability.

“Whether it is raising livestock or grain production, there's just an immense amount of risk,” Mr. Hill said, speaking by phone last week at his farm during a break from the harvest. “You can throw millions of dollars out in the field on the hope and a prayer that there will be something there later on in the year.”

The 2014 Farm Bill has eliminated direct payments to producers, which previously were paid regardless of whether farmers had a loss, and now links subsidized crop insurance more tightly with federal safety net programs.

As part of that legislation, the U.S. Department of Agriculture in late September released Web-based tools to help farmers decide between a yield-based or price-based safety net program.

Doug Yoder, senior director of affiliate and risk management at the Illinois Farm Bureau in Champaign, Illinois, said the new farm bill puts a premium on risk management. While the direct payments of the previous farm bill were unrelated to private crop insurance, the new safety net programs “are very much like crop insurance,” he said.

“This farm bill is like none other before because it requires you to integrate your safety net choices with your crop insurance,” Mr. Yoder said. “There's no way to use the safety net tools without also incorporating your crop insurance selection.”

Keith Coble, Tuscaloosa, Alabama-based Giles distinguished professor of agricultural economics at Mississippi State University, said agricultural risk managers have become more comfortable using upgraded weather and soil data to aid decision-making in their farm operations.

“Producers have to become sophisticated risk managers and understand risk at a fundamental level,” Mr. Coble said. “As I continue to interact with the producers, the sophistication of the managers is just skyrocketing.”

Rick Shanks, Kansas City, Missouri-based national managing director of Aon Risk Solutions' food system, agribusiness and beverage practice, said larger farms can afford better technology.

“There has been such a consolidation in the farm industry, so the people that have large operations tend to be the most sophisticated risk managers,” Mr. Shanks said.

Mr. Hill said farmers can tap higher-resolution images from satellites, airplanes and even drones, enabling more precise remediation, such as using more fertilizer only on certain sections of a field.

“You can now identify shortcomings whether from improper drainage or problems due to drought,” he said. “Imagery goes a long way to identifying stressors to the crop and to more precisely deliver whatever intervention is necessary.”

Crop insurers also are using higher-quality imagery to fine-tune their models, said Andreas Rohm, Chicago-based senior underwriter of agricultural risks with Munich Re America. “Granular satellite data is becoming increasingly important for yield modeling purposes, since the models can be better calibrated,” he said.

Crop insurer The Climate Corp., formed in 2006 by two former Google Inc. employees and acquired earlier this year by agribusiness giant Monsanto Co., crunches terabytes of weather, soil and crop data daily to help the agriculture industry — which generated gross U.S. farm output of more than $374 billion in 2011 — mitigate risk. The farm output data is the latest available from the U.S. agriculture department.

“Over the last 10 years, the amount of data that farmers have been getting off their fields has grown exponentially, but the problem has been drawing insight from it,” said Cameron Norgate, San Francisco-based director of product management at Climate Corp. “Our intent is not to tell a farmer how to do his job, but to supplement the knowledge that they have with data-driven analysis and recommendations.”

Sophisticated tracking devices installed on farm equipment also have increased the precision of data collected, Mr. Norgate said.

“We're pretty much down to the square meter when it comes to tracking what's going on in the field,” he said.

Michael Langemeier, Lafayette, Indiana-based associate director of the Center for Commercial Agriculture at Purdue University, said new technology also will make farmers better able to manage environmental damage due to field runoff.

“The new precision technology is really going to help farmers with environmental risk,” Mr. Langemeier said. “We can now do a much better job of utilizing fertilizer in the field and managing parts of fields that are close to water.”

This precision agriculture is a long way from the techniques his grandfather use to work the family farm.

“My grandfather knew every square foot of his farm because he went over it with a horse or a 30-horsepower tractor,” Mr. Hill said. “We can do that now with technology, whether it's a soil survey or a fertility map. So what we once knew intuitively is now well documented, and you are using data to make decisions.”