What is precision farming?
Food is perhaps the best known consumable product, and the economic laws of supply and demand are pointing to an emerging pain point unlike any we have seen in recent history. To combat this looming problem, the agriculture industry is embracing technology, much of which is similar to that housed inside the smartphones we use today, giving rise to the precision agriculture market.
The current average life expectancy in the U.S. stands at 78.8 years according to a National Center for Health Statistics, which was on par with the 78.6 years in Europe reported as of 2019. By comparison, historical data from the United Nations reveals life expectancy in 1950 was 65 years in more developed regions of the world and 42 in less developed ones. The increase is driven by several factors, including a healthier lifestyle, which in and of itself has been found to add up 6.3 years for males and 7.6 years for women, according to findings from the UK Biobank. According to the U.S. Census Bureau, by 2060, average life expectancy for the US population is projected to increase to 85.6 in 2060.
At the same time, the United Nation’s Population Division expects the global population to hit 10.9 billion by the end of the current century compared to 7.8 billion in 2020. Rising disposable incomes among the growing population is fostering greater demand for complex proteins. More people living longer poses a challenge to the nutritious diet aspect of that healthier lifestyle given that arable land per person is shrinking.
According to the FAO, arable land per person stood at 0.23 hectares (ha), down from 0.38 ha in 1970 and is expected to fall to 0.15 ha per person by 2050. We at Tematica describe that situation as a pain point, and pain points tend to give rise to solutions. In this case it means we need to make better use of our existing farmlands and that has prompted farmers to adopt technology to boost yields while helping to manage costs. This wave of technology-meets-farming has given rise to the precision agriculture market, which is expected to reach $12.9 billion by 2027, according to Grand View Research up from $9.65 billion in 2019.
What is Precision Agriculture?
According to the International Society of Precision Agriculture,
“Precision agriculture is a management strategy that gathers, processes and analyzes temporal, spatial and individual 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.”
In other words, it is about using high-tech tools to generate greater yield with less resources while minimizing any potential harm. Just how important is this? The World Economic Forum estimates that if just 15% to 25% or farms were to adopt precision agriculture techniques, global crop yield could increase by 10% to 15% by 2030 while at the same time reducing greenhouse gas emissions and water use by 10% and 20% respectively.
That sounds great, but do we really need to do this?
Soil today is eroding up to 100 times more quickly than it forms and some research indicates that we may have already lost more than one-third of the planet’s arable land.
Even more concerning, if the current rates of soil degradation continues, the remaining arable land could become unfarmable in the next 60 years.
How does precision agriculture help?
The market that would become precision agriculture started in the 1990s with the adoption of GPS that allowed farmers to gather data and steer equipment automatically. While it may seem somewhat pedestrian in today’s connected world, GPS tractor guidance helped farmers to improve crop production by reducing overlaps and gaps when planting, fertilizing, and protecting crops. Over the last two decades’ technological developments including telematics, robotics, automated hardware, agriculture drones, and variable rate technology have expanded precision agriculture to include equipment guidance and automatic steering, yield monitoring, variable rate input application, remote sensing, in-field electronic sensors, section and row control on planters, sprayers and fertilizer applicators, and spatial data management systems. Much like we have seen technology enable a host of new applications such as video conferencing and streaming video that has altered how we work and play, technology has expanded the capabilities of precision agriculture as well:
- Choosing suitable crops with higher yields and more lucrative markets
- Measure the performance of the site by automatically capturing relevant data
- Increasing the farm’s economic and environmental sustainability
- Predicting climate changes and reacting to them proactively
Existing as well as up and coming precision agriculture players to watch
Companies participating in the precision agriculture market include agriculture equipment companies such as John Deere (DE) and AGCO (AGCO). There are also the technology enablers that include applied technology businesses like Raven Industries (RAVN).
As a confluence of factors have raised concerns over the long-term future availability of food, venture investors have been pouring capital into agtech startups. In 2019 alone, they invested $2.8 billion into the space across the globe, a fourfold increase over 2015.
According to the 2019 AgriFood Tech Investment Review, investment in digital technologies (which combines the independent sectors of imagery, precision agriculture and sensors and farm equipment) made up about 41% of 2019 deal activity. Some examples of these investments are Farmobile and its DataEngine that ingests and standardizes farming data so that it can be shared and used to create insights; Trace Genomics that provides soil DNA sequencing services to farmers and agronomists; and CiBo Technologies that allows farmers to create “virtual fields” with real-world inputs.
With greater adoption of artificial intelligence, big data, and the internet of things in the coming years we strongly suspect there will be new applications and further advances for precision farming, much like we’ve witnessed with the smartphone and the automobile of today compared to ten years ago.
This Featured Article has been produced by Tematica Research LLC. Rize ETF Ltd make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability or suitability of the information contained in this article.
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