Precision Agriculture

The world is facing a food crisis. Not in some distant future, but today, as a growing global population and rising quality of life are demanding more and more production every year in order to feed all of humanity.

According to the United Nations, the global population is on track to increase from 7.3 billion in 2015 to nearly 10 billion by 2050, requiring that food production must double worldwide in that time to keep up with demand and combat hunger, which today impacts more than 1 billion people worldwide. This fact is the result of decades of insufficient investment in agriculture and food security, leaving millions at risk due to rising food prices, economic swings and climate change.

[Save the world while feeding the world: Investing in Organic Agriculture]

In order to achieve true food security in the world, it’s time to start investing in agricultural research, natural resources, local infrastructure and more, per Korea’s UN representative Park In-kook. “Food prices, already high and volatile, could spike again as droughts, floods and other climate-related events affected harvests, and States must develop responses for both the short-term and the medium-term. Agriculture had to adapt to changing weather patterns caused by climate change, and social protection and safety nets had to be strengthened to ensure adequate access to food for those in need.”

And it’s not just any food that’s needed to solve these problems, either. Rising incomes and quality of life worldwide also mean increased calls for proteins, sustainable foods, organics and other nutritious, high quality options.

For those interested in the investment potential of this rapidly-growing sector, there are a few important points to understand.

What Is Precision Agriculture?

At a high level, so-called precision agriculture is simply “the application of new technologies to agriculture. It involves using innovations such as Big Data, GPS and more to increase crop yields and profitability while lowering the levels of traditional inputs needed to grow crops (land, water, fertilizer, herbicides and insecticides).”

It’s all about using less and growing more.

[Climate change is one of the primary challenges of our time. Here’s how investors are supporting the technology that’s making a difference.]

According to Grand View Research: Precision farming, also known as site-specific crop management or satellite farming, is a farm management concept that uses information technology to ensure optimum health and productivity of crops. The precision farming technique largely depends on specialized equipment such as sensing devices, antennas and access points, and automation and control system. It also involves maintenance services and managed services. Additionally, it incorporates a broad range of technologies such as bio-engineering, robotics and automation, imagery and sensors, and big data.

For example, a farmer outfitted with a Big Data analytics platform and a tracking device on their tractor could precisely analyze both when to plant certain crops and how to lay out their fields for maximum production. The system could also manage the application of fertilizers for best effect and tell the farmer when to water and for how long. All of these tools would help increase the amount of food the farm is able to produce while simultaneously lowering the farmer’s costs associated with fertilizers (inputs), fuel and time spent managing their operation.

This type of data can also be used to monitor and optimize a farm for changing weather conditions, soil characteristics, pest problems and more, guiding the farmer’s day-to-day management decisions or taking them entirely off of their shoulders.

In addition to Big Data, as described above, some of the applications for precision agriculture currently under development include:

  • Robotics: Farming is traditionally a labor-intensive, time-consuming line of work. Farmers are famous for their long hours, starting early in the morning, and typically can’t even get away much during the year given all of their responsibilities, from planting to harvesting and much more. Plus, much of the labor force that the agriculture industry relies on is temporary, moving from job to job during the season. Changes to immigration laws, demands for higher pay and more have made hiring a challenge for farms of all types. That’s why robots have shown so much promise in the field. Imagine the convenience of a robot picker that can go out into the field at all hours, informed of the optimal picking time by local data, and manage the entire harvest by itself while the farmer and their crew sleeps. The same applies to specialty robots that can precisely apply fertilizers exactly where and when it’s needed or monitor and empty pest traps automatically.
  • Drones: The FAA is currently reviewing new rules that would enable agriculture operators to use drone to monitor and oversee their crops, delivering eye-in-the-sky functionality that doesn’t truly exist in the industry. For farmers, this means the potential to manage vast tracks of land, including both farms and ranches, without ever even having to drive out to the field. Instead, they could keep an eye on everything from the air conditioned comfort of their home or office. The same goes for fertilizer application and other real-world tasks. This would boost farm efficiency and help drive down costs by eliminating the need for costly, in person oversight work.

Why Invest in Precision Agriculture?

Simply put, the agriculture industry is well behind the times when it comes to the use of technology. Farming is a very traditional industry that has functioned well for generations, producing enough food to keep up with demand while also providing a living for the farmers themselves.

But the growing world population and emerging risks of climate change are changing the math behind agriculture. Efficiency and scale are needed now like never before.

Enter the power of technology to help make this happen.

And it has created a growing market of providers at the same time. According to Grand View Research, the market for precision agriculture companies is expected to reach $10.23 billion by 2025, racking up a compound annual growth rate of more than 14% in that time.

Major factors driving this growth includes farm mechanization, rising labor costs, population, smart farming techniques, and government initiatives to adopt modern agricultural techniques.

Per Market and Markets: Precision farming is gaining tremendous popularity among farmers due to the increasing need for optimum crop production with limited available resources. Further, the changing weather patterns due to increasing global warming have impelled the adoption of advanced farming technologies to enhance farm productivity and crop yield. Precision farming has the potential to transform the agricultural sector, making traditional farming activity more efficient and predictable. Increasing global food demand, extended profitability and crop yield, and crop health monitoring for higher yield production are the major factors fueling the growth of the precision farming market. Also, government initiatives in many countries are helping farmers to use optimized agricultural and technological tools to improve their production levels.

How to Invest in Precision Agriculture

Of course, as an emerging and fast-growing sector, investing directly in precision agriculture companies can be risky and many are still private. A search on Magnifi suggests that there are a number of different ways for investors to get involved in precision agriculture without opening up their portfolios to undo concentrated risk in this new and growing industry.

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The information and data are as of the December 18, 2019 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.

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