Connectivity is set to disrupt the agricultural industry. We that the total addressable market for Smart Agriculture is expected to grow from US$13.7 billion in 2015 to US$26.8 billion by 2020 ─ a CAGR of 14.3 percent. The tech is there to improve efficiency, environmental impact, crop quality and yield, and profitability almost instantly. As sensors become smaller and cheaper, and as farmers realize the benefits of wirelessly connected crop management systems, smart farming will very quickly become the norm.
Telcos and enterprises have significant roles to play in connecting the technological dots, and in making smart agriculture accessible and attractive to any and all farmers, regardless of scale.
Our Cupboards Are Bare
The world is struggling to feed itself. With the global population expected to exceed 8.5 billion people by 2030, providing food for everyone is driving the environment to the breaking point. Alongside land and resource use, the agricultural industry accounts for nearly 70% of human race’s fresh water consumption. With water scarcity affecting 2.7 billion people for at least one month out of the year, and climate change slashing crop production in some areas by over 20%, modern farming needs to do more with less.
But innovation faces a number of historical hurdles. A major one is that global agriculture is mostly comprised of small family-run farms that lack access to capital and know-how. Even if farmers have some tech in place already, they may lack access to the infrastructure and best practices to analyze their data.
But things are changing. More farmers are using mobile devices, both in emerging and developing markets. Doing so gives them the capability to improve trade and engage in industry initiatives. Advanced companies are adopting IoT in combination with low-cost cloud applications, low-power wide-area (LPWA) networks, sensor technologies, and data analytics platforms. These systems can impact everything from back-end processes, such as purchasing or inventory control, to field activities like planting, irrigation, fertilizing and harvesting.
By 2025, the transformation of agriculture will be in high gear, perhaps as important a development to the global food supply as the invention of the tractor or combine harvester. Just as these machines enabled farmers to achieve much more at less cost, far more quickly, so will Smart Agriculture enable farmers to grow and manage crops with less or without human effort, while using a continuous feed of intelligence and insight to drive up efficiency, resource utilization, and crop yields.
Precision farming will use data derived from images and sensors to track crops, soil, and the air in real time so farmers can observe and respond to changes at specific locations, also in real time.
Variable rate input technologies will add accuracy to planting, and fertilizer and pesticide use, so that farmers only use what’s needed where it’s needed, saving both costs and labor.
Smart irrigation systems will minimize water waste and ensure its delivery to the right places at the right times.
Soil monitoring systems will track the overall quality and chemical composition of the land, so farmers can improve fertility for specific crops and deal with local issues like toxicity, salination, and acidification as they occur.
Yield monitoring will provide real-time geo-referenced data about crops as they’re harvested, including quantity, quality, and moisture content.
Drones will monitor farms from the air, with data from cameras and sensors feeding into the other farming systems.
Smart greenhouses will manage growing conditions, with automated climate control and irrigation systems optimizing growing conditions and minimizing human intervention.
Precision livestock farming will manage and improve livestock health.
Farm management systems will combine all this field data with insights from wider sources such as farm machinery telematics, weather observatories, and global trading markets. Data analysis, risk assessment, and financial analysis tools will help farmers minimize waste and maximize output on an end-to-end basis.
Smart Agriculture will slash OPEX by requiring fewer seeds and workers, as well as less fertilizer, pesticide, and fuel and maintenance for machinery. Farmers will produce more food with the same resources through targeted sowing and an improved understanding of the local environment. With better quality produce and a better knowledge of global trading markets, they’ll also be able to command better prices, especially in the less advanced markets, where impoverished farmers are often at the mercy of middlemen.
In turn, society will benefit because there’ll be more food to go around, agriculture will be easier on the environment and resources, and food is likely to be cheaper.
How Telcos Can Make Money
However, individual farms rarely have their own private connectivity networks, as they’re generally too small, lack skilled personnel, and have few established relationships with providers. But to benefit from IoT, they’ll need continuous communications coverage, often over remote and very wide areas.
The value chain for Smart Agriculture is also complex. It includes device and farming equipment manufacturers; sensor makers; connectivity providers offering communications based on LPWA, satellite, and mobile networks; IoT connectivity platform providers; application providers; vendors of data analytics solutions; and systems integrators.
Telecoms are ideally placed to help farmers deal with this complexity by providing the scale needed for the industry to exploit the available opportunities; the expertise for individual farmers to make most of that opportunity; and the market clout to create an ecosystem of partners delivering industry-standard, end-to-end service packages and solutions that are easy for farmers to use.
Telcos are poised to generate nearly US$13 billion in annual revenues by 2020 from the Smart Agriculture value chain. By delivering E2E solutions and applications through the cloud via partners, telcos can generate revenues from increased numbers of wireless and fixed network connections, sensors, systems integration, and services.
The highest revenues will come from precision farming, precision livestock, and yield monitoring solutions, but all potential applications are set to deliver decent returns.
Plantain production in Colombia: Colombia Telecom, Movistar, Claro and Tigo have all introduced monitoring systems for plantain crops to help farmers deal with flooding, soil oxygen exhaustion, humidity, and low temperatures, boosting productivity by 15%.
Fish farming in Vietnam: Viettel Mobile, MobiFone and VinaFone all offer livestock monitoring services. By deploying this type of solution, a major aquaculture has cut fish mortality by 40 to 50%, thus increasing turnover by a similar percentage.
Automated irrigation in Spain: Telefonica and ABB have supplied a GPRS-connected automated irrigation system to a dozen farms in Spain, slashing water usage, reducing electricity bills by 30%, and increasing profits by 25%.
Even the cows are getting online: Low-power and high-capacity Narrowband IoT (NB-IoT) modules from Huawei are being attached to cows, enabling farmers to understand bovine biorhythms, fertility cycles, and likelihood for sickness (by monitoring temperature). Click here for more on connected cows.
This is just the beginning: For telcos, more opportunities abound in applications that require high levels of connectivity and mobility, such as monitoring livestock, aerial herd/crop photography (via drones) and remote sensing, logistics and distribution, and via high-bandwidth applications such as surveillance. Applications requiring dense networks of connected sensors and associated control systems are also rich in potential, such as variable-rate input technologies. In each of these cases, connectivity not based on 3GPP network standards won’t meet downstream and upstream bandwidth or latency requirements. Operators can also provide support services such as mobile payments and insurance, access to trading platforms, and farmer helplines, which is especially important in emerging markets.
Who Else Can Get Rich?
The opportunity to serve farmers with Smart Agriculture solutions isn’t limited to telcos, with various other tech suppliers set to benefit.
Device and equipment vendors that provide components like sensors and farm machinery with inbuilt sensor and connectivity capabilities have a great opportunity for upselling, providing differentiated products, and creating new service propositions. Every year, millions of new connected devices will be needed, from classic machines such as tractors, harvesters, bailers and planters to new tech like drones.
By 2025, sensors for monitoring animals, crops and environmental factors will be shipping in the billions, representing a hugely lucrative market space.
Application providers will be involved in most aspects of the Smart Agriculture revolution. Their tools will enable farmers to use the data collected from devices and sensors to monitor and automate farm processes and interact with farm machinery. A variety of crop-, process-, and equipment-specific applications will be delivered as cloud-native software services. To open the channel to customers, application providers will use direct sales models and third parties such as equipment vendors, systems integrators, and telcos.
They have the opportunity to target a market that has never before been software-intensive.
Data analytics companies will help farmers understand what’s happening on a local level, predict outcomes, and suggest interventions. Partnerships and visibility into multiple farms will let them collate information from across the industry. Typically based in the cloud, these companies can position analytics about individual farmers’ crops and decisions on improving efficiency and productivity into the context of the wider industry. This macro-level data can be invaluable for farm suppliers by identifying the need for more raw materials, finance, insurance, or new equipment, for example.
Systems integrators and outsourcing providers will have a significant role to play in bringing together the various systems needed to develop Smart Agriculture, and will especially benefit the largest farms, especially those run on an international scale. These companies will often be the primary contractors that stitch together disparate sets of applications to create fully interconnected Smart Agriculture ecosystems. Smaller value-added resellers will have a role to play too – providing a channel to market to smaller farms.