Wed, 11 Jul 2018
WHAT PREVENTS THE MASS ADOPTION OF TECHNOLOGY IN AGRICULTURE?
Appropriately incorporating precision Ag technologies can improve the efficiency of farming operations by reducing costs and increasing grower incomes. However, according to Rabobank Senior Research Analyst, Ben Zuckerberg, currently, fewer than 5% of farmers are implementing some form of digitalised practices on their farmland. But why is this, and what can a farmer expect to achieve from true digitization across their farm space?
BENEFITS OF USING MODERN MACHINERY IN THE AGRICULTURAL INDUSTRY
Precision Ag advocates would cite the following areas as the core benefits for farmers in relation to appropriate adoption of ag technologies and processes:
1- Improvements to productivity and diversifying of farming activities.
2- Optimisation to the cost of applying inputs such as seeds, fertilizers, agrochemicals, mechanization.
3- Improvements in supply chain efficiency, enabling reduced borrowing costs.
On top of these key deliverables, the implementation of tech-based agricultural practices might help with the current labour shortages that the industry is facing. You can read more about this in our related article.
Considering its advantages, the severity of the questions behind why the industry has not seen widespread adoption become apparent. What is stopping the modernisation of agricultural tech and practices?
MAJOR IMPEDIMENTS THAT HINDER THE ADOPTION OF NEW TECHNOLOGIES IN AG
Zuckerberg states that there are five key impediments to Precision Ag adoption, barriers that growers and data scientists have validated during three years of field research:
1- Many new software technologies don’t have a clear identified return on investment (ROI).
2- Many farms don’t have the necessary AgTech infrastructure to support the integration of new technologies – “Trying to get farmers to purchase both IT hardware and software is hard enough in a favourable commodity price environment, as farmers are typically resistant to change, given the ‘family tradition’ and experience-based nature of farmers,” the report points out. “Trying to do this during a downturn in the crop cycle is, and has been, nearly impossible.”
3- Selling software as a service to financially strapped customers is a difficult revenue-generation strategy. Zuckerberg suggests a better strategy may be to offer farmers free software while selling premium add-on products to the independent agronomists and crop consultants who advise these farmers.
4- Big data security and privacy related issues are proven to be one major holding back factors. You can read more about these here.
5- Digital agriculture still lacks a universal operating platform. Zuckerberg understand there should be a standardized operating system that can “upload, store, validate, refine, cleanse and analyse” data. His prediction: This will happen, and it will probably come from outside the industry.
When we consider these challenges to the specificity of US agriculture, there are some further key challenges that need to be considered in the market. US agriculture, farmers and stakeholders throughout the supply-chain suffer from the following in relation to agtech:
1- Low incentive: many US farms are owned by their operators, meaning there is little need to deliver market-rate returns to investors, making adoption of yield-enhancing tech slow.
2- Risk appetite: with 62% of US farmers nearing retirement age (the average farmer is 58 years old) there is less attraction for systems upgrades.
3- Growing season: a single growing season in much of the US reduces adoption opportunities and the number of potential technology iterations each year.
Challenges like these are fixed barriers to the modernisation and resultant progression of the US agricultural supply-chain. This limits market performance, accessibility and sustainability, with different stresses being felt throughout the market value-chain.
To address these challenges, we have developed AG40 workshop, a programme designed around bringing key stakeholders from throughout US agriculture together to tackle the most issues in relation to the stability of the market. To find out how this will be achieved, and whether you can be involved in this, follow the link here and below:
ABOUT AG40
Challenge Advisory is bringing together AG40, a unique workshop where organisations will have the ability to network amongst each other for precise and profitable resolutions across the entire industry. There will be panel discussions and workshop sessions designed to create partnerships and profitable business development, helping to find cross-specialism solutions to current sectoral challenges.
Join Challenge Advisory and all our stakeholders for education, interoperability and investment relating to the latest technology in digital agriculture – click here to find out more:
Rebecca Lam
Rebecca Lam