05 June 2024
While FinTech tends to grab the investment headlines, there is an ongoing revolution in smart agriculture technology. Even though huge improvements in agricultural techniques have already been identified and implemented, many believe we are only scratching the surface of the potential, especially in the APAC region.
While Asia covers just under 30% of the Earth's land area, it has a population of 4.75 billion (as of 2022), approximately 60% of the global population. Consequently, improvement in agricultural technology has been long overdue and much needed. Recent estimates suggest that the smart agriculture market (in the APAC region) will register a CAGR of 13.2% between 2021 and 2026. The target is simple: to ensure food security and increase ongoing efficiency, which will impact yields.
To put this into perspective globally, the crop monitoring market is forecast to grow from $2.2 billion in 2020 to $4.4 billion by 2025, implying a CAGR of 15.2%. Significant innovation in precision farming, automated irrigation, and the extended use of smart sensors has led to more focused investment.
The key to successful investment in innovative technology is the ability to focus on particular issues, providing solutions which increase crop yields and reduce input costs. Some of the more popular investment areas include:-
For many people, precision farming is light-years away from traditional farming methods in the APAC region and further afield. This area uses precision farming equipment and software, assisted by in-depth analytics, and has been shown to increase crop yields by up to 30% while reducing costs by up to 20%.
It would be misleading to suggest that irrigation systems had not improved before the technological revolution, but today's technology has taken irrigation to a different level. Water management is becoming ever more critical due to climate change and a growing population in the APAC region (and globally). New automated irrigation systems have been shown to reduce water usage by up to 50%, which has many obvious benefits.
When you consider the vast areas of land associated with agriculture, historically, it has been almost impossible to monitor every acre. This was before the introduction of drones and aerial imaging, a market that has grown significantly in recent years. Not only do these new modern-day systems allow farmers and agricultural companies to monitor crops and livestock, but they also capture invaluable data.
On a global basis, the aerial imaging market was valued at around $5.9 billion in 2021 and is expected to hit $36.7 billion by 2029. This suggests there is potential for significant investment in the future!
As an essential element of precision farming, smart sensors can monitor soil health, weather conditions, and real-time crop growth. This allows the delivery of nutrients, fertilisers, and water to be micromanaged, with the potential to increase crop yields by up to 20%. This is critical with a growing population and limited land available for agriculture.
It's essential to recognise the considerable developments in agricultural technology in recent years, which have positively impacted crop yields and costs. Looking further forward, we are already seeing increased investment in areas such as:-
· Greater use of AI
· Predictive analytics
· Autonomous machines
· Enhanced transparency and traceability
· Investments in organic and vertical farming
· Improvements in sustainable practices
Blockchain technology is already helping to enhance the transparency and traceability of crops and livestock. However, again, we are only scratching the surface of the potential.
Unless you are specifically involved in the agricultural sector or an investor in agricultural technology, many of us automatically assume that farming practices of years gone by are being maintained with relatively little change. The reality is very different; the introduction of cutting-edge technology and the concept of precision farming are making huge differences in crop yields and costs. Blockchain technology is also providing a secure means of introducing transparency and traceability to the food chain.
Recent developments have led to a 30% increase in crop yields (higher in some areas) and a 20% reduction in input costs. That's before we even consider the wider benefits of automated irrigation on water usage and the obvious long-term benefits. Often overlooked, it may be time to contemplate the potential benefits of investment in agricultural technology.
This article is for information purposes only and does not constitute financial advice. It is important to take professional advice if you are considering any investment.
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