Insight | Research Programme 2017: The future of the agritech sector


Research Programme 2017: The future of the agritech sector


The future of farming will be determined by the interaction between two factors: on the one hand pressure from increasing and changing consumer demand and environmental degradation, and, on the other, the opportunities offered by technology.

The chief consideration for the first factor is population growth – by 2050, the world’s population will have grown by approximately a third, reaching 9.7billion people, according to the United Nations World Population Prospects report. Not only will the agricultural sector have to produce more food than it currently does to address this population growth, but it will have to do so in a way that maintains sustainable productivity in the face of rising temperatures and other environmental challenges. Climate change is also taking its toll – consecutive years of drought in South East Asia, for example, has made it important for farmers there increase their yield.

Moreover, an ever-increasing array of regulations and standards seek to make sure that farming takes place in a sustainable and safe way, and put pressure on farmers to change the way they operate. With both regulation and consumers demanding a more environmentally-friendly agricultural sector that reduces water usage, food wastage, and lessens the distance from “farm to fork,” there is a growing pressure on farmers to change the way they operate.

It is vital that the global agriculture sector is able to adapt to these challenges, not just for its own good, but for the geo-political stability of the world. Technological advances offer a way to drastically improve efficiency and we have found with our own research that this potential is not being ignored by the burgeoning agritech sector. In their efforts to take advantage of the digital revolution, these companies are exploring a wider variety of technologies than their peers in industries such as energy and transportation.

It’s noteworthy that 62 per cent of agritech respondents are already exploring machine learning technology – the average for companies from other sectors is almost half this, at 33 per cent. Meanwhile, almost half are looking at cognitive AI – the average for other sectors is 20 per cent. At a time when these specific technologies are in their infancy, farming’s most progressive force is clearly forging ahead in order to find a way to take on the challenges of the future.


of agritech respondents said that they were already exploring machine learning technology

Precision farming will become the norm, increasing efficiency at every level of the agricultural process and therefore enabling the sector to get more produce out of their land in a way that is sustainable and environmentally friendly.

This approach is clearly already yielding results, with around a third of companies having already achieved reduced costs and new revenue streams from their IoT deployments.

Once farms have this kind of network in place, they will have the volumes of quality data they require to drive AI and machine learning technologies. The best processing power of computers matched that of a spider’s brain in 2000, but by 2023 we will have developed computers which can process data at the level of the human brain.

By 2045, we may have developed computers with the processing power 100,000 times that of humans, according to leading futurologist Ray Kurzweil. Applying this kind of analytical power to agriculture and its difficult conditions could yield huge increases in productivity, cost-savings, and new ways of farming sustainably. While agriculture is coming under weighty new pressures from a wide range of sources, it is also forging a more productive and sustainable future out of the latest technology – an exciting future awaits those who embrace this vision.

Agriculture is subject to a swathe of macro and micro environmental factors, meaning that AI’s intense analysis of vast data sets will be invaluable to the sector. This, however, relies on the ability to collect and process data from across the whole agriculture operation. Our research has revealed that agritech’s adoption of IoT technology has been enthusiastic and sophisticated, with almost half having fully deployed IoT-based solutions. This take-up indicates the place that IoT will have in developing a much more precise way of farming that can improve productivity and efficiency. Smart sensors with remote sensing capabilities will result in ever more detailed amounts of data collected in the years ahead, enabling the extensive micro-management of production in hundreds of new ways.

76 per cent of agritech respondents believe that the IoT will revolutionise their industry, and this is unsurprising when you consider how the farms of the future can utilise smart sensors in an IoT network that encompasses the whole agricultural operation. This kind of network will act as the foundation for an agricultural operation that adapts in real-time to environmental changes – for example, maximising production of certain crops during favourable weather conditions, automatically protecting growing yields from rain or hail, or diagnosing an outbreak of disease amongst plants or animals before it takes hold. Automated robotics will then be able to address this issues without the intervention of a human.


of agritech respondents believe that IoT will revolutionise their industry

Green shoots for a changing agritech sector

Until a few years ago, agritech had predominantly niche position within biotechnology and seed genetics. However, with the advent of the technological trends that are fuelling the Fourth Industrial Revolution, this is all changing.

Investment by companies and venture capitalists in agritech businesses is rising rapidly, reaching $25bn in 2015. According to Goldman Sachs Group, this is just the start of a major upswing, and the investment company estimates that the sector could be worth $240bn by 2050. A fertile market.

The growth of the agritech industry is being caused by two key drivers: necessity and technological advancement. Macroeconomic trends in population growth are pushing up demand, while pressures on resources such as water and land usage are forcing farmers to produce more with less. Furthermore, agriculture now accounts for about 30 per cent of global greenhouse gas emissions, according to the US Environmental Protection Agency, and is a prime target for countries seeking to achieve their carbon reduction targets.

These pressures have grown at the same time as the arrival of a range of new hardware technologies, the separation of computing power from desktops (virtualisation), and cloud computing. The creation of ‘big data’ and the ability to analyse this data to create efficiencies and wholly new ways of working, has the potential to be revolutionary. Underlining these developments has been improved connectivity.


was invested in agritech businesses in 2015

In the past, a lack of connectivity on vast, remote farms has been the biggest sticking point on the largescale adoption of IoT.

This is now changing with the increasing use of global satellite systems, integrated with terrestrial network infrastructure for more connected areas. Combine the macroeconomic pressures and these technological improvements, and agritech is in the early stages of a golden age, set to revolutionise how we feed the world.

Many of the gains from seed genetics and bio-technology have reached a plateau, so the next stage of innovation is to gain highly specific data on the environment of crops and livestock to optimise performance and minimise waste. IoT is also forming the starting point for the deployment of automation and robotics in an aim to reduce the impact of labour shortages in the sector.

Agritech is feeling positive – eighty per cent surveyed felt that they were ahead of their competitors when it came to IoT development, and while they can’t all be right, this figure does show a high level of confidence in the pace of innovation that is underway in the sector. Nearly half of agritech businesses have deployed an IoT based solution to market so far and every respondent surveyed expects to have deployed a solution within the next 18 months.

This level of confidence is further expressed through the planned doubling in expenditure expressed as a proportion of IT spend in the next five years. A full 68 per cent also stated that between 10 and 20 per cent of their IT budgets would be spent specifically on IoT development by 2022.

This extraordinary pace shows the central role IoT is playing at the core of the digital transformation that is underway in the agricultural sector. As well as IoT there is also significant interest in other forms of technology including machine learning, automation and robotics. Combined, the use of these technologies marks a step change across the agricultural industry.

“ IoT acts as an enabler for many other areas of innovation. Finding new ways to collate new types of data means agritech companies can develop new products and services in previously unimagined ways. ”

Ayan Jobse-Alkemade, Director, Agritech

However, while there is a high level of confidence in the use of IoT, the research did uncover a slight drop when it came to achieving results, with only 62 per cent stating that they were ahead of their competitors.

This slight dip hints at the immaturity of the market.  But the technology behind IoT and the ability to manipulate and analyse the data produced at the scale required, just didn’t exist a short time ago. The opportunities to use digitally transformative technology in the agricultural sector are immense and the pressures of population growth, environmental sustainability and the need to reduce cost and use of natural resources will only increase, giving agritech a very bright future.

Growing sustainability standards are sowing the seeds of innovation

Consumers are increasingly keen to understand the provenance of their food and are developing a taste for organic and free range options.

In combination with government environmental regulations and pressure exerted by shareholders environmental, social and financial sustainability has been pushed to the top of the agricultural agenda. The net result is a framework of complex standards and regulations, many of which present logistical and operational challenges for the industry.

“ The need for sustainability has been one of the core drivers of IoT in the agricultural sector; technology that makes it possible to gain a clear picture of the journey that food takes from ‘seed to bin’ and from ‘farm to fork’ ”

Ayan Jobse-Alkemade, Director, Agritech

When we asked agritech respondents what their priorities for IoT deployments were, the highest responses were for monitoring and improving the health and safety of the workforce, and monitoring the environment.

As stewards of the environment, agricultural businesses face the need to comply with standards designed to protect against agricultural damage. The pressure on the environment created by agriculture is well known in developed economies and there has been a steady growth in regulation over the last 40 years. Moreover, this pressure is rapidly growing, and as food production becomes increasingly globalised, developed country standards are being transferred to developing countries as a pre-condition of agricultural businesses exporting into western markets.


of agritech respondents are exploring IoT in order to address industry and government regulatory challenges

For example, Indonesia faces restrictions on its ability to export fish into both the United States and the European Union due to standards in traceability now required by the United States Department of Agriculture, for all fish entering these markets. In recent years, both markets have been more relaxed about enforcing traceability standards but pressure is increasing. The Indonesian fishing fleet – one of the largest in the world – needs to show the location of where fish have been caught, and prove that they have been caught in a sustainable way.

A key part of this is the installation of IoT sensors into the fishing fleet to track fishing activity and prove that fish are not being caught in overfished regions. Additionally the monitoring makes the lives of fishermen safer, as they are tracked combatting piracy and making them easier to insure.

Farmers also need to become better at resource efficiency. As the global population increases so will their demand for water and it is likely that the need for drinking water will come into direct competition with the need for water in agricultural production. This is already happening – California has suffered a drought since 2011, with the Governor of the state, Jerry Brown, only declaring it over in April 2017. This protracted period created huge strains on agricultural production and led to clashes between farmers and environmental groups.

Water in food production is unavoidable but to meet existing regulations, and to prevent heavier restrictions in future, farmers need to adopt the most efficient use of water possible. Farmers in the US state have taken proactive measures to limit their use of water where they can. At present, 80 per cent of the world’s production of almonds happens in California and a single nut consumes about a gallon of water before it reaches the supermarket according to the Almond Board of California.

IoT moisture sensors have been successfully deployed in many farms in the region – sending data to drip feed taps in the fields so water is only delivered to plants when they need it. This has reduced water output by about 20 per cent in successful deployments.

Environmental protection is not the only regulatory phenomenon happening in the agricultural sector. According to the UK’s Health and Safety Executive (HSE), agriculture, forestry and fishing are the riskiest sectors to work in and have one of the highest fatality rates of any area of employment. The most common forms of injury or death come from being struck by moving vehicles or objects, falls from height and contact with machinery. Agri-businesses are constantly trying to find new ways to keep their workers safe from the many risks that they face. Technology can play an important role in these areas by limiting or removing the source of risk to workers or by removing the need for humans to be present at all in some of the most hazardous areas. Automation and robotics – both enabled by the use of IoT can play a significant factor in reducing the incidence of injury to workers.

Looking globally, without the greater use of technology, there will likely be a ‘health and safety squeeze’ in the coming decades. Most of the population increase over the next half century will occur in the developing world meaning the pressure to increase food production will be higher here than anywhere else. Economies in these areas also stand to expand the most, diversifying into more areas and stretching a more educated workforce into different jobs. There will therefore likely be a drop in the available labour workforce for agricultural production, placing a premium on workers and a need to use them as efficiently as possible, while increasing the need to keep them safe.

In both regulatory spheres, IoT, combined with other elements of digital transformation, are essential to minimise the burden and costs of new regulations. IoT can boost the globalisation of food production, enable access to new markets and create greater prosperity in the developing world. It can also create a safer working environment in what is currently one of the most dangerous places to work. No wonder it is such a focus for agritech businesses today.

We must achieve far more, with far less, to avoid food poverty

By 2050, the world’s population will be a third larger than it is today, reaching 9.7 billion people, according to the United Nations World Population Prospects report. This means that global food production must be boosted by 70 percent in order to feed these extra mouths.

The pressures on the planet will be immense, the logistics of growing and transporting food to where it needs to be, highly complex; and without the adoption of advanced technology, people will go hungry.

The latest available figures from the Centre for Sustainability and Global Environment, on land use estimates that, already, nearly half (46 per cent) of the world’s land surface is currently used for food production. When you also factor in rising GDP-per person and that richer people eat more, and have more diverse eating habits, the impact of global population growth on the planet becomes stark.

If agriculture is going to continue to feed the world adequately, it needs to find new ways to increase its yields produce more food using fewer resources, and to limit its impact on the environment. New technology, and particularly IoT, is a significant part of the answer to this challenge, and a vibrant agritech sector is now taking shape to support farmers at a global scale. In short, food producers and processors need to get smarter, leaner and faster.

“Food production will need to become a lot more efficient, with heightened attention to environmental sustainability and use of resources.”

— Ayan Jobse-Alkemade, Director, Agritech

IoT is central to innovation in agriculture because so much of precision farming rests on having highly accurate and specific information on the status of crops, livestock, and their environment. Without accurate data, other technologies like automation, machine learning and robotics become either redundant or at least far less effective than they could be. The IoT functions as the eyes and ears for all other technology in the era of digital transformation.

As an example, we can look at fish farms. The largest operational cost for these farms is the feed that they need to provide to maximise growth in their livestock. By placing sensors above and below the waterline in fish pens they can monitor water temperature, oxygen levels, and water currents. These three data sets are then analysed for the optimum time for feeding, minimising food wastage.

Our latest research shows that agritech businesses understand the central importance of IoT-based innovation and have a clear focus on the technology in their R&D. However, it should not be an isolated innovation, but rather as part of a larger combination of transformative technology including machine learning, automation, robotics and more.

Returning to our fish farm example, other areas of digital transformation can also play a role. Whereas now a lot of feeding is completed manually, in future, this whole process can be automated – IoT sensors can collate data, which is then analysed through machine learning for the most optimum moment for feeding. Automated feeders can then be set to work without the need for any human intervention.

Predictive analysis of IoT data is another area that can bring significant benefits for agricultural production, particularly when it comes to the weather.

It is one thing to use sensors to understand the current environment of a crop – acidity, water levels, etc. – but another to analyse this information and predict how the microenvironment will change depending on varying weather conditions.

Farmers can take precautionary measures to protect their crops as needed, maximising potential yield. Predictive analytics can also be used to estimate crop yields based on the information being collated from the fields. This ensures that farmers and their customers can tailor their supply chains accurately to crop yields later in the year, reducing unnecessary logistics and labour costs.

Cultivating ever more land for agriculture is not going to be an option in the future.

The future of farming can only be to drastically reduce the ratio of land and resources needed to produce the food that we need. Key to this is to have the knowledge, derived from IoT sensors, and the tools to manage the micro-environment of crops and livestock.

Agriculture is both an ancient profession, slow to change with the majority of production based at the SME level, and one at the cutting edge of innovation, forced to tackle significant global issues. Perfecting the technology to efficiently feed the world as it undergoes a dramatic set of changes will be challenging, but with the right focus, investment and innovation it is achievable.


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