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Digital Ag review 2021: Covid-19 and climate change emerge as catalysts
25 January 2022IHS Markit Agribusiness Expert
Digital agricultural practices briskly proliferated most
emerging markets in 2021, with improved adoption observed across
Asian and African nations. Although mature industrialised markets
benefited from innovations such as artificial intelligence
(AI)-based crop monitoring and precision farming, the effects were
most perceptible in nascent markets such as India, where consorted
efforts from the government and the industry translated into an
actionable regulatory framework. Overall, the sector was commanded
by the developed North and South American markets, with Asian
countries such as China and Japan emerging as significant business
territories.
The deployment of drones in agrochemical spraying and the use of
technologies such as AI, machine learning and Internet of Things
(IoT) gained traction, especially with several smaller businesses
testing the waters alongside their larger, established peers. A
study of the sector's trajectory during the year highlights
considerable focus on the development of hardware, besides the
integration of software tools with traditional farming systems. The
sector also leveraged remote sensing and satellite imagery for a
host of services ranging from crop prediction, stress detection and
irrigation management, to wildfire detection and insurance
surveys.
Israel emerged as the fountainhead of innovation, with start-ups
in the country securing large funds for technology development and
scaling up their solutions.
Covid-19 catalyst
The ongoing Covid-19 pandemic and the accompanying challenges to
smallholder farmers in the form of access to finance and inputs,
supply chain constraints, and transportation hurdles, brought
digital agriculture to the fore. Growers in countries such as
India, Kenya and Nigeria benefited from services offering agronomic
advisories and insights on use of inputs, financial and insurance
solutions, and weather information through mobile-based services.
Furthermore, the easing of smartphone ownership in these economies,
coupled with the availability of flexible data plans to access the
internet, acted as catalysts.
The pandemic also resulted in a narrowing of the digital divide,
with smartphones and internet connectivity affording farmers access
to a burgeoning agricultural e-commerce ecosystem. A large
repository of offline information was also made available for users
with basic phones and through SMS-based services. In India, for
instance, several mobile-based commodity marketplaces leveraging
blockchain technology have expanded over the past couple of years
to include thousands of farmers on their platforms. In fact,
reports suggest that losses incurred by Indian farmers because of
market closures could be recouped to a substantial extent through
e-commerce channels that directly connect them to other
businesses.
Policy push
In India, decisive steps from the government on digital
agriculture ushered concrete regulatory changes. In June, the
Ministry of Agriculture and Farmers' Welfare published a
consultation paper on the country's national digital agriculture
ecosystem, dubbed the IDEA (India Digital Ecosystem of
Agriculture). The Ministry noted that the technologies under IDEA
are to leverage cloud technologies and adopt a "cloud first" or
"cloud-by-default" approach. A three-year action plan with specific
milestones, deliverables and timelines has been proposed to roll
out IDEA across the country.
Deliberations throughout the year translated into the country's
government releasing a standard operating procedure (SOP) involving
the use of drones for the application of pesticides in agriculture,
forestry and non-cropped areas. In the run-up to the SOPs being
published, several companies, including Bayer's Crop Science
division, were cleared to deploy drones for various agricultural
activities.
In March, the agricultural use of drones took off in the
Philippines, with the country's Fertiliser and Pesticide Authority
(FPA) granting "conditional approval" to FMC for spraying its
insecticide, Prevathon (chlorantraniliprole - trade-marked as
Rynaxypyr), on rice. This was followed by Syngenta receiving the
same clearance to deploy drones for spraying its insecticides,
Alika 247 ZC (thiamethoxam + lambda cyhalothrin), and Match 050 EC
(lufenuron).
However, using drones for agrochemical spraying is banned in the
EU under its sustainable use of pesticides Directive (2009/128),
with exceptions granted only under strict conditions. There exists
uncertainty whether the use of drones, a popular research area,
constitutes aerial spraying. The issue is being discussed as part
of the Commission's planned revision of Directive 2009/128, with
the industry voicing its displeasure over the matter in May.
An agreement was forged by the US, Canada and Mexico in January
to work together on evaluating new technologies, including
drones.
Climate change
Several governments committing to ambitious environment goals,
and renewed discussions on climate change, translated into enhanced
focus on environmental, social and governmental (ESG) goals across
sectors including agriculture. The digital agriculture segment
leveraged the conversation surrounding sustainability to advance
products and services that aid in optimum use of agricultural
inputs, besides reducing wastage.
Furthermore, the rising tide of carbon capture initiatives aimed
at combating climate change and enabling farmers to generate carbon
credits for an additional source of income also drove the adoption
of digital agriculture. With several large agrochemical players
committing to align themselves with the EU's Farm to Fork strategy
that sets targets for achieving more sustainable agriculture
systems by 2030, the pressure is high on making a switch to
sustainable practices such as the implementation of digital
practices.
Deals and consolidation
While major agrochemical players buoyed their portfolios in the
segment, the space was also shaped by several big-ticket deals and
acquisitions.
BASF kicked off the year with a couple of partnerships - one
with Dutch satellite-derived data company VanderSat (Haarlem) to
offer daily biomass images unimpeded by cloud cover - and another
with US-based weather forecasting business Salient Predictions
(Falmouth, Massachusetts) to provide growers with access to
long-range, seasonal weather forecasting data. In March, the
company collaborated with Austrian digital agriculture company
Pessl Instruments (Weiz) to collaborate on improving pest
management in fruits and vegetables, with the deal expected to
integrate the latter's hardware and software capabilities with its
Xarvio Scouting app.
Collaborations also included Bayer's digital agriculture
subsidiary, The Climate Corporation, agreeing a deal with German
farming technology manufacturer Horsch (Schwandorf). The companies
say that the development will equip farmers with new ways to
connect their Horsch seeders, planters and other implements to
Climate's farming platform, Climate FieldView.
In the run-up to India publishing its drone SOPs,
Bangalore-based agribusiness company Farmonaut agreed a
collaboration with Noida-based aerial data provider GarudaUAV to
offer remote sensing technologies to the country's farmers. The
company also joined hands with Indian agribusiness company Godrej
Agrovet to help the latter with farm-level data for field
mapping.
The series of deals through the year included FMC's venture
capital arm, FMC Ventures, investing in US technology company
Scanit Technologies (Fremont, California) to use the latter's
SporeCam instrument to analyse Asian soybean rust (Phakopsora
pachyrhizi) in Brazil.
Furthermore, a deal was signed between Corteva Agriscience and
US robotics firm Boston Dynamics (Waltham, Massachusetts) to employ
its Spot robot system.