Digital, connectivity-fueled transformation is needed for one of the oldest sectors to cope with rising demand and various disruptive factors. Over the past half-century, the agricultural economy has seen a dramatic change. Due to technological advancements, farm machinery has grown in size, speed, and production, allowing farmers to cultivate more land more efficiently. Farmers are reaping the benefits of enhanced seed, irrigation, and fertilizer technology. New technologies such as artificial intelligence, analytics, and linked sensors are poised to boost yields, improve water efficiency, and create resilience in crop and livestock production. However, this would be impossible without a reliable infrastructure for establishing connections.
According to analysis, if the relationship is successfully deployed in agriculture, the industry might add $500 billion to the global GDP by 2030. As a result, farmers would experience significant stress reduction. According to the McKinsey Center for Advanced Connectivity and the McKinsey Global Institute (MGI), it is one of seven industries that will add $2 trillion to $3 trillion to global GDP.
Land and farming materials are becoming more scarce as demand for food continues to rise. By 2050, the world’s population is expected to exceed 9.7 billion people, necessitating a 70 percent increase in the number of calories available for consumption. There will be a 40 percent shortfall in global water supplies by 2030, and rising energy, labor, and nutrients prices are already putting pressure on profit margins. About a quarter of the world’s land has been degraded and requires extensive repair before it can support large-scale agriculture. On top of all this, we must contend with mounting environmental and societal challenges for more ethical and sustainable farming practices.
Connectivity’s potential for value creation
By the decade’s end, increased agricultural connectivity might contribute more than $500 billion to global GDP, resulting in a 7–9% increase in productivity. Much of that value, though, would need investments in connectivity that today is virtually lacking from agriculture. Other industries already use technology like LPWAN, cloud computing, and cheaper, better sensors requiring minimum hardware, which can significantly lower the necessary expenditure.
We looked at five areas where enhanced connectivity is already being used and is most likely to deliver higher yields and reduce costs. We increased the resilience and sustainability that the industry needs to thrive in the twenty-first century: crop monitoring, livestock monitoring, building, and equipment management, drone farming, and autonomous farming machinery.
Agriculture’s current state of connectivity
In recent years, more farmers have examined data regarding critical elements like soil, crops, livestock, and weather. In less-developed locations, practically all farmwork is manual, involving little or no advanced connectivity or equipment.
Even in the United States, a pioneer in connectivity, only around one-quarter of farms utilize any linked equipment or devices to access data. In either scenario, the networks can support only a limited number of devices and lack the performance for real-time data transfer, which is required to unlock the value of more advanced and complex use cases.
Agricultural connectivity has far more value than can be realized with these more basic instruments. The industry must fully use digital applications and analytics, which will demand low latency, high bandwidth, high robustness, and support for a density of devices given by advanced and frontier connectivity technologies like LPWAN, 5G, and LEO satellite.
The potential value will initially accrue to large farms with more investing power and substantial incentives to digitize. The fixed costs of building IoT solutions are more easily offset in extensive production facilities than on small family farms because connectivity promises quicker surveying of large tracts. Similarly, crops such as grains, fruits, and vegetables will generate most of the value.
Because of the vast farms, the relatively higher concentration of players, and the better applicability of connected technologies, IoT networks, which are specially adapted to static monitoring of many variables, open up more use cases in these sectors than in meat and dairy. It’s also noteworthy that Asia should get roughly 60 percent of the entire value simply because it produces the highest volume of crops (see the sidebar “About the use-case research”).
Use case 1: Crop monitoring.
Connectivity offers a range of approaches to improve the observation and care of crops. Integrating meteorological data, irrigation, nutrition, and other systems could optimize resource use. And raise yields by recognizing and predicting shortfalls more effectively.
We could improve crop harvesting windows with the use of intelligent monitoring.
Today’s IoT networks can’t even transport images between devices, let alone perform autonomous image processing, and can’t handle enough devices or density to monitor large areas accurately. It is hoped that 5G and the NB-IoT would help with bandwidth and connection density difficulties.
Use case 2: Livestock monitoring.
Most animals are kept in close quarters on a regimen that assures they go readily through a highly automated processing system. Preventing the spread of disease in livestock herds and enhancing the quality of food could be made easier with the development of chips and sensors that monitor vital signs like temperature, pulse, and blood pressure.
Farmers are already employing ear-tag technology from providers such as Smart bow (part of Zoetis) to monitor cows’ heat, health, and location, or technology from firms such as Allflex to conduct comprehensive electronic tracing in case of disease outbreaks.
Similarly, environmental sensors may trigger automatic modifications in ventilation or heating in barns, minimizing suffering and enhancing living conditions that increasingly concern consumers. As much as $70 to $90 billion in additional value might be generated by 2030 simply by improving the monitoring of animal health and growth conditions.
Use case 3: Building and equipment management.
Chips monitor and measure levels of silos and warehouses could prompt automated reordering, decreasing inventory costs for farmers, many of whom are already employing such systems from businesses like Blue Level Technologies. Similar tools could help extend the shelf life of inputs and reduce post-harvest losses by monitoring and automatically modifying storage conditions. Predictive-maintenance systems that use computer vision and sensors linked to equipment could save repair costs and increase machinery and equipment life. Such methods could produce $40 billion to $60 billion in cost savings by 2030.
Use case 4: Farming by drone.
Farmers worldwide have been utilizing remote-controlled drones like Yamaha’s RMAX for crop spraying for over two decades. Now the next generation of drones is starting to touch the sector, with the ability to survey crops and herds over broad regions swiftly and efficiently or as a relay system for ferrying real-time data to other linked equipment and installations.
By analyzing the field conditions using computer vision, drones could also deliver precise interventions, such as fertilizers, nutrients, and pesticides, to crops in the most critical regions of the field. Or they might plant the seed in the outlying areas, decreasing equipment and labor costs. Drones have the potential to produce between $85 billion and $115 billion in value by lowering costs and increasing yields.
Use case 5: Autonomous farming machinery.
More precise GPS controls linked with computer vision and sensors could improve intelligent and autonomous farm machinery introduction. Farmers may run various equipment on their field simultaneously and without human involvement, freeing up time and other resources. Autonomous robots are also more efficient and precise in working in an area than human-operated ones, which might offer fuel savings and higher yields. Increasing the autonomy of machinery through more excellent connectivity might provide $50 billion to $60 billion of additional value by 2030.
Additional sources of value
The value of connected technologies is not included in the estimations offered in these use cases because they provide an additional, indirect benefit. The worldwide farming business is highly fragmented, with most labor done by individual farm owners. Particularly in Asia and Africa, few farms hire outside workers. On such farms, adopting connectivity technologies should free significant time for farmers, which they can use to farm additional land for compensation or to pursue work outside the business.
We show the value of putting advanced connectivity on these farms to achieve such labor reductions equals over $120 billion, bringing the total value of increased connectivity from direct and indirect consequences to more than $620 billion by 2030. However, the amount we will collect this value hinges primarily on advanced connectivity penetration, which is predicted to be very low, around 25 percent, in Africa and poorer areas of Asia and Latin America. Achieving the critical mass of adopters needed to build an economic case for providing enhanced connectivity also will be more difficult in those regions where farming is more fragmented than in North America and Europe.
Implications for the agricultural ecosystem
As the agriculture industry digitizes, you will undoubtedly tap new pockets of value. As a result of their strong links to farmers and their in-depth understanding of agriculture, input providers supplying seed, nutrients, herbicides, and equipment have played an essential role in the data ecosystem so far. For example, one of the world’s leading fertilizer distributors now supplies fertilizing agents and software that analyses field data to help farmers select where to apply their fertilizers and in what quantity. Similarly, a large-equipment manufacturer is working to improve field equipment efficiency by using precise controls based on satellite images and vehicle-to-vehicle links.
However, improved connectivity opens up the market to new entrants. For one thing, telcos and LPWAN providers are crucial in providing the connectivity infrastructure needed to allow digital farm applications. They might combine with governmental authorities and other agribusiness companies to construct public or private rural networks, collecting some the new value in the process.
How to do it- Final Procdure
No single company can lead the necessary investment in agricultural connectivity independently. As a precondition for all of these developments, major players in the industry must commit as a team. Winners in delivering connectivity to agriculture in the future will require expertise in various disciplines, spanning from farm operations to advanced data analytics, as well as the ability to provide solutions that interconnect with other platforms and neighboring businesses. For example, data obtained by autonomous tractors should effortlessly flow to the computer running irrigation systems, which should be able to use weather-station data to optimize irrigation plans.
However, industry leaders in connectivity have already begun developing these new skills within their organizations. For privacy and competitive advantage, businesses seek to keep secret information about their operations within their walls. Having this level of control also facilitates data analysis, which in turn helps the firm respond more quickly to changing customer demands and expectations.
However, acquiring new skills is not the goal. Agriculture players who create alliances with telcos or LPWAN providers will gain enormous power in the emerging connected-agriculture ecosystem. Not only will businesses be able to acquire connectivity technology more readily and affordably through those partnerships, but they will also be better positioned to create tight relationships with farmers as connectivity becomes a strategic issue. As a result, input providers and distributors may find themselves in a race for connectivity. Direct connections with farmers could eliminate the need for distributors if input providers successfully form such agreements. If distributors prevail in this battle, they will solidify their position as an essential middleman, closer to the requirements of farmers, in the value chain.