Digitalisation of Agriculture: Sustainable Profitability

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1 CHALLENGE ADVISORY Digitalisation of Agriculture: Sustainable Profitability Fulfilling the Potential of Agriculture with Technology, Traceability and Profitability

2 Challenge Advisory Digitalisation Of Agriculture Sustainable Profitability All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage and retrieval system, without prior permission in writing from the publisher. Copyright Challenge Advisory LLP London Berkeley Square House, Berkeley Square, London W1J 6BD Dehli 15th Floor, Eros Corporate Tower, New Dehli Chicago One South Dearborn, 2100, Chicago, Illinois, Singapore Centennial Tower, 3 Temasek Ave, Singapore singapore@challenge.org Nairobi 13th Floor, Tower 2, Delta Corner Towers, Chiromo Road, Nairobi nairobi@challenge.org Curitiba Rua Pasteur, andar, Batle, Curitiaba curitiba@challenge.org Published September 2015

3 OUR MISSION: WE INFLUENCE BUSINESS, GUIDE GOVERNMENTS AND CULTIVATE EFFICIENCY, PREPARING PLANET EARTH FOR 10 BILLION PEOPLE BY THE YEAR 2050.

4 Digital Agriculture: Increasing Profitability Improving Crop Yield and Efficiency in the Modern Digital Age As the needs and demands of planet Earth grow and transform, so too will the industry of agriculture, and this is never more apparent than in the field of precision agriculture. Precision agriculture is defined by the advent of new technologies, that collect and leverage huge amounts of data; generating massive amounts of revenue for relatively nothing. Precision agriculture makes a farmer s field operations altogether more efficient, by driving insights and productivity. The precision agriculture market is expected to grow at a compound annual growth rate of 12.2%. By the year 2020, this should see precision agriculture become a $4.6 billion industry. Vital for global food security is increasing the output of the average farm dramatically. In comparison, total land area available for farming is expected to only increase marginally. The solution? To get a significantly better output out of the farms we currently have, looking at crop wastage, minimising failure, and getting every drop out of our current resources. The field of precision agriculture is vital for meeting global demands, and for providing enough food for 10 billion people by the year The proliferation of precision agriculture on widespread farms has encountered obstacles that have so far hamstrung this nascent industry. The capture and subsequent use of data has not yet borne fruit due to issues over the timing of this data, and as a result, decision making on a farm has suffered from a dearth of information. The precision of data collected from sensors was also in dispute until recently, with a farmer being unable to process or understand the data provided until the chance for improvement had already gone. According to the USDA, precision technology based around variable-rate technology has already arrived, with nearly two-thirds of fertiliser, stimulant or pesticide based stateside offering products that cater to this specific area of agriculture that is, input providers that provide technology enabling farmers to adapt to demand on the fly. The technology has been there for some time, but the modern farmer is only now beginning to adopt these new practices as efficiency becomes a pressing issue in agriculture. Precision agriculture allows for the 21st century farm to exploit some considerable untapped potential in their industry, and only the swiftest adoptees will prosper. With new innovations in big data analytics, as well as simulation, visualisation and stronger industry knowledge, the opportunity is huge to grow their business not only in terms of revenue and sales, but also in terms of organisational health and efficiency. Challenge Advisory aims to help farms across the globe to gather and integrate huge amounts of data in order to gain a panoramic view of their farm. Once this data has been collected, our aim is to help them to use this data to the best of their advantage, to make meaningful and timely operational decisions which will help any farmer to enhance their yields and their profits Challenge Advisory All rights reserved. 1

5 History of Agriculture 19th Century The transition from organic to intensive agriculture, characterised by energy-intensive input farming systems Crop yields are limited by soil-based nitrogen input and efficiency 20th Century More sophisticated machinery such as tractors, combines and transport vehicles introduce greater efficiency into agriculture Genetically modified crops allow for hybrids and greater nutrition, as well as resistance to disease and pests Early 21st Century Introduction of Global Positioning Systems Increased awareness of environmental practices and sustainable agriculture Improved tracking of machinery Increased intensity and workforce efficiency thanks to the First Industrial Revolution and steam powered machinery Farms benefit from increased buying power by forming cooperatives The use of chemicals in agriculture such as fertilisers and pesticides mean higher yields for crops Advanced biotechnology such as biomolecular tools, chemistry and biologics Challenge Advisory All rights reserved.

6 Cultivating Agriculture How has the Industry Grown? Since the dawn of human civilisation, there has been a select group of industries that every society has required for their very survival, and agriculture stands taller than any other industry in comparison. The growth of agriculture and the innovations responsible for this growth are one of the main reasons for human development and evolution. In the past century, however, agriculture has somewhat faded in terms of technological innovations, though its importance has not diminished. Recently, however, agriculture has seen a renaissance with respect to technology; current trends of rural-to-urban migration have seen an increased focus on machinery, automation and simulation as manpower wanes and the pressure of efficiency weighs heavy. What are the latest trends in agriculture, and how has the face of agriculture changed? Changes in Farming Practices and Technologies As the agriculture sectors grows more innovative and sophisticated, so too have the practices around agriculture that enable farmers to make the most of the technologies available. In response to urban migration and the subsequent labour shortage, farmers have turned to automation to meet their farming needs, using technologies such as real-time kinetics to facilitate their crop development, taking advantage of satellite data for increased precision for their data. Tillage, which prepares soil for agricultural use by way of agitation such as stirring, turning or digging, has also developed significantly over the past decade, with new developments in water usage and irrigation. Strip tillage, where narrow strips of soil are separated and designated for seed growth, is another technique that has arisen recently as a means of conserving resources and soil health. Finally, the use of autonomous machines such as drones, UAVs and autonomous weeding and harvesting machines have helped to facilitate the division of labour even further, and technological advancements as as the advent of the Industrial Internet of Things have helped to integrate these machines into a cohesive farming environment. The combination of automation, new tillage practices and the advancement of independent, autonomous machines have led to a technology-enabled, detailed form of agriculture known as precision farming. With precision farming, the 21st century farm benefits from a complete technological perspective on their crops. Online sensors as well as new facilitators with respect to mapping provide farmers with a panoramic view of the field, enabling them to increase their yields and reduce costs for maximum efficiency. Additionally, this has allowed farmers to improve their decision making, supported by the technologies available. Decision farming gives farmers the ability to tailor their approach for their specific needs, and have the information available to fully streamline their agricultural operations and learn from their setbacks Challenge Advisory All rights reserved. 3

7 Precision Agriculture Today Connected Ag Weather Stations Plant Sensors UAV with Sensor Payload Machinery & GPS Tracking Challenge Advisory All rights reserved.

8 The 21st Century Farm How Challenge Advisory Assists the Modern Farmer For every farm operator, the objective of the agriculture industry is to grow as much as possible on as small an area as possible, operating at maximum efficiency. As well as this, they aim to make the highest profit by minimising their operating costs and selling their crops for the highest price. In order to turn this profit, the 21st century farm requires the effective management of inputs such as water, fertilisers and seed quality. As well as this, farmers must stay wary of external effects, minimising the effect of unpredictable and undesirable variables such as the prevalence of pests and the threat of weather. How does a farmer in the modern age achieve the highest possible efficiency, and as a result improve its profitability? There are a number of challenges facing agriculture that have hindered the average farmer in a number of logistical areas. The physical inspection of crops for pests and disease has become troublesome, proving to be lengthy and inaccurate. Conventional sensors have helped farmers to remain aware of farm operations, but rarely provide real-time information, and as a result cannot have as much of an influence. The influx of data has also enabled farmers to have a greater view of potential risks and areas of improvement, but knowing what to do with this information is proving somewhat more difficult. In order to fully realise the potential of their farm, farmers need greater assistance in translating their data into the operational insights that can truly drive decision making. Challenge Advisory s Digital Agricultural Service is tailor-made for the modern farmer, and well enable them to fully take advantage of the innovations available to them in order to improve their profitability and their efficiency. The Digital Agricultural Service helps a farmer to establish detailed insights into their operations and the environmental factors that surround their fields. We also help farmers in their data-driven decision making, minimising expenses, crop failure and environmental impact for sustainability and profitability, with some crop farms benefiting from profitability increases of as much as 100%. The Agricultural Service aggregates granular and real-time data from a wide range of sources from across the farm, such as environmental sensors in the field, UAV imaging that uses normalized difference vegetation index (NDVI) to understand better the needs of the farm, Challenge Advisory All rights reserved. 5

9 and is substantially superior to the naked eye. Mounted sensors in the field enable even greater omniscience, while weather and soil data enable farmers to see underground and into the future. The service aims to combine these data sources in order to gain an informed understanding of the farm. Additionally, with the help of a decision support engine encoded with crop-specific business rules for maximum profitability, farmers can greatly benefit from an integrated work management system. Facilitated by Challenge Advisory, this system enables a farm to auto-schedule the entire operation of their farm (including planting, inputs and harvest) in order to operate at maximum profitability. The system also interacts with the relevant machinery on a farm, and can even communicate with human farm workers should the farmer derive and accept specific recommendations suggested by the learning machine. Additionally, these systems are integrated with machine learning and artificial intelligence, which allows the system to learn from trends and patterns to adapt to its farming environment. The service also comes with an enhanced program for economic impact, which enables a farm to better understand the financial implication of every decision made on their farm. This allows for even better decision making, as the system can highlight the best financial decision, and is even able to project further data for even more detailed decision making. The system also reviews information on issues at similar farms that may have been encountered at an earlier date, which showcases the system s learning capabilities. Farm operators have been exposed to a great deal of technology in the past decade, but their ability to process complicated information may hinder them from taking full advantage of the data and technology available. The integrated farming system benefits from a simple user interface, which is tailored toward the key demographics affected by agriculture. The user interface is so simple that it could be used by a child, but it is deceptively powerful with respect to the influence it can have on the farm. For those who are inclined to take advantage, the opportunity is available for even greater data insight such as NDVI imaging, or specific sets of data from particular sensors that can highlight information that can cause incremental changes throughout the farm Challenge Advisory All rights reserved.

10 Agriculture IIoT: Complete Visibility of the Supply Chain Regulatory Proof of Procedure Outbreak Investigation Transparency of Comm. Waste Management Trace Initiatives Farm Feeds Seeds Sensors Phosphorus Cycles Production Packaging Processing Pasteurising Manufacturing Suppliers Fertilisers Pesticides Water Consumer Traceability Trust Nutrition Storage Data Monitoring Conditions Quality Retailers Groceries Restaurants Catering Markets Export Quality Exchange Economics Demand Imports Customs Diseases Safety Challenge Advisory All rights reserved. 7

11 Value Chain Visibility and Traceability Achieving Supply Chain Mobilisation for Complete Industry Awareness When the supply chain becomes more diverse and global, it is imperative for the consumer that the food they eat can be traceable for not only ethical reasons, but for worst-case scenarios such as disease or defects. The advantage of complete value chain visibility is often lost on farmers, but a comprehensive understanding of the value chain can help to manage risk. As the Food Safety Modernisation Act works to ensure that farmers have complete understanding on the products leaving and entering their farm, the farm operators themselves can benefit from visibility from farm to fork, which traces their harvest from production through exports and processing, and maintains complete digital awareness as their products go through retail, food service or exports. The Challenge Advisory Agricultural Service assists the modern farm by helping them to take a risk-based view of their products and processes by mapping supply chain risks, segmenting their supply base, identifying critical areas of risk and identifying key aspects where the supply chain could be improved. In addition, the Industrial Internet of Things becomes commonplace in the daily operation of agriculture. Farmers will be able to benefit from increased modularity in the agriculture sector. To take full advantage, the Challenge Advisory Agricultural Service enables the farmer to benefit from integration of field data with that of suppliers and consumers along the supply chain, which means that any change in the farm system can be identified and accommodated for by automated systems, meaning farmers can enjoy greater efficiency and flexibility when ordering inputs or selling their harvests for maximum profit. The Challenge Advisory Agricultural Service reduces the time and improves the accuracy of scouting on a farm. It measures growth rates of every crop and seed of the field, and provides the input data that affects the variable-rate application of inputs. It is also tuned toward artificial intelligence, and can learn from previous data and other applicable situations to better understand future demand. As well as this, the Agricultural Service enables a farm operator to gain better understanding of the agricultural value chain for greater insight, and to promote optimisation-based decision making Challenge Advisory All rights reserved.

12 Conclusion The aim of any farm is to improve its yield, and by extension, its profits. With digital agriculture experiencing a rich period of development, the possibility is there for farmers to operate at maximum efficiency, and to improve their profitability by unprecedented margins, while at the same time fulfilling global demand and providing sustainable food security for 10 billion people by the year Precision agriculture has evolved to the point where it can no longer be ignored in contemporary agriculture, and the cost effective nature of the practice means that modern farmers have no recourse but to adopt in order to stay relevant in the agriculture sector. A persistent trend in 21st century in is based upon the principles of IIoT; namely, the ability to have complete understanding of their business environment, with complete awareness of the supply chain. In agriculture this is no different. The future of agriculture lies in the vast information available on a farm, and as more of this information is gathered, the ability to process this information will become vital. With Challenge Advisory, farms will be able to revolutionise their business model, communicating all across the agricultural industry for complete sapience of exports, manufacturing and regulatory guidelines. Additionally, the modern farmer will be able to take full advantage of sensor data available to them, integrating this information not only for their own efficiency and economic gain, but also for complete transparency with consumers, processors and suppliers. Challenge Advisory s vision for the future of digital agriculture is built upon the concept of complete visibility of the agricultural supply chain. If the true potential of digital agriculture can be harnessed, then water wastage, chemical run-offs and carbon emissions could become a thing of the past, and digital agriculture could have a critical role in the sustainable development of farming as a whole. As a result, it is imperative for all the components of the agricultural value chain to embrace new technologies, in order to cultivate efficiency, productivity and profitability in agriculture. Challenge Advisory s Digital Agricultural Service enables the modern farmer to remain completely aware of farm operations, taking control of many aspects of data to not only increase their yields, but improve the quality and efficiency of their operations, while remaining integrated with their supply chain for complete omniscience of their industry Challenge Advisory All rights reserved. 9

13 CONTACT Charles King Head of IIoT E: Lara Francesca Global Partnerships E: Dr. Aubrey Longmore Head of Agriculture E: CHALLENGE.ORG The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Jeremy G for Challenge Advisory I CH I Sept 2015