by Kevin Kimle and Dave Krog
We just returned from Brazil, where we accompanied twelve Iowa State University students who are a part of a travel course that is examining farmer perspectives on current and future precision agriculture technologies for crop production. Our time was spent in Mato Grasso, one of the frontiers of agricultural production in Brazil.
Our perspectives on precision agriculture technologies are as investors, both in farm land and in agtech businesses. Our bias is that there has not been a recent ‘killer’ app or product in the space, though there are certainly technologies such as yield monitors and auto steer that are ubiquitous. Nonetheless, technologies that enable producers to make decisions differently to significantly decrease cost and/or increase revenue are not in evidence as yet.
It’s not a perfect analogy, but what we’ve wondered is whether a technology would emerge like Roundup Ready soybeans in the 1990s. Before their commercial release, when we worked for Pioneer Hi-Bred International, we saw an analysis by the market research team that showed U.S. farmer adoption of 90 percent-plus within five years of introduction. We remember being skeptical about that fast of adoption, but the prediction was spot-on. The compelling value proposition to farmers drove significant disruption in both seed and herbicide markets.
The size of some of the farms we visited is significantly larger than most we know in the U.S., ranging from 25,000 acres to more than 1 million acres, so their perspectives were quite interesting. Some take-aways include the following:
Less than half of available technology capabilities on farm equipment is utilized – As in the U.S., much of the technology that comes standard on new equipment or is offered up by input suppliers is actually used. It appears a classic ‘solution in search of a problem’ issue, in that the farmers don’t utilize technologies that don’t have a clear and compelling value proposition.
Equipment monitoring technologies are employee monitoring technologies – Technologies that enable real-time monitoring of equipment are useful for smarter maintenance, etc., but for large farms in Brazil it also enables monitoring and management of employee productivity, a significant issue in Brazil for large farms.
Variable rate technologies aren’t big… yet – Variable rate fertilization or seeding haven’t been widely adopted for lack of a clear value proposition. What farmers do expect, however, is value from variable-rate or precision spraying technologies. The pest pressure in sub-tropical Mato Grasso is significant, so technologies that decrease pesticide use without sacrificing effectiveness will be valuable. We spoke to a farmer, for example, that averaged more than 30 passes with the spraying in cotton fields, once every three days. Precision spraying compared to broadcast pesticide use is of significant interest. There’s a reason Deere bought Blue River Technologies for more than $300 million.