Investment bank looks at precision ag
Current estimates are that the size of the precision agriculture market investments in the U.S. by producers and service providers using precision ag technology will be growing by at least 13 percent per year during the next five years to reach $3 billion to $3.5 billion.
The current estimates show the size of the precision agricultural market in the U.S. is between $1.5 billion and $2 billion. These are AgWired reported estimates passed along by Focus Investment Banking in a recent precision agriculture analysis report.
Looking at precision ag outside the U.S., with an emphasis on developing countries, the growth rate is projected to be 25 percent per year. As noted by the report, developing countries need to improve production drastically and change can begin to swiftly take crop production from antiquated to modern techniques.
Adoption of precision ag in the U.S. is increasing in conjunction with younger farmers replacing some of the older generation, the Focus Investment Banking group contends.
Companies Will Merge
Development of precision ag technology is not limited to U.S. companies, and companies developing precision ag technology range from the biggest ag equipment manufacturers to small privately owned or venture capital backed companies. The varied size companies are developing specialty farm management software, cloud data services, various types of sensors, data analytics and drones or unmanned aerial vehicles (not yet fully approved for U.S. use).
The Focus Investment Banking report notes what has typically been happening in all agricultural technology advancements. “Many of these smaller companies will be bought as they gain momentum and provide unique products and services that larger companies can leverage into their current customer base or provide entry into a new line of business or customer base,” the report notes.
“The entire industry is realizing that a key value driver in the development of precision agriculture is data—collecting it, analyzing it and using it,” it is further noted.
The return on investment and payback to farmers is highly advertised as being quite quick. The Focus Investment Banking report agrees with the contention that payback periods can be one to five years depending on what technology in which a farmer invests.
The report provided an example of Brian Watkins, a Kenton, Ohio, corn and soybean farmer of 7,000 acres seeing a 145 percent return on investment. The main return has come from the use of auto steer, GPS guidance equipment and variable rate application equipment.
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