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.
What really will be making a huge difference between farming with and without precision technology is the amount of data that can be gathered in precise manners, and the large amount of data being referred to as big data. “This wealth of data needs to be filtered, fused and analyzed to provide useful and actionable information for increasing yields and reducing costs,” it is noted.
The Focus Investment Banking group expresses a lot of excitement about unmanned aerial systems for the future of precision ag. “Drone companies offering or planning to offer products and services to the agriculture market are numerous, and investments in these companies are on the rise. During the first nine months of 2013, approximately $40.9 million has been invested in UAS related startups—double the pace of 2012’s UAS investments,” the report noted while quoting Bloomberg news numbers.
“The use of drones [UAS] for agriculture will add real time high definition imagery, collected on-demand, to help a farmer see what is happening in the field without having to walk through the field. Drones can cost a fraction of what an airplane or a satellite costs, and they can provide a superior set of images with a potential resolution equivalent to standing next to the plant,” the report further suggested.
The website for Focus Investment Banking LLC is www.focusbankers.com. AgProfessional by providing the information used in the report from the group is not endorsing the company.