Digital Ag review 2021: Covid-19 and climate change emerge as catalysts

Digital agricultural practices briskly proliferated most emerging markets in 2021, with improved adoption observed across Asian and African nations. Although mature industrialised markets benefited from innovations such as artificial intelligence (AI)-based crop monitoring and precision farming, the effects were most perceptible in nascent markets such as India, where consorted efforts from the government and the industry translated into an actionable regulatory framework. Overall, the sector was commanded by the developed North and South American markets, with Asian countries such as China and Japan emerging as significant business territories.

The deployment of drones in agrochemical spraying and the use of technologies such as AI, machine learning and Internet of Things (IoT) gained traction, especially with several smaller businesses testing the waters alongside their larger, established peers. A study of the sector's trajectory during the year highlights considerable focus on the development of hardware, besides the integration of software tools with traditional farming systems. The sector also leveraged remote sensing and satellite imagery for a host of services ranging from crop prediction, stress detection and irrigation management, to wildfire detection and insurance surveys.

Israel emerged as the fountainhead of innovation, with start-ups in the country securing large funds for technology development and scaling up their solutions.

Covid-19 catalyst

The ongoing Covid-19 pandemic and the accompanying challenges to smallholder farmers in the form of access to finance and inputs, supply chain constraints, and transportation hurdles, brought digital agriculture to the fore. Growers in countries such as India, Kenya and Nigeria benefited from services offering agronomic advisories and insights on use of inputs, financial and insurance solutions, and weather information through mobile-based services. Furthermore, the easing of smartphone ownership in these economies, coupled with the availability of flexible data plans to access the internet, acted as catalysts.

The pandemic also resulted in a narrowing of the digital divide, with smartphones and internet connectivity affording farmers access to a burgeoning agricultural e-commerce ecosystem. A large repository of offline information was also made available for users with basic phones and through SMS-based services. In India, for instance, several mobile-based commodity marketplaces leveraging blockchain technology have expanded over the past couple of years to include thousands of farmers on their platforms. In fact, reports suggest that losses incurred by Indian farmers because of market closures could be recouped to a substantial extent through e-commerce channels that directly connect them to other businesses.

Policy push

In India, decisive steps from the government on digital agriculture ushered concrete regulatory changes. In June, the Ministry of Agriculture and Farmers' Welfare published a consultation paper on the country's national digital agriculture ecosystem, dubbed the IDEA (India Digital Ecosystem of Agriculture). The Ministry noted that the technologies under IDEA are to leverage cloud technologies and adopt a "cloud first" or "cloud-by-default" approach. A three-year action plan with specific milestones, deliverables and timelines has been proposed to roll out IDEA across the country.

Deliberations throughout the year translated into the country's government releasing a standard operating procedure (SOP) involving the use of drones for the application of pesticides in agriculture, forestry and non-cropped areas. In the run-up to the SOPs being published, several companies, including Bayer's Crop Science division, were cleared to deploy drones for various agricultural activities.

In March, the agricultural use of drones took off in the Philippines, with the country's Fertiliser and Pesticide Authority (FPA) granting "conditional approval" to FMC for spraying its insecticide, Prevathon (chlorantraniliprole - trade-marked as Rynaxypyr), on rice. This was followed by Syngenta receiving the same clearance to deploy drones for spraying its insecticides, Alika 247 ZC (thiamethoxam + lambda cyhalothrin), and Match 050 EC (lufenuron).

However, using drones for agrochemical spraying is banned in the EU under its sustainable use of pesticides Directive (2009/128), with exceptions granted only under strict conditions. There exists uncertainty whether the use of drones, a popular research area, constitutes aerial spraying. The issue is being discussed as part of the Commission's planned revision of Directive 2009/128, with the industry voicing its displeasure over the matter in May.

An agreement was forged by the US, Canada and Mexico in January to work together on evaluating new technologies, including drones.

Climate change

Several governments committing to ambitious environment goals, and renewed discussions on climate change, translated into enhanced focus on environmental, social and governmental (ESG) goals across sectors including agriculture. The digital agriculture segment leveraged the conversation surrounding sustainability to advance products and services that aid in optimum use of agricultural inputs, besides reducing wastage.

Furthermore, the rising tide of carbon capture initiatives aimed at combating climate change and enabling farmers to generate carbon credits for an additional source of income also drove the adoption of digital agriculture. With several large agrochemical players committing to align themselves with the EU's Farm to Fork strategy that sets targets for achieving more sustainable agriculture systems by 2030, the pressure is high on making a switch to sustainable practices such as the implementation of digital practices.

Deals and consolidation

While major agrochemical players buoyed their portfolios in the segment, the space was also shaped by several big-ticket deals and acquisitions.

BASF kicked off the year with a couple of partnerships - one with Dutch satellite-derived data company VanderSat (Haarlem) to offer daily biomass images unimpeded by cloud cover - and another with US-based weather forecasting business Salient Predictions (Falmouth, Massachusetts) to provide growers with access to long-range, seasonal weather forecasting data. In March, the company collaborated with Austrian digital agriculture company Pessl Instruments (Weiz) to collaborate on improving pest management in fruits and vegetables, with the deal expected to integrate the latter's hardware and software capabilities with its Xarvio Scouting app.

Collaborations also included Bayer's digital agriculture subsidiary, The Climate Corporation, agreeing a deal with German farming technology manufacturer Horsch (Schwandorf). The companies say that the development will equip farmers with new ways to connect their Horsch seeders, planters and other implements to Climate's farming platform, Climate FieldView.

In the run-up to India publishing its drone SOPs, Bangalore-based agribusiness company Farmonaut agreed a collaboration with Noida-based aerial data provider GarudaUAV to offer remote sensing technologies to the country's farmers. The company also joined hands with Indian agribusiness company Godrej Agrovet to help the latter with farm-level data for field mapping.

The series of deals through the year included FMC's venture capital arm, FMC Ventures, investing in US technology company Scanit Technologies (Fremont, California) to use the latter's SporeCam instrument to analyse Asian soybean rust (Phakopsora pachyrhizi) in Brazil.

Furthermore, a deal was signed between Corteva Agriscience and US robotics firm Boston Dynamics (Waltham, Massachusetts) to employ its Spot robot system.

Akashpratim Mukhopadhyay | Specialist Reporter, IHS Markit

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.