Top Menu

Self-driving tractors could put small farms on investors’ map

1024px-Aerial_view_of_a_tractor_at_Werktuigendagen_2005

By making agriculture ventures more productive, the rise of autonomous mobility promises to open up the market in counter-intuitive ways.

Amid the excitement surrounding driverless cars, it has dawned on people that the biggest threat to their success may not be technological failure. Rather, it’s the prospect that they could be routinely bullied by their mischievous, human-driven peers – leading them to react in unpredictable ways.

Agriculture shares few of these concerns. Farms are what robotic experts call ‘semi-structured’ environments: they’re not exactly like a lab, but they are organized in a fairly systematic fashion, and most obstacles are easy to map out. Crucially, they are also sparsely populated. It is thus easier to achieve automated driving in agriculture, which explains why it’s one sector where the technology has made the most advances.

Many tractors now have ‘level 4’ autonomy, meaning they can self-drive in specific situations. In labs, the technology can already achieve full ‘level 5’ autonomy, says Khasha Ghaffarzadeh, research director at market research firm IDTechEx. “The question is whether the market wants it or not.”

It seems it does. IDTechEx believes the market for autonomous vehicles in agriculture will grow from little more than $200 million today to more than $1.2 billion in 10 years’ time; robot sales as a whole are forecast to reach $12 billion by 2027.

The numbers should be taken with a pinch of salt. Less than a year ago, Tractica, another research outfit, predicted shipments of agricultural robots would hit $74 billion in 2024. Yet from agri investors’ point of view, it doesn’t matter too much. The direction of travel is clear: the drive to boost productivity will lead many farms to embrace autonomous mobility.

For years, more advanced machines had to be bigger, heavier and faster, in order to cover longer distances, sow deeper and pick more stuff. The idea was that they would allow big farms – the only ones able to afford the most sophisticated kit – to reap sizeable economies of scale by maximizing driver use on ever larger tracts of land. That suited investors looking for value creation and capital gains, some of whom have plowed money into mammoth estates.

But the rise of driverless technology may change the way we envisage agricultural machinery. It could give birth to a new class of small, lightweight, slow autonomous robots, a fleet of which could replace one big heavy machine. “You would be able to give very controlled care to your farm, almost like bringing gardening skills to farming,” Ghaffarzadeh told Agri Investor this month. That could suit smaller farms, helping boost productivity in ways not previously possible without scale.

In principle, the need to finance equipment costs will remain a hurdle. But again, new models will probably emerge. Instead of selling expensive pieces of kit, agricultural majors could introduce robots as a service, renting them out or using them onsite while pricing them in terms of dollars per acre of land covered. In addition to smoothing cash outlays, such models will also help win over farmers who hesitate to place their trust – and money – into technology they know little about.

The jumps in profitability this could engineer at smaller farms may help bring more investors on board. Initially, this could involve family offices or local institutions, with pensions and insurance firms joining once larger portfolios form. Entrepreneurs could also seek capital from dedicated fund managers as they take on new crops or look to expand – while remaining at the wheel.

Write to the author at matthieu.f@peimedia.com

, ,

No comments yet

Write a comment or reply

© PEI Media 2017