Drones in Agriculture: Are They Really Taking Over?

Drones in Agriculture: Hype or Reality

"Drone" is unquestionably one of the largest tech buzzwords at the moment. The term itself is currently known through several different media outlets to be at its "peak of inflated expectations."

However, one industry of the world that currently faces a dearth of drone excitement is agriculture. But to that end, there have been a variety of publications coming forward expressing how drones will transform the industry into a brave new world.

So what about the data supporting drones in agriculture?

The image below describes the market research/forecast for the industry with drone technology, something many of us may be familiar with:

According to AUVSI’s “The Economic Impact of Unmanned Aircraft Systems Integration in the United States” report released in early 2013, agricultural Unmanned Aerial Vehicles (UAV) would dominate the market and “dwarf all others”. This report was the initial finding that inspired many other market tests in the same topic. What's interesting to note, however, is that this report has drawn assumptions that are questionable at best, or entirely wrong at worst.

Here is a great read on this topic, in a nutshell:

• The AUVSI report is not an objective piece of research due to this organization’s goal is to “promote unmanned systems”
• Japan is not a good proxy for the US due to a very different agriculture landscape based on  field location, average field size, agriculture products and UAV application (pesticide spraying in Japan and remote sensing in US) itself

However, let’s step aside from research papers and take a look at actual numbers, specifically the adoption of drones.

In 2015 Crop Life Magazine conducted a survey among Agricultural dealers and producers on how they use precision agriculture technologies, including questions on drones for the first time in the magazine's history.

Results are pretty eye-opening (here is the full survey):

While 16% of US Ag dealers were offering drone-related services in 2015…

…only 13% of them were generating a profit from it

Drones in Ag: Threats and Opportunities

Down below I’d analyze potential threats and opportunities for drone-related businesses in agriculture.

Threats

1. Satellite / Aircraft platforms

Current research and venture capital interest in space-related startups have made small satellite-based Earth Observation(EO) a very large threat to drones.

However , satellite/drone imagery adoption rate (perhaps the most important metric for assessing one or another technology’s perspectives) point to an interesting phenomenon : UAVs’ adoption among both Ag dealers and producers is at the level satellite imagery has been 11 years ago.

Thus, taking into account that a huge number of Earth Observation satellites (both by commercial companies and government/academia) is going to be launched in coming years, satellite imagery price will definitely decline and this would significantly reduce the barriers for farmers to use remote sensing data.

Moreover, there is a competition from aircrafts which are sometimes claimed as an optimal platform for gathering imagery in terms of spatial resolution and data acquisition costs at the moment (nice read on this here). And there are some startups utilizing imagery from manned aircrafts, such as YC-backed TerrAvion, which declares it collected more data than the whole electric drone industry combined in 2015

2. Unclear AgTech mid-term adoption
In addition to the questionable perspective of drones in agriculture in competition with other imaging platforms, it is unclear how farmers will adopt tech startups’ products in mid-term.

According to Kenneth S. Zuckerberg, senior research analyst at Rabobank Food & Agriculture, commodity price downturn will have a serious impact on AgTech startups adoption.

The key takeaway from this study is that farmers would hardly invest their resources to innovations (say provide AgTech startups a revenue) due to significantly declined income.

Jonah Kolb, vice president at farm management group Moore & Warner, and Arne Duss, the founder and CEO of HighPath Consulting, outlined even more reasons for limited AgTech adoption in another research paper. A few are the following:

• Falling farm incomes
  USDA forecasted that 2015 farm incomes were down 36% from 2014, making them the lowest farm since 2006.
• Low incentive
  Many US farms are owned by their operators, meaning there is little need to deliver market-rate returns to investors, making adoption of yield-enhancing tech slow.
• Risk appetite
  With 62% of US farmers nearing retirement age, there is less appetite for systems upgrades.
• Growing season
  A single growing season in much of the US reduces adoption opportunities and the number of potential technology iterations each year.

Summing up, there are some unfavorable macro trends for drones in agriculture beyond competition with satellites/aircraft.

3. Beyond-Visual-Line-Of-Sight (BVLOS) Restrictions
The absence of an established mechanism for safely managing UAV operations in low-altitude airspace (at or below 500 feet) and, consequently, beyond-visual-line-of-sight (BVLOS) flight restrictions imposes significant limitations on the efficiency of drones implementation in agriculture.

While some farms only consist of several acres and could be fully surveyed within-visual line of sight (VLOS), many more farms do not fit this description. For these larger farms, the importance of being able to conduct BVLOS operations is magnified.

If farmers with large acreage are restricted to VLOS requirements then they would need to fly multiple, potentially redundant missions to cover the necessary ground. Instead of capturing the imagery and collecting the relevant data all at once, these farmers would be forced to expend precious additional resources into stitching together maps and synthesizing data. This would be highly inefficient — both in terms of manpower and time — and could nullify the potential time and cost savings provided by UAS for Ag industry.

At the same time, there are some technical (such as lack of access to spectrum and uncertain UAS traffic management (UTM) system architecture) and regulatory barriers that may cause the system to be years away (more on this here).

Moreover, BVLOS are limited in most of the countries (not only in US):

Thus, BVLOS restrictions serve as another threat to the potential expansion of UAVs in Ag.

Opportunities

Despite the threats described above, there are some positive signals making drones’ perspectives more promising.

1. Drones Are Getting Smarter & Stronger
Generally, drones implementation is limited due to several technological difficulties, such as:

• Lack of autonomy
  UAVs full potential can be unlocked only when truly autonomous drones would be available.
• Low flight endurance
  The efficiency of drones operations strongly tied with the flight endurance, which is, for most of the professional UAVs, such as SenseFly eBee and AgEagle, is about 30-40 minutes, which is not enough obviously for continuous surveys.

However, a lot of great startups are overcoming these challenges with their products.

Recent computer vision applications improved drone capabilities beyond pretty straightforward “follow-me” features towards impressive autonomy. To name a few startups in this area there are Skydio (raised $28M from Accel and a16z) and Percepto (raised $1M from Mark Cuban and some other high-profile angel investors). Moreover, advanced computer vision is already embedded in consumer models, such as brand new DJI Phantom 4.

As for flight endurance improvement, there are 2 options: ground charging stations and advanced (not LiPo) batteries.

Ground stations are developed by a number of startups (Skysense and Hive to name a few) and usually consist of protected case and induction charging pad, thus, a drone should just be landed at it.

Regarding batteries, there are several projects developing fuel cells for UAVs, such as hydrogen fuel cell by Intelligent Energy. Moreover, world record for the longest drone flight (more than 3 hours) that was recently set in Russia involved hydrogen-air fuel cells.

Thereby, considering that drones would be capable of flying for hours and doing it without humans' assistantship quite soon, this will significantly increase drones’ operations efficiency.

2. UAVs Sensors’ Advancements
One area in which drones are definitely ahead of satellites at the moment is sensors variability and data resolution. With lidars , hyper-/multispectal imagers and thermal sensors drones are capable of collecting unique data compared to satellites. For example, an average hyperspectral image space-based system can provide has 30–50m GSD, which is 2 order of magnitude lower than it’s possible to get using UAV.

But, while these sensors have already proved its value for construction,mining, energy and O&G, it remains unclear which applications (except NDVI calculation utilizing multispectral sensors, which can be successful provided with satellites as well) for agriculture can be useful for farmers (crop counting or weed detection?).

3. Ag Can Adopt New Tech Pretty Fast (if it brings real value)
Despite the data on satellite/drone imagery penetration and unfavorable AgTech mid-term adoption forecast mentioned above, historically,the  Ag industry has snapped up some technologies pretty fast, such as GPS-related ones.

Thus, if we take these technologies as a reference to UAVs and extrapolate adoption growth rate we’d have a pretty optimistic scenario with around 60%(taking GPS guidance with auto control/autosteer 30% CAGR as a reference) penetration of drones in US agriculture industry till 2020.

Conclusion

In my opinion, unfavorable conditions prevail over the favorable ones at the moment and global expansion of agriculture drones is questionable (at best).

However, there is probably some niche on the intersection of:

• Hyperspetral Imagery
  UAV-based hyperspectral imagery is much more affordable than the one from satellite-based sensors at the moment. Thereby, if startups would be able to solve some technology problems related to hyperspetral data (huge data volume, the need for calibration for different geographical areas) and create uses cases providing value to the Ag customers — it’s is one of the things that would give drones an edge compared to other platforms
• Relatively small farms
  At the moment, to purchase satellite imagery it is required to buy some minimal order amount of data (e.g. 500 km2 for 5m GSD data from RapidEye constellation), which makes it unreasonable for small farmers. Consequently, small farmers represent a market opportunity in agriculture for drone startups, perhaps Japan and Western Europe, speaking of geography. However, there are some limitations on the area on which drones’ implementation is economically reasonable (here is a research paper on drones, aircrafts and satellite cost effectiveness comparison:

Thus, drone Ag startups probably should try to target a niche market/use case, establish a beach head instead of aiming for global expansion from the beginning and prove they can really bring some value to the farmers (and provide return to its investors consequently).