There are a number of overarching trends that continue to dominate the agricultural sector. Global population growth, backlash against heavy use of synthetic crop protection, and the implementation of new IoT technologies into the agricultural technology mix are changing the landscapes innovation teams are tasked with navigating.
Population scale features most prominently of all. The world population is expected to increase to 9.2 billion by 2050. In order to meet this demand, current food production must increase by 70%. To meet this goal, agricultural production will need to both increase and evolve in order to increase crop yields and improve quality of food production, while also adapting to both insecticide resistance and shifts in the pest spectrum due to the impacts of climate change and changes in agronomics. Therefore, agrochemicals need to brace for political pressure, as a changing regulatory environment may find many current agrochemicals under stricter regulatory controls or banned entirely.
One of the major focuses for crop protection is the development of new biologicals and related applications of biotechnology as a substitute for currently-dominant synthetic compounds.
With the new regulatory environment focused on mitigating the serious side effects of major classes of insecticides like neonicotinoids leading to severe restrictions or outright bans, current research is showing an increasing focus towards developing and modifying biological organisms to act in a similar role. Given the nature of the mechanisms, biologicals are highly diverse and vary from plant-derived chemicals to pathogenic bacteria or fungi, to bio-stimulants that enhance the ability of plants to better tolerate stressful growing conditions.
This trend is amplified by a shift in consumer preferences that demands lower levels of chemical residue within the food supply chain as biologicals tend to have lower toxicity and environmental impact. Moreover, the biologicals sector is a rapidly growing portion of the crop protection market, as sales have expanded at roughly 17% compared to the more established sectors. However, biologicals represent only 5% of the global market, creating a greenfield opportunity for the crop protection sector.
Furthermore, biologicals tend to have shorter development costs and timelines, meaning that firms can release products faster, at a lower cost, and a high potential for profit.
While all industries are or will be affected by climate change, the agricultural sector, agrochem in particular, will feel the effects acutely. As climate change is predicted to have a serious negative impact on global crop production, agrochemicals will need to rise to the occasion and develop new crop protection mechanisms and genetic modifications to address a range of negative impacts from droughts, floods, severe weather, invasive species, temperature variations, changes to growing seasons and other second-order impacts.
Biotech is one of the major avenues that crops can quickly adapt to the significant changes brought up by climate change, as crops can be modified to resist pests and diseases. This has the secondary effects of maintaining or increasing yields, lessening the need for pesticide use and other environmentally damaging practices. However, given with how complex the potential solution to plant adaptability can be, industry leaders will need to develop deeper ties to academic researchers and competitors in order to quickly develop solutions before the impact of lower agricultural productivity reach crisis levels.
Big Data and IoT
A quickly growing yet undefined growth opportunity within agriculture lies in data analytics and the internet of things. In an agricultural context, IoT focuses on implementing sensors, cameras, and other data collecting arrays that monitor crucial agricultural metrics and use the data to optimize agricultural processes. While the specifics vary, ultimately IoT aims to deliver insights that enable farmers to make better decisions around harvesting, planting, and other farming activities.
According to industry reports, only around 10-15% of farmers currently use IoT solutions in their operations. More critically, a large majority of growers are not deeply aware of the potential that IoT offers. While growers are aware of individual components of the solution (i.e. soil moisture sensors, light sensors), there’s a lack of market knowledge of the full breadth of solutions and their comprehensive impact on farm operations.
More importantly, by allowing for more optimized use of agricultural chemicals, IoT can enable the highly precise use of pesticides and fertilizers, and mitigate and potentially reduce chemical use in agricultural operations.
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