On November 27, within the framework of the V International Agro-Industrial Dairy Forum, the session "Digital Agenda of the Dairy Industry" was held. It was attended by the Director of the Department of Digital Development and Management of State Information Resources of the AIC of the Ministry of Agriculture of Russia Irina Ganieva, who presented the departmental project "Digital Agriculture".
Its goal is to provide a technological breakthrough in the agro-industrial complex through the introduction of digital technologies in agriculture. It is assumed that this will increase labor productivity at agricultural enterprises by 2 times by 2021.
One of the stages of the project implementation will be the creation of an intelligent system of measures state support. Integration with the databases of Roshydromet and the Ministry of Emergency Situations will make it possible to adjust subsidies during the introduction of emergency situations in the regions. It is planned that by 2021 100% of contracts with recipients of state support will be concluded in in electronic format. By the same date, all agricultural products for export will be accompanied by a paperless system “from field to port”.
Also, by 2021, it is planned to introduce intelligent sectoral planning in all constituent entities of the Russian Federation on the principle of growing the most profitable crops, taking into account the transport distance to the place of processing or consumption. The project also involves the creation of Russia's first industry electronic educational system"Land of Knowledge". In 2019-2021, 55,000 specialists of domestic agricultural enterprises will be trained in the competencies of the digital economy.
The Ministry of Agriculture of Russia has developed a roadmap for the implementation of the Digital Agriculture project until 2021 with a detailed indication of the tools and deadlines for the implementation of activities.
The Digital Agriculture project has been submitted to the government. This was reported to Rossiyskaya Gazeta by the Ministry of Agriculture of Russia. The project prepared by the ministry should contribute to the rapid digital transformation of agriculture. It is planned that thanks to the introduction of digital technologies and platform solutions in the agro-industrial complex, there will be a technological breakthrough, and productivity at "digital" agricultural enterprises will double by 2021.
"Now the project is going through the approval procedure in the government. It is planned to contribute funds to the budget for the implementation of the project from 2019," the ministry told RG.
The key innovations of the project are: the digital platform "Digital Agriculture", which is an electronic platform for a large amount of data on Russian agricultural resources. "The project algorithm implies that producers will provide information in exchange for the proposed subsidies," the Ministry of Agriculture explained, "the majority of the project budget is planned to be directed in the form of grant support to farms investing in their own modernization."
Three integrated digital solutions will also be developed, which are planned to be widely implemented in the agro-industrial complex. Firstly, "Smart Farm" is a fully autonomous, robotic agricultural facility designed for breeding animals (meat, dairy) in automatic mode, which does not require human intervention (operator, livestock breeder or veterinarian). According to the Ministry of Agriculture, the "smart farm" independently analyzes the economic feasibility of production, consumer activity, the level of general health of the region's population and other economic indicators. To do this, she uses artificial intelligence, the Internet of things, big data, neural networks. Based on the analysis, the farm decides which species and breeds of animals (with given quality and quantitative indicators) must be diluted. "The introduction of such technologies will help increase the level of production and consumption of dairy products in Russia. By developing farms with automated systems management, the parameters of which change depending on the microclimate and the condition of the animals on the farms, we can improve the quality of milk to the "extra" class and ensure a stable increase in the milk productivity of animals," the ministry said.
Secondly, "Smart field". This is an intelligent system that automatically analyzes information about the state of agrobiocenosis, makes management decisions and implements them with robotic technical means. "The system analyzes soil and climatic conditions, determines the choice of crops depending on the target functions (maximization of production or profitability, economic restrictions), regulates the plant nutrition regime, carries out phytosanitary measures and care work.
Thirdly, "Smart Greenhouse" is an autonomous, robotic and isolated from external influences agricultural facility for obtaining crop products in automatic mode, minimizing the participation of the operator, agronomist and engineer as much as possible. "The system optimizes the economy of the facility, taking into account costs and consumer activity, complies with environmental and sanitary and hygienic regulations, using digital technologies, taking into account the agro-ecological assessment of hybrids and plant varieties, soil analysis," experts say. "The introduction of such technologies will ensure a stable growth in crop production in protected ground, obtain highly competitive substrates and fertilizers, reduce the energy intensity of production and increase the nutritional value of vegetables.
Systematic continuous training will also be provided. industry experts with the competencies of the digital economy through the introduction of a unique industry-specific electronic educational environment.
In Russia, the trends in the use of digital technologies are in line with global trends - this is an increase in agricultural production and an increase in the profitability of the industry. Now that technologies have evolved, become cheaper and have advanced significantly, it has become much easier than ever to achieve this, notes Alexander Lopukhov, Deputy CEO of CROC: , robotics, virtual reality, big data analytics and forecasting.For example, thanks to the Industrial Internet of Things (IIoT) technologies, agro-industrial enterprises can now receive information of a fundamentally new level about each agricultural facility and its surrounding objects.It enters a single information field from various devices: sensors and sensors that are equipped with agricultural machinery, video cameras installed on drones and satellites, or from other external information systems".
So far, Russia in terms of the level of digitalization in agriculture ranks only 15th in the world, only 10 percent of arable land is processed using digital technologies.
The Ministry of Agriculture proposed to the government of the Russian Federation to allocate 152 billion rubles for the creation of "digital twins" Russian enterprises APK and combine them into a single blockchain system. Large farms of the Leningrad region have already introduced technologies electronic analysis work and are not ready to reveal technological secrets and know-how. This project will be much more interesting for small farms.
“We have the preparation of a tractor for their system, but we are not directly involved in the development - this is a completely different production,” said Ilya Razaev, manager for regional sales of agricultural machinery in the North-West Federal District of the St. Petersburg Tractor Plant.
Robot milker
Smart agriculture is also practiced by other agricultural producers in the Leningrad region. In the greenhouses of the agricultural complex " All year round"(belongs to the Ecoculture holding") automatic systems are responsible for watering, monitor fogging and temperature. "The desired mode is set depending on weather conditions. Power plants are connected to electronic system, daily statistics are saved. If necessary, it can be downloaded and analyzed," the representative of the complex said.
GK "Losevo" carried out the modernization of the dairy farm back in 2012. At that time, the enterprise introduced a system of free-standing milking of cows "Karusel", the so-called robot milker manufactured by the Swedish DeLaval.
"It allows you to instantly track the parameters of raw milk and the condition of the animal. Thanks to the system, we managed to reduce the cost of production by 20% and increase milk yield by an average of 30%," Losevo says.
Tethered milking robots are installed at the breeding farm - they drive up to the animals on rails. "The cost of such an installation is no different from a carousel. It also allows you to keep computer records and monitor milk production," says Petr Pugachev, commercial director of Galaktika Agro (DeLaval dealer in St. Petersburg).
The idea of the Ministry of Agriculture of the Russian Federation is interesting, because it will bring weak enterprises up to the general level, says the commercial director of JSC Maxim Zhemchuzhnikov. "But strong companies and that's how they control it. The most important question: how to choose specific parameters, the data on which should be transferred to a single information base data? At our enterprise there are more than one hundred such parameters. In addition, it is necessary to clearly understand the project financing system - the integration and maintenance of analyzers and sensors entails significant costs," he argues.
One more question for representatives of the Ministry of Agriculture of the Russian Federation: how to transfer data? Penetration broadband internet in the Russian Federation is about 55%. "In remote villages, they use 3G and 4G modems, and not wired internet, since stretching fiber optics there is a costly and low-return event. At the same time, the modem provides unstable Internet, which stops working in bad weather and peak hours. These are big risks,” said one of the participants in the telecom market. The way out will be the use of satellite technologies, which provide a slower and more expensive, but stable Internet.
In Europe, the introduction of new technologies in the agro-industrial complex is also actively supported. For example, in France, the state also finances research centers to develop digital solutions that would be available not only to large companies, but also to small farmers. New products include drones for monitoring crops and collars for sheep that track movements using GPS.
Such technologies are already being used in Russia. Another issue is that they are available only to the largest farms, and their wider implementation will require state support.
Theoretically, any consumer in the future will be able to scan the barcode on a pack of seeds with a smartphone and find out that in fact these are not purple hyacinths, as indicated on the package, but pink ones, and sue the seller. But besides the benefits for the end buyer, the main value is for the state, which ensures food security and transparency in the circulation of seeds, because the gray market is often underestimated.
Victor Smirnov
Head of Integration Solutions CJSC Croc Incorporated
We will give you all the information, we already have it all. We also have nine nine-story old Soviet poultry houses at our factory - they are completely empty, we can provide them to you for the blockchain platform. I also have a question for representatives of the Ministry of Agriculture of the Russian Federation: how do their colleagues from the USA give the most accurate forecast for the growth of grain crops without the need to obtain data from our tractors?
Artur Holdoenko
CEO poultry farm "Sinyavinskaya"
A robot milker is an expensive pleasure, even for a small farm, investments in its installation start from 100 thousand euros. This is a significant investment, without subsidies from the state, an ordinary farmer cannot afford it. But there are technologies that allow the same 50 heads to be milked for less investment, however, the volume will increase. manual labor and biological risks. We are talking about mobile milking machines costing from 1 thousand euros. For a farm of fifty heads, it will be necessary to buy several.
Petr Pugachev
Commercial Director"Galaktika Agro" (dealer "DeLaval" in St. Petersburg)
In Finland, since 2005, farmers have been participating in the Naseva program to maintain epidemiological and epidemiological well-being. Thanks to this, an electronic unified database has been formed on the health of animals, the effectiveness of their treatment and the existing critical points of livestock farms. Each farm receives an individual development plan, updated based on the results of annual audits and constant monitoring of indicators. Finland today is almost completely free from infectious diseases of a major cattle, which avoids the cost of vaccines, and for the treatment of animals to use a limited range of antibiotics. One of the most significant differences between the regulation of the Russian market and the Finnish one is the complete availability of statistical data in Finland (on the number of animals, the volume and quality of milk, and much more). In Russia, statistics are collected in various planes, not always integrated with each other, which complicates both forecasting and support.
Evgeny Provorov
Veterinarian "Valio" LLC
In the context
It is pointless to argue with digitalization, it will come inexorably and change the face of the economy just as it once did Railway or the internet. The issue is that no blockchain will work if there are no clear rules in the system. It is impossible to digitalize the mess.
The initiative proposed by the Ministry of Agriculture is extremely sound. For once, instead of banning everything and obliging them to “buy blockchain” from one supplier, agricultural producers were offered comfortable stimulus measures. It would have been like that for a long time - and we would not be surprised that only in 2018 Russia was able to catch up with the United States in terms of the yield of a hectare sown with grain. Overseas, by the way, they worry about our agro-industrial complex, and not in vain. The American market has been greatly weakened due to trade wars with China: it is difficult for farmers to sell such volumes against the backdrop of increased duties. Since we are so obsessed with the idea of catching up and overtaking, there is no better time to invest in digital.
The problem is that no blockchain can now protect a business from raiders, from werewolves in uniform and from sudden checks by the Ministry of Emergencies. We will not build a digital economy if GPS trackers can turn out to be "spyware" at any moment, and all related innovations can be a criminal offence. And no digital milk yields from a barn full of big data will yet save a small farmer from the purchasing department of a large chain, which stubbornly puts on the shelves only the products of partners - large agricultural holdings.
But, if the economy is digitalized step by step, these problems become solvable. Tortured trading networks? Smart contracts are able to form clear rules of the game between suppliers and retailers. Not enough volume? Welcome to the aggregators that are able to unite groups of farmers under one brand, as the Finnish Valio once did. Tired of checking? Let the inspectors look not under the tail of the cow, but into their monitor - all indicators are displayed there in real time. When every grain counts, the attitude of workers to work changes. You look, the entrepreneurial vein, which seemed to be lost forever in 70 years of collective farms, will also return.
Blockchain is good for everyone and no longer costs sky-high money. The problem is, is it necessary? political system? It is impossible to digitalize the economy, and leave the law enforcement system without reform. It is impossible to increase the transparency of business and deny the same to the judicial and electoral systems. So far, not everyone is aware of this. And well, I guess. After all, if the blockchain is implemented in time, it will be too late to change it back.
Select the fragment with the error text and press Ctrl+Enter
The world has entered the era of digital globalization, defined by the flow of data containing information, ideas and innovations. The introduction of digitalization technologies allows the state, business and society to function effectively.
Developed countries are successfully modernizing their economies by accelerating the development of innovative technologies using artificial intelligence, automation and digital platforms. Global spending on scientific and technological development today is about 2.0 trillion. US dollars with an annual increase of 4.0% on average.
The transfer of valuable information flows, data, allows you to move goods, services, finances. Virtually every kind of cross-border transaction now has a digital component. Over the next five years, it is predicted that the flow of information, search queries, data, video, and internal corporate traffic will increase tenfold.
Today, the digital form of globalization is opening the door for developing countries, for small companies and start-up entrepreneurs, for billions of people. Tens of millions of small and medium enterprises around the world have turned into exporters by joining the e-commerce bases. Global flows of all types support growth through increased productivity, while data flows help create more efficient markets.
Digital technologies in the agro-industrial complex are the main way to strengthen the economy, its reorientation from a raw-material to an industrial-service model using "smart" agricultural technologies, which are provided through machine learning and neural networks, digital platforms, 3D printing, robotics, biosensors and Big Data.
Digital technologies in the agricultural sector
Today, the opportunities for modernizing the agro-industrial complex are enormous: the world's agriculture is transforming from a traditional into a high-tech industry capable of creating new markets for innovative solutions and developments to solve a large number of practical problems.
Digitalization in the agricultural sector allows reducing risks, adapting to climate change, and increasing crop yields. Reducing the cost of production, improving its quality and competitiveness based on effective use resources and evidence-based approaches is the main task of digitalization.
Security necessary information agricultural producers will reduce the costs of buying and selling, simplify the supply chain of products from the field to the consumer, reduce the shortage of qualified labor force. Entrepreneurs need to produce more food with fewer resources, so a significant breakthrough in agricultural production technologies is needed.
To work without digitalization means to lose in the global competition. To remain competitive in the market, it is necessary to predict product offers depending on demand and consumer preferences. To take the right management decision agricultural producers must master digital technologies such as satellite imagery, high-tech sensors, mobile applications and GPS systems.
The experience of countries with a developed agricultural sector shows that the introduction of IT technologies into production has reduced unplanned costs by up to 20%: using available mobile or online applications, data obtained from equipment, sensors, drones, satellite and other external applications are used to making optimal decisions. New technologies make it possible to trace the entire path of product promotion from the field to the consumer, which guarantees its quality and meets the needs of customers.
Digitalization will become key instrument for the development of the main directions of regulation of the agro-industrial complex, including the availability of financing for the subjects of the agro-industrial complex, the availability of sales markets and the development of exports. The digitalization of the agro-industrial complex will help increase competitiveness and labor productivity, ensure food security and attract investment in the industry.
Creation of innovative agro-industrial parks
As part of the digitalization of the agro-industrial complex, technological agro-parks are being created, where Newest technologies in the field of precision farming, crop production, seed production, phytosanitary, digital solutions and sustainable management practices.
The problem of storage and processing of agricultural products in the regions of Russia is being solved: the construction of 5 wholesale distribution warehouses with a total area of more than 260,000 sq.m. The former wholesale and distribution centers were focused mainly on retail and small wholesale trade. Analysts note that the time has come for new and technological alternatives. It is expected that in the next 5 years regional centers active construction of modern agricultural parks with warehouse terminals with multi-temperature chambers for storing vegetables and fruits, cross-docks and equipped wholesale warehouses will begin.
Analytical report ( full version)
September 2017
Market Review
September 2017
J'son & Partners Consulting presents a summary of the results of a study of the analysis of the current state and prospects for the development of the Internet of things in agriculture in Russia.
Prospects for investors
The intensive introduction of digitalization and the Internet of things in agriculture promises to turn the least IT-influenced industry into a high-tech business through the explosive growth in productivity and reduction in non-productive costs that are attributes of Agriculture 4.0.
(more details in the J'son & Partners Consulting review: Internet of things in agriculture (Agriculture IoT / AIoT): world experience, application cases and economic effect of implementation in the Russian Federation)
For a long time, agriculture has not been an attractive business for investors due to a long production cycle, exposure to natural risks and high yield losses during cultivation, harvesting and storage, the inability to automate biological processes and the lack of progress in increasing productivity and innovation. The use of IT in agriculture has been limited to the use of computers and software mainly for financial management and tracking commercial transactions. More recently, farmers have begun using digital technologies to monitor crops, livestock, and various elements of the agricultural process.
Technologies have evolved and a sharp jump in attention to the segment occurred when technology companies paid attention to agriculture, which, together with partners, learned to control the full cycle of crop or livestock production through smart devices that transmit and process the current parameters of each object and its environment (equipment and sensors measuring the parameters of soil, plants, microclimate, animal characteristics, etc.), as well as seamless communication channels between them and external partners. Thanks to the integration of objects into a single network, the exchange and management of data based on the Internet of things, the increased productivity of computers, the development software and cloud platforms, it became possible to automate the maximum number of agricultural processes by creating a virtual (digital) model of the entire production cycle and interconnected links in the value chain, and plan the work schedule with mathematical accuracy, take emergency measures to prevent losses in the event of a fixed threat, calculate the possible productivity, cost of production and profit.
The catalyst in evolution and progress is a complex of technologies united by a common name Internet of Things(Internet of Things)*. This is a combination of fundamental discoveries in the field of data analysis (Data Science, artificial intelligence, machine learning), innovative achievements in the development of sensors and self-driving (unmanned) technology, which made it possible to collect data and control all objects at a level unattainable before, as well as connected network solutions, control systems, platforms and applications that take the way of growing plants and animals to a new level.
Picture:KPMG
Agriculture is becoming a very data intensive sector. Information comes from various devices located in the field, on the farm, from sensors, agricultural machinery, meteorological stations, drones, satellites, external systems, partner platforms, suppliers. General data from various participants in the production chain, collected in one place, allows you to receive information of a new quality, find patterns, create added value for all involved participants, apply modern scientific methods processing (data science) and on their basis to take right decisions minimizing risks, improving manufacturers' business and customer experience.
Farmers, agronomists, consultants get access to mobile or online applications that, when uploading data about their field (coordinates, area, crop type, past yield), provide precise recommendations and sequence of actions taking into account the analysis of many historical and current factors, both on its site and in the external environment, combining data from equipment, sensors, drones, satellite, and other external applications. Now the program helps to determine the best time for planting seeds, fertilizing, moistening or harvesting, calculate the time of loading and delivery of goods to the buyer; monitor the temperature in the storage and transportation area to avoid spoilage and deliver fresh products; predict yield and income and receive advice on how to improve plant processing compared to past performance.
If in 2010 there were no more than 20 high-tech companies operating in the field of agriculture in the world** and the venture capital investment market was $400 thousand, then since 2013 the exponential growth of venture capital has begun. By 2016, more than 1300 new technology startups were invested, more than 500 high-tech startups are created annually. Investments in the agricultural sector in 2015 reached a historic high and amounted to $4.6 billion.*** The most active countries that attract investments in agricultural start-ups are the USA, China, India, Canada, and Israel.
***(Agfunder.com)
A new investment segment has formed Agtech.
General term AgroTech (AgTech) integrates various equipment and technologies based on the acquisition and processing of data, both inside and outside the agricultural production cycle, used to increase yields, efficiency and profitability.
Investments in agricultural technologies in the world, 2014-2016
Source: J'son & Partners Consultingon thebasisAgfunder.com
Among the main arguments in favor of the investment attractiveness of "smart agriculture" are the following:
Agrotech investment accounts for less than 0.5% of all agriculture ($7.7 trillion) and less than 3.5% of all global venture capital investment ($128.5 billion) - extremely low for a sector that accounts for 10% of global GDP . For comparison, investments in healthcare make up about 12% of global GDP, and the same amount (12%) of the volume of venture investments, which is almost 3 times more than investments in AgTech.
Even if a small fraction of the total venture investment in the industry is successful, the result that innovative technology can bring can increase farm productivity to a level that is not comparable to the growth that has been achieved in the history of agriculture since the early days of mechanization.
The largest investment segments in 2016:
- Grocery marketplace / farm e-commerce - $1.29 billion (40%)
- Biotechnology - $719 million
- Seed breeding technologies - $523 million
- Applications (software) for farm management, sensors, IoT - $363 million
The largest investment segments in 2015:
- Grocery marketplace / farm e-commerce - $1.7 billion
- irrigation solutions - $673
- drones - $389 million
The largest investment segments in 2014:
- Grocery marketplace / farm e-commerce - $460 million
- Bioenergy - $374 million
- Technologies for monitoring the state of land and plants - $314 million
Modern agricultural technologies differ from existing technical solutions in the speed with which they can scale and enter global markets, and in the disruptive nature of the business (disraptive), as a result of which new start-ups can replace established businesses, offering more competitive services (in terms of price, quality, ease of use) .
Major M&A deals , corporate venture funds and investment priorities
At the same time, several major deals attracted the attention of investors: in 2013, Monsanto (the world leader in biotech and seed production) acquired Climate Corporation, a big data analytics company from San Francisco, worth almost $ 1 billion. Then in 2014, the subject The deal turned out to be Monsanto itself, which was bought by the German pharmaceutical concern Bayer for $66 billion (the deal turned out to be the second largest in 2016 in the world). Later, the Chinese China National Chemical Corp. bought Swiss Syngenta for $43 billion, China's largest cross-border investment; and there was a merger of the two largest US chemical companies - DowChemical and DuPont in the amount of $145 billion.
In a situation where startups are intensively developing, offering innovative technologies that quickly capture the market and threaten traditional businesses with loss of income, the only development scenario for large companies and industry leaders in order to remain efficient and competitive against young technology companies is constant search and implementation of innovations both inside and outside the company- through investments or purchase of start-ups, partnership schemes, joint research (R&D).
In order to track the emergence of new breakthrough technologies in time, organize their testing and work with promising startups, market leaders create own corporate funds- Syngenta Ventures, Monsanto Growth Ventures, Pontifax Global Food and Agriculture Technology Fund, as well as global technology giants - Yamaha, Intel, Verizon, etc.
For example, Monsanto (a leader in seed biotechnology) created the Monsanto Growth Ventures fund in 2013, through which it has already invested in more than 20 startups. The company justifies this by the desire to keep up with the market and offer customers demanded solutions right now - technologies are developing so quickly that it is often much more efficient to buy a ready-made tested technology so as not to waste time creating your own solution. Together with integration with own solutions, saving time (time to market) and a new client base pays for this approach. Monsanto itself invests $1 billion annually in R&D, which it considers an absolute must.
According to BCG, the total investment of agribusiness companies in technology in 2015 amounted to $ 20-25 billion, including venture capital, which companies made despite the decline in profits in the industry. To remain leaders in a rapidly changing external environment, companies need to identify the most important technologies for future growth and implement the chosen investment strategies as rigidly as possible. According to the BCG survey****, the No. 1 priority for ¾ of the interviewed leaders of international agroholdings is "data-enabled agricultural technologies". Due to the fact that extracting previously unavailable data and obtaining information useful for decision-making allows agribusiness to optimize resources and reduce costs.
Data-enabled agricultural technologies include: sensors, communication, data storage and aggregation, optimization equipment, big data and analytics, software, mobile platforms and applications for drone control, plant monitoring and protection, photo image processing.
****(BCG, Boston Consulting Group “Lessons from the Frontlines of the AgTech Revolution”, October 2016.)
Internet of Things Market IoTAg in the world
The Agricultural Internet of Things (IoTAg) market is one of the vertical segments of the IIoT. As of the end of 2016, agriculture accounted for about 6% of all IoT projects implemented in the world.
IoTAg is characterized by an early stage of development, is one of the fastest growing segments of the Internet of Things and is an investment-attractive business for investors.
Roland Berger evaluates the market largest market is North America (more than 40%). The highest growth rates (at an average of 21% per year) will be observed in Asia and other regions of the world outside Europe and North America.
Market assessments by various foreign analytical agencies differ significantly due to the lack of an established methodology and market structure, as well as the difficulty of separating "connected" or "connected" systems and complexes from standard automation tools.
Some agencies consider only the market within the agricultural production cycle, others only the market for manufacturers of agricultural machinery with integrated precision farming systems (hardware), some evaluate the entire value chain. Someone evaluates the cost of solutions, others the economic effect of implementation.
According to J'son & Partners Consulting, as the market develops, more and more devices, mechanisms, equipment and information systems will be "connected" and have all the attributes of the Internet of things. Therefore, when evaluating the market, one should consider networked equipment, solutions, applications along the entire value chain, including the end user.
The emergence of an ever-wider range of remote surveillance technologies (UAVs and satellites), self-guided robotics, agricultural equipment complexes with built-in intelligent systems is accelerating the development of “connected” integrated agriculture. As IoT technologies move from R&D into production, the cost of components, devices, equipment will decrease, making connected technologies accessible to small businesses. farms and developing countries. This explains the high growth rates of the IoTAg market.
GoldmanSachs estimates that the cumulative increase in horticulture productivity from the adoption of the high-tech precision farming solutions described above will be 70% or an additional $800 billion per year (on top of the current $1,158 billion) by 2050. The additional market for precision farming solutions is estimated by the company at $240 billion in 2050.
Solutions under consideration:
Precision fertilizer application systems,
Precision irrigation systems,
precision spraying systems,
precision landing systems,
The use of small self-guided equipment (instead of large heavy tractor equipment, which negatively affects soil compaction).
Technological (not) readiness in Russia
Considering that developed countries set themselves goals to maximize agricultural productivity and return per unit area through digital farming, the task of accelerated development and application of technologies that increase productivity in the industry is all the more urgent for Russia.
Despite the prize-winning places of Russia in the export of wheat and pork, as well as the increased indicators of domestic agricultural production due to import substitution, the efficiency of domestic agriculture is noticeably inferior to the largest economies. In Russia Gross value agricultural products per worker in 2015 amounted to $8 thousand, in Germany $24 thousand, in the USA - $195 thousand.
As the analysis conducted by J’son & Partners Consulting consultants shows, a whole layer of economic problems lie on the way to realizing the potential of digitalization in Russian agriculture:
1) A feature of agriculture in Russia is an abnormally high proportion of auxiliary peasant and small farms (99% in terms of quantity in total, almost 30% in terms of production in monetary terms and 50-90% in terms of certain types agricultural products in physical terms, with an average annual income of a peasant economy of 200 thousand rubles. and farming - 2 million rubles).
The predominance of small farms in the structure of agricultural production in Russia, combined with the inaccessibility for such farms modern means mechanization and automation of labor, as well as fertilizers and chemicals, is the main reason for the low labor productivity in Russian agriculture, which, in turn, determines the low level of wages and high unit costs per unit of output.
The annual volume of proceeds of 4 thousand US dollars for a peasant economy does not allow buying anything other than primitive agricultural implements, and forms of collective use of equipment in Russia are not developed.
The situation is similar with the automation of even basic functions, such as accounting and tax accounting. With an average level of ICT spending in units of percent of turnover, the annual ICT budget can be about $100 (~6 thousand rubles), which is enough only for the purchase of communication services.
Share of individual farms in agricultural production in Russia, %
Source: Rosstat
2) In contrast, the share of large farms (~0.5% of the total number of farms in Russia, ~20% in the US) and vertically integrated holdings (agro-industrial complex, ~0.1% in Russia and ~0.5% in the US ), which are the main productive force of the industry and provide the maximum contribution to the GDP of agriculture, is extremely small in Russia.
This explains the low performance of agriculture in the industry. For comparison: all Russian large farms and agro-industrial complex produce 10 times less revenue per year ($25 billion) than all large farms and agro-industrial complex in the USA ($275 billion). At the same time, they provide up to 45% of the total agricultural revenue in Russia and about 60% in the USA.
Source:J’
son &
Partnersconsultingbased on Russian and US statistics
With regard to automation, even large farms have a low level. Occupying ~4% in the structure of GDP, agriculture consumes less than 1% of the total ICT consumption in Russia.
At the same time, large farms have a high level of debt load. Thus, in 2016, the total volume of loans issued to agricultural producers exceeded 1.5 trillion. rub. Thus, even in the presence of mechanisms for subsidizing the interest rate, most of the profits of agricultural producers go to debt servicing, and not to the introduction of modern technologies.
3) Another important feature of Russian agriculture is the high proportion of vacant agricultural land. Thus, in Russia, according to the Ministry of Agriculture, there are 406.2 million hectares of agricultural land (approximately 23.6% of the total land fund of Russia), including 220.6 million hectares of agricultural land. But only about 77 million hectares (35%) is used by farms of all categories of arable land. Of these, the area of arable land under the control of large agricultural holdings (less than 200 agricultural holdings) is estimated by the Institute for Agricultural Market Studies (IKAR) at 11.5 million hectares, that is, less than 15% of the total area of cultivated arable land in Russia. The remaining 85% of arable land is owned by small farms and subsidiary farms, which ensures their high share in agricultural production in physical terms, with low labor productivity.
The cultivation of vacant land is an important strategic competitive advantage any country, because the area of arable land is shrinking all over the world, and the world's largest agricultural producers, having reached the yield threshold, due to the lack of the possibility of developing new lands, are looking for new ways to increase efficiency and invest in innovative technologies.
However, given the current low level of domestic food consumption, large volumes of imports, and limited opportunities for exporting agricultural products, even after a two-fold devaluation of the national currency (low labor productivity, high costs), introducing additional land into production in Russia is not economically feasible.
4) In Russia, the structure of consumption is dominated by cheap and low-quality food products. Consumption of meat, dairy products, vegetables and fruits is below medical standards, and 2-3 times lower than in the USA and Germany (detailed in the J'son & Partners Consulting study, based on the analysis of data from Rosstat, the Ministry of Agriculture, the International Dairy Federation ( IDF), CIMR and other sources).
The difference in food consumption corresponds to the difference in income and the share of spending on food in the family. Incomes in Russia are 6-8 times lower than in the US (with a comparable level of food prices), and the share of spending on food is 50% in Russia and 11% in the US of household spending.
Thus, the consumption of meat and meat products in Russia in 2016 was, according to Rosstat, 73.5 kg per person, and according to alternative estimates - 63 kg, which is almost two times lower than in the United States (120 kg per person in 2016). year), with the prevalence of relatively inexpensive poultry meat in the structure of meat consumption in Russia - 45% (31% pork and only 21% beef). In the United States and other economically developed countries, with the exception of Japan, beef prevails - the most expensive type of meat.
The consumption of milk and dairy products per capita in 2016, according to the Ministry of Agriculture, amounted to 239 kg (against the norm of 325 kg), compared to 1991, this is a decrease of almost 40%. Alternative estimates paint an even bleaker picture. Thus, according to the International Dairy Federation (IDF), milk consumption in the Russian Federation amounted to 140 kg per capita in 2015, cheese - 5.7 kg, butter - 2.3 kg. According to CIMR, milk consumption per capita was 163 kg in 2015 and 146.7 kg in 2016. For comparison, in Germany and France, the consumption of milk and dairy products averages 430 kg per person per year, in the USA - 270 kg. That is, relative to the United States, the consumption of milk and dairy products in Russia is almost two times lower, and relative to Germany and France - three times lower.
The consumption of vegetables and gourds (excluding potatoes) in Russia in 2014, according to Rosstat, amounted to 111 kg, fruits and berries - 64 kg per capita per year at a rate of 120-140 kg of vegetables and 90-100 kg of fruits and berries . That is, the consumption of vegetables was 15-20% below medical standards, and for fruits and berries - 25% below the norm. Consumption levels in the US (105 kg of fruit and 120 kg of vegetables) are roughly in line with Russian norms, and ~20% higher than actual consumption in Russia.
The lack of consumption of the above expensive food products is compensated by the high level of consumption of potatoes (120 kg per person per year versus 60 kg in the USA), which is mainly (90%) grown in own household plots. Moreover, the indicated volumes of consumption of expensive food products (meat, milk, fruits) also include products produced by consumers themselves in private households. And this is a very significant share. Thus, according to Rosstat, 57% of meat and 48% of milk produced in Russia is produced in personal subsidiary farms and is mainly used for personal consumption within peasant farms.
The situation is not expected to improve due to the growth of household incomes. Moreover, real disposable incomes have been declining since October 2014. Thus, since 2012, household expenditures have consistently exceeded incomes - see Fig., and this situation in Russia will continue, according to forecasts, at least until 2019.
Source: HSE
5) Opportunities for the purchase of modern equipment by Russian agricultural producers are extremely limited today, and modern equipment is practically inaccessible for peasant and small farms.
The number of tractors in agriculture per 100 sq km of land in Russia compared with the USA, Germany, China and India
Source:J’ son & Partnersconsultingbased on national statistics
As a result, in Russia there is no proper level of technical support for the sold equipment: there are not enough well-equipped and staffed with qualified personnel service and dealer centers, the use of precision farming technologies that are widespread abroad and implemented through cloud platforms and mobile applications that make it easier for farmers to process crops is not developed. soil and plants.
A possible solution to this problem is to transfer the relationship "supplier of equipment" - "agricultural enterprise" to the contract model life cycle with predictive maintenance based on automatic monitoring technical condition equipment, and payment for equipment according to the actual time of its use. This is the so-called “Uber for farm equipment” model. It is especially attractive for small farms. And large ones can serve as the basis for Maintenance thus further reducing the prices for the use of agricultural machinery.
It is important to note that we are talking not only about increasing the number of mechanization tools (for example, tractors) per unit of cultivated field area, but also about increasing the efficiency of its use (utilization). However, the shortage of mechanization means is so great (six times behind the US level and 17 times behind the German level per 100 sq km of cultivated areas) that even with a threefold increase in the level of utilization of mechanization means by creating a pool of resources with a single automatic control ( "Uber for agricultural machinery"), the need to increase the number of mechanization tools can be at least plus 100%. With regard to tractors, this is plus about 300 thousand units of equipment.
And this is without taking into account the possible increase in the area of cultivated land. For comparison: the annual production of agricultural tractors in Russia is last years less than 10 thousand units per year, and the share of tractors older than 9 years in the existing fleet of agricultural tractors is more than 85%, that is, with a standard tractor full depreciation period of 10 years, the vast majority of tractors operated in Russia also require replacement. That is, we are talking about a real possibility of formation due to the transition to a payment model for the actual use of the market for mechanization services, the size of which only for tractors is estimated at 600 thousand pieces of equipment, or 60 annual production volumes of agricultural tractors in Russia. A similar situation is with grain harvesters, the demand growth potential for which can be estimated at 200 thousand units with the existing fleet of 100 thousand units and the degree physical wear and tear in ~80%. At the same time, the transition to a payment model based on actually used time or other metrics will allow equipment manufacturers to make payments more “smooth”, actually switch to a telecom operator model and work in terms of the “average monthly subscriber payment” (ARPU).
6) The greatest effect on the agricultural industry has a long chain of intermediaries: wholesalers and retail companies. Small producers do not have access to store shelves and are forced to sell products to wholesalers often below the cost of production. The situation is slightly better for large farms, especially if they are integrated with processing facilities and trading networks. But there are less than a hundred of them in the whole country.
At the same time, up to 90% of the margin from the sale of agricultural products remains in wholesale and retail trade and with banks, and the selling price of products, with its low quality, is high relative to the level of real disposable income.
Despite the high level of trade margins for agricultural products, the margin of each of the resale links is low - at the level of 5% due to significant logistics costs and costs associated with incorrect determination of demand.
Digitalization can dramatically reduce transaction costs for the purchase and sale of goods, and simplify the supply chain, which allows resellers to maintain the same margin - 5%, while reducing the total trade margin "per round" from 85% to 25-35%. And due to the increase in the volume of consumption (decrease in retail prices), the absolute values of the margin could increase by 1.5-2 times.
Prospects for the digitalization of agriculture and Internet of things projects
Thus, in Russia there is a potential for a multiple increase in consumption and an increase in the production of basic food products.
In order to achieve at least a minimum sufficient level of consumption of the main agricultural products in Russia (meat, milk, fruits, vegetables), in the current situation, a significant reduction in retail prices for these products is necessary without deteriorating their quality.
In favor of this conclusion, it is important to note that most markets for services and consumer goods are characterized by non-linear elasticity of demand to price. That is, a decrease in the price of a product, for example, by a factor of two leads to an increase in the volume of consumption of this product in physical terms by more than two times, and to an increase in consumption in monetary terms (the area under the curve in Fig.), despite a two-fold decrease in prices .
Source:J’
son &
Partnersconsulting
In the current economic situation, digitalization could indeed reduce the cost and final prices of food products if not only processes within the agricultural production cycle, but also suppliers of raw materials, marketing, logistics, and transport links were “connected”. At the same time, it is possible to rebuild the existing relationships and even exclude intermediate links located on the way to the consumer from the value chain.
End-to-end automation is a higher level of digital integration that touches the most complex organizational changes in business, however, their implementation can dramatically affect the profits and competitiveness of products and the company as a whole.
Source:J’
son &
Partnersconsultingbased on corporate materials of one of the market leaders
(not in Russia), developing digital integration and a leading industry platform
throughout the crop cycle. Read more in the full version of the ReportJ’
son &
Partnersconsulting.
According to J'son & Partners Consulting, due to digitalization and the Internet of Things (IoT), it is possible to:
- Without deteriorating product quality, reduce the trade margin on food products in the wholesale and retail sector by 2-3 times.
- More than triple the volume of food consumption in Russia in physical terms, given the current level of income of the population.
- To multiply the productivity of labor in agriculture and reduce the cost of production, increasing the marginality of the business of agricultural producers by:
- Speeding up the process of delivering products to the end consumer, which makes it possible to simplify canning technologies and reduce logistics costs.
- Increasing the level of mechanization and automation to the global average even for small farms and individual farms, which becomes possible when switching to a cloud model of consumption of automation tools
- Applying a rental business model instead of buying mechanized equipment on a pay-as-you-go basis or by sharing equipment (Uber for tractors). The life cycle contract model significantly reduces the risks of the agricultural producer and dramatically increases the availability of automation and mechanization for small farms.
- Provide customers with products with measurable and controllable characteristics (information about the seeds used, fertilizers applied, preservatives, etc. at all stages of production and marketing), which will allow selling products manufactured according to special requirements at special prices (for dietary nutrition, baby food, environmentally friendly, etc.).
- Implement elements of automated resource management and reduce the impact of the human factor at all stages of production and marketing of agricultural products. This allows you to significantly increase the efficiency of growing and processing plants, the use of fertilizers and chemicals, reduce fuel costs by 30-40%, and reduce losses during harvesting.
- Implement models of predictive management of the entire value chain: from the production of seeds, fertilizers, agricultural machinery, to the production of agricultural products and its marketing, when all participants in the chain will be able to predict the demand for their products with sufficient probability.
- Significantly reduce the risks of lending to agricultural producers, and thus reduce the rates on bank loans, which significantly affect the cost of production.
(Detailed assessment economic effect presented in the ReportJ’ son & Partnersconsulting, content in the appendix to this review)
Technological barriers
Formally, all the technologies and components necessary for the practical use of IoT services (IoT platforms, devices for connecting telemetry and telecontrol objects to these platforms) began to develop on Russian market. However, in practice, many international platforms have not yet been localized, and Russian solutions are at an early stage of development.
In Russia, isolated projects are known that, to one degree or another, can be associated with the Internet of things in agriculture. In the overwhelming majority of cases, such projects are experimental, pilot, etc. in nature.
In order for digitalization and the Internet of things to have a tangible effect on the economy, farms and final prices, single projects implemented in the country are not enough.
Massive adoption and dissemination of cloud applications, IoT technologies, big data management services, communications in rural areas, integrated IT solutions based on IoT platforms can provide the maximum potential; offer a model for renting agricultural machinery.
This requires a developed IoT ecosystem, including partnerships with a wide range of participants and the exchange of data between them; availability of a wide range of domestic developers with experience in creating digital integrated solutions, specialists in the field of data analysis and management; prompt organization of the collection of current and historical data by any accessible ways from the fields and technology.
In developed countries, farmers are assisted by independent agricultural consultants, and mobile services are actively distributed that provide recommendations to farmers on tillage and plant protection, based on input data and historically collected parameters.
To implement such machine predictions, it is necessary that the field and equipment be automated, able to constantly monitor, transmit and process data from various sources (drones, satellite images, tractor equipment, stationary sensors, weather forecast applications, etc.) .
The opportunities for modernization of the industry are enormous, the world's agriculture is transforming from a traditional into a high-tech industry that is able to create new markets for innovative solutions and developments that did not exist before to solve a large number of existing problems.
In order for Russia not to remain a country with a poor population, which does not have access to its own products, high quality and technological innovations, systemic efforts are needed and the role of the state is great.
Figure: https://dupress.deloitte.com
Conclusion. International economists about agriculture
International experts warn that even with increasing productivity in agriculture and the use of high technology, even the most efficient agriculture in the world (American or European) will not survive without subsidies and patronage. And the economic downturn in the country primarily affects agriculture and manifests itself in the form of a fall in food prices caused by a decrease in income and effective demand.
“In developed countries, the protection of the agricultural sector is a protectionist measure, including with the aim of preventing the industry's income from falling behind the level of wages in the industrial sector.
The introduction of tariffs on agricultural products has always been part of a defensive strategy to protect the peasants of the industrial countries from the same peasants from the agrarian countries. The income of peasants must be protected from competitors - peasants from poor countries or from countries with a better climate.
Rich countries throw excess goods into the markets of poor countries at a low price in order only to prevent the exporter from reducing the output that the exporter has in the home country. a relatively new worrying trend.
Today's hunger is the result of insufficient purchasing power, not insufficient food in the world.
From a businessman's point of view, poor countries suffer from a lack of investment because they have few profitable investment opportunities, and few because of low purchasing power and high unemployment. Peasants who barely make ends meet are not profitable consumers for most of the goods and services produced.
Agriculture is usually the first sector of the economy to enter the downward phase of the economic cycle and the last to exit it. In Norway, they once said: "If the peasant is rich, everyone is rich." There is a problem in agriculture - cyclical fluctuations in productivity, for which nature is to blame. Unlike the manufacturing industry, agriculture cannot stop production or store semi-finished products in storage. Peasants, unlike industrialists, do not have the opportunity to hold on to goods in order to keep prices high. Because demand does not move in sync with production, agricultural commodity prices fluctuate significantly.
Economists knew what to do if the colonists found a connection between their poverty and the ban on industry. It was necessary to confuse them, to allow them to freely export agricultural products. “As the people on the plantations, seduced by the opportunity to freely sell their products throughout Europe, will plunge headlong into their cultivation to satisfy its enormous demand, they will be diverted from manufactures, and this is the only point in which our interests can coincide with their interests,” - wrote Matthew Dekker in An Essay on the Causes of the Decline international trade» in 1744. It's amazing how relevant this proposal sounds today. Deindustrial poor countries are seduced by the opportunity to freely export agricultural products to Europe and the United States and forget about industrialization. However, no country in the world has yet managed to get rich on the supply of food products abroad in the absence of its own industrial sector. Rich countries will buy food produced by people so poor that they themselves cannot afford to eat it. The disappearance of industry brings real wages to a minimum in the country. Poor peasants cannot receive more money for their products. Poverty is based on a vicious circle of lack of purchasing power, and hence the demand for products and large-scale production.
The deindustrialization of the country leads to a sharp drop in productivity in agriculture. Developing countries will never get rich by exporting to rich countries foodstuffs. With significant intervention in the operation of the market, the wealth created in the industrial sector is distributed to the country's agriculture. Raising wages in rural markets depends on urban purchasing power, the labor market and technology.
Countries specializing in raw materials and agriculture (decreasing returns activities) will remain poor, while countries specializing in industry and high-tech services (increasing returns activities) will slowly but surely raise wages and develop systems production, will achieve an improvement in the standard of living.
Quotes from the book:
Eric Reinert How Rich Countries Got Rich and Why Poor Countries Stay Poor.
Eric Reinert is a Norwegian development economist and economic history. In 2007, he published How Rich Countries Got Rich… and Why Poor Countries Stay Poor, which later became a bestseller. In 2008, the book was recognized as the best monograph by the European Association for Evolutionary Economics (Gunnar Myrdal Prize, named after Gunnar Myrdal).
The newsletter was prepared by J "son & Partners Consulting. We make every effort to provide actual and forecast data that fully reflects the situation and is available at the time of publication of the material. J" son & Partners Consulting reserves the right to revise the data after publication by individual players of new official information.
Copyright 2017, J'son & Partners Consulting. The media can use the text, graphics and data contained in this market review only with a link to the source of information - J'son & Partners Consulting or with an active link to the portal
™ J'son & Partners [registered trademark]
|
FOR ADDITIONAL INFORMATION PLEASE CONTACT: |
|
|
Key account manager J"son & Partners Consulting |
|
