Autonomous Mobility

Employing robots in agriculture – Is there a potential market?

By Swapnil Nanir - Jun 14 2021
More and more companies are introducing AI powered agricultural robots to plough, sow, control weed, prune, harvest, and pluck fresh fruits – proposing unique ways of transforming agriculture. However, the question really is there a market for autonomous agricultural robots globally?



UNDERSTANDING THE CHALLENGES AND ENABLERS


There is no doubt about the fact that automation technologies do bring innovation in a way that reduces labor cost, increases productivity, increases yield volumes, and thereby provides better profit margins for the farmers. However, the real question is whether the technology is affordable to every farmer? 

Even though agricultural technological innovations historically have always collided with the labor market, owing to which it has always been among the last ones to adopt automation, things are changing, and we expect farmers across the globe will adopt autonomous agricultural robots at a faster pace than expected earlier. This is because of multiple reasons.



First, the agricultural labor costs are rising in comparison to technology. For instance, this year, the labor cost in California increased by a dollar and is heading towards $15 per hour, by next year. In the past, labor was relatively cheap compared to technology, however, today the cost of labor has risen and is getting much closer to technology. 

Second, the phenomena of labor migration towards urban areas and to the non-farming sectors is witnessed across multiple agrarian societies globally, pursuing for better pay and standard of living. This has led to both, crunch in skilled labor availability and increased cost to acquire labor for the farming industry. 

Finally, with the rising population, the food demand is increasing vertically, this has led farmers to adopt new ways by which they can produce more, without relying much on labor, and have better price for their food product.

Thus, more and more farmers are now working with agricultural robotic companies for autonomous harvesting, weed eliminating, sowing, ploughing and all kind of farming operations. 

ANALYZING THE MARKET POTENTIAL


AI-powered autonomous tractors and agricultural robots companies are majorly in their early commercialization stage adopting the farming-as-a-service or robot-as-a-service model to first earn farmers trust. Each company has its own unique offering – such as fresh fruit harvesting robot, robot for crop harvesting such as broccoli, lettuce, and cauliflower, weed-eliminating robots, spot spraying robots using computer vision identifying weed, pruning robots, or multipurpose robotic implements for ploughing, sowing, and planting. 

Agricultural Robots
There are more than 30 companies worldwide providing robots for in-house farming, outdoor farming, lawn moving, orchards and non-orchard, vertical farming etc. All the major robotic companies are working with large farmers around the world by providing farming services following robot-as-a-service (RaaS) model. This business model best works when it comes to early stage in commercialization of the technology. This is because of two major reasons.

First is trust deficit from the farmers adopting such newer autonomous equipment, while the other is the question of extremely expensive machine cost. However, in case of agribots that are cheaper for e.g., costing $20,000 and smaller, farmers prefer buying the equipment. Our estimates show that the market dynamics will change with higher demands as the industry matures, pricing structure is more affordable, and trust issues are addressed. The most important fact is that the scalability of RaaS is currently very narrow due to physical equipment at work, unlike SaaS. These agriculture precision robots are currently operating at not more than 200 locations worldwide, however, our most conservative estimates are that the total annual shipment could cross 3,500 units by 2030, at a compounded growth rate of 86 percent, between 2021 and 2030. Moreover, the robot-as-a-service market estimates are very impressive.




Currently the aggregated deployed fleet of these agricultural robots across all farming functions is around 200. This figure is expected to grow 30x to reach a total accumulated fleet size of more than 6,000 units by 2030. While the RaaS market is estimated to be multi-million dollars in the next few years.

Autonomous Tractors
Then there are large agriculture equipment and vehicles manufacturers such as John Deere, Kubota, Case IH, Mahindra, AGCO, and Yanmar among others developing autonomous tractors and its technology. Although these manufacturers have not yet commercialized autonomous tractors or self-propelled harvesters due to several reasons, M14 Intelligence analysis predicts that the market is expected to witness commercialization in next 2-3 years and potentially skyrocketing sales of these autonomous machines post 2025. Our best estimates are that the autonomous tractors will initially penetrate the market by less than a percent globally, majority of which would be sales in the North America and European region. However, with mass deployment and increased demand post 2025, the market penetration could increase to as large as 10.3 percent in North America and 8.9 percent in European region.

Our most conservative estimates show that by 2030, market penetration is estimated to increase to more than 12.8 percent in average globally, which equals to 300,000+ units in sales. In terms of market size this could replicate into a $66.5 billion market by 2030, growing at compounded annual rate of close to 49 percent, between 2021 and 2030. 

Conclusion
The use of robots for farming activities is gaining momentum, not just in developed economies, but in developing markets like India too. This huge market potential brings opportunities for not just the robot manufacturers and robotic companies, but also for perception solution providers like sensor (LiDAR and camera) companies, autonomous software stack companies, computer vision & machine learning companies, and data annotation companies, among many others. In coming 2-3 years, this market is expected to witness huge investment not just from within the agriculture industry but also from big VC firms. The race to autonomy and trust has just begun, let’s see if we see huge capital flow as witnessed in the self-driving cars industry. 


autonomous tractors
agricultural robots
RaaS market


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