Precision agriculture, producing more with less?

Summary: One of our key focuses over the coming decades, both financially and socially, must be on making our food production more efficient. But this doesn't necessarily mean more industrial scale farming. It means using technology and new approaches to make the type of agriculture we want financially viable. There are ways of growing more with less, and precision agriculture is an important contributor to of this. We need to focus more on these “easy” wins, but we also need to do so in a way that respects the financial reality faced by many farmers.

Why this is important: The role of agriculture in delivering net zero, regenerating our environment and enhancing our social systems is often the “elephant in the room” that we just don't talk about in a coherent way. Food prices and food security are massive political issues in many countries, and we argue that with increasing urbanisation we have become disconnected from where our food comes from, effectively exporting the negative impacts in return for low prices and year round availability.

The big theme: Our global food production system contributes roughly one third of all global GHG emissions. Close to 70% of this comes from agriculture and related changes in land use, with the rest coming from activities such as transportation and packaging. And with expected increases in food production, industry emissions might increase by up to 80% by 2050. There is no single silver bullet to solving this challenge in an economically viable way, but there are many actions that together can make a real difference.

Summary of a study published in Nature

• In a 2022 report for Nature titled Roadmap for achieving net-zero emissions in global food systems by 2050, the authors highlighted that “even if fossil fuel emissions stopped now, current trends in global food systems would prevent the achievement of the 1.5 °C target and threaten the achievement of the 2 °C target by the end of the century” They also highlighted that, carbon budgets and net-zero emissions targets are often only discussed in terms of CO₂ emissions, not for non-CO₂ emissions, such as CH₄ and N₂O, which are material in agricultural production.

• There is much that can be done, as illustrated by the chart below. Some of the big wins will come from changing livestock farming and rice production, but outside of this “just” producing the same or more food using less inputs also has an important role to play. They highlighted a recent study by Roe et al (Land-based measures to mitigate climate change) which combined technical and financial criteria. This suggested that "just" implementing the cost-effective solutions identified would put the industry in line with achieving a 1.5°C pathway by 2050.

Why this is important

• Precision agriculture has the potential to allow farmers to grow more, using fewer inputs, so less irrigation water, less fertiliser and less pesticides. And with the right support, it can benefit small as well as large farmers. But, we should also be careful not to over promise. It’s a really exciting prospect, from both a sustainability and financial perspective, but it must also be seen as part of a wider suite of solutions. Precision agriculture on its own will not make our food systems totally sustainable. In this Quick Insight we introduce the theme, and highlight why it's important. We will dig down into the various elements in later blogs.

• Growing up in an agricultural country (New Zealand), I had many friends who were farmers. And while the country is becoming less rural and increasingly urban, for many of us the countryside, where much of our food came from, was “just down the road”. This meant that I had a better understanding than many people about the complex tradeoffs involved in running a farm. It was a relatively precarious existence, more so after New Zealand largely halted agricultural subsidies in 1984. So farmers walked a fine line between needing to constantly invest to innovate (to keep costs manageable), while at the same time recognising that one bad harvest could push you into financial distress.

• And many farmers in the Global South live even more “hand to mouth”, often lacking the capital to invest in innovation, even if it can potentially provide better financial returns in the mid to long term. This means changing agriculture is challenging. A recent McKinsey report highlighted some of the issues including the fact that the agriculture industry is significantly less consolidated than other sectors, which means that reducing emissions requires action by a lot of people, roughly one-quarter of the global population. Plus, as we touched on before, the agriculture sector has a complicated set of objectives to consider alongside climate goals, including nutritional needs, food security, and perhaps most important from a change perspective, the livelihood of farmers and farming communities.

• This is where “technologies'' such as precision agriculture, that offer lower costs/improved financials at an affordable upfront expense, can be very attractive. The McKinsey report referenced above looked at various approaches to reducing GHG emission, and their cost. Unsurprisingly, among those that had negative costs ie they produced financial benefits greater than their cost of introduction, were precision agriculture related technologies, such as variable rate fertilisation, and reducing the over application of nitrogen based fertilisers. And remember, the study only looked at GHG emissions, so other benefits such as reduced water usage, were not covered.

• Looking at the bigger picture, there is a well established farming trend, going back many decades, where agricultural input costs have risen faster than output prices. And, recent events such as the war in the Ukraine have just made this worse. So innovation is a constant.

• According to the American Farm Bureau Federation, the two biggest costs for US farmers are Chemicals/Fertilisers/Seeds and Feed. Together they make up around one third of a total on farm costs. So, if we can find ways to optimise the use of these inputs, while maintaining yields, it will make financial sense to farmers. This in turn will materially increase the changes of a wide scale uptake.

So what is precision agriculture?

• Precision agriculture is one of those phrases that gets tossed about a lot, without much thought for what it actually means in practice. In this sense it's a bit like similar phrases such as “regenerative agriculture” and “organic farming”. It makes a great sound bite, but what does it actually mean? Put simply, precision agriculture is using sensors and data to optimise and often automate decision making, to allow farmers to do more with less. The end result should be lower environmental impacts and improved economics for the farmer.

• Concrete examples of this include the use of ground based sensors, often combined with camera sensors on tractors, drones or hand held devices, to measure soil moisture, plant (and weed) growth/health, and soil fertility. Using this data farmers can micro adjust the amount of water they use for irrigation, and how much fertiliser and pesticides they use. And longer term, they can modify what they plant, to better use the available soil and other resources. Precision agriculture is as much about data analysis as it is the hardware.

• Does it work - well yes. To quote the Nature Conservancy team …precision agriculture can result in more production, less water used, less nutrient run-off and higher water quality. And, there is clear evidence that where precision agriculture is widely used, water and fertiliser use can go down by somewhere between 20 percent and 40 percent with no impact on yields, and even increased yield in some cases. Farmers who use precision agriculture do so on cost-benefit grounds. Plus, there is evidence that smart spraying can reduce pesticide use by up to 80%.

• So, if it's so financially attractive, why is it not used more? The short answer is that while it’s already becoming mainstream in many markets, such as the US, it's less widely used in other parts of the world. To understand why this we have to go back to our initial statement …“technologies'' such as precision agriculture, that offer lower costs/improved financials at an affordable upfront expense, can be very attractive.

• While the upfront cost of precision agriculture is affordable for larger scale farmers, it’s tougher for smaller farmers. The companies that sell the data and software largely recover their development costs from farmers with deep pockets, who can afford to make the investment because they farm on a scale that makes it economically viable. Plus, these farmers more generally have the IT skills, or can rely on an extensive network of third party providers. None of this applies to where precision agriculture is actually often most desperately needed—where resources and inputs are scarce, farmers are poor, and lives are on the line.

• So, does this mean that precision agriculture is only of benefit to richer countries, and even then only to large scale farms. Yes and no. Yes, at present, but no in that pilot work is underway to make the technology work for low income farmers. The ICARDA is carrying out a test project in India. The three-year pilot project will span irrigated and rainfed agro-ecologies and focus on the most economically important crops in Madhya Pradesh; namely cotton, wheat, and soybean. ICARDA scientists have long researched precision farming and ICT for agriculture, using open-source data, low-cost sensors and weather stations, evapotranspiration measurement devices, and SMS-based and interactive voice response systems to provide farmers with personalized advisory and early warning information.

In this blog, we have only been able to scratch the surface of what precision agriculture can do, and how it can be made scalable. The key to a wide spread roll out is making the financial benefit larger than the cost. Farmers will take up these new technologies if they make their farms more profitable. From a sustainability finance perspective, this is an approach that can benefit farmers, investors, and the wider society/environment. We will be digging down into the different aspects of this theme in later blogs.

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