The Agricultural Revolution Will Be Mechanized

April 10, 2018

 

Automation has largely replaced human labor as more efficient and cost effective in a variety of industries, including the production of automobiles, clothes, electronics, and other products.  Could the agricultural sector be similarly ripe for a revolution?

 

There are good reasons to believe as much, though it is true for certain types of farms more than others.  According to our recent study at Alpha Brown, 27% of farmers are considering the purchase of robotic harvesting solutions when they become available.  This should not come as a surprise considering the fact that we also found that over half of farmers surveyed were primarily concerned by labor costs. In fact, that was the most widely shared concern by farmers. 

 

However, automated harvesting solutions would likely be more useful to some types of farms more than others.  In particular, when it comes to grapes and and pome fruit, our research found the contract labor costs associated with harvesting those products to be higher than for many other types of fruits and vegetables -- and farmers of the former also appeared more open to adopting robotic solutions. Therefore, it would likely make more financial sense for technology companies to enter the market there.

 

In addition, we also found both the interest and the return on investment to have greater potential with larger farmers as they generally have higher costs associated with harvesting. According to our survey data, nearly 100,000 farms of 500 acres and greater could be interested in purchasing robotic solutions. And our estimates place that market value at over $5 billion just for the early adopters.  According to the trend of growing farm size due to consolidation identified by the USDA, the target market for this technology can be expected to increase over time.

                                                                                     

Yet, as it stands, only 3.2% of growers are currently using robotic harvesting solutions. One major cause for this low percentage is the limited availability of these products - most have yet to reach the market. Another reason, according to Alpha Brown’s data, is that around three-quarters of farmers are not well-informed regarding the robotic harvesting options available.

 

However, even those who are informed about technological harvesting solutions may be wary of investing in such a product because most farms grow several types of crops and the solutions are crop-specific.  This concern is especially relevant for smaller farms, which may find the purchase of such a robot to be unnecessary considering they will only seeing a return on their investment in 5-10 years they have comparatively low labor costs. Yet, these markets are not a lost cause: if robotic harvesting becomes cheaper and more effective than human labor it would still make financial sense for to rent out such solutions in much they same way as they contractually hire labor.

 

With a significant portion of the potential target audience already considering robotic harvesting solutions, it is clear that the potential demand is significant.  Of course, meeting consumers expectations that robots gather ripe products in a timely manner and without damaging the fruits and vegetables will be a difficult task on the developmental level.   However, the potential financial reward for doing so could be great.                       

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