How 5G is reshaping agribusiness for future growth
July 12, 2022
July 12, 2022
For years, consumers and businesses have been anticipating the availability of 5G technology. Well, 5G is here and it’s quickly revolutionizing the agribusiness industry.
Connected cows, precision farming, autonomous vehicles, predictive crop monitoring—the use cases are rapidly emerging for opportunities to improve efficiency and production, with cash flow effects that are very promising. 5G brings higher data capacity, lower latency, greater device density, and, with that, opportunities to leverage analytics, artificial intelligence and machine learning as never before.
Consider the magnitude of change societies experienced when 3G and 4G technologies entered the market. Smart phones may now seem an obvious innovation to emerge from those technologies, but few could have imagined the seismic impact of all-new business models introduced by brands like Uber and Airbnb. Similarly, 5G holds the promise of shaking up the agribusiness industry with entirely new ways of doing business.
Take dairy farming, for example, where 5G is connecting cows to the cloud and enabling revolutionary new levels of automation, resulting in greater efficiency and higher production.1 A British agricultural technology research center uses 5G-connected collars on cows to monitor diet, rest, milk production and movement. With 5G, continuous data monitoring and real-time intelligence are making it possible to act on fluctuations that may indicate critical events, such as cows going into labor. Other possibilities include allowing cows to choose when they are milked in a “self-milk” station. This leads to greater dairy production as the cows aren’t constrained by human schedules.
Of course, 5G enables farmers to link more than cows. Connected workers can use wearables and augmented reality technology to tap into geo-located agronomy data and visually pinpoint where to plant, what to plant and how much to plant. Connected farm vehicles equipped with telematics can automatically manage where and for how long they operate to optimize fuel consumption and fertilizer supply.
A drone that identifies pestilence, deploys targeted crop protection and then communicates with other drones so they can learn from each other is revolutionary.
With 5G-enabled solutions like these, farmers will be able to produce more food with fewer resources to meet the demands of growing populations. They’ll be able to use real-time insights into crops and agribusiness to make predictive and proactive farming and operational decisions. Simply put, the increased use of automation and improved precision farming that 5G enables will help farmers work smarter, not harder—and get much more in return.
Precision farming alone does not require 5G. However, 5G enables all the devices used in precision farming technology to communicate and work together. This spurs a virtuous cycle of insights leading to prediction, preventive interventions and more insight.
Think of it this way: A drone that identifies pestilence is interesting. A drone that identifies pestilence and then intervenes with targeted crop protection is compelling. A drone that identifies pestilence, deploys targeted crop protection and then communicates with other drones so they can learn from each other is revolutionary.
We are entering a world of interoperable systems that will demand networks capable of handling intense device density growth and the ability to share large volumes of data. Imagine, for example, the benefits gained if that same intervening drone could also utilize soil probes, intelligent bug traps, weather analysis and the ability to share that data with other farmers.
Agribusiness is a capital-intensive industry. Farmers must keep a lot of assets on the books while managing cash flow that surges during seasonal harvests, when livestock are sold at market or assets are otherwise liquidated. Whatever the scenario, costs are steady and revenue is variable. Moving from a CAPEX to an OPEX model can alleviate this disparity and improve cash flow.
For example, farmers often purchase harvesting equipment so they can be assured it will be available when needed, rather than use a temporary, less reliable lease arrangement. Farm equipment retailers are unable to just sell services because of the uncertainty in available labor in markets that become tight during harvest.
One way to shift from an equipment ownership to service-based fee structure could be autonomous machines that reduce the need for human labor. Imagine a world in which farmers may take advantage of renting self-driving combines to reduce their harvest time and potentially avoid losses due to adverse weather that could arise during a longer harvest time. Imagine, furthermore, that farmers could rent 10 of these combines and execute a large harvest in one day of perfect weather, as opposed to over several days and weeks, when wind, bugs, rot or snow could devastate yield. 5G could play a key role in enabling that autonomy to move farming from CAPEX to OPEX as the reliance on human labor is reduced.
The fact is all these industry innovations are only made possible by having access to a 5G network. But the cost of building out 5G infrastructure remains a significant challenge in many rural areas. Some private carriers are hesitant to invest in expanding 5G more broadly in less populated areas due to lower device density, which could limit profitability.
However, the situation may start to change. In the United States, Congress has allocated US$65 billion in the Infrastructure Investment and Jobs Act to promote broadband deployment in underserved areas.2 Furthermore, the National Telecommunications and Information Administration has started receiving applications for rural communities to request access to broadband.
As this infrastructure is built out over the coming months and years, those in the agribusiness industry should start now to understand how 5G can produce more food without expanding labor and land inputs, while at the same time loosening the asset-rich, cash-poor constraints of a seasonal business.
No one can predict the full extent of the new business services that will be enabled as 5G and subsequent technologies continue to evolve. But we are confident that players in the agribusiness sector can begin realizing valuable gains today in terms of improved efficiency and production, and a reduction in resources across the value chain. Beyond that, the possibilities are endless.