Three ‘C’s will shape the future of digital ag in Australia

Mick Keogh, Australian Farm Institute executive director , June 28, 2017

THE Australian Farm Institute “Harvesting the benefits of digital agriculture” conference held two weeks ago in Melbourne attracted a big crowd of Australian and international participants, which included government ministers, government agencies, agricultural researchers, farmers, technology specialists and potential ag-tech investors.

Mick Keogh

The simple takeout message is that the future of digital agriculture in Australia will depend on the three “Cs” – namely connectivity, capability, and commercial reality.

Connectivity is clearly a major challenge for the sector.

While the connection of farms to the internet either via mobile phone services or satellite is becoming more common and reliable, the big challenge for many is connectivity “across” the farm.

Many conference speakers and participants made the point that much of the new digital farm technology that is now becoming affordable relies on connections to the internet to regularly upload and download data, and the current very patchy mobile service (generally limited to locations close to main roads or major regional centres) simply is not adequate.

Nor is connectivity based on satellite technology, because it relies on access via a stationary receiver, and is limited to one access point per business.

Local narrow-band services that can be used to create a farm-wide wi-fi network provide a partial solution, but these generally are only suitable to transmit very limited amounts of data.

Even when such systems are implemented (at individual farmer’s expense), a number of providers highlighted that upload capacity can often be the limiting factor, as well as transmission speed.

These systems offer solutions for transmitting small volumes of data from digital monitoring systems (e.g. for irrigation, water trough, climate or soil moisture monitoring systems) to a central point for uploading to the internet, but fall well-short of true across-farm connectivity.

Capability is the next major challenge for farm businesses wishing to implement digital farm technologies.

There is a dearth of technical advisors available who can help farmers design and implement digital strategies that marry up a range of different sensors and monitors and enable the resulting data to be collected, transmitted and analysed to the point where it aids farmer decision-making.

Too often the assumption appears to be that farmers will happily spend hours each week inputting data and then reformatting and analysing it in order to come up with useful insights that provide more value to them than is currently available through observation, experience and intuition.

Similarly, it seems to be assumed that farmers will be able to manage problems with incompatible or patchy connectivity with the same level of knowledge and skills as a trained telecommunications technician. This is not a correct assumption is about 99 per cent of cases.

Farmers want easy-to-use, integrated and comprehensive information that they can use to assist decision-making.

Ideally, digital farm technology should help to make farm decision-making more objective, or at the very least should make current compliance and administrative tasks easier and quicker.

The level of integration required to achieve this is still a long way off for most of the currently-available crop of digital farm tools, and there is simply not enough technical support available to enable farmers to integrate and adopt these with confidence.

Internet-based support models may work for popular, high-volume products like accountancy software, but fail miserably in the absence of poor or non-existent connectivity!

Commercial reality is the final hurdle that will present a challenge, especially for technologies that aim to enhance productivity, rather than just make compliance easier.

Taking Australian broadacre cropping or livestock production as an example, average gross margins for these enterprises in relatively high rainfall areas range from $350 – $500 per hectare.

If a conservative assumption is made that the application of digital technology could lift productivity by 5pc, then the potential gain in gross margins ranges from $17.50 to $25 per hectare.

Based on other examples, it is reasonable to assume that farmers will want to see benefits of between three and five times the cost as the minimum threshold for adoption of new technologies.

This suggests that a cost of between $4 – $6 per hectare is probably the upper threshold of what broadacre farmers would be prepared to pay for technology that holds the promise of a 5% productivity gain.

Obviously in the case of higher value crops like cotton the adoption cost threshold will be higher, but these figures generally represent what appears to be a likely threshold cost for productivity-enhancing technology.

If the initial startup cost amortised over the likely life of the technology and the annual operating costs exceed this level, then it will be difficult to generate the levels of adoption required for a new technology to be successful.

If the technology simplifies compliance or regulatory requirements that may alter this somewhat, but the adoption cost threshold is not likely to be much higher than these figures.

Each of these challenges – connectivity, capability and commercial reality – is surmountable, but some government action and cross-industry collaboration will be needed to ensure that none of these become a permanent blockage, and prevents Australian farmers from taking advantage of the undoubted productivity benefits that digital agriculture promises.

Source: Australian Farm Institute


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