Speaker 1: This is Dana Perkins and you're listening to Switched on
Speaker 1: the BNF podcast. Pesticides are considered an indispensable part of
Speaker 1: modern agriculture for many farmers. They're used to prevent weeds, insects,
Speaker 1: and fungus from attacking crops and decreasing yields. But the
Speaker 1: use of these chemicals comes at a cost because pesticides
Speaker 1: are a driver of environmental damage and soil pollution, and
Speaker 1: they have been linked to declines in bird and insect
Speaker 1: populations and aquatic biodiversity on today's modern farms. The most
Speaker 1: common way to apply pesticides involves broadcast spraying. This is
Speaker 1: where chemicals are sprayed uniformly over crops, but this method
Speaker 1: is exceptionally inefficient, with ninety five percent of herbicides and
Speaker 1: ninety eight percent of insecticides not actually reaching their intended pest. However,
Speaker 1: new precision delivery technologies could change all of this through
Speaker 1: the use of cameras and artificial intelligence, and it would
Speaker 1: enable green on green sensors to detect and target individual
Speaker 1: weed with pesticides, leaving the other green crops untouched. How
Speaker 1: does this technology work and just how efficient is it?
Speaker 1: And beyond environmental protection, what other benefits does it offer
Speaker 1: to farmers? To find out more, today, I am joined
Speaker 1: by Alexander Littington, an analyst from bnaf's Sustainable Agriculture team. Together,
Speaker 1: we discuss the significance of green on green technology, the
Speaker 1: positive environmental impact it promises, and the potential cost savings
Speaker 1: for farmers. We also discuss the conditions required to use
Speaker 1: these new sensors and whether drones are a viable option,
Speaker 1: And finally, we discuss whether pesticide manufacturers are embracing this
Speaker 1: technological revolution. To access associated BNF research highlighted on today's show,
Speaker 1: including Alex's research note with a terrific title, Precision Pesticide
Speaker 1: Delivery Booming to Spray the Least, you can find it
Speaker 1: on BNF dot com or at BNF go on the
Speaker 1: Bloomberg terminal. If you like this podcast, make sure to
Speaker 1: subscribe or give us a review. But right now, let's
Speaker 1: jump into our conversation with Alex about precision agriculture. Alex,
Speaker 1: thank you very much for joining the show today morning.
Speaker 2: Thank you for having me well.
Speaker 1: Alex is very kindly saying good morning to me, But
Speaker 1: it's actually evening where you are, so I'm located in London,
Speaker 1: you're located in Australia, and we're here to discuss pesticides.
Speaker 1: It would be great if you could give us a
Speaker 1: little bit of context as we head into this regarding
Speaker 1: why we think there might be the opportunity to have
Speaker 1: a breakthrough on being motivated to actually fix the pesticide problem. Because,
Speaker 1: as many people know, in the agriculture space, farming is
Speaker 1: incredibly distributed and so trying to rally behind organized common
Speaker 1: solutions that are centrally managed can be somewhat difficult to do.
Speaker 1: And I think you can give us a little bit
Speaker 1: of context around some of those central sources of motivation
Speaker 1: that are just starting to emerge now.
Speaker 3: So we've got all these new policies emerging, like the
Speaker 3: Global Biodiversity Framework, these big supernational targets to reduce the
Speaker 3: amount of chemical pesticide that we need to apply. And
Speaker 3: this is pretty much the best solution for that, and
Speaker 3: that is to protect nature because obviously all these chemicals
Speaker 3: that leach out and leave the cropping system, they then
Speaker 3: enter the natural environment, They enter organisms, they cause reproductive distress,
Speaker 3: They cause trofic cascade, which is when one species essentially
Speaker 3: falls out of the food web and the whole food
Speaker 3: chain then collapses.
Speaker 1: So it would be great if you could give us
Speaker 1: a little bit of color on the current way we
Speaker 1: are using pesticides in most places in the world so
Speaker 1: that we can understand what it is that actually needs
Speaker 1: to be fixed.
Speaker 3: So agriculture has a trilemma. We need to feed ten
Speaker 3: billion people by twenty fifty on potentially less land as
Speaker 3: it's protected by nature, and to halt the biodiversity crisis
Speaker 3: which we're currently experiencing. As I said, we need to
Speaker 3: feed ten billion people by twenty to fifty. Unfortunately, that
Speaker 3: does mean that we still need to rely on a
Speaker 3: portion of chemical crop inputs as well as implementing integrated
Speaker 3: pest management systems, which are a methodology of reducing the
Speaker 3: amount of chemical pesticide that is used.
Speaker 2: So currently we spray.
Speaker 3: Chemical pesticides at very high volumes, very indiscriminately, and that
Speaker 3: can either be via aerial with a crop duster, which
Speaker 3: is a small plane with a payload that just drops
Speaker 3: the chemical onto the field, or we do it via.
Speaker 2: A big boom spread which is.
Speaker 3: An effect attractor with a tank attached to it with
Speaker 3: two large wings which then deliver that pesticide along the
Speaker 3: rows of crops. Now, what this means is that the
Speaker 3: chemical can actually then either blow away in spray drift
Speaker 3: as the air picks up, or more chemical is released
Speaker 3: then is actually necessary to kill the pest. And that
Speaker 3: pest can either be a weed, it can be a fungus,
Speaker 3: it can be an insect or something even more obscure
Speaker 3: like a nematode which exists in the soil and can
Speaker 3: harm the plant's growth. And eventually what that means is
Speaker 3: the yield that we obtain from the crops.
Speaker 1: So why don't you give me a little bit of
Speaker 1: context around just how bad the problem is in terms
Speaker 1: of the overuse or inefficient use of pesticides, be those
Speaker 1: insecticides or herbicides.
Speaker 3: Absolutely so when we spray these chemicals in these big
Speaker 3: broadcast methods, ninety eight percent of insecticides and ninety five
Speaker 3: percent of herbicides don't even reach their target pests.
Speaker 2: So what that means is.
Speaker 3: It that chemical can then leave the cropping zone and
Speaker 3: the cropping system or the farm and then cause knock
Speaker 3: on consequences to nature and ecology, whether that be disrupting
Speaker 3: breeding cycles of aquatic organisms, killing native plants, affecting the
Speaker 3: behavior of large animals, that neurotoxicity as we call it,
Speaker 3: and even up to the human level. There was traces
Speaker 3: of glyphosate found in human urine at very, very shocking
Speaker 3: levels recently in the United States.
Speaker 1: I think there is a general understanding that for overall
Speaker 1: health of organisms, we want to reduce pesticide use. I mean,
Speaker 1: these are micals designed to kill things, including insects, which
Speaker 1: we do need for biodiversity. So the urgency is so
Speaker 1: well laid out by the fact that ninety eight percent
Speaker 1: I mean, I'm just going to repeat that, because that
Speaker 1: is such a huge amount of overall pesticides not reaching
Speaker 1: their desired location. But Aha, we are here to discuss
Speaker 1: solutions as we always do, and I find this. We're
Speaker 1: going to launch into a conversation around how AI can
Speaker 1: actually address this, which going to be learning a lot
Speaker 1: on this show, because when I think about the natural
Speaker 1: world and I think about plants in particular, the interventions
Speaker 1: that immediately come to mind are not ones that I
Speaker 1: would think involve computers sitting in a lab somewhere and
Speaker 1: a technology fix. So explain to us how AI has
Speaker 1: an application in reducing pesticides.
Speaker 3: Absolutely, so there's a leading technology which is emerging that
Speaker 3: we call as a blanket variable right technology, and it
Speaker 3: kind of does what it says on the tin. It
Speaker 3: varies the right in which we apply these chemical pesticides. Now,
Speaker 3: the pinnacle of that the best performing technology is green
Speaker 3: on green optical spot spray and that essentially is cameras
Speaker 3: that amounted to a conventional broadcast boom spray that then
Speaker 3: uses artificial intelligence algorithms to detect the weeds in the
Speaker 3: row of the crops. As this machine is working down
Speaker 3: the field and it chooses to turn on and off
Speaker 3: the nozzles to only spray the weed that is present.
Speaker 3: So the reason we call it green on green as
Speaker 3: opposed to green on brown was the previous technology was
Speaker 3: a green on brown, meaning that it can sense green
Speaker 3: plants on brown soil. Now we're talking about green on
Speaker 3: green technologies. This means that we can sense green weeds
Speaker 3: amongst green crops. So it's selecting green within green to
Speaker 3: then deliver that precise dose of herbicide.
Speaker 1: So, if I'm understanding this correctly, this is basically a
Speaker 1: very advanced facial recognition technology but for weeds, so it
Speaker 1: can tell the difference between the plant that you want
Speaker 1: to have there and the plant that you don't want
Speaker 1: to have there.
Speaker 2: In essence, yes, okay.
Speaker 1: So this is interesting. I wonder if there'll be any
Speaker 1: mistaken identity moments there. But the point is that this
Speaker 1: seems like a technology solution to detecting the pests that
Speaker 1: are within the desired crops. But why is this considered
Speaker 1: an artificial intelligence application? What about it makes it AI?
Speaker 3: So what they do is they feed a model, a
Speaker 3: computer model, annotated images of weeds thousands of thousands of times,
Speaker 3: and the model begins to learn the shape of the weed,
Speaker 3: the color of the leaf compared to a crop, and
Speaker 3: it can eventually manage to do that at speed and
Speaker 3: make the decision by itself which is the weed and
Speaker 3: which is the crop. Now a lot of this is
Speaker 3: done in house by the big machinery manufacturers, but there's
Speaker 3: also a push to make this open source so that
Speaker 3: it can be used globally free to use, and that's
Speaker 3: by actually a chap working over here in Sydney at
Speaker 3: the Sydney University called the University of Sydney Weed AI.
Speaker 1: So also to simplify this, it enables precision application, so
Speaker 1: it's able to really make the location of the pesticide
Speaker 1: that's being used quite specific to address the specific weed. Now,
Speaker 1: how much of an improvement would this lead to, because
Speaker 1: it's all going into the soil in this general area.
Speaker 1: Is this actually going to dramatically reduce the amount of
Speaker 1: pesticides that are used in a commercial farm?
Speaker 3: Absolutely, the best available technologies are promising an up to
Speaker 3: ninety seven point five percent production in the amount of
Speaker 3: chemical that is used.
Speaker 1: Wow, So that's a huge improvement. And then that begs
Speaker 1: the question does this then have a net economic benefit
Speaker 1: for the farmer? What are the financial savings for the
Speaker 1: farm in terms of reducing pesticides and pesticides essentially a
Speaker 1: really expensive part of farming.
Speaker 3: So yeah, with our modeling that we've done here at
Speaker 3: Bloomberg NIA, we've found that this employing this green on
Speaker 3: green technology can be up to sixty percent cheaper.
Speaker 2: Than current broadcast methods.
Speaker 3: So that takes into account the fuel, all the changes
Speaker 3: in cost of labor, the chemical itself, the herbicide, and
Speaker 3: the cost of the actually implementing and fitting one of
Speaker 3: these new green on green machines.
Speaker 1: So presumably the machines themselves have a pretty substantial capital
Speaker 1: outlaid the beginning, and then the savings that you make
Speaker 1: on reducing your pesticide use is going to help you
Speaker 1: pay for that over time. But let's get into that
Speaker 1: to begin with. How expensive is it? How much cost
Speaker 1: is it going to be for the farmer to start
Speaker 1: using this technology to begin with.
Speaker 3: So there's two models that you can go for here.
Speaker 3: You can either buy a new sprayer which is equipped
Speaker 3: with this technology, or you can be buying a retrofit part,
Speaker 3: which is where a secondary manufacturer will fit this to
Speaker 3: your current existing sprayre Now, most farmers already own a spray,
Speaker 3: they've already outlaid that capsule expenditure. Most of these models
Speaker 3: sit around one hundred and twenty thousand dollars.
Speaker 1: And are these sprayers stationary? Are you capable of moving
Speaker 1: them around? And the real question I'm getting at is
Speaker 1: whether or not you need to have a lot out
Speaker 1: of them on a farm or you'd be able to
Speaker 1: invest in a smaller number and actually move them around.
Speaker 3: Typically a farmer will have one sprayer and that'll be
Speaker 3: the one spread that they use. Now, obviously, in the
Speaker 3: really really large operations, when we get up to the
Speaker 3: thousands upon thousands of hectors. You may need to have
Speaker 3: a couple of machines, but for the most part, one
Speaker 3: machine will definitely take care of all of the land
Speaker 3: that you have.
Speaker 1: So where in the world are these being adopted right now?
Speaker 1: Are there more technology friendly farming communities that we should
Speaker 1: know about somewhere between where you live and I live
Speaker 1: on this beautiful blue planet?
Speaker 2: There certainly are there, certainly are.
Speaker 3: Actually Australia, where we're sitting right now, has had the
Speaker 3: greatest adoption of variable rate technology or precision application. In
Speaker 3: the earlier stages, there was a technology called green on Brown,
Speaker 3: not quite as advanced and can only be used under
Speaker 3: certain applications. It just so happened that those applications fitted
Speaker 3: Australia's agronomy and in geography perfectly, so we had a
Speaker 3: great uptake of the technology and that equates to around
Speaker 3: seventy percent of grain along the eastern parts of Australia
Speaker 3: being sprayed with variable rate technology. Now looking at the
Speaker 3: green on green technology which are starting to become really
Speaker 3: popular here in Australia, but they also will be able
Speaker 3: to provide savings to farmers in the US, in Brazil
Speaker 3: and in the EU. Are the key cropping areas.
Speaker 1: So you mentioned the conditions being right in Australia for
Speaker 1: early adoption of some of these technologies. What are the
Speaker 1: conditions that need to be in place in order for
Speaker 1: this to work.
Speaker 3: Older technologies were only able to spray when they sensed
Speaker 3: a plant and not use AI to detect the difference
Speaker 3: between a plant, a crop and a weed. So that
Speaker 3: means they could only be used when the field was
Speaker 3: being fallowed and that is when the field is empty
Speaker 3: of any crops. So we were only spraying during that
Speaker 3: period between harvest and sewing, again to avoid the cost
Speaker 3: of accidentally spraying your crops. Now with the newer technology,
Speaker 3: we can use it year round because it's able to
Speaker 3: detect the weed in crop. Means whilst the field bears crops,
Speaker 3: we can use this technology to spray throughout the full
Speaker 3: cropping cycle.
Speaker 1: When we're thinking about the sort of crops that this
Speaker 1: would be most used for, whether they're the economically beneficial
Speaker 1: ones because certainly some of them make more money than others,
Speaker 1: or the way that they're harvested does it make a difference.
Speaker 1: I mean, I'm from Napa Valley, which is well known
Speaker 1: as a wine growing region, and there's multiple different ways
Speaker 1: to go about growing grapes, and some of them are
Speaker 1: dry farmed, but most of them are in rows with
Speaker 1: some sort of irrigation. Is this something that would be
Speaker 1: used for the wine industry perhaps, or does it have
Speaker 1: more applicability in let's say corn or even I'm thinking
Speaker 1: about really fast rotation crops near the equator, like bananas.
Speaker 3: So the most gains that we're going to see here
Speaker 3: are typically in row crops. Now, these are big, broad
Speaker 3: acre operations that are growing grains, oil seeds, things like corn, wheat, canola.
Speaker 3: Now that's not to say that it can't be used
Speaker 3: and it isn't used in tree crops. The amount of
Speaker 3: gains that we're going to see are going to be
Speaker 3: best from these larger row crops, big operations. We think
Speaker 3: here in Australia there's some farmers who can go for
Speaker 3: ten kilometers without having to turn their vehicle around. And
Speaker 3: then in terms of frequency of use in the US
Speaker 3: and in THEEU, there's typically one crop per year in
Speaker 3: each field. Now, if we move down close to the equator,
Speaker 3: take Brazil for example, Brazil, you can have up to
Speaker 3: three crops per year being taken out of the field.
Speaker 3: So that really equates to a lot of savings on
Speaker 3: the amount of pesticide that we're spraying.
Speaker 1: So you've painted a picture in my mind of fairly
Speaker 1: large farms monocropping, and you know, the things that are
Speaker 1: actually reaching most people on their dinner plate. And there
Speaker 1: have been concerns not just regarding pesticides, but actually the
Speaker 1: vulnerabilities of monocropping and also what it does to the
Speaker 1: soil to constantly be rotating the same crops on the
Speaker 1: same space. Is there a benefit to soil health when
Speaker 1: it comes to reducing the amount of pesticides And is
Speaker 1: this going to make that plot of land that the
Speaker 1: farmer is working on something they're going to be able
Speaker 1: to be on for longer and maybe even reduce their
Speaker 1: need for fertilizers.
Speaker 2: Certainly.
Speaker 3: So, a lot of these chemicals reduce the health of
Speaker 3: the soils, not only in the microorganisms, but also those
Speaker 3: larger organisms that are existing, the beneficial insects and invertebrates.
Speaker 3: So by reducing the amount of damage that we're causing
Speaker 3: to the soil by overspraying pesticides, we actually stop the
Speaker 3: vicious cycle, which is damage soil less beneficial insects and
Speaker 3: therefore more chemical needing to be sprayed.
Speaker 1: The pesticide business is a big business. By reducing the
Speaker 1: amount that are actually being used, there could potentially be
Speaker 1: a lot of money at stake. What is the current
Speaker 1: market size for this and how much are they doing?
Speaker 1: I guess annually in terms of how many pesticides are
Speaker 1: being sold around the world.
Speaker 3: So the global pesticide industry or crop protection industries is
Speaker 3: also known, is around forty three billion dollars a year.
Speaker 3: Now that's completely under threat at the moment, both due
Speaker 3: to legislative pressures but also due to the farmer being
Speaker 3: very squeezed. The farmer doesn't receive very much of the
Speaker 3: share of the dollar, so wherever they can reasonably cut costs,
Speaker 3: they will. Now this technology is allowing them to reduce
Speaker 3: both their cost base but also to improve the productivity
Speaker 3: of their farm.
Speaker 1: How are the pesticide companies viewing this new technology that's
Speaker 1: emerging and is it something that they're interested in and
Speaker 1: potentially developing a house or even acquiring, or is it
Speaker 1: something that they're threatened by and trying to figure out
Speaker 1: how long they can avoid it becoming mainstream.
Speaker 3: The crop protection industry has been able to move very agile,
Speaker 3: and they've learned from previous legislative knocks such as in
Speaker 3: the EU the amount of pesticides that are being restricted
Speaker 3: for use on a yearly basis. So they've really grabbed
Speaker 3: the ball by the horns and they've jumped in at
Speaker 3: the deep end. For instance, there's a startup called the
Speaker 3: Eco Robotics ARA, which is a precision delivery unit which
Speaker 3: promises to reduce crop inputs from herbicide insect side and
Speaker 3: funger side as well as fertilizer. Now that's had investment
Speaker 3: from notable investors, both the ASF, the German crop protection company,
Speaker 3: but also Yara, the global fertilizer company.
Speaker 1: So when you're talking about this AI technology being used
Speaker 1: to spot those pesky pests, you specifically referenced it being
Speaker 1: put onto a boom and kind of coming across the
Speaker 1: entire field. But I'm thinking now of drones that are
Speaker 1: not actually connected to the ground flying over. That is
Speaker 1: something that has been i think excitedly talked about. And
Speaker 1: the question for you, is someone who's looked at this
Speaker 1: in more detail, is whether or not you think that
Speaker 1: that's got legs No pun intended.
Speaker 3: So there absolutely is an application for drones in agriculture. However,
Speaker 3: the spraying of large sways of cropping land is probably
Speaker 3: not it. The payloads are just too small at the
Speaker 3: moment and we haven't really seen advances in swarming technology,
Speaker 3: and that's when we deploy multiple drones. So I think
Speaker 3: the largest drone which is currently available is the Guardian
Speaker 3: Agriculture sc one, which has around seventy to eighty liters
Speaker 3: of payload capacity. It has also been invested by big
Speaker 3: names in the industry like leaps by Buyer. Now, the
Speaker 3: case for drones is that we can apply chemical to
Speaker 3: hard to reach areas, which will mean that the use
Speaker 3: of the chemical is more efficient, so such as the
Speaker 3: tops of tree crops, which previously we haven't been able
Speaker 3: to apply to very efficiently we've therefore lost yield. It
Speaker 3: also can be used on areas such as boundaries where
Speaker 3: the spray is.
Speaker 2: Not able to get to as easily.
Speaker 3: Alternatively, and areas of sprayer can't enter, like greenhouse agriculture
Speaker 3: or glasshouse agriculture. So there certainly is a case for
Speaker 3: spray drones. The technology is just not there yet at
Speaker 3: the moment to spray big swathes of agricultural arable land.
Speaker 3: Another application of the use of drones will be in
Speaker 3: mapping and surveillance of fields. So that is something that
Speaker 3: currently takes a lot of time and effort and also
Speaker 3: a lot of money to get a satellite map done
Speaker 3: of the characteristics of your farm land, which are very
Speaker 3: useful in applying inputs. So that may be the yields,
Speaker 3: that may be the presence of pests, that may be
Speaker 3: the availability of.
Speaker 2: Water for your cropping.
Speaker 3: So this will enable us to work smarter using imagery
Speaker 3: mapping software that then can be loaded up to farm
Speaker 3: management software to deploy chemicals smarter. So the case for
Speaker 3: drones is either as surveillance and mapping imagery technology or
Speaker 3: as in small payloads in areas that we can't get
Speaker 3: a boom spread to.
Speaker 1: So the drone technology is actually a compliment to the
Speaker 1: boomsprayer as opposed to an alternative to it, at least
Speaker 1: in the picture that you've painted of the future, where
Speaker 1: we're looking at the field and being strategic and then
Speaker 1: the boom sprayer has that ability to actually do the
Speaker 1: end application in that quite precision way. This seems like
Speaker 1: a great solution. You've got me very excited about what
Speaker 1: this technology could accomplish. So let's pivot a little bit
Speaker 1: to what parts of the pest world that it could
Speaker 1: actually be applied to. A lot of our conversation thus
Speaker 1: far has really focused on weeds and the plant based
Speaker 1: problems that we have there, but invariably there are also
Speaker 1: fungus and insects. Is that the next frontier for this technology?
Speaker 1: And I guess, without asking you to predict the future,
Speaker 1: how soon do you think it'll be applicable to a
Speaker 1: wider range of pests?
Speaker 3: Absolutely so, we already have companies offering drone surveillance to
Speaker 3: be able to detect other types of pests, such as
Speaker 3: Xavio for instance. However, what we haven't yet seen is
Speaker 3: a machine that is actually capable of seeing and detecting
Speaker 3: the other types of pests in real time and then
Speaker 3: therefore delivering the precise dose of required pesticide, whether it
Speaker 3: be a herbicide, insecticide, or fungicide. Now we've put a
Speaker 3: rough estimate there together that we think by at least
Speaker 3: twenty thirty we'll have this detection available for fungicide, so
Speaker 3: that disease will be detectable by a machine in real time,
Speaker 3: and then for insects, we think that should come land
Speaker 3: somewhere between now and twenty fifty. The problem with insects
Speaker 3: is that they are mobile, they're fast, and they're cryptic.
Speaker 3: That means that they can hide, so actually spotting them
Speaker 3: in a crop is a particularly difficult endeavor.
Speaker 1: So when I'm imagining the future, I should not be
Speaker 1: imagining some sort of robot, whether on a boom or
Speaker 1: as a drone, flying around chasing insects in some sort
Speaker 1: of a field. But who is coming up with these
Speaker 1: technology solutions. Are they Silicon valley tech companies, Are they
Speaker 1: smaller startups or are they the pesticide companies themselves thinking
Speaker 1: about these new and innovative ways to essentially make farming better.
Speaker 2: So it's actually a mixture.
Speaker 3: What we've seen is we've seen two roots to market,
Speaker 3: and that is from either in house R and D
Speaker 3: and bolt on acquisitions, or it's from parts ships with
Speaker 3: larger companies and smaller startups. So John Deere has gone
Speaker 3: the complete in house route. It's kept its doors shut,
Speaker 3: It's acquired a couple of interesting companies along the way,
Speaker 3: such as Blue River Technology and bear Flag Robotics. On
Speaker 3: the flip side, we've seen companies like CNCH Industrial and
Speaker 3: Agco who have entered into partnerships with spot spray startups
Speaker 3: like Zavio and one smart Spray now there. Recently, there's
Speaker 3: been a joint venture between Agco and one of the
Speaker 3: world's biggest technology companies, Trimble. This acquisition has enabled ADCO
Speaker 3: to really take control of the retrofit precision agriculture suite.
Speaker 3: This is across both spraying, harvesting, delivery of fertilizers. But
Speaker 3: one key part of that joint venture is Bilbury. Now,
Speaker 3: Bilbury is the best performing green on green sprayer on paper.
Speaker 3: What this means is they have the best promises to
Speaker 3: reduce the most amount of chemical pesticide and that is
Speaker 3: sitting at ninety seven point five percent.
Speaker 1: Now let's just pivot again to adaption. Going back to
Speaker 1: what you were saying earlier about some of these units
Speaker 1: being over one hundred thousand US dollars to install. This
Speaker 1: is a big capital outlay, and we know that farming
Speaker 1: is a tough business to be in and the margins
Speaker 1: are not amazingly great, so this may be a fairly
Speaker 1: big hurdle for some farms to actually cross. What are
Speaker 1: governments doing and maybe we can use the case of
Speaker 1: Australia where we've seen good farmer uptake. What it's driven that.
Speaker 1: Has it been entirely the market or have there been
Speaker 1: in government incentives and schemes that have facilitated it.
Speaker 2: That's a great question.
Speaker 3: And actually the geography with the highest adoption in Australia
Speaker 3: has seen most of its adoption of infact all of
Speaker 3: its adoption driven by savings to the farmer. Now, with
Speaker 3: nineteen percent of the variable costs for a grower in
Speaker 3: each year being comprised of crop protection reducing that can
Speaker 3: really cause a benefit to the bottom line for the
Speaker 3: grower themselves. Now, with our modeling, what we've seen is
Speaker 3: the cost of spraying one hecta employing this green on
Speaker 3: green optical spot spraying is about sixty percent saving.
Speaker 1: So really the farmers are very much motivated by how
Speaker 1: much money they're going to save and the payback period
Speaker 1: in terms of money saved on pesticides. It's going to
Speaker 1: make it worthwhile pretty quickly to buy these machines. They
Speaker 1: may even be able to get loans for them.
Speaker 3: Absolutely, So now that does bring a little bit of
Speaker 3: a question into it, and the limitations are that in
Speaker 3: countries where or with a grow who is not large
Speaker 3: enough to be able to outlay the capital expenditure to
Speaker 3: actually obtain the chemical, then what does that mean for them?
Speaker 3: But we are hearing certain calls, whether it be tax
Speaker 3: breaks or tax incentives or subsidies for purchase of precision
Speaker 3: agriculture equipment.
Speaker 1: So we're thinking about the future of farming here, and
Speaker 1: this AI application is certainly one important way for us
Speaker 1: to think about tackling a problem pesticide use. So tell
Speaker 1: me a bit about the future. How soon and what
Speaker 1: does it look like in these modern farms that are
Speaker 1: going to be much more efficient.
Speaker 3: So what we'll see in the future is we'll see fungicide,
Speaker 3: herbicide and insecticide all being able to be delivered from
Speaker 3: the same machine. But not only that, the machine will
Speaker 3: be able to make decisions in real time to detect
Speaker 3: all types of pests, but also be able to learn
Speaker 3: year on year what the trends are, what does the
Speaker 3: local area look like, what does the agronomy request or
Speaker 3: require to be applied, and so essentially what we're doing
Speaker 3: is we're building a large data model of the farm.
Speaker 3: So as the machine goes through the farm, it learns
Speaker 3: the farm, and that's from both we're talking earlier about
Speaker 3: drone surveillance and drone surveying, but also from the.
Speaker 2: On farm cameras.
Speaker 3: So as they learn, the machines get better and they
Speaker 3: get better and more precise.
Speaker 1: So in this increasingly technology reliant agriculture future, what are
Speaker 1: the potential downsides? You know, with the exception of the
Speaker 1: obvious ones, which are that there is required energy use
Speaker 1: for operating any sort of machine, as well as energy
Speaker 1: use for the servers that will very much be required
Speaker 1: in order to facilitate this AI technology the energy transition.
Speaker 1: This makes it intrinsically linked to the changes that may
Speaker 1: be required in the agriculture space. But are there any
Speaker 1: other downsides to this that maybe I haven't considered.
Speaker 3: We haven't spoken at all about autonomy on these machines,
Speaker 3: and actually what we're moving to as a smart vehicle
Speaker 3: that can actually work and operate without the requirement of
Speaker 3: a human. But what that means is then the farmer
Speaker 3: can spend more time monitoring their crops and actually paying
Speaker 3: attention to the local agronomy. Even if these machines moved
Speaker 3: to being fully autonomous, being able to operate by themselves.
Speaker 3: That will mean that we'll free up time on the
Speaker 3: farm for growers who conventionally quite time poor, to be
Speaker 3: able to pay more attention to their crops, to be
Speaker 3: able to monitor for pests, monifor the presence of pests,
Speaker 3: monitor the health and monitorf really for their plant need
Speaker 3: as opposed to spending a lot of the time in
Speaker 3: the cab actually applying these products. Now there's a startup
Speaker 3: also based here in Australia called swarm Farm Robotics. Now,
Speaker 3: what swarm Farm does is they operate a driverless vehicle
Speaker 3: that is capable of towing a sprayer. However, this vehicle
Speaker 3: can choose or has the smarts to operate only when
Speaker 3: the timing is perfect for the chemical to be applied,
Speaker 3: and that is when there is low rain and low wind.
Speaker 3: That means that the chemical is less likely to be
Speaker 3: pulled off of the cropping system or escape the cropping system.
Speaker 1: So, Alex, my final question really comes down to the
Speaker 1: fact that when I think of technology now, I think
Speaker 1: about all of these subscription models that we all subscribe to.
Speaker 1: Will this apply to this technology and will there essentially
Speaker 1: be software updates to the AI technology where it becomes
Speaker 1: more sophisticated and can do a better job of figuring
Speaker 1: out what the precision sprayer needs to do. And as
Speaker 1: a result, is this both a hardware and software conversation?
Speaker 2: It absolutely is.
Speaker 3: So there's essentially three models that the machinery manufacturers are employing. Firstly,
Speaker 3: is a one off fee to purchase both the software
Speaker 3: and the hardware. Then we have a second where you
Speaker 3: would purchase the hardware and then choose to turn on
Speaker 3: the software for a year, and that would enable you
Speaker 3: to spray the amount of hectares per year paying for
Speaker 3: the algorithm that actually detects these pests in field. Now,
Speaker 3: the third option is paying per use, So every time
Speaker 3: you turn on your tractor and choose to use that function,
Speaker 3: you'll pay a fee. So what this means essentially is
Speaker 3: that the current quotes that we're currently seeing are around
Speaker 3: five to seven dollars per hecta to use the technology.
Speaker 1: So this is really interesting because not only is this
Speaker 1: technology going to help save the farmer money on its
Speaker 1: pesticide use, but there actually is a long term revenue
Speaker 1: stream for the companies that are actually selling the technology.
Speaker 1: So I am very interested to see how these business
Speaker 1: models evolve and invariably where it ends up in the world,
Speaker 1: because Australia great first place to start. But I am
Speaker 1: seeing a lot of potential here for other parts of
Speaker 1: the world which you've already identified, such as parts of
Speaker 1: Europe and Brazil and North America. So we will wait
Speaker 1: and see. We look forward to having you back on
Speaker 1: the show telling us about more developments in the agriculture space.
Speaker 1: Thank you for sharing your thoughts.
Speaker 2: Thanks for having me, It's been great.
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