The level of investment in the agricultural sector is significantly lower than the levels seen in the other industries included in this report. With 80 per cent of agriculture businesses ranked as IIoT starters, the industry is clearly at the early stages of its IIoT investment cycle, and if it is to capture the full value of IIoT solutions it must ramp up its level of investment to ensure successful deployments.

How will the agriculture sector invest in IIoT? (%)

Laggards
Starters
Progressives
Leaders

How will the agriculture sector invest in IIoT? (%)

Laggards
Starters
Progressives
Leaders

However, the picture is more complicated than these figures would suggest and when viewing agriculture’s investments in IIoT to date, and those planned in future, as a percentage of overall IT budgets, the sector appears in a better light. Respondents invested 2 per cent of their IT budgets in IIoT over the last three years – a comparable figure to the overall sample – and their planned investment over the next three years surpasses that seen in other sectors. Agriculture respondents will devote 9 per cent (11 per cent in farming) of their IT budgets to IIoT through to 2021, indicating that the sector is investing heavily in the technology.

Indeed, respondents expect to spend more of their IT budgets on IIoT-based solutions than they will on other next generation technologies over the next three years.

WHAT PROPORTION OF YOUR IT BUDGET DO YOU EXPECT TO SPEND ON THE FOLLOWING TECHNOLOGIES OVER THE NEXT THREE YEARS? (%)

IIoT
Cloud computing
Robotics
Big data analytics
Next generation security
Virtual reality
Cognitive AI
Machine learning

WHAT PROPORTION OF YOUR IT BUDGET DO YOU EXPECT TO SPEND ON THE FOLLOWING TECHNOLOGIES OVER THE NEXT THREE YEARS? (%)

IIoT
Cloud computing
Robotics
Big data analytics
Next generation security
Virtual reality
Cognitive AI
Machine learning
9%

of IT budgets will be spent on IIoT over the next three years

Despite this, the absolute figures reveal a different view. Agriculture businesses reported that they expect to spend on average close to $1million on IIoT solutions in the next three years, significantly below the average amount of over $5million that respondents across all industries expected to invest over the same timeframe. The investment picture also shows significant variation across the different sub- sectors. Those businesses involved in farming and OEMs are showing bullish levels of investment, at well over $1millon, while the forestry sector languishes behind on just over $400,000.

These differences owe much to the size of organisations surveyed but also, more importantly, agriculture’s relatively low-tech starting point. It of course stands to reason that a farm would spend less on technology than, say, an oil company, though agriculture businesses should reassess the amount they spend on technology as they look to seek the benefits of a more digitally-enabled future.

Over the next five years, farming businesses expect IIoT solutions to help grow their turnover by over 16%

While sensors can be deployed in fields or on livestock to monitor basic parameters such as soil moisture levels or animal welfare at relatively low cost and to good effect, heavier duty IIoT deployments hold the promise of more substantial rewards. Completely automating heavy machinery, like seed drills or crop harvesting machinery, for example, would reduce the sector’s reliance on manual labour, speed up the rate of production and serve to maximise crop yields. These next-level IIoT deployments come with a higher price tag, though the data indicates that a higher spend on IIoT technologies comes with a correspondingly high return on investment.

Large scale farmers’ enthusiasm for IIoT, and higher level of investment, is reflected in these organisations’ expectations for IIoT’s contribution to their turnover and costs. Over the next five years, farming businesses expect IIoT solutions to help grow their turnover by over 16 per cent, well above the agriculture average figure of 14 per cent. In addition, farmers expect IIoT solutions to help them save almost 20 per cent of their costs, ahead of the 18 per cent reported by agriculture respondents overall, reflecting IIoT’s potential to help businesses in the sector operate with much greater efficiency.

WHAT OPERATIONAL COST SAVINGS AND TURNOVER INCREASES DO YOU EXPECT TO ACHIEVE THROUGH IIOT? (%)

Farming - cost savings
Farming - turnover increase
Agriculture - cost savings
Agriculture - turnover increase

WHAT OPERATIONAL COST SAVINGS AND TURNOVER INCREASES DO YOU EXPECT TO ACHIEVE THROUGH IIOT? (%)

Farming - cost savings
Farming - turnover increase
Agriculture - cost savings
Agriculture - turnover increase

Admittedly, these are ambitious projections though when we consider some of the operational pressures and production methods in the sector today, cost savings of this sort of order may be within grasp.

The farm sector is facing potentially limited crop price appreciation (outside of a major weather event), continuing logistical challenges in emerging markets, trade barriers in developed markets, and increases in labour costs.

Farming remains heavily reliant on manual labour and labour availability, or lack thereof, will be key issue for the global agribusiness industry over the coming years.

In developed economies, antipathy towards globalisation and increases in populism could reduce migration levels and therefore a potential source of cheap labour, meaning that to attract additional labour, wages will need to rise.

In emerging economies meanwhile, urbanisation and the expansion of heavy industries are seeing the pool of available labour contract and pushing up wages.

To increase profitability, farms therefore need to become more productive, which will chiefly come from the increasing use of technology. Automation, enabled by IIoT, could help reduce agriculture’s dependence on the labour market and deal with the macroeconomic challenges it faces.

FOR MORE INFORMATION ON THE RESEARCH, DOWNLOAD THE REPORT - INDUSTRIAL IOT ON LAND AND AT SEA: AGRICULTURE

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