With technology convergence enabling the ag robotics industry to take shape, what business model is needed to tackle the labor crisis? Equipment manufacturers explore the developments and investments they believe are needed to support farmers at scale.
“Robotics are just starting in agriculture and are going to keep getting better over time. An interesting model to consider in this type of situation is a recurring revenue business model. With this model, customers are able to gain incremental value from the technology by having access to the latest offerings. This model also provides lower starting costs which reduces barriers to entry and increases adoption. In turn, companies are highly motivated to keep improving their products to deliver incremental value to incentivize customer to renew.
For farmers to use these technologies at scale, companies need to make sure that their products work reliably in all the conditions that the farmer needs them to work. This problem in robotics is called ‘solving for the long tail’. In other words, making sure that the system not only works on the common scenarios, but also on the uncommon ones. Until we solve for the long tail, robotics will have limited use. That is exactly what we are focusing on at John Deere. We are happy to report that we have achieved it in See & Spray and in our Full Autonomy project, as well as in other advanced robotic products for harvesting and planting. It took clever approaches, hard work by a talented team and time. The results are a products that meet customer expectations in a broad range of conditions.” Jorge Heraud, VP Technology, JOHN DEERE
“Outside of field crops that are grown on flat terrain where we see some prototypes today, there are other huge applications for automating manual tasks in tree crops cultivated in difficult terrain and planted over large areas. We at Sime Darby Plantation view the underlying technologies to be ready, and see a huge productivity upside and potential business opportunity.
Early builders like Sime Darby Plantation have the role to invest and to stack up the technical building blocks. We have started automating operations in crop protection, fruit evacuation, and fertilizer application. Solutions here will be leveraged to approach trickier operations such as pruning and harvesting. We are co-developing these solutions with startups, universities, and robotics pioneers. Over the coming months and years, we will be building multiple prototypes for various operations, and progress these through the stage gates of rigorous testing, and proving the AI and safety measures before operationalizing.
Robotics as a Service (RaaS) is a good model for taking these machines from a workshop to mainstream use. This means there will be opportunities for other businesses to maintain and operate these new machines, and potentially adjacent business models to advance engineering, advance on precision agriculture solutions, and to service small farmers. A large ecosystem of service providers will be needed to address labor crisis in agriculture.” Aditya Tuli, Chief Digital Officer, SIME DARBY PLANTATION
“Farmers told us that upskilling field workers to data workers to solve their problems with modern tools is the first priority. They need technical solutions for the dirtiest, hardest, least-wanted jobs on the farm. Our multi-task, multi-action autonomous implement does this with a degree of fidelity never seen before. By partnering with farmers to create new, well-paid, on-farm jobs that are equitable, clean and tech-focused, we are helping to reinvigorate and rebuild rural communities. Autonomous vehicles and dancing robots may get headlines, however right now agriculture is the most impactful area for robotics, automation, and machine learning. To farm sustainably at scale, we must move faster to advance robotic technology and accelerate broad adoption of the regenerative and precision ag solutions it delivers.” Gabe Sibley, CEO, VERDANT ROBOTICS
“I don’t think there is a “one size fits all” business model when it comes to solving the labor crisis on farms with robotics and automation. The key when deciding on a business model is matching it with the customer’s problem and business need, and framing the investment with a clear ROI that compares cleanly to their existing business. For many early robotics companies, the most straightforward way has been to charge “as a service,” where the farmer pays the company in operating costs similar to how they pay their human workers. For others, it may be more valuable to frame it as a capital investment. Farmers face the same question with more traditional farm equipment – sometimes it makes sense to rent, lease, or pay someone else to perform a service with their own equipment. Other times, it makes sense to buy the equipment and finance it yourself.
Internally, robotics companies need to make an extraordinary amount of investments beyond the tech itself in order to move from pilot to mainstream. While robotics conjures ideas of fully autonomous “set it and forget it” solutions, in reality, robots are just a high-tech tool that exists within a farmer’s very intensive operational environment. Robots work alongside humans, must be supervised and maintained by humans, and have to seamlessly integrate into the complexities of today. That’s why we have made internal investments to shift from a tech-focused company to an operations-focused company as we’ve scaled up. “Boring” things like Standard Operating Procedures, hiring, training, tools, and systems are essential to scaling up a professional mainstream application, and we think many companies are underestimating the required investment. ” Eric Adamson, CEO, TORTUGA
An effective business model needs to consider farmers first and would be one that prioritizes developing and distributing technology that is tailored to the unique needs of the industry. The model needs to be attainable, approachable, and affordable and, most importantly, it has to be easily adopted and integrated into existing farming operations. Additionally, the model should be scalable and work for a wide range of farmers, regardless of their size or location.
To advance technology from pilot to mainstream, real end-users who are willing to take a chance on new technology are essential. Farmers need to be involved in the development process from testing and trialing to provide valuable feedback for continuous improvement on the solution. This approach accelerates the advancement of the technology and makes it more likely to be adopted by the wider farming community more than any amount of investment money alone.” Tim Bucher, CEO, AGTONOMY
“Our first challenge is to make robotics work in scale – thousands of machines. We are not there yet as an industry. I don’t think there is one “right” business model, it will depend on various factors, including the specific crop and location, as well as the goals of the company. However, some potential business model that has been successful is robots as a service – you pay for the task as you paid until now but the application will be made by a tired party that will have a lower cost structure. Another option is to sell the machine directly to the farm and in that case, theoretically, you will be able to charge up to the cost of the employee that the robot is replacing.
To achieve scale, we need to think of connectivity, not in all places there’s a reception to operate the robots. Then, we need to see that the robots really save employees’ costs. For example, if I have a robot that can spray but I need a person to do the refilling, or take it out of the shop to the field, I’m not really saving employees time/cost. Which will be reflected in the business model. Lastly, we need to prove that robots are really much more efficient than people. We didn’t prove it with all the tasks.” Boaz Bachar, CEO, FIELDIN
“We have been commercially active in California for more than two years now, working closely with growers who became our partners. One of the learnings we have from our conversations on the labor crisis is that accessibility is key. Reducing the risk the growers are taking, by embracing an accessible business model which they can compare to their day-to-day operations cost, and does not require an upfront large capital investment. Our subscription model costs can be compared to salary costs, making it easier to see the financial impact the technology adaptation in the farm can create from day one.
Investments in robotics companies in the growth stage should have different matrixes than those done in traditional SaaS companies. Higher capital investments that might be seen as riskier are required, but they are also higher in return and are more sustainable. These products change the way growers work, and therefore create higher commitment and engagement from the customer side, who will find it harder to replace the product after he sees the positive impact on its farm economics.” Ben Alfi, CEO & Co-Founder, BLUEWHITE
Want to talk with more corporates, investors and innovators focused on bringing autonomy on the farm? Join Jorge, Ben, Eric, Tim, Boaz, Aditya and Gabe and more professionals at the World Agri-Tech Innovation Summit on March 14-15 in San Francisco. See full program here.