Now, agricultural sector shows raising numbers of M&A transactions which are successful in terms of fundraising for their projects. It gives grounds for assuming that amount of the companies involved in agriculture would be reducing within the next few years, while the volume of assets of the remaining participants would be growing up.
In terms of competitiveness, it is justified tendency: according to statistics data and private agriculture holdings reports, only farmers with large land bank are able to reach crop yield level which at least approximates the European or global peers level, largely due to more available financing.
Agricultural holdings enter new stage of development, they have to change the degree of innovation in their field, whereas now it is one of the lowest among sectors of economy. In particular, this will bring improved crop cultivation, modern agricultural machinery and precision farming technologies – operational satellite monitoring of the farmland in order to spot significant deterioration of plants vegetation and consequent complex of measures to eliminate them (vegetation control).
Spectral characteristics of fields, results of texture analysis and changes in dynamics of colors brightness are being used to build indices and functions for harvest assessment and control. Processing of the satellite images in the red and infrared spectral range gives an opportunity not only to observe the fields in a real time mode, but also to generate database on the soil temperature and changes in its condition, rainfall, vegetation indexes for different crops, with a time horizon of 10 and more years.
1.Fertilizing. Rational fertilizing is extremely important for countries, whose chemical industry depends on imported raw materials and high gas prices. In particular this type of expenditures takes on average 17% in total crop cultivation cost. It is worth noticing that without using any additional options the satellite monitoring system enables to adequately measure only the level of required nitrogen content, nevertheless, the N-group fertilizers (mostly ammonium nitrate and urea) are the main types of minerals that are used by farmers.
Due to the satellite crop monitoring usage savings on fertilizers constitute more than 10% of annual expenditures on them. Thus for wheat the amount of savings in fertilizer can be from $8 to $40 per ha.
2.Wage costs. According to the results of our studies, every 1,500 hectares of farmland additionally require from 3 to 5 agronomists being employed, whose salary starts from $625 per month (developing countries). Satellite crop monitoring reduces human capital needs by 1-2 employees. Savings on vegetation control from staff optimization is $0.5-$1 per month per ha.
3.Accuracy costs. Because of the outdated methods of determining fields boundaries and absence of the operational data on their shape and area changes, resulting from erosion, anthropogenic, climatic and other factors, each year actual processing cost is overstated by at least 1-3% per hectare of crops. Satellite crop monitoring effectively utilizes mentioned inefficiency.
High quality satellite images with regular updates make it possible to avoid such losses. The average cost of 1 centner of wheat in developing counties amounts to $14.2/centner, the average yield – 33.5 centners/ha, therefore, due to modern technology use, you can save more than $9.4/ha.
4.Expenditures on fuel. It is recommended to do not less than 7 detours around the field per year in order to control crops development, including vegetation control. This requires approximately 0.4 l of diesel fuel (about $0.5) per hectare, while infrequent visits due to satellite monitoring give opportunity to save up to 40% of fuel per hectare ($0.2).
5.Expenditures on measurement of nitrogen level. Cost of a laboratory analysis of a soil, which is recommended to undergo at least once every three years, is around $0.9-$1.2 per ha. Satellite crop monitoring gives information about the level of nitrogen in the soil, analyzing vegetation indices and its deviation for a particular field, saving annually $0.4 per hectare.
In the developed countries, annual satellite crop monitoring service price of the crops starts from $1.5 per one hectare per year. Already listed factors provide savings circa $27/ha per year. It is not possible to take into account all specific conditions for every particular case, but lets bear in mind that, sources of savings, mentioned above, does not include the direct effect of technology – timely identification of deteriorations and precise preventive measures to save the crops while using satellite crop monitoring for vegetation control.
There are private satellite crop monitoring service providers: Monitoring Agricultural Resources (Italy), Cropio (USA/Germany), MapExpert (Ukraine), PrecisionAgriculture (Australia), Vega (Russia), eLeaf (Holland), Astrium-Geo (France).
In order to become a client of satellite crop monitoring service an agricultural company should sign a contract, pay fees, send shape-files with GPS-coordinates and Excel-file with cultivation history of the field.
Thereafter company’s manager (from the director of the group to agronomist of a single cluster) can monitor, in the real time mode, current soil temperature dynamics, weather conditions, vegetation index, precipitations and field development deviations, compare them with historical values, using any stationary or tablet computer. Moreover, the obtained data can be passed on to other staff members or investors, be printed or uploaded into board computers of the agricultural machinery.
Long-term cooperation with farmers suggests that the use of satellite crop monitoring technology (including vegetation control) is spreading gradually but steadily among agricultural companies. In our opinion, this process would naturally correlate with increasing prestige, wages and labor efficiency of modern agronomists. Another reason is rising competition in world food markets and increasing costs of production components that are forcing agricultural companies to work more efficiently. So, those who will fail in efficiency improvements will be bought by those who succeed in it.