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Nov 15, 2021

The trillion-dollar market behind tractors in the robot age

With the rise of fully autonomous mobile robots (AMR), robot developers are increasingly looking beyond the industrial scene. They have reached out to a $5 trillion market -- automated agriculture. To meet the needs of automated agriculture, growers need accurate information about the growth and health of crops throughout the growing season, and to accomplish seeding, irrigation, harvesting, etc., with greater efficiency. In the past, some automated farms have used drones to inspect data, but this has not been able to capture information below the ground. For ground-based detection, the need for additional infrastructure, such as cables or radio beacons, is greatly limited.


For automated farms, however, the advent of AMR has certainly changed the landscape. First, the AMR has autonomous mobility, which allows task-driven movement to the operating area within a defined area. This mechanical advantage supersedes the planning problems previously associated with covering the area with fixed equipment. Second, the AMR is also a treasure chest. A single AMR can perform multiple tasks instead of relying on different devices to collaborate, greatly reducing the complexity of the automation chain.


In 2018, there was a flurry of agricultural AMRs, most of them in the laboratory. Cambridge Consulting's Agricultural AMR Mamut, for example, can explore farmland to capture data on health and yield on a large scale at the level of individual plants. Provide growers with regular, accurate and actionable crop information through automated data collection, enabling them to predict and optimize yields.


Until 2020, the best-known startup in the field is FarmWise, a weeding robot that uses computer vision to identify weeds and crops as it runs and weed them with a weeding arm that sits on the robot's chassis.

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FarmWise Weeding Robot (source FarmWise)


The project received $14.5 million in Series A funding in September 2019. FarmWise's weeding robot was once considered the standard model for agricultural AMR -- future irrigation, planting, and picking robots are expected to follow this model: On the one hand, the robot is big enough to hold more tools. On the other hand, the hood keeps the sun out and the computer inside operates at a low temperature.


However, after 2020, almost all agricultural robotics startups have adopted the design idea of transforming tractors into agricultural AMR. Bear Flag, which has just been acquired by John Deere, and the Moarch Tractor, which completed A $20 million Series A funding round in 2021. Especially going into 2021, there isn't even a single company designing agricultural AMR on their own, like FarmWise and Cambridge Consulting.



Business comes before technology


As mentioned above, most of the agricultural AMR was originally designed by original design, but by 2020, the market will no longer have various original agricultural robots, instead, modified tractors. In the final analysis, capital discovered the fact that the three words "tractor" were more suitable for agriculture than the three words "robot".


In 2021, a factory will sell an AMR for about $30,000, excluding any software costs, and if you want to buy multiple collaboratively task-capable AMRs in a service cluster, the price will rise again. At the same time, the John Deere 6B-1404-A sold for as little as $4,000, and an agricultural AMR made from A modified tractor sold for about $10,000 to $20,000.


While the modified tractor may not be as precise as the FamrWise or Cambridge Consulting AMR with millimetre movement, it is actually more customer-friendly. In the past, agricultural AMRs have been powered by electricity, while tractors have a more cost-effective diesel power system. The best-selling John Deere 6B-1404-A, with A maximum output of 140 horsepower and A fuel tank capacity of 265 litres, costs far less than the agricultural AMR of the past but has A longer range. For agriculture, on the scale of an acre, the error of 1 mm and 10 cm is negligible. The users who really need automated agriculture, basically have dozens of acres of land, they do not care more about the original robot and modified tractors in the movement of the error.

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Bear Flag's agricultural AMR modified by tractor (credit: John Deere)


In addition, the birth of the tractor has been more than 200 years of history, its vehicle design, brake assembly and material selection have reached a very mature point. Today, a tractor can run steadily for more than 10 years. In contrast, no original designed AMR has been in the field for more than two years.


For robot manufacturers, robots are durable devices that operate with no other consumables other than basic fuel or energy. Not only does the tractor fit this well, but it also dramatically increases its added value by bringing in new capabilities. According to John Deere, the gross margin on a tractor is about 33%, but Bear Flag's AMR can achieve more than 50%.


Of course, there are robot manufacturers who have adopted a new business model: RaaS (Robots as a service). One such company is Blue White Robotics, which has converted a tractor into a robot that can fully automate everything from spraying and harvesting to planting and seeding. But Blue White Robotics does not sell its robots to customers. Instead, customers will buy its agricultural Robotics services on a time basis, depending on the soil, climate and duration of use.

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Blue White Robotics (Credit: Blue White Robotics)


While buyouts are the default payment method for farm tools for farmers, a spokesman for Blue White Robotics said its customers prefer to pay for their services. That's because robots are new to farms, and even though they're still tractors, they don't actually operate like traditional tractors. Instead of paying hundreds of thousands of dollars for several agricultural AMRs to bring to the farm, most farmers would rather watch the machines for a few months at a cost of a few hundred to a few thousand dollars a month and wait for them to meet their expectations before taking the long view.



Market prospects of agricultural AMR


By 2021, 84 percent of the world's farming will be done by humans, but the cost of workers in the global farming sector is rising by about 10 percent a year, and in some areas, workers are far more expensive than robots.


In the case of picking grapes, the function of the Burro Agricultural AMR is picking grapes. The company sold a total of 90 robots. The robot operates on a 996 working schedule and drives itself between 100 and 300 miles a day in the grape fields. Robots pull 250-pound carts and walk for miles in the heat, while farm workers stand in the shade to pack, increasing their daily fruit harvest by 48 percent and rising. Charlie Andersen, Burro's chief executive, said it would take only two months for farmers to cover their costs with Burro's profits.


According to Transparency Market Research, the agricultural robot industry is currently growing at a compound growth rate of 24.1 percent and is expected to surpass the $5 billion Market by 2024. Among them, the Asia-Pacific region will become the world's largest growth point.


At the same time, the second problem arises. China's agricultural area is 1.4 million square kilometers, mainly distributed in the eastern coastal monsoon zone, concentrated in the northeast, north China, the middle and lower reaches of the Yangtze River, the Pearl River Delta and other plains, mountain basins and vast hilly areas. However, the climate, water content and temperature changes in these regions are quite different. In addition, there are agricultural lands such as rice paddies and terraced fields that are not suitable for tractor cultivation. According to the results of China's agricultural census, there are 26.9 million tractors, 5.13 million tillers, 8.25 million rotary tillers, 6.52 million planters, 680,000 rice transplanters, 1.14 million combined harvesters and 10.31 million motorized threshers. This shows that China has a large enough tractor base and customers in the terrain that can be reclaimed by tractors.


On the other hand, China has 18,532 self-propelled wheeled grain harvesters, 22,367 combined corn harvesters, 53,969 caterpillar rice harvesters and 3,258 semi-fed rice harvesters. This shows that China's current level of automated agriculture is low. Whether agricultural AMR can be successfully promoted in China depends on the technology itself, as well as product marketing and business model. RaaS is a good example.


In addition, unlike traditional automated machines, agricultural AMR is much easier to operate even though it is more technical. Take combine harvester as an example, before operation, it is necessary to reduce the cutting table and the pulling wheel to the working position, and then adjust the stepless variable speed according to the crop growth, maturity and humidity. When turning, but also put away the cutting table, granary oblique grain can not reduce the engine speed and so on. For agricultural AMR, simply set the work site and harvest time at the time of purchase, and the machine runs automatically, saving customers a lot of operations. From the perspective of the product, the simpler the operation, the higher the willingness to pay.


Of course, for China's agricultural automation field, the intensity of subsidies is also extremely important. In July 2021, the Ministry of Finance and the Ministry of Agriculture and Rural Affairs implemented and released the key policy of strengthening agriculture and benefiting farmers, which clearly mentioned that the estimated subsidy proportion of high-end, compound and intelligent agricultural machinery products increased to 35%, and agricultural AMR naturally ranked among them.


There are also companies in China trying to create AMR for agriculture, such as Suzhou Botian and Gongda Agriculture, but the technology and products are still in the early stages. But with a strong tractor industry and a John Deere rival, China YTOl, the infrastructure is sufficient to create a Chinese agricultural AMR track.


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