I was told the following story several times. A phone rings at a drone manufacturer’s office somewhere in Shenzhen. A customer is on the line:
Customer: My drone’s not working. Can you help?
Drone manufacturer: Sure, what’s the issue?
C: It won’t fly.
DM: Is the battery charged?
DM: Are you in an open and safe area?
DM: Hmm. When did you buy the drone?
C: It’s brand new.
DM: Okay. Can you tell me exactly what happens when you try to fly it?
C: Well, when it takes off, it flies up a bit and then falls to the ground. Sometimes it veers off to the side and crashes.
DM: Ah. Do you attach anything to it?
C: Yes, 10 kilograms of pesticides.
The drone manufacturer now understands; a farmer in the Chinese countryside is trying to turn a product made to snap social media-ready selfies for urban folk into a small self-flying crop duster. Never designed to carry such weight, the drone is crashing.
Employees at DJI and XAG, two of China’s largest drone manufacturers, narrated this story to me whilst I was investigating Chinese intelligent computing industries and cultures at The Hong Kong University of Science and Technology. The similarities between the stories—shared with me at different times by people who did not know each other—is remarkable; the call took place around 2015 and the customer was farming cotton in Xinjiang province, northeast China.
This story is important nonetheless because it situates the moment drones began to fly over Chinese farms. At that moment, DJI, XAG and many others recognised the lucrative market for agriculture drones and propelled themselves into developing a product for the Chinese farmer. It is more than money that motivates these companies; agriculture technology (AgTech) pioneers in China feel pride and achievement knowing they are assimilating two zeitgeists of today’s China: intelligent computing business models and the enduring aspiration to ‘fix’ China’s rural economy and thus recognise the nation’s agrarian heritage.
For decades, Chinese parents berated their children, “Study hard or you’ll end up a peasant!” Today, with a slight twist, they can say, “Study hard and you can help the peasants!”
Getting Precise About Drones
Ninety-eight percent of China’s 425 million farmers are smallholders. Increasingly, they are entering into different types of contractual relationships with industrial agriculture organisations. Beginning in the mid-1990s, some of these farmers began experimenting with Precision Agriculture (PA) technologies. PA enables site-specific crop management using information and intelligent computing technologies. Geographical Information Systems (GPS) and Remote Sensing systems (RS) are some early examples of PA technologies. Drones—unmanned aerial vehicles (UAVs) to be precise—are a combination of hardware and intelligent computing software that can spray synthetic chemicals over fields in precise quantities on precise locations. Using a combination of mechanical, electrical and computational systems combined with sensors, cameras and algorithmic capabilities, drones consider geographical and terrain information, weather conditions, air characteristics and more as they go about their work. And it is exacting work; one data scientist explained to me how he created a better algorithm to help drones’ cameras distinguish between crops and weeds at different speeds and heights as well as under different weather conditions.
Navigating Market Entry
Drones currently operate over 3 to 5 percent of China’s farmland, or about 4 ½ million hectares. A significant proportion of this is in Heilongjiang province in the northeast and Xinjiang province in the northwest; here, farms are long and wide plains that drones currently find easy to survey and operate over. But every province has farms with drones above.
The market is growing; by 2025, it will be valued at over US$ 5 billion. Indeed, the larger manufacturers can have over 20,000 drones in operation at the same time. As such, there are all manner of opportunities for businesses wishing to enter the market; there is probably a market for every component. For example, drones perform better when wings are tipped; yet the best design is yet to come. Furthermore, seemingly simple rotating nozzles that spray the pesticides are actually an engineering marvel and patent protected; but manufacturers are always looking for a better nozzle that can distribute pesticides more efficiency and save costs. In addition, drones can now carry up to 16 kilograms of weight; lightweight yet more powerful (and quieter) motors are needed. Finally, pesticides require new formulations; no longer diluted for manual application, new concentrated formulas introduce entirely new packaging, application, handling and safety requirements. These are just some of the exciting opportunities emerging as agriculture drones take to the sky.
Businesses also need to understand the new ecosystem that is unfolding as well as its relationship with existing business practices. This new ecosystem includes drone manufacturers, drone operators, rural farmers, local governments and university graduates. Drone manufacturers produce the product as well as, normally, all the supporting hardware and software systems necessary for operation. While smaller companies sell direct to farmers, larger companies prefer to set up training and certification centres, usually at the county level.
Here, they train large numbers of Chinese to become certified agriculture drone operators. These operators set up businesses, purchasing drones and related equipment. They may also stock synthetic chemicals. As such, while drone manufacturers design and build, operators can be responsible for maintenance. Moving ahead, at the village level, farmers hire operators to spray their fields, paying an all-inclusive price based on how many mu (666 1/6 square metres) they tend. Local governments offer subsidies for drone usage because they have food security concerns. University graduates from the city, interested in agriculture now that it is ‘techy’, are rushing to take part. It all looks rosy.
But existing businesses dealing in agriculture equipment and synthetic chemicals as well as different government departments can make things complicated. Prior to the introduction of drones, farmers were accustomed to buying their pesticides directly from local businesses.
For larger farms, machinery and equipment such as tractors was also available locally. New drone operators work in fixed areas, generally a county; for now, their motivation is to acquire more customers in the county so they can spray more fields (i.e. more mu). Existing businesses also have county-level markets yet make their money by selling more pesticides to the same group of farmers. This is one reason why pesticide use in China is so high.
Furthermore, existing businesses may be government owned. The roll-out of drones thus puts pressure on existing government revenue. Several tense incidents and stand-offs have already occurred. And in case you are wondering how local governments incentivise and discourage agriculture drones at the same time, such is the nature of official departmental responsibilities in China today.
None of this is to say that Australian businesses cannot make something of the growing Precision Agriculture market in China today. But it will take more than having the best wing or nozzle. An understanding of how agriculture drones are reconfiguring business ecosystems in the countryside and the stakeholders involved is also critical.
About Sacha Cody
Sacha lives, works and writes in Melbourne. He spent 15 years in China, during which time he was Head of Client Solutions at Millward Brown and Global Account Director, Huawei at Kantar. With a PhD in Anthropology from the Australian National University, Sacha has published numerous articles about business and culture in Asia. His first book, about food and consumer culture in China, was released in 2019. Before moving home to Melbourne, Sacha researched intelligent computing industries and cultures in Asia at The Hong Kong University of Science and Technology. Sacha welcomes contact from people interested in these topics and others. He can be reached at Sacha.Cody@alumni.anu.edu.au and https://www.linkedin.com/in/sachacody/.
By Sacha Cody