Strategic Insights | Smart Agriculture

Strategic Insights | Smart Agriculture

Published November 2, 2020

Demographic change

Climate change and the environmental challenges facing us are the perennial issues on which all of us are focused. But there is another – just as deadly – menace in the offing: population growth and changes in the composition of our society’s age structure. In short: demographic change
One of the corollaries of population growth is a reduction in available arable land. An increasingly crowded planet needs more infrastructure and a more extensive built environment. That means less land to grow crops on. And although much of what we eat in the Western world is processed almost beyond recognition, at least some of the ingredients in the foodstuffs we buy are usually derived from something which is grown, cultivated or reared in a field somewhere. The agricultural sector is vital to our survival.
As the pressures on land use become greater, farmers are investing heavily in ways to increase the efficiency of what they do, reduce the environmental impact that it has, preserve the planet’s natural resources and automate labour-intensive work (such as weeding, watering and harvesting). And this is yet another area that has become a hotbed for technological innovation.
The result is smart agriculture: technology-enabled agricultural practices which sustainably improve production and incomes and contribute to resilience, while at the same time reducing greenhouse gas emissions.

The dawn of smart agriculture

Nowadays, innovation in agriculture means much more than just sophisticated combine harvesters and weeding equipment. Technologies such as IoT, AI and GPS are all helping farmers and agronomists to produce food more intelligently, and more and more of them are adopting agritech solutions (products, services and applications) to improve yield, efficiency and profitability.
In 2018, the global market for agricultural robots (or agribots) was worth an estimated US$4.1 billion. This figure is set to increase to US$10.1 billion by 2024. And a critical indicator is the projected market size of IoT in farming: according to analysts, it could be worth more than US$30 billion by the end of 2023.
A plethora of innovations are creating endless possibilities for stakeholders in the agricultural sector. This week, we take a look at just a few of the breakthrough technologies in which IQ is investing.

Technologies used in agriculture

Plant sensors
Crop yield amount and quality have always been determined by numerous factors that are extremely difficult to measure, let alone control. But now we have fully enabled, utterly game-changing IoT technology. Sensors located in fields can monitor environmental factors, such as humidity and temperature, as well as stresses placed on crops by pests and other dynamics that can affect the health of a plant.
A server-side IoT platform can then analyse all this information, so that farmers can precisely calculate the quantities of fertiliser they need and deploy any necessary pest-control measures. And thanks to AI-driven crop monitoring systems, farmers can use predictive analytics to make data-driven decisions.
Animal monitoring
Livestock farmers now have access to a number of innovations providing ways and means to monitor cattle. We’ve been “chipping” our pets for years, but now IoT-enabled microchip implants, collars and ear tags have tracking capabilities, and some are able to measure the animal’s body temperature. A signal can be sent to a vet if something is wrong, and farmers can be notified when cows or sheep are ovulating.
Farmers can use the technology to find lost cattle, separate sick animals from the rest of the herd to reduce contamination risks and increase the livestock birth rate. All of these benefits can mitigate the risks associated with raising cattle, significantly increasing a farm’s profits.
Drones get a bad rap. But when they are not violating people’s privacy or scuppering air traffic over Gatwick airport, they are being put to very good use in modern agriculture. They can gather information about field topology, soil quality and crops cultivated over large areas – reducing the need for travel and other human intervention. Farmers can also use them for precision crop-spraying operations – they are considerably more accurate than tractors and can get the job done in a quarter of the time.
They are also excellent general monitoring tools for crop fields and livestock. Equipped with cameras or infrared sensors, they can detect any critical changes in crops and herds.

Blockchain technology

We’re all used to blockchain technology used to record cryptocurrency transactions – indeed, both the Bitcoin and Ethereum networks are built on blockchain. But in an age when people are increasingly concerned with what they are putting on their plates – its nutritional qualities, whether or not it was sustainably produced, whether or not whoever produced it received fair remuneration for their efforts – it is now being used in agriculture to enable retailers and consumers to track the provenance of meat and other food products from their origins to stores and restaurants.

The future of agriculture

These technologies may have transformed traditional agricultural practices. But there are many even more revolutionary ones in the pipeline. Currently, farmers use individual smart devices to automate a limited number of separate tasks. But the farm of the future will be a complete hyperconnected system.
The world is about to enjoy a dramatic surge in data speeds, courtesy of 5G. More reliable connections combined with ultra-low latency will enable famers to implement numerous IoT and AI-enabled solutions. Faster speeds and ubiquitous coverage will mean that even the most remote farms will be able to deploy these smart solutions.


Agriculture has to become smarter if it is to adapt to the depletion of the planet’s natural resources and the gradual disappearance of arable land.
Investors actually have a great deal of influence and leverage when it comes to driving such changes and improving the world. We can, for example, decide that we will only invest in companies if they have a high ESG rating, and can demonstrate a firm commitment to corporate social responsibility, or to sustainable farming practices. Indeed, it is becoming increasingly apparent that technological innovation, safeguarding the environment, investing and sustainability are all concepts that are inextricably interlinked.
At IQ, we adopt a thematic approach to investing in agriculture and the sectors that are shaping the world of tomorrow. For example, we own companies within the Sarasin Food & Agriculture Opportunities fund, a specialist equity fund designed to provide access to the powerful long-term themes impacting the global food economy. It invests in companies across the entire food spectrum, from production to consumption – or from ‘field to fork’. We are also in talks with representatives of the RIZE Sustainable Future of Food ETF. This relatively new ETF seeks to invest in companies that stand to benefit from the accelerating transition to more sustainable food production systems and consumption patterns designed to safeguard our nature and ecosystems. With this well-diversified exposure, we can be sure that we are always investing in the most attractive parts of smart agriculture and the global food economy.