As the coronavirus pandemic presented its influence on countless different industries, it has also changed the ways in which various different businesses operate, and has, as a result, evoked the existence of several overall industry trends, as well as their potential future developments. This article in particular takes a closer look at the Precision Agriculture Systems industry while touching upon the overall industry performance, as well as on the analysis of its products and services segmentation. In addition, this article will also discuss the potential issues existing within this industry, as well as the general coronavirus impact, and what it means for the future of not just Precision Agriculture Systems, but also the sector of Agriculture as a whole. All of the key finds and statistics assessed within this article are primarily based on the industry report conducted by IBISWorld.
The Effect of Coronavirus on the Precision Agriculture Systems Industry
Based on the information as well as predictions gathered and analyzed by IBISWorld, it has been noted that the coronavirus pandemic has led to an overall decline in the farm economy that has resulted in lower demand for all the general services offered within the industry in 2020. Nevertheless, it is predicted that a restoration of the industry’s growth will take place in 2021, even though there is an expected deceleration during the outlook period.
In addition, although the Precision Agriculture Systems Industry does not take part in international trade, downstream original equipment manufacturers have substantially decreased the purchases of the industry’s products because of the noted deterioration in export markets for agricultural equipment.
Lastly among the stated coronavirus influential trends within the IBISWorld report is the occurrence of bottlenecking within the supply chain. In turn, it has resulted in a general price imbalance for several different agriculture sector products. A detailed graphical representation of the Precision Agriculture Systems and Services industry’s coronavirus impact, created by IBISWorld, is shown below.
Precision Agriculture Systems Industry Structure
When taking a closer look at the Precision Agriculture Systems industry structure, it can be noted that there has been a noticed overall growth, a medium revenue volatility and capital intensity, an increasingly low industry assistance, as well as a low concentration level. In addition, the regulation level of the industry has been stated as being medium, with an increasing trend. The changes in technology have logically been stated as high, while barriers to entry have been assessed as steady and medium. The level of industry globalization has been stated as being medium, with an increasing trend, while competition’s level low, with an increasing trend. The mentioned occurrences within the overall Precision Agriculture Systems Industry are visually portrayed in the following table.
The relationship between the Precision Agriculture Systems industry revenue and the technology sector is portrayed in the graph below.
Precision Agriculture Systems Industry Products & Services Segmentation
The products and services belonging to the precision Agriculture Systems Industry generally include yield monitors, variable-rate applications as well as guidance systems, data management services, geographical information, and soil mapping systems. Their specific percentages tying to their overall industry segmentation are represented on the following chart that was created by IBISWorld.
Overall Industry Performance
When all factors are taken into consideration, it is expected that the Precision Agriculture Systems and Services industry will grow over the following period.
In fact, due to the growing demand from crop farmers who have sought to achieve the maximum productive efficiency in order to satisfy the overall increase in world demand, the industry has continued to grow over the last five years.
Still, major industry players have experienced lower sales in the last couple of years, mainly because of the decreased prices of commodities, as well as because of farm incomes. These issues have been intensified together with the upsurge of the coronavirus, which also led to revenue reduction. However, it is expected that the Precision Agriculture Systems and Services industry is predicted to restore in the following period, but because of both the innovative technology instructions that are practiced by major players, recovering agricultural markets as well as those that are growing, will continue to face strong demand for larger equipment.
In addition, the demand from agribusiness together with government aid as well as technological development are among the primary drivers of the overall industry revenue. The mentioned demand from agribusiness may be understood as among the several downstream markets of precision agriculture developers, starting from farm machinery manufacturers, all the way to family-owned farms as well as research operations funded by the public. New technologies also have a strong effect on machinery manufacturers as well as on profit. More specifically, technological innovations decide on which types of industry products will be used by major player John Deere’s latest line of tractor models. As of now, there exists an ongoing occurrence of technological innovation evoking further evolvement in the industry in general, since the adoption rates of the used Precision Agriculture Systems and Services technologies are increasing.
Nevertheless, a general imbalance of the world economy evoked by the coronavirus outbreak has hindered adoption rates for the time being, as farm income, as well as commodity price, continue to remain weak.
Over the course of the next five years leading up to 2026, the Precision Agriculture Systems and Services industry is predicted to experience strong growth as well as significant revenue increases. In particular, the overall industry revenue is expected to increase up to $4.4 billion. In addition, provisions found in the 2018 Farm Bill made to grow the overall rural development as well as streamlining payments to farmers are likely to increase their capability of affording industry products. Various precision agriculture companies are also predicted to remain to deliver products that cater to a larger amount of different farmers. Still, the resistance or even the inability of certain farmers to understand the concepts existing behind precision agriculture, as well as its applied technologies, will keep preventing their potential adoption. Farmers are however expected to substantially begin to obtain the overall Precision Agriculture Systems and Services industry as broadband, and mobile technologies are likely to additionally pierce rural areas.
Precision Agriculture Systems and Services Industry Issues
As is the case with any other industry, there exist threats as well as opportunities for the Precision Agriculture Systems and Services industry.
More specifically, semiconductors, as well as other electronic elements, are a fundamental part of the overall development of precision agriculture systems. Therefore, it is logical that the prices for these items influence the industry’s product prices, profit margins, as well as revenue. Since the prices of semiconductors, as well as other electronic elements, are predicted to become lower within the next period, there is an existing potential threat for the overall Precision Agriculture Systems as Services industry.
It is generally known that the Agribusiness industry consists of enterprises that either directly engage or directly experience advantages from all kinds of agricultural activities. In fact, the agribusinesses that are most applicable for the overall industry generally consist of farmers as well as companies that act as suppliers of goods and services to various farms. As demand for agribusiness is expected to grow in the following period, there is a possible opportunity for the industry as a whole.
From the information provided above, this article summarizes the key aspects of the Precision Agriculture Systems and Services industry that should be taken into consideration. The report conducted by IBISWorld is thoroughly analyzed, while the article also prompts drawing of conclusions as well as the making of future predictions for the overall industry.
Read about the agricultural statistics conducted by IBISWorld and learn more about agriculture’s great impact on the economy and wellbeing of the population, the farmers, farm markets, and food manufacturers.
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