Agricultural Drone:The Next Ten-Billion-Yuan Market

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   The Most Promis-ing Market
  When you hear the word“drone”, or unmanned aerial vehicle (UAV), you’ll probably picture some kind of flying weapon, snooping or raining missiles from above just like the scene shown in some sci-fi movies. In reality, drones are not only used in the military field, but also in civilian ar- eas.
  At the 4th China International Modern Agricultural Expo (CIMAE) for 2015 held from May 29 to May 31 at Shanghai world expo exhibition and convention center (SWEECC), multitasking weather-resistant drones designed for agricultural purposes, such as crop-dusting, land mapping and monitoring, stole the show.
  As known to all, China is a big agricultural country with nearly 900 million practitioners and the central government also attaches great importance to the development of the agricultural industry.


  According to publicly available data, the size of the agricultural drone market is expected to reach 15 billion yuan in the coming years, as the huge demand for agricultural drones leaves a great space for development.
  “The agricultural drone vertical market is on the cusp of a big breakout,” said Peng Bin, CEO of Guangzhou-based Xaircraft Technology Co Ltd. Established in 2007, Xaircraft Technology specializes in the design and manufacture of civilian-use drones and flight-control systems and has branches in Beijing and Australia.
  In China, personal drone startups are on fire. In September 2014, Xaircraft Technology acquired 20 million dollars of series A funding round led by Chengwei Capital. In May 2015, Shenzhen-based DJI Technology Co Ltd, a drone maker founded a year earlier than Xaircraft Technology, also announced that it secured 75 million yuan financing, making its market valuation reach 10 billion dollars.
  Peng admitted that his company lagged behind DJI Technology which has captured the boom of consumer, due to a late entry and mistakes in strategies. However, Peng said that the consumer drone market has moved from the blue ocean to the red ocean in the first half of this year, while the agricultural drone vertical market is on the cusp of a big breakout.
   Profit Model


  Chinese companies are chomping at the bit to launch agricultural drones.as well as production and marketing of agricultural drones.
  Different from other drone providers, XAircraft Technology puts the focus on selling services rather than just marketing products, providing farmer with a whole set of solutions for cropdusting and irrigation system. Besides, XAircraft Technology also provides services for express delivery and firefighting, as well as public security. It is said that the company is working with a Chinese well-known express firm for the research and development of express delivery drones.   “We believe that drones are not toys. They can be used as means of production that can change mode of production. Therefore, XAircraft Technology is focusing on the agricultural drone market,” said Peng. “We hope the technology will change our lives, rather than entertain us.”
  According to Peng, in 2014, XAircraft Technology occupied the dominate market with XAircraft –made agricultural drones providing services for more than ten thousands of mu of cultivated land. China has 1.8 billion mu of cultivated land, indicating that there is great potential to be tapped in the agricultural drone market.


  In response to a question about when XAircraft Technology planned to expand into overseas markets, Peng said that his company will soon enter into markets where demand for agricultural drones is rising, such as Brazil, India and Indonesia.
  From military reconnaissance to pizza delivery, drones can be used across multiple industries. Currently, more and more farmers realize the advantages of drones. For example, drones fitted with cameras enable farmers to get a bird’s eye-view of their crop, while those with Infra-red imaging detect which plants are sick and which ones are healthy.
  Chinese central government is attaching great importance to the development of the agricultural industry, giving a great opportunity for drone makers.
  On May 28, 2015, China’s authorities, including the Ministry of Agriculture, the Ministry of Science and Technology, the National Development and Reform Commission issued the Planning for National Agricultural Sustainable Development (2015-2030), which underscores the importance of technologies and innovations in the agriculture industry.
  According to the planning, China encourages more companies to introduce new technologies to the agriculture industry.
  “With the introduction of new information technologies, the traditional agriculture turns to a more complicated, more dynamic and more innovative industry, with crops monitored in real time and more agricultural products sold through the Internet,” said Wang Xiaotong, founder of Mivacurium Agricultural Park and chairwoman of Jilin Province-based Mivacurium Agricultural Development Co Ltd.
  According to Han Qizhen, chairman of Hehele Health Group, the main consumers through Internet are the young in their 30s and 20s.

  “With the rise of E-commerce and the growing consumer group, the Internet commerce becomes the best marketing channel of agricultural products, which not only avoids the disadvantages of traditional marketing channels, but also solve the last one-kilometer problem of the logistic ecosystem,” added Han.
  Wang Zhenggui, head of Jiangsu Yangzhou Health Ecological Park, said that information and communications technologies (ICTs) have infiltrated into every aspect of the whole industrial chain of agriculture, reversing the old pattern of the sector.
  The application of drones in agriculture greatly liberates the workforce and helps transform the sector. Some insiders said that with more agricultural drones flying over cropland, the agricultural production mode is changing again.
  Drones can also play a significant role in the agricultural crop care. Data shows that market size of drones for agricultural crop care in China market in the near future is expected to reach 15 billion yuan. China’s agricultural crop care is in big demand for UAV products, leaving a huge space for development.
  However, there still have some problems to overcome. According to an insider, the industry has a very low entry threshold, as a flying model can be called a drone and can perform some simple tasks. The government should roll out a set of rules and regulations to regulate the sector.
  On the other side, a lot of companies are seeking to take a bit of the pie but the cost control is a big problem for them. As we know, drones are rather highly priced. “Drone makers must reduce the production and operational costs to a level that clients can afford,”said an insider.


  Besides, drones are still the subject of intense public debate, as people fear drones will displace jobs and drone manufacturers also worry that overregulation may stifle innovation. In addition, privacy and property rights are central to the drone discussion. In China, the application of drones is still under increased scrutiny, mainly due to privacy concerns.
  “The agriculture sector is the most promising commercial market for drones, as the technology is a perfect fit for large-scale farms and vast rural areas,” said an expert.
  He said that compared with urban areas, privacy and safety issues are less of a concern in large-scale farms and vast rural areas.
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