Change The Agriculture: XAG's Ambition in Digital Agriculture and Drones Industry
As a leading enterprise in drones and digital agriculture, XAG aims to use its production to empower the farmers and improve the efficiency and safety of agriculture.
Agriculture is a primary industry and the foundation for the development of the national economy. China has a long history in agriculture, but it is not a strong country in this traditional field. Currently, traditional agriculture has gradually developed to a higher stage, and the concept of “digital agriculture” has emerged. The “digital agriculture” means that using scientific and technological methods to manage the crops and soil in the process of agricultural production, and to generate dynamic spatial information systems. With these advanced technologic means, we could achieve the goal of reducing costs, improving production efficiency, ensuring food quality and safety, and environmental protection, and achieving traditional agricultural transformation.
China's rural agricultural economy is huge. There are 187,000 agricultural machinery operation service organizations, the number of service organizations with the original value of agricultural machinery of USD 75,000 has reached 46,700, and the number of agricultural machinery cooperatives has reached 68,000.
XAG (XAIRCRAFT) was founded by a group of geeks in 2007. It is now one of the world’s largest drone & robot companies, a leading industrial UAS manufacturer and top-rated Agricultural Technology Company. The company focuses on agricultural automation and R&D of unmanned devices. During the last 5 years, XAG has successfully introduced unmanned aerial applications and artificial intelligence to millions of farmers around the world.
With the popularity and application of digital agricultural technology, traditional production relationships are challenged. If we classify the agriculture by growth process of crop, agriculture can be divided into four links: “cultivation, planting, management, and harvesting”. Compared with the other three links, the management process has a broader development space in terms of automatic and intelligent development.
According to XAG’s CEO, PENG Bin(彭斌), “There are many opportunities in the industrial transformation. Some opportunities are ours, some are not. We have to do the most valuable things that we are best in.”
PENG Bin says that there are two important forces in the agricultural field. One force is the seed, pesticide and fertilizer enterprises that could “improve the farmers’ harvest”. The other one is the procurement and sales enterprises of agricultural productions that “increase farmers' income”. As for XAG, it is a company that helps farmers to connect these two types of companies through hardware products and data services.
PENG Bin state that this connection capability requires a four-layer architecture from a technical perspective: the bottom is the hardware execution platform (XPlatform), including the current P-series plant protection drones, the Jixia farm mapping drones, farm robots, etc.; the second layer is the information sensing (XSense) layer, including various types of sensors such as aerial camera, spectral camera, and farm camera; the third layer is the Agricultural Internet of Things (XIoT), which includes data interconnection and storage of various hardware; the top layer is agricultural artificial intelligence (XAI). It includes intelligent analysis of various business data to help farmers make better production decisions. In the future, all XAG’s research and development work will be carried out around these four levels.
The plant protection drones are one of the ways that use the agricultural “XIot” thinking and use technology to empower the crop management. Plant protection drones have outstanding advantages in pesticide spraying, video monitoring, map mapping and so on. In addition, it also has an improved spray efficiency, more uniform spray, and safe spray protection. At present, the global drone market is in a period of rapid growth, especially in China. According to data released by National Bureau of Statistics of the People's Republic of China, in 2017, the output of China's UAVs reached 2.9 million, with a year-on-year increase of 67%. In 2018, China became the country with the largest area of plant protection drones.
Taking XAG as an example. By the end of Nov 2018, the number of plant protection drones operated by XAG was 21,731, and the number of certified plant protection drone operators exceeded 28,000. At the same time, the company has achieved a net profit of USD 7.5 million in the first three quarters of 2018. From Sep to Oct 2018, 1,213 XAG users completed 4,466.7 Km2 of cotton defoliant spray operation for 98,588 cotton farmers from Xinjiang. This area is equal to 30% of the whole cotton-picking area of Xinjiang.
Though the digital agriculture developed rapidly, the traditional method of agricultural planting still dominates the country. The total area of the plant protection drone covers accounts for less than 5% of China's cultivated land, and the number of people using plant protection drones to provide services is less than 50,000. On the other hand, this situation makes it possible that the agricultural technologies could do more in rural areas in terms of agricultural production.
XAG uses agricultural drones as the entrance. Besides providing hardware such as agricultural mapping drones and agricultural plat protection drones, XAG also promotes the innovation of agricultural and agricultural machinery markets. The use of new technologies such as drones, visual recognition, and AI, combined with the data of farmland land information and crop, XAG could do more in other fields, such as agricultural finance, agricultural information systems, and so on.
On Dec 14, 2018, XAG held its annual meeting. At this conference, XAG released “P series” plant protection drones. With a further upgraded rigidity of the fuselage and a 16 liters medicine box, this new type could cover an area of 0.14Km2 within 1 hour. Moreover, the second-generation smart medicine box can accurately calculate the spray flow, thus further improves the spray accuracy. The new products released in the same period include the XMISSION multi-function unmanned flight system, which can be equipped with various functional modules such as mapping cameras and multi-spectral cameras. With the help of this system, it would be easier to photograph and remote sensing on the farmland, generating farmland orthophotos and farmland work prescriptions. With XMISSION system, we can use AI to identify the details of each part of a farmland. We could clearly know that where the field is, where the crops are and where the canal is. After AI recognition, farmers will get a farmland prescription map.
In addition, XAG also empowers farmers through cross-border cooperation. Ant Financial provides online financial support for users through grant (unsecured and unsecured), with the help of data of farmers and farmland accumulated by XAG in the agricultural plant protection service; China Merchants Bank can provide up to USD 15 million credit to partners of XAG. In cooperation with Zhonghang Future Education Group and Superstar Education Group, XAG has founded the strategic brand “XAG Education” to cultivate professional talents in drones and agricultural plant protection talents.
According to the forecast of the market trend of industry-level UAV by international authorities, by 2023, the industry-class UAV market will exceed USD 30 billion. However, according to the data from “2018-2024 China UAV Industry Market Development Demand Survey and Investment Opportunity Analysis and Forecast Report” by Insight & Info Consulting Ltd, the consumer-grade UAV market share accounts for 94% of the market share while the industry-level UAV’s market share is only 6%. The low market share of industry-level UAV made us think about deeper problems behind this industry.
It’s undeniable that industry-level drones are highly affected by the natural environment, which requires the operator has the high-level professional skills and the ability to adapt to different scenarios. In addition, as the industry-level production, industrial-grade drones should be designed more powerful, more reliable, and more efficient than consumer-grade ones. However, judging from the current situation, most of the industry-level UAVs still have shortcomings in adapting to the scene, and it is difficult to meet the demand for operations in multi-domain scenarios, which is not conducive to the external expansion of the industry-level UAV market.
In recent years, XAG has gradually turn its attention to foreign markets. On one hand, XAG expands business in developed countries such as U.S. and Japan; on the other hand, the company also actively responded to the national “Belt and Road” strategy and turned its attention to South American countries where abundant agricultural resources located. Since 2017, XAG has gradually promoted in Brazil and Ecuador. Currently, XAG has customers from Colombia, Chile, Peru, Ecuador, Brazil, and Argentina. More than 80 units have been sold in South America. MegaDrone S.A, a partner of XAG in Ecuador, has conducted more than 30 promotion activities since March 2018. The first XAG’s plant protection drone instructor in South America was also from MegaDrone S.A., which conducted six training sessions in the region and more than 10 trainees were qualified as operators.