With the development of drones technology, people begin to explore the industrial commercialization of drones. Agriculture, as one of the most important industry in the world, provides lots of application scenarios for drones. Currently, lots of drones are helping with the plant protection of the cotton land. With the atomized liquid spraying to the cotton, the drones could cover 1 Mu with 1 minute which greatly improves the plant protection efficiency. One week after the protection process, the cotton would bloom, and the leaves would shake. The leaves are badly affecting the recovery quality, that’s why all of the cotton farmers love the cotton flower without any leaf.
For large textile companies, they would prefer to purchase the cotton a higher quality at a higher price. In this way, farmers are glad to pay for the drones to help with the plant protection, with price CNY 8-10 per Mu. In 2018, more than 10 million Mu cotton fields were covered by plant protection drones. According to the statistics data, Xinjiang’s total cotton planting land is about 38 million Mu, where drones cover almost 25%.
The plant protection of the cotton is only part of the business of the plant protection drones. In 2018, the accumulated area of operation of drones is more than 250 million Mu. Assuming that the average price is CNY 10 per Mu, then in 2018, the spraying section would generate CNY 250 million in revenue. According to Huxiu’s estimation, in pessimism situation, the plant protection drones could have a market size of about CNY 21.6 billion. In an optimistic situation, that would be CNY 32.6 billion.
Agriculture is a large market full of potential
It is estimated that the total farmland in China is about 200 million Mu, where only 6% of them use drones to take plant protection. The plant protection contains many sections, including the spraying of liquid medicine, the spraying of seeds, and the spraying of powder medicine, etc. Currently, the plant protection is the most important use of agricultural drones.
In Japan, the permeability rate of plant protection drones is around 54%. However, it is estimated that in China, that number would have 3 situations: 50% in the optimistic situation, 40% in the neutral situation, and 30% in the pessimism situation.
The gross cultivated farmland in China is 200 million Mu, which is relatively stable. In average, for each farmland, it requires 3 times plant protection every year. Currently, the average area for one drone to cover is about 10 thousand Mu and is expected to be promoted to 15 thousand Mu in the future. Meanwhile, the retail price for agricultural drones is about CNY 40 thousand. In 2018, the price for drones to do the plant protection is around CNY 10 per Mu. Gathering all this information together we concluded that in optimistic, neutral, and pessimism situations, the ownership of the drones is 200 thousand, 160 thousand and 120 thousand, respectively. In the long term, the market capacity of the Chinese plant protection with drones would be between CNY 18 billion to CNY 30 billion.
Low Agricultural efficiency generates great needs of drones
The rapid development of the agricultural drones in the Chinese market is mainly because of the low efficiency of Chinese agriculture, the high cost, and relatively low income. In contrast, the U.S. uses 1.9% of Chinese labor to achieve 117% of the total Chinese production. However, due to the difference in geography, history and airline industry, it is not suitable for China to massively use the American mode. However, drones mode in Japan may be more suitable for China. According to the statistics from the National Development and Reform Commission, China’s labor cost is way much higher than that of the U.S., the agricultural mechanization is becoming a necessary need for Chinese agriculture.
According to Huxiu, Heilongjiang province, which owns the most agricultural navigation airplane in China and massively use drones to do plant protection, used to make a comparison between the drones and the agricultural navigation aircraft. After the research and investigation, they found that the cost of drones is CNY 1-2 lower than the agricultural navigation airplane, which is a surprising result. In addition, China’s drones industrial chain has shown great potential and a rapid developing ability, which may lead to a further cut down of the drones’ cost. It is fair to say that drones are suitable choices for China to improve agricultural efficiency.
Newmarket for consumption-level drones
The agricultural drones belong to the consumption-level drones classification. In this field, DJI is the largest market share holder, which occupies around 72% of the global market. However, in terms of agricultural drones, XAG, the professional agricultural drones manufacturer, is the real competitor of DJI.
The consumption-level drones market rises rapidly since 2009. DJI keeps a leading technology advantage in the consumption-level drones due to its great market share advantage. Under this background, more and more drones companies are seeking new application scenarios to compete with DJI. Comparing with other scenarios such as electricity monitoring and security checking, agriculture requires most new technology on its application scenarios. Besides the drones platform, which is the most fundamental technology, the method of liquid spraying, the calculation of the agricultural medicine, the monitoring of the farmland situation, all these kinds of scenarios require a new technology of consumption-level drones. Not only DJI is trying to develop new technology that is suitable for agriculture, but also other competitors. Agriculture is a brand-new market for consumption-level drones, which provides the market with new opportunities.
XAG found great opportunities in the plant protection industry. In 2014, XAG established its own plant protection team and the cotton plant protection service center in Xinjiang province. With the helping of the plant protection in Xinjiang, XAG keeps testing its technology and making innovation to better serve the market. In 2015, XAG published P 20, the XAG’s first generation plant protection drones system.
DJI sensitively found the great opportunity was taking by XAG gradually. 7 months after the publication of P20, DJI published MG-1, which is the first model of DJI’s agricultural drones. Afterward, DJI’s plant protection series of products updated at a rapid pace. Although DJI has a leading technology, it entered the agriculture market in a later time, and finally, in the plant protection drones market, XAG is competing violently with DJI.
Why multi-rotor drones?
The simple structure makes the multi-rotor drones popular in the plant protection market. Taking the 4-rotor drones as examples, which is the most common multi-rotor drones. The 4 rotors are not only the power elements but also the control elements for the drones. People could easily manage the drones with simple adjustments to the rotating direction and speed of the rotors. All these kinds of adjustments could be done by a higher-efficient circuit and chip. In plant protection process, a drone with a simple structure which is easy to control makes the multi-rotor drones an easy tool for the farmers. Meanwhile, the multi-rotor drones not only cut down the cost of the drones but also lowers the maintenance fees of the facilities.
During the plant protection process, the multi-rotor drones have another advantage. The downward wind generated by the rotors could offer help of the spraying process. With the help of the wind, the atomized liquid could equally attach to the plants, which generated a better spraying result comparing with the traditional one. However, the multi-rotor drones have their own shortcomings. It has low power efficiency. Almost all of the plant protection drones cannot last over 30 minutes, which requires extra batteries to solve the problem. Currently, both XAG and DJI use the smart charging system to provide drones with power. More importantly, the multi-rotor drones are products with high-level information technology, which build a solid foundation of smart agriculture.
Commercial competition promoted the whole industry
In recent years, XAG and DJI are competing violently in the agricultural drones field. In Oct 2017, XAG published its flagship model, the P20 2018 RTK version with a price of CNY 41999. 1 month later, XJI published MG-1S Advanced, which is not as advanced as XAG’s but has a lower price, CNY 29999. On the conference at the end of 2018, DJI published its T16 drones, with a series of new functions while the price is only CNY 31888. 10 days later, XAG published its new generation of P20 and P30, with the price ranging from CNY 34999 to CNY 54999.
According to Huxiu’s investigation and research, both the XAG and DJI’s drones have advantages and disadvantages, because of the differences in the detail. Generally, DJI has a larger size and a better endurance capacity, while the XAG has a lower price. So far, the two companies are competing while keep promoting, which increases the technology level of the agricultural drones industry. Currently, the competition between XAG and DJI mainly focuses on the details such as pricing and new technology. Since the major requirements of the agricultural drones industry have been solved, either XAG or DJI cannot beat the competitor totally.
Besides the products and technology, XAG and DJI both built its own sales network and use agencies to sell their products.
Operators and medicine: significant chains of the plant protection process
The drones operators in the plant protection industry are of vital importance. Generally, they are made up of different groups: the plant protection drone distributors, the traditional agricultural capital system, the big farmers and the professional drones operator organizations. In 2017, a professional drones operator could earn CNY 100 thousand per year by operating the drones. For the organizations which own more operators and drones, they could make more money because of the scale effects and stronger bargaining power.
In 2018, due to the rapid increase of the operators, the market competition became more violate, and the unit service fee for the plant protection drones declined. However, with the development of agricultural drones technology and the increasing recognition of the plant protection drones, the market capacity would keep increasing, which would generate more opportunities for drones operators.
According to Farm Friend, an agricultural information platform, there are 63% drones operators in its platform are professional ones, but only 16% of them have the plant protection experience. How to help with the drones operators to gain plant protection experiences has become the most important problem of the whole industry. Both XAG and DJI established the plant protection college for the cultivation of the drones operators. By teaching the drones consumers with the knowledge of drones operation and plant protection, XAG and DJI wish to cultivate more and more drones operators to promote the industry.
On the other hand, from 2017, DJI and XAG began to cooperate with the international agricultural medicine magnates. DJI cooperates with the Dow, while XAG strategically cooperates with the Bayer. However, these two agricultural medicine magnates haven’t taken any actions so far.
Future: technology keeps promoting the plant protection industry
In the long term, Chinese agriculture must be developed with intensification mode, and science and technology would further promote the production efficiency of agriculture. Besides the drones, other facilities and devices should be applied to promote agricultural efficiency. XAG published 3 models of the smart monitor station since 2017, which could monitor the weathers’ changes and the farmland situation with the help of the cameras and sensors. In addition, XAG also developed its AI map system, which could smartly generate the virtual map of the farmland and intelligently recognize the areas that require to be strengthened. On Apr 25, 2019, XAG published its smart seeds sowing system, which could greatly improve the efficiency of seeds sowing process and cut down the cost as well.
In the future, with the promotion and development of the agricultural drones, the drones may help with agricultural works beyond the seeds sowing and pesticides spraying. The information gathered with the drones might be more important for the overall promotion of agriculture.