The Total Addressable Market (TAM) for variable rate technology was valued at USD 3.83 billion in 2022. It is estimated to reach USD 10.62 billion by 2031, growing at a CAGR of 12% during the forecast period (2023–2031).
Precision agriculture technology can be categorized into guidance, recording, and reacting technology. Variable rate technology in precision agriculture is the only reacting technology. The VRT takes real-time input from advice and recording technology and responds timely in agricultural input applications. VRT functions through variable rate application (VRA), which varies the agricultural input application rates, and avoids the time-consuming and human-error component that can arise when input applications are performed manually.
The variable rate technology in agriculture can adjust the rate at which agricultural inputs such as fertilizers, seeds, irrigation, and crop protection chemicals are applied throughout a field based on location and soil conditions. Pesticides, herbicides, fertilizers, lime, and even seeding rates can all be adjusted based on the state of the soils at different locations of a single field. The VRT technology has a variable rate control system with application equipment that applies inputs at a precise time to a specified location. VRA can be performed by adopting two different VRTs that are map-based and sensor-based technology.
|Market Size||10.62 billion|
|Fastest Growing Market||Asia-Pacific|
|Largest Market||North America|
|Report Coverage||Revenue Forecast, Competitive Landscape, Growth Factors, Environment & Regulatory Landscape and Trends|
As of 2021, the average rate of variable rate technology adoption in the U.S. is approximately 40.55%. In the same year, most other precision agricultural technology, such as tractor auto-steer and yield monitoring, had a 65% adoption rate in the U.S. As a result, the demand for variable rate technology in the U.S. is expected to expand throughout the projection period. A few established players in the variable rate technology industry are expanding their investment and partnership in variable rate technology to grab the market opportunities. Additionally, the adoption rates of other precision agriculture technology are similar between the United States and other nations. However, it is close to 14.1% when viewed from the variable rate technology perspective. Therefore, global variable rate technology companies are expected to witness a surge in opportunities across the U.S. and other countries during the forecast period.
An effective technology solution is replacing the sharp decline in the number of agricultural workers to close the supply and demand mismatch in the farming sector. The employment of agricultural workers is anticipated to increase by only 2% between 2020 and 2030, which is less than the average employment growth for all other occupations, according to the U.S. Bureau of Labor Statistics. More automation in the agricultural sector is anticipated due to declining agricultural employment and rising labor expenses.
In addition, growing labor scarcity in the agriculture industry is one of the major drivers accelerating the demand for variable rate application technologies. The variable rate technology mechanism helps automate the application of chemicals, fertilizers, irrigation water, and other farm inputs at different rates across the field without any manual intervention, leading to a significant reduction in overall labor costs. For instance, a study conducted in 2020 on the implementation of variable rate fertilizer at rice precision farming in Felcra Seberang Perak, Malaysia, revealed a 50% reduction in the workforce engaged compared to conventional fertilizing.
Variable rate technologies for farming are still in the early stages of development and require a high degree of knowledge before it is implemented. For example, in the case of variable rate irrigation, the software takes input from sensor or satellite imaginary devices. It creates irrigation prescription data as input to the center pivot irrigation system. In integrating the entire variable rate irrigation system, several interfaces, technologies, and protocols are deployed, all of which should be in alignment to avoid any technical glitches. Many equipment manufacturers employ interface communication protocols, which causes trouble with other manufacturers’ products.
The risk of data misrepresentation is high due to the absence of standardization of various communication interfaces and protocols. The lack of technical standards makes system integration more difficult and prevents the best possible outcome from variable rate technology. The misrepresented data can lead to inefficient utilization of agricultural inputs and can negatively affect crop yield, hampering the market growth.
Variable rate technology has enormous capital investment, a substantial barrier for smallholder farmers, especially in developing countries such as India and Indonesia, to adopt such technologies. The variable rate technology is unaffordable for smallholder farmers who survive on less income with minimal access to credit policies. However, smallholder farmers are forced to adopt precision technologies such as variable rate technology to fulfill the growing food requirements. The global variable rate technology manufacturers can utilize this opportunity by developing affordable variable rate technology products targeting the needs of smallholder farmers.
In addition, hardware manufacturers cannot compete on pricing because it may affect their profit margins due to the long component lifespan and high component costs. In contrast, software providers compete on pricing and distinctive features since they may raise their profit through subscription income. Many start-ups have been emerging across the global variable rate technology market with affordable software solutions to attain a competitive advantage by tapping this smallholder farmer segment.
By region, the global variable rate technology market is divided into North America, South America, Europe, Asia Pacific, and the Middle East and Africa.
North America Dominates the Global Market
North America is the most significant shareholder in the global variable rate technology market and is anticipated to grow at a CAGR of 21.26% during the forecast period. The U.S. and Canada are the key growth contributors to this region. Due to a lack of agriculture workers and rising input costs, variable rate technology is becoming more popular across North America. Many variable rate technology companies are strengthening their market positions in North America by understanding market needs in a better way. For instance, in April 2022, Kubota Corporation opened a new manufacturing unit with a new R&D center in the North American region for all areas of business operations. Similarly, in January 2021, Valmont Industries implemented a plan to expand the new manufacturing unit and laydown yard to store equipment and materials in the North American region.
Asia-Pacific is expected to grow at a CAGR of 19.46% over the forecast period. According to a 2018 report published in the China Economic Review, China's overall food self-sufficiency would decrease from 94.5% in 2015 to roughly 91% by 2025. Hence, the demand for effective crop production technology with optimal input utilization is expected to increase during the forecast period. In terms of using variable rate technology, the farmers in China lag behind the U.S. substantially. As part of its agricultural strategy, China's 13th Five-Year Plan has designated the widespread use of precision agriculture technologies as one of its key objectives for economic growth. This prioritizes the need to adopt information collecting systems, easily accessible administration of digital information, intelligent decision-making systems, and precision management that is variable rate technology (such as water, fertilizer, and pesticide) implementation systems across the country.
Numerous European start-ups are emerging with cutting-edge products to satisfy market demand for variable rate technology, which signifies that European farmers are progressively adopting variable rate technology. OneSoil, GeoPard Agriculture, QZ Solutions, farm Technologies, and Solorrow GmbH are critical European start-ups active in the variable rate technology market. Due to growing market demand, these start-ups are raising funds to expand into Europe. For instance, in April 2021, OneSoil raised USD 5 million in Series A Funding to implement a plan to expand business in Europe and North and South America.
In South America, large, commercial export-oriented farms dominate agriculture in the Southern Cone, notably in Argentina and Brazil. In contrast, smallholder and family farms account for much of the region's food production. South America is rich in land and water and contributed 13% of world agricultural and seafood commodity production and 17% of net export value in 2021. This percentage is expected to rise in the future decade, boosting the demand for variable rate technologies to improve crop yield and meet the global market demand with optimal input utilization.
In the Middle East and Africa, Israel and South Africa are the key growth contributor to this region. Most of the nations in this area continue to utilize groundwater at rates that exceed the renewable internal freshwater resources, making it the most water-stressed region in the world. In the Middle East and Africa, around 85% of the water is used for agriculture. Crop production is possible with an annual average rainfall of 400–600 mm, although irrigation is needed to maintain constant, high yields. Although the need for variable rate technology (VRT) is being constrained by the scarcity of cropland in this area, it is still necessary to maximize water use in agriculture to meet the region's food needs.
The global satellite variable rate technology is segmented by application, technology, and solution.
By application, the global market is divided into variable rate fertilization (VRF), variable rate seeding (VRS), variable rate irrigation (VRI), variable rate crop protection chemical (VRC), and others.
The variable rate fertilization (VRF) segment is the highest contributor to the market and is anticipated to grow at a CAGR of 20.47% over the forecast period. Variable rate fertilization (VRF) or variable rate nutrient application employs the application of multiple rates and types of fertilizers on distinctively diverse soil sections within a field by a pre-set field map created based on various forms of information or employing sensors. The quantities of plant-available soil nutrients, including nitrate-nitrogen, phosphorus, potassium, and sulfate-sulfur, can vary significantly in areas with various soils and terrain. As a result, different fertilizer kinds and rates across fields can be beneficial to improve overall crop productivity. The other forms of fertilizer, such as liquid, granular, gaseous, powder, and even manure, can be applied using VRF.
Variable rate seeding (VRS) can effectively and accurately modify the seeding rate based on characteristics such as soil nutrients, light, and water storage capacity, significantly boosting crop output and minimizing seed consumption. VRS allows farmers to spatially optimize seed inputs by matching plant populations with productive areas within a field. It is crucial to validate prescription data maps when utilizing VRS to ensure that target seeding rates are positioned precisely to maximize returns. Check strips must be used in the field to see how accurate prescription data maps are and to compare them to the recommended seeding rate letting the software that makes prescription data maps make changes and focus on seeding rates that give the best returns.
By technology, the global market is segmented into map-based and sensor-based technology.
The map-based segment owns the highest market share and is expected to grow at a CAGR of 20.48% for the forecast period. Map-based technology is the popularly adopted variable rate technology across global nations. This technology relies on multiple data sources collected from yield mapping, soil sampling, crop monitoring, and others. Map-based technology can be carried out using zone-based maps, which are produced by automatically allocating a number to each zone within the field. The different variable rate applications such as fertilizer, seeding, irrigation, and others can take advantage of these differential zones. Grid sampling is another method of implementing map-based technology. The region is randomly split into grids using a GNSS-enabled desktop or laptop equipped with an agricultural GNSS software program. Each grid is given a number, similar to the zone-based maps (method mentioned above). Since the same naming scheme is utilized for zones (in the zone-based map) and grids (in grid soil sampling), the GNSS system can match the data to the correct zone.
The sensor-based variable rate technology does not require prior mapping and positioning of the farm and the crops. As the applicator attached to the tractor moves, the sensors continue to operate. The sensor-based variable rate technology sensors are crucial because they enable real-time estimation of the quantity of fertilizer, seeds, and herbicides required by crops and soil. The sensor-based variable rate technology allows on-the-spot decisions on the amount of input utilized in the field without needing any field mapping software. One of the key benefits of the sensor-based variable rate technology is the speed with which the sensor processes the data it receives and uses it to direct the applicator to apply the appropriate amount of input to the crop and the soil.
By solution, the global market is segmented into hardware, software, and services.
The hardware segment is the highest contributor to the market and is anticipated to grow at a CAGR of 20.46% throughout the forecast period. GNSS receivers are the major revenue-generating hardware in the global variable rate technology market, followed by sensors, drones, and other hardware components. The GNSS receivers are used in the variable rate technology value chain in two places. It is used in input data collection and navigating tractors during the application process. As a reflection of market demand, hardware manufacturers are coming up with new GNSS receivers which can be highly efficient in terms of accuracy. Sensors are the critical component in sensor-based variable rate technology. However, sensors (such as canopy sensors) are also used with drones for input data collection in map-based variable technology. Hardware manufacturers are also launching new products in the sensor category as the demand for sensor-based technology is increasing in developed countries due to its accurate results. Variable rate controllers and displays are the other essential hardware category in the variable rate technology market.
The players in the software segment of the global variable rate technology market are providing software for a defined license period and offering software-as-a-service (SaaS) with annual or monthly subscription charges. These players are competing in terms of pricing and added features. The segment consists of a few established players with dominating market share which offer software and hardware as bundled products. Few start-ups are solely offering variable rate technology-enabled software such as navigation and digital mapping software. The players in this segment are developing an innovative and open-source platform to enhance their product portfolio to beat the competition. For instance, in March 2019, Yara International launched Yaralrix. It is a gadget that allows farmers to use smartphones to measure crop nitrogen requirements. It features a free-to-download application that uses the smartphone camera to assess the nitrogen demands of various crops at different stages of development.