Agtech in Brazil’s Cane Sector: The Current Situation and Future Outlook
Agtech is already well embedded in the Brazilian cane sector’s practices. The country’s mills produce two-thirds of the country’s cane output, and as ‘agro-industrial’ players, they are able to deploy significant resources in order to acquire and implement new technology. They also have good incentives for doing so since field costs typically represent 60% to 70% of the total cost of producing sugar or ethanol.
In spite of the widespread use of agtech, some challenges remain (e.g. connectivity in the field, lack of data standardization) that must be overcome to realize the full potential of agtech in the sector. At the same time, there are grounds for optimism that new developments in areas such as 5G technology, artificial intelligence, machine learning, and biotechnology could bring new benefits to the sector over the coming five years.
A Brief Overview
Brazil produces 570m to 650m metric tons of cane annually. Mills grow around two-thirds of this total, with independent growers accounting for the rest. Field costs typically represent 60% to 70% of the total cost of producing sugar or ethanol from cane. The cost competitiveness of the cane sector is therefore very much driven by the technical and economic efficiency of field operations.
For this reason alone, agtech is already well embedded into the cane sector’s practices. But agtech’s contribution to the sustainability of cane production is also an increasingly relevant driver of investments in technology.
This article briefly explores the use of agtech in Brazilian cane production today. It also highlights some of the challenges and barriers faced by the cane sector in integrating agtech into commercial agriculture, and concludes with a look at what the sector views as the most promising agtech opportunities in the next three to five years.
A number of our clients in the Brazilian cane sector generously shared their time and knowledge in discussing these issues with us, and we thank them all for their support and insights. This research was first published in 2021 in Portuguese, but we believe that the material should also be of interest to our global clients and partners.
Agtech in Current Brazilian Cane Production
Georeferencing for machinery tracking and automatic piloting is standard practice throughout the industry. Avoiding damage from machines running over rows of cane in the field is key to maintaining yield and crop longevity. Georeferencing also helps to prevent the creation of irregular rows during planting, minimizing the risk of machines straying onto the crop rows.
Telemetry (the recording and transmission of data) is also amply used in the sector, allowing real-time monitoring of machines and their operations. This technology also enables fleet management, primarily during harvest, where the coordination of large numbers of harvesters, tractors, and trucks aims to maximize the use of machinery and vehicles while minimizing fuel consumption. The cost savings achieved with this technology are significant, as harvesting, loading, and transport account for a significant share of production costs.
Drones are widely used for mapping biomass and identifying crop failure and pest or weed outbreaks, although images can also be obtained via satellites or planes. Hyperspectral cameras (which create images containing information beyond the visual spectrum of the human eye) provide an enhanced level of data that can help diagnose pests and diseases and identify nutritional deficiencies in plants. This remote sensing facilitated by drones, satellites, or aircrafts coupled with georeferencing is a key pillar of precision agriculture, the use of which is also widespread in the sector.
Drones can be used not only for the application of conventional crop protection products, but also for the distribution of biological control agents, contributing greatly to cost effectiveness and efficiency compared to more labor-intensive approaches. However, even in the application of conventional crop protection substances, the use of drones for targeted applications could reduce costs by as much as 20%.
Data Collection and Management
The generation of vast amounts of data resulting from the use of the technology described above has driven the establishment of data management centers at all sugar and ethanol companies and at large cane farming enterprises to efficiently capture, organize, and analyze data. Such centers are crucial to maximize the use of data generated by the various technologies and improve decision-making through data analysis.
Connectivity in rural Brazil is patchy: 4G coverage can be limited and, consequently, access to data can be slow or subject to interruptions, meaning that equipment capable of transmitting and receiving data in real time may not be able to operate to its full potential.
Companies and farmers operating in regions with only partial 4G coverage can resort to other technologies to compensate. Radio or satellite networks can be accessed to create a hybrid network, often via the use of mobile units that connect to satellite networks. These can be deployed as needed as harvesting teams move from one location to another.
Some milling companies, on the other hand, have opted to invest in building their own permanent 4G networks covering their area of field operations.
Poor Data Standardization
The formatting of data provided by the various technology platforms and equipment suppliers is not uniform, which means that some pre-processing of data must take place before analysis is possible. An efficient ‘back office’ to fulfill this function is an essential component of mills’ and large farmers’ data management centers.
The Human Element Remains Important
No matter how sophisticated the systems and machinery are, it is crucial to also have a qualified and motivated team of people to get the best out of the hardware and software. In some cases (e.g. image analysis of cane fields), despite the ongoing development of artificial intelligence and machine learning, nothing so far beats the eye of a specialist.
How Can Smaller Producers Keep Up?
Sugar mills are large ‘agro-industrial’ players and have a corresponding balance sheet. They are able to deploy significant capital to acquire and operate much of the technology described above. Large farmers in Brazil are equally capable of doing so. But access to affordable technology is a far greater challenge for smaller farmers. Several approaches are being explored to ensure that smaller cane growers are not left out of the trend toward greater use of agtech:
- Cooperatives and grower associations providing agtech services to their members: This approach not only makes services financially accessible, but also helps to resolve one of the major dilemmas smaller producers face in acquiring technology when the market is crowded with potential service providers and the choice between the technology and services on offer is complex.
- Milling companies or large growers providing services to smaller producers.
- Service providers offering access to technology via a subscription model: This means that smaller growers can access technology at a relatively low recurring cost instead of having to make substantial investments in hardware and/or software for one particular system or technology.
What’s the Next Big Thing?
According to Brazilian milling companies and growers, what are the most promising emerging technologies to watch over the coming three to five years?
Artificial Intelligence, Machine Learning, and 5G
With many agricultural regions still lacking full 4G coverage, it seems premature to talk about 5G wireless communication. Simply expanding 4G coverage in rural areas in the coming years will spur more extensive use of current technologies.
However, 5G is already being rolled out in Brazilian cities. No one expects it to come to rural areas soon, but when it does, 5G will substantially increase the velocity of communication and data transfer, as well as enable a much increased flow of data.
This should greatly facilitate real-time communication between machines and equipment, unlocking the full potential of the ‘Internet of Things.’ In the short term, this is expected to enable even tighter and more complex coordination of machinery during operations such as cane harvesting.
Further ahead, the arrival of 5G should provide more opportunities to automate field operations. Machines will not only be able to better ‘communicate among themselves,’ artificial intelligence and machine learning could also improve collaboration between machines. For example, a drone equipped to record and process field imagery could automatically instruct a squad of drones to apply appropriate treatment to areas infested with pests or weeds.
The first transgenic cane varieties developed by the Cane Technology Center (CTC) were approved in 2017. Given the six-year replanting cycle for cane, the spread of these varieties in Brazil’s approximately 9m hectares of cane will be relatively slow. However, they will bring valuable characteristics such as pest and drought resistance that can contribute to resilience and savings in costs and inputs.
Another major – long-running – project that will bring about change in the future is to fundamentally alter the way cane is planted. The idea is that by encapsulating plant tissue in a nutritive gel that also provides some protection against water stress, it would be possible to create cane ‘seeds’ that could be planted in a manner similar to the planting of grains. This could enormously reduce the current cost of planting cane: In 2022, at an exchange rate of USD/BRL 5.20, planting a hectare of cane costs about USD 2,500.
A radical reduction in cane planting costs could create a virtuous circle: Cheaper planting could increase the planting frequency from today’s standard six-year replanting cycle. This would boost average yields, as the early cuts of cane are more vigorous and higher yielding than later cuts. In addition, the shorter cycle would allow the faster introduction and spread of the latest cane varieties.
Where to go from here
Andy DuffHead of RaboResearch Food & Agribusiness - South America; Global Strategist - Sugar Read more