Deux Ex Machina Part V: Robotics In Agriculture 

The TD Cowen Insight

This is part V of a collaborative series examining the global robotics landscape. 

As the world looks to feed a growing population of rising wealth and accompanying tastes in an environment of increasingly scarce resources, robotics will be a key tool utilized to deliver maximum output efficiency. Deployment is still in its early stage, but leaders are committed, and tech is expanding. 

See the other insights in this series: 

Part 1 – Industrial Robots 

Part 2 – Robotics in the Warehouse / Logistics Market 

Part 3 – Human / Robot Collaboration (Cobots) 

Part 4 – Robotics As Tools In the Climate Fight 

Three Megatrends Supporting Robotics in Agriculture

We believe investment into agriculture related robotics and precision agriculture applications will be born and supported out of necessity based on three megatrends:  

1. Labor shortages for farming related applications 
2. Urbanization / broadening of the global middle class 
3. Water scarcity  

Essentially, we must figure out how to feed and support a growing population with increasing wealth and more discerning tastes with a declining resource base. There will be multiple strategies deployed to accomplish this. However, we believe the application of robotics into the agriculture space will certainly be one of them and we are already seeing signs pointing in that direction. 

Estimating The Market Agricultural Robotics

The market is still in its early stage, but we are seeing a similarity to other next gen robotic success. Autonomous Mobile Robots (AMR) or Autonomous Guided Vehicles (AVGs) saw private investment grow more than 50x over 2014-2019 to almost $3.5B as it entered more mainstream discussions in the logistics market. The private landscape is broad and growing, and key large public companies are committed and will likely act as consolidators. 

Takeaways From Our Survey of Robot Manufacturers and End Users

We collaborated with our partners at MassRobotics to survey both robot manufacturers and end users to determine: 

• What types of applications are in development 
• How formalized plans to combat food related issues are today 
• Key hurdles to overcome.  

Over 80% of participants are taking some sort of actions to address food scarcity, though only about half have made public commitments. Funding was listed by 2/3 of respondents as a key hurdle, and one we’d view as infinitely solvable as proof points are achieved and consumer awareness increases. 

In order to gain further insights into technology development, we held extensive conversations with multiple private companies focusing on different areas within ag tech. In our report we highlight our discussions with a company automates harvesting of high value crops and another that focuses on sustainable fish farming. 

Our Machinery & Transportation OEMs team also developed a model for precision agriculture revenue growth, which they estimate will grow at a 13% CAGR through 2030. 

Early Market Forecasts for Agriculture Related Robotics

We forecast global precision ag revenue to grow at a ~13% CAGR over the 2023-2030 period. We see 1/3 of this growth coming from the base ag equipment market that’s already equipped with precision and 2/3 driven by machines and services with incremental technology, including autonomy. 

We also believe leading OEM companies will seek deals that satisfy at least two of the four criteria:  

1. A strong autonomy or AI offering 
2. New technologies, including new power 
3. Targets that facilitate decarbonization, directly or indirectly 

A material percent of revenue from recurring services