Investor Spotlight: Agricultural Robots Are Set to Solve the Global Food Crisis
Written by: Richard Lightbound, CEO of ROBO Global EMEA
Here in the UK, the challenges of Brexit are many, but one that will likely have a near-immediate impact on food supply—and food prices—is the looming shortage of agricultural workers. It’s estimated that once Brexit takes effect, the UK will lose tens of thousands of farm workers from across the EU who will be unable to work in the county. That dramatic loss will leave a vast gap in our agricultural labour force.
In Japan, so many workers have aged out of the farming business that the country is already in a desperate scramble to produce enough food for its fast-growing population—few of whom are learning the skills required to fill the shoes of retired farm workers. The situation has created a crisis that is both economic and social. In the US, the average age of a farmer is now 58 years old and rising. It’s no wonder both countries are urgently seeking solutions to this critical shortage of trained and capable human resources.
While these countries may be in the most extreme circumstances at the moment, it’s clear that meeting demand across the food and agricultural supply chain is a crisis that reaches around the globe. Population growth is accelerating worldwide, with total population estimates approaching 10 billion by 2050, and that growth will translate into the need to increase food production by 70% in the next 35 years. How can such an increase be supported? There’s only one viable solution: robotics, automation, and artificial intelligence.
If the first image that comes to your mind is a fleet of farm-friendly Roombas combing the fields for ripe produce, you’re not entirely wrong. But in fact, robotic “pickers” are just the tip of the iceberg when it comes to how robotics, automation, and artificial intelligence, or RAAI (pronounced “ray”) is transforming the food and agriculture industry. Today, RAAI is driving major changes in how food is planted, monitored, fed, weeded, watered, and harvested. And the supply chain doesn’t stop there—nor do the potential applications for RAAI to drive efficiencies and cost savings. Once food is out of the fields, precision robots are changing how that food is handled, warehoused, and distributed. Every area of this long and complex process being disrupted by the introduction of robotics. And though it may be easy to assume that this disruption is taking jobs away from a willing workforce, the truth is that applying innovative technologies is the only way possible to fill the void of human workers at a time when a highly productive labour force is more needed than ever.
From seed to store to table, the race to apply RAAI across the agricultural supply chain is accelerating at a record pace. And because automation and innovation is necessary for our very survival, that pace simply cannot, and will not, slow down.
As a result, demand is skyrocketing for agricultural-specific solutions that are already on the market. Companies like Deere & Co, John Bean Technologies, and Raven Industries – all members of the ROBO Global Robotics & Automation Index - are seeing demand for food and agriculture solutions soar. Much more useful than self-driving cars, self-driving tractors are enabling what’s called precision farming. Today, these “smart” farming vehicles can evaluate how much fertilizer is needed on a particular square foot of soil and automatically adjust the amount of fertilizer it delivers. “Smart” planters use artificial intelligence to maximize the yield of each field, and “smart” irrigation systems use water sensors to not only increase the yield of each field by as much as 10%, but also reduce water waste by as much as 50%.
But what may be even more important than existing technologies are those that are still in design and are poised to bring even greater change to the industry. These RAAI-based technologies are designed to further increase production yields and lower costs, while simultaneously delivering significant environmental benefits. Water savings is a given, but RAAI can also make it possible to use other limited resources more effectively by reducing over-fertilizing, minimizing the need for excess pesticides, and keeping workers out of harms way to preserve our precious human resources. And while many of us are already becoming accustomed to warehouse-to-home delivery of non-perishable items, the ability to automate distribution processes is expected to make doorstep-delivery of perishable items commonplace as well.
This global transition presents an urgent and nearly unprecedented opportunity for investors who are aware of the wave of change that’s already riding a strong tide. The penetration of RAAI throughout the food and agriculture sector is not only anticipated—it is inevitable. Because this is true across the entire ecosystem of the food supply chain, its reach is almost incomprehensible.
That opportunity is the very reason our team created the ROBO Global Robotics & Automation Index over four years ago. Designed expressly to help investors capture the incredible potential of the then-nascent robotics, automation, and AI market, the Index now includes more than 80 companies that are selected on an ongoing basis by our team of top industry thought-leaders. As one of the 12 subsectors included in the ROBO Index, food and agriculture is expected to play an important role in the future growth of the global robotics and automation value chain for many years to come.
To learn more about the growth of the industry and its impact on ROBO Global’s Q2 results, see Earnings growth? Look no further than robotics automation.
 Source: Goldman Sachs Precision Farming Research Report, July 2016
China's Push Toward Excellence Delivers a Global Robotics Investment Opportunity
Written by: Jeremie Capron
China is on a mission to change its reputation from a manufacturer of cheap, mass-produced goods to a world leader in high quality manufacturing. If that surprises you, you’re not the only one.
For decades, China has been synonymous with the word cheap. But times are changing, and much of that change is reliant on the adoption of robotics, automation, and artificial intelligence, or RAAI (pronounced “ray”). For investors, this shift is driving a major opportunity to capture growth and returns rooted in China’s rapidly increasing demand for RAAI technologies.
You may have heard of ‘Made in China 2025,’ the strategy announced in 2015 by the central government aimed at remaking its industrial sector into a global leader in high-technology products and advanced manufacturing techniques. Unlike some public relations announcements, this one is much more than just a marketing tagline. Heavily subsidized by the Chinese government, the program is focused on generating major investments in automated manufacturing processes, also referred to as Industry 4.0 technologies, in an effort to drive a massive transformation across every sector of manufacturing. The program aims to overhaul the infrastructure of China’s manufacturing industry by not only driving down costs, but also—and perhaps most importantly—by improving the quality of everything it manufactures, from textiles to automobiles to electronic components.
Already, China has become what is arguably the most exciting robotics market in the world. The numbers speak for themselves. In 2016 alone, more than 87,000 robots were sold in the country, representing a year-over-year increase of 27%, according to the International Federation of Robotics. Last month’s World Robot Conference 2017 in Beijing brought together nearly 300 artificial intelligence (AI) specialists and representatives of over 150 robotics enterprises, making it one of the world’s largest robotics-focused conference in the world to date. That’s quite a transition for a country that wasn’t even on the map in the area of robotics only a decade ago.
As impressive as that may be, what’s even more exciting for anyone with an eye on the robotics industry is the fact that this growth represents only a tiny fraction of the potential for robotics penetration across China’s manufacturing facilities—and for investors in the companies that are delivering or are poised to deliver on the promise of RAAI-driven manufacturing advancements.
Despite its commitment to leverage the power of robotics, automation and AI to meet its aggressive ‘Made in China 2025’ goals, at the moment China has only 1 robot in place for every 250 manufacturing workers. Compare that to countries like Germany and Japan, where manufacturers utilize an average of one robot for every 30 human workers. Even if China were simply trying to catch up to other countries’ use of robotics, those numbers would signal immense near-term growth. But China is on a mission to do much more than achieve the status quo. The result? According to a recent report by the International Federation of Robotics (IFR), in 2019 as much as 40% of the worldwide market volume of industrial robots could be sold in China alone.
To understand how the country can support such grand growth, just take a look at where and why robotics is being applied today. While the automotive sector has historically been the largest buyer of robots, China’s strategy reaches far and wide to include a wide variety of future-oriented manufacturing processes and industries.
Electronics is a key example. In fact, the electrical and electronics industry surpassed the automotive industry as the top buyer of robotics in 2016, with sales up 75% to almost 30,000 units. Assemblers such as Foxconn rely on thousands of workers to assemble today’s new iPhones. Until recently, the assembly of these highly delicate components required a level of human dexterity that robots simply could not match, as well as human vision to help ensure accuracy and quality. But recent advancements in robotics are changing all that. Industrial robots already have the ability to handle many of the miniature components in today’s smart phones. Very soon, these robots are expected to have the skills to bolster the human workforce, significantly increasing manufacturing capacity. Newer, more dexterous industrial robots are expected to significantly reduce human error during the assembly process of even the most fragile components, including the recently announced OLED (organic light-emitting diode) screens that Samsung and Apple introduced on their latest mobile devices including the iPhone X. Advancements in computer vision are transforming how critical quality checks are performed on these and many other electronic devices. All of these innovations are coming together at just the right time for a country that is striving to create the world’s most advanced manufacturing climate.
Clearly, China’s trajectory in the area of RAAI is in hyper drive. For investors who are seeking a tool to leverage this opportunity in an intelligent and perhaps unexpected way, the ROBO Global Robotics & Automation Index may help. The ROBO Index already offers a vast exposure to China’s potential growth due to the depth and breadth of the robotics and automation supply chain. As China continues to improve its manufacturing processes to meet its 2025 initiative, every supplier across China’s far-reaching supply chains will benefit. Wherever they are located, suppliers of RAAI-related components—reduction gears, sensors, linear motion systems, controllers, and so much more—are bracing for spikes in demand as China pushes to turn its dream into a reality.
Today, around 13% of the revenues generated by the ROBO Global Index members are driven by China’s investments in robotics and automation. Tomorrow? It’s hard to say. But one thing is for certain: China’s commitment to improving the quality and cost-efficiency of its manufacturing facilities is showing no signs of slowing down—and its reliance on robotics, automation, and artificial intelligence is vital to its success.
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