According to a precision farming industry report compiled by IBISWorld, the precision industry is expected to grow at an annualized rate of 5.3% over the next five years (by 2019), to $1.5 billion. This report was recently updated to reflect any changes made to the finalized 2014 Farm Bill.
“Due to increasing demand from crop farmers who have pushed to maximize crop output to meet growing global demand, industry growth has been strong,” according to IBISWorld Industry Analyst Antal Neville. However, growth is expected to slow to 1.8% in 2014 as lower demand for grain and oilseeds dampen farm income in the United States.
Demand from agribusiness, government assistance and technological change are the main drivers of precision equipment revenue. First, demand from agribusiness represents the various downstream markets that precision farming developers seek to serve. These markets range from farm machinery manufacturers to family-owned farms and publicly funded research operations.
“For makers of machinery, technological innovations determine whether John Deere's latest line of tractors features one type of precision farming technology or another,” says Neville. For downstream farm operations, technological change is also important for enticing purchases, but government assistance in the form of subsidies plays a crucial role in providing the farmer funds to do so.
During the five years to 2019, steady growth is set to continue for the industry.
The 2014 Farm Bill expanded support for small and beginning farmers with training and access to investment capital, which is expected to increase the available funds farmers have for precision farming equipment, making it more accessible to a wide range of farmers. New legislation is also expected to pass over the five-year period, including regulation for the commercial use of unmanned aircraft vehicles (i.e. drones).
Precision manufacturers companies are also anticipated to continue releasing products that cater to a wider variety of farmers. The reluctance or inability of some farmers to grasp the concepts behind precision farming and its technologies will remain an obstacle during the period. Nevertheless, farmers will increasingly accept precision farming, as penetration of broadband and mobile technologies in rural areas grows.
For more information, visit IBISWorld’s Precision Agriculture Systems and Services in the US report page.