Facing stagnating revenues, e-commerce giants, such as Alibaba, Baidu, JD.Com and Tencent are leveraging their AI expertise to modernize agriculture in China

Seoul, Hong Kong, New Delhi, Beijing, London, Buenos Aires, San Diego

September 3rd, 2019

Faced with falling productivity, high labour costs and a dwindling and ageing rural workforce, China’s agriculture industry is under severe pressure to feed its expanding population. At the same time, there are demands for better quality food driven by an increasingly affluent middle-class population as well as demands for improved food safety to curb the many food scandals in the country.

As a result, the Chinese government is anxious to modernize the country’s agriculture industry. In its recent 5-year National Strategic Plan for Rural Revitalization, it declared that it had decided to promote use of Smart Agriculture using “the A-B-C-Ds,” i.e. Artificial Intelligence, Blockchain, Cloud computing and Big Data technology.

China is home to some of the leading AI technology companies in the world, which are heavily supported by the government. Until recently, companies such as Alibaba, Baidu, JD.com, Tencent and DJA were experiencing rapid growth rates. With some now facing stagnating revenues, these big tech companies are diversifying and have identified agriculture as an excellent opportunity to leverage their AI technology expertise, while at the same time contributing to the rejuvenation and modernization of a vitally important sector of the economy.

While smart agriculture adoption in North America and Western Europe was initially mostly focused on crop farming, in China, the main focus is livestock farming, particularly pig rearing. China is the largest pig producing country in the world and also the largest consumer of pork. However, pig farming in China is woefully inefficient and Chinese tech companies see an opportunity to use AI-based technologies to drive up efficiencies.

Companies such as Alibaba, Baidu, JD.com, Tencent and gaming company Netease are already trialling their own SmartAg AI platforms:

• Based on its City Brain AI platform, Alibaba recently launched its Agricultural Brain platform, which improves pig husbandry by monitoring individual animals 24/7 using small IoT sensors. In a trial with pig farming company Tequ Group, Alibaba claims to have raised the Pig Per Sow Per Year (PSY) index from 15 to 23 and is targeting a PSY of 25 by 2019, a level on a par with countries such as the US.
• JD.com subsidiary JD Digits, has developed the JD Intelligent Stock Breeding Solution, which uses AI, IoT, robotics and edge computing, and according to the company, delivers better quality pork plus a 30%-50% reduction in pig rearing costs.
• Netease subsidiary Weiyang is using its parent company’s AI platform to breed non-genetically modified (non-GM), organic speciality black pork which is sold to affluent Chinese consumers.

“Apart from improving farming efficiencies, a major driver behind these initiatives, particularly from the government’s perspective, is to curtail the spread of infectious diseases” said Wei Sun, Senior Analyst at Counterpoint Research. “The outbreak of the African swine flu in 2018 resulted in the slaughter of more than one million pigs and its effects are still being felt today. By monitoring the pig population on a 24/7 basis, it will be possible to detect diseases much earlier and thus minimize contagion” she added.

Another key objective is to improve food traceability. China has a history of food safety scandals from melamine-tainted eggs, smuggled and out-of-date frozen meat to crops tainted with heavy metals. Alibaba and JD.com are exploring ways to secure the food supply chain using blockchain ledgers that record the quantity and transfer of food as well as link products to serial codes and RFID tags.

Meanwhile DJA, the world’s largest drone manufacturer, is focused on developing autonomous spraying drones to reduce fertiliser and pesticide overuse, a problem rife in China, and a major source of environmental pollution.  Its latest agridrone, the massive T16, is equipped with advanced AI machine vision and 3D point cloud location capabilities coupled with an integrated ground radar. This enables extremely precise altitude determination and autonomous routing, even in fog or at night, and enables the drone to spray only when directly above fruit trees rather than while moving between them, thus minimizing environmental pollution.

The big tech companies are also active in developing a smart agriculture ecosystem and are funding an increasing number of start-ups, including Alesca Life, DeepIntell, InnovationAI, McFly, Sanan Bio Sciences, Plenty, Oasis Biotech SmartAHC, Hydro Biotech and Yinkzi Technology.

However, despite this rapidly expanding ecosystem, most of these initiatives are only at the trial stages. Smart agriculture in China faces numerous challenges, which must be overcome before we see widespread adoption. These include the high cost of implementing smart agriculture solutions coupled with the fact that the vast majority of Chinese farms are very small and cannot afford these new technologies.

“With the heavy involvement of the state government, however, we expect that many of the challenges will be overcome in the medium term (5-10 years) and that AI-based smart agriculture, driven by the latest advances in machine vision, deep learning algorithms, intelligent robotics and UAV technologies, will have a significant impact on agriculture in China” said Gareth Owen, Associate Research Director and Counterpoint. “We also expect to see the rapid implementation of other emerging technologies such as blockchain for food source tracing, 5G for real-time data transfer and cloud platforms for data storage and sharing” he added.

Counterpoint Research’s “E-Commerce Giants Driving Smart Agriculture Adoption in China” report provides a complete overview of the latest developments in smart agriculture in China, highlighting the key market players spearheading the application of AI and other emerging SmartAg technologies. It also discusses the key issues and challenges, which must be overcome for smart agriculture to be widely adopted across the China.

Background:

Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in the high-tech industry.

Analyst contact: 

Gareth Owen

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