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In the second of three articles exploring the agriculture drone industry in China, Sacha Cody explores the lay of the land: the industry’s ecosystems and its many players. Read part one here.
Note: The author has conducted ethnographic fieldwork with XAG, an academic endeavor undertaken with the company’s permission. He has not worked for, consulted for, owned shares in, nor received funding from any company or organization mentioned in this article.
By late October, Xinjiang’s farmers are almost finished harvesting the region’s two million hectares of cotton. That’s an area the size of Israel or New Jersey. Prior to picking, crops are sprayed with chemicals so the leaves fall off; this aids harvesting. While cotton farmers generally have enough resources—human or mechanical—to pick the cotton, they have struggled to conduct the pre-harvest spray efficiently. As with many agricultural products, there is a precise window of time for picking cotton: picking too early or too late negatively impacts its quality. Hence, the timing of the pre-harvest spray is crucial.
During my ethnographic fieldwork investigating China’s agriculture drone industry, XAG, one of China’s biggest drone makers, explained to me their arrangement sending tens of thousands of drones—almost their entire fleet, by truck and plane—to spray as much farmland as possible in the shortest possible time so harvesting occurred the moment cotton quality peaked.
A new business ecosystem emerging around agriculture drones facilitated this feat. Previously, farmers were dependent on local government and business monopolies for their fertilizer and pesticide needs. Now, independent drone operators who are trained by drone manufacturers offer farmers an alternative.
Introducing the new ecosystem
Drone companies manufacture the product and provide all the hardware and software systems necessary for the machines to operate. While smaller manufacturers try to sell direct to farmers, larger manufacturers like XAG have had more success setting up training and certification centers across the country, usually at the county level. At these centers, large numbers of Chinese pay to become certified agriculture drone operators. Upon graduation, operators are assigned by the manufacturer to work exclusively in a specific territory, usually a collection of villages.
To facilitate the development of the ecosystem, manufacturers enforce these territories, so operators need not worry about competition for now. But savvy operators go on to establish successful businesses and can even “take over” multiple territories with the manufacturer’s permission; these operators purchase large fleets of drones from the manufacturer and become known in their territories as reliable experts and professionals. The really successful operators stock their own chemicals, giving customers a choice of brand. They may even look after drone maintenance. Regulatory frameworks are catching up with all this activity; for now, operator licensing is a grey area across some parts of China.
Operators make money by hiring out their services to farmers, spraying their fields for an all-inclusive price per mu (666 1/6 square meters). County governments support the industry by subsidizing operators’ purchases of new drones. University graduates from the city, interested in agriculture now that it is “techy,” are rushing to take part, either as apprenticed staff of certified operators or seasonal casuals. From this perspective, the new drone business ecosystem appears very rosy.
But existing stakeholders and relationships make things complicated. Local businesses dealing in agriculture equipment and synthetic chemicals as well as various government departments have engrained commercial interests that come into conflict with the new drone ecosystem. Very few of these existing stakeholders are adapting to the new ecosystem described above. Indeed, prior to the arrival of drones, local businesses could rely on farmers purchasing synthetic chemicals such as pesticides directly from them. Larger farms bought or rented machinery such as tractors as well.
At the moment, drone operators are incentivized to drive penetration of drone use; i.e. spray more mu while using less chemicals. Existing businesses, by contrast, are volume businesses; they make money by selling more synthetic chemicals to the same group of farmers. (This is one reason why pesticide use in China is so high.) Complicating things even further, existing businesses are sometimes offshoots of local government departments. The arrival of drones thus puts pressure on government revenue.
Several tense incidents and stand-offs have already occurred, although there has been no violence. One incident narrated to me is as follows: an operator and his team were blocked from entering a particular village, even though they had been hired to conduct a drone spray. It took several days of negotiations between the drone manufacturer and a group of county and village officials to break the deadlock. In this case, the village officials had controlled the local chemical industry for decades. And in case you are wondering how it is that local governments incentivize and discourage agriculture drones at the same time, such is the nature of official departmental responsibilities in China today.
None of this is to say that local and international businesses cannot capitalize on the growing agriculture drone market in China today. Yet while having the best wing or nozzle is important (see the previous article in this series), an understanding of how agriculture drones are reconfiguring local business ecosystems in the countryside and the many stakeholders involved is critical. It does appear that local monopolies are eroding as international Chinese companies empower both individual operators and farmers to pursue a slice of the revenue pie. It is not so simple, however; new power asymmetries are already appearing.
Indeed, in the next and final article in the series, we will explore some of these new power asymmetries; the data streams that underpin the agricultural drone industry as well as the intelligent computing technologies and cultures that facilitate these data streams. In short, we will explore who controls this data and what they do with it.