XAG is a leading agriculture technology company and industrial UAS manufacturer, which developed its own patented agriculture drones, sensors and other digital farming tools for precision spraying, granule spreading and mapping.

The World Economic Forum (WEF)'s 13th Annual Meeting of the New Champions (AMNC), or Summer Davos, has taken place in Northeast China's coastal city Dalian from 1-3 July. As an official member of the WEF, XAG engaged with other 1,800 leaders from government, business, academia and civil society in the AMNC to elaborate the driving forces behind China's accelerated development of smart agriculture.

XAG is a leading agriculture technology company and industrial UAS manufacturer, which developed its own patented agriculture drones, sensors and other digital farming tools for precision spraying, granule spreading and mapping.

Justin Gong, Co-founder and Vice President of XAG, gave a keynote speech at the meeting's session The Future Frontier of Food: Scaling Agritech, along with Mariam Mohammed Saeed Al Mheiri, Minister of State for Food Security of the United Arab Emirates and other attendees holding leadership positions.

"China's rapid developing smart agriculture is mainly driven by five factors, including smallholder economy, urbanisation, technological innovation, consumer upgrading and policy support," Gong said.

In China, smallholder economy has restricted the scaling of large ground-based machines whereas farmers are in great need for nimble, intelligent agricultural tools. Such demand becomes more overwhelming in recent decades when manpower cost has witnessed a continuous rising trend due to rural labour shortage. Also, urban consumers are calling for diversification of high-quality food while the countryside has started to adopt new technologies, emerging under the era of Industry 4.0, to improve its agricultural production approach.

Drone and AI: Reshape the Smallholder Economy

According to the Food and Agriculture Organisation of the United Nations (FAO), China accounts for almost half of the world's small farms, and 98% of its farmers manage farmlands smaller than 2 hectares. Large ground-based machinery, such as tractor, is difficult to reach these segmented lands especially on hills and mountains. This smallholder economy has been taken much of the blame for the less mechanised agriculture, with urbanisation and the rising labour cost further exacerbating the problems.

A drone that is flexible, cost-effective and easy-to-use, is a powerful tool to achieve precision agriculture, replacing physical labour to conduct spraying and seeding on small fields at all kinds of terrains. Such technology is helping smallholders obtain new competitive advantages through improving cost-efficiency and producing more diversified, high-quality agricultural products.

By contrast, countries relying on scale farming might be losing momentum in the global consumer market due to monocropping and inflexibility.

Riding the Wave of Industry 4.0 and Consumer Upgrading

Consumer upgrading has also urged the agriculture industry to transform its traditional labour-intensive, resource-consuming pattern. Smallholder economy, once empowered by smart agriculture technology to effectively grow multiple crop species, can satisfy consumers' increasing needs for food biodiversity. Higher product quality and more traceable, transparent food value chain in turn attract consumers to go for premium produce.

China's technological innovation progress in smart agriculture is also affecting other developing countries. In Central and South America, many countries produce large amounts of cash crops, selling to large multinational food enterprises, however, with meagre profit. Now, the consumer upgrading trend in China has given local farmers a new choice, as they begin to grow high-quality, small-scale, diversified agricultural produce, such as grapes and coffee beans, and export to China.

Besides, China's agriculture drones and smart farming solutions are also helping them better manage their farmland and lower production costs. For example, local growers can utilise surveying drones to scan their mountainous farmland and have a HD prescription terrain map, then conduct a fully autonomous aerial variable-rate application for fruit trees, tee plantation or terraces, by using AI-driven plant protection drones. The price will be much cheaper than that of manual work.

As XAG introduces its drone-based smart agriculture solutions into 38 countries around the world, especially Southeast Asia, Latin America and Africa, more varieties of food are now available to China's consumers.

Industry 4.0, distinguished by the trend toward automation and digitalisation, serves as another catalyst to smart agriculture. The convergence of drone, AI and cloud computing technology can inform farmers of scientific decisions to manage the farms through data analytics and machine learning.

XAG has been rebuilding the trust between producers and consumers. XAG's drone collects flight and spraying data such as the types of pesticides used and the chemical dosage for each operation while the IoT system and surveying drone records the meteorological condition and crop growth. All these data would form into a digital farm log, help solve the problem of information asymmetry between land, crop, consumer, and consumers.

For the past five years, XAG's smart agriculture solutions have reduced over 6,000 tons of pesticide use, conserved 1.4 million tons of agricultural water and helped 4.74 million farmers achieve a total crop yield increase by 980,000 kilograms.

When agricultural production and service records are digitalised, financial institutions have also started to change their attitudes towards smallholders. In China, XAG has partnered with some of the biggest financial institutions such as Alipay to build individual credit risk scoring system in rural areas. This new finance model offers farmers, even those without credit card or collateral, convenient, equal access to loans and claims.

During the past 30 years, agriculture had been considered a low-value sector for China's economic development. However, once new technology and new finance penetrate the rural areas, smallholder economy will present great advantages and become a new growth engine.