Precision Agricultural and

Agricultural Value Chain

Proposed Implementation Stages
By Reza Abdillah
Member of Policy Lab Team, Directorate of Food and Agriculture
Ministry of Planning/BAPPENAS
Background
Global trends affecting agribusinesses

Need to feed over

Shrinking cultivable 9 billion people by 2050 Increasing demand for food world-
acreage per capita wide and especially meat in
developing countries

Digitization leading to
Increasing demand from
changed business
consumers for safe and
models and business
sustainable food
processes

Increasing regulatory
and sustainability requirements High volatility of commodity
prices
 Agriculture Needs Technology

Technology Enablers:
▪ ERP
▪ GIS
▪ GPS
▪ Sensory Equipment
2050
In the year 100% more 70% of this food ▪ Farm Equipment
the world population food and must come from ▪ UAV Technology, etc.
will require efficiency-improving
technology
 Crop Production Cycle

Short term ▪ Periodical crops (every three months)

▪ Harvested several times in the same year
▪ Production cycle less than a year

Medium term ▪ Periodical crops (every 3 to 5 years)

▪ Harvested several times
▪ Production cycle no longer than 5 years

Long term
▪ Only one planting
▪ Harvested during many years ahead
▪ 5 to 40 years of produce
Key business challenges

Food production to rise 50% by 2030 to meet rising demand while continuously
losing arable land

Increased global trade, demanding flexible supply chains and efficient

processing

High price volatility, increasing the challenge to stay profitable in a low-margin

business

Growing demand from consumers for safe and sustainable food associated with
new directives, regulations, and restrictions

Digitization, leading to a changed competitive landscape, new business models,

and changed business processes
Commodity volatility directly impacts
profits
 High volatility of agri commodity prices

 Unpredictable prices for all players in the agri

value chain

 Pricing and risk management challenges

 Unstable operating margins

 Challenging revenue and liquidity planning

 High impact on overall business success

Source: Commerzbank, enterprises’ trusted banking partner for risk management, in its Commodity Radar Screen for the 3 rd quarter of 2016 www.commerzbank.com/commodities
Approach
 Holistic approach to agribusiness

Agricultural Food
Origination and Commodity
Provision of Input Production and Manufacturing and Retail Consumer
Trading Processing
Farming Packaging
Seed, fertilizer, and crop
protection

Soft commodities: Agritrading companies Grain mills, oil mills, sugar

Grain, coffee, cocoa, (soft commodities) and refineries, ethanol
cooperatives
Crops

sugarcane, oilseeds processing plants

Farm
equipment

Breeding, medicine,
nutritional
supplements, farm
equipment
Meat Livestock trading Slaughtering,
Animals

(pigs, cattle, poultry), companies and milk processing

fish and dairy products cooperatives

Animal feed
Digitization will transform the traditional
value chain into a network

Seed and crop protection

Originator or agricultural trading

company Consumer products
company
Network Network
Farmer or
grower
Processing

Network Network
Farm equipment Network
The mandate: Produce more, master supply chains and price risk, and
serve consumers

Primary Business Objectives Key Questions

• How do we help farmers boost productivity to meet rising food

Help farmers increase input–output
demands?
ratio.

Stay in the forefront of innovation for • How do we drive value from digitization and Big Data and get the
growth and efficiency in farming. next generation’s traction for this industry?

Build global and profitable supply chain • How do we efficiently manage end-to-end supply chains from
networks. farmers to consumers?

Achieve continuous supply and • How do we best manage commodity contracts while mitigating
minimize the impact of a volatile market. supply and price risk?

Secure trust and serve consumers’ • How do we ensure food safety and quality from reliable sources?
needs for more information on food.

© 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 11

PRECISION FARMING - STAGE I
 Definition
Precision Agriculture (PA) is the concept of
agricultural management based on observation,
measurement, and responding to intra and inter-
land variability in cropping figures, or on aspects
of animal husbandry. The main benefits to be
gained are increased yields and / or increased
production benefits for farmers / ranchers.
 Definition

• Precision Agriculture is about doing the right thing, in

the right place, in the right way, at the right time.
• This approach imposes site-specific differences in
the field and adjusts management actions
accordingly.
• Manage crop production inputs such as water,
seeds, fertilizers etc. to increase yields, quality,
profits, reduce waste and be environmentally friendly
• The concept is based on observing, measuring and
monitoring intra and inter-land variability in plants
 Precision Farming vs. Traditional
No. PRECISION FARMING TRADITIONAL
1. The farm is broken into Land use entirely as
"Management zone" homogeneous area
2. Management decisions are Decisions are based on
based on the requirements of averages
each zone in the field
3. tools (eg GPS / GIS) are used to Inputs are applied uniformly
control zones at whole land
The Need of Precision Agriculture
• Decreased total productivity
• Reduced natural resources
• Agricultural income is stagnant
• The lack of an eco-regional approach
• Land tenure is decreasing and fragmented
• Limited employment opportunities in the
non-agricultural sector
• Global climate variations
Some Benefits of Precision Agriculture
• Improved yields overall
• Reduction of production costs; fertilizer,
chemicals & seeds
• Increased crop yields
• Increased work efficiency and farming time
efficiency
• Better decision making.
• Reducing the environmental impact
Some Example of Precision Farming Tools

Source: On-the-go soil and plant sensors used in precision agriculture (Dobermann et al. 2004)
 Precision Farming - Phase 1 -
Implementation Methodology (Pilot)
• Establish the management zone that the Precision Farming will be applied
to
• Set Yield targets
• Conduct soil sampling and data interpretation with
• Based on the analysis of static indicators (soil, resistivity, land history,
etc.)
• Or Sampling: biomass weighing, Nutrition Deficiency Identification, etc.
• Determine procedures for the management and preparation of land,
variability, fertilizers and other nutrients to achieve the yield goals
• Mapping the population of pests, insects, diseases and weeds through the
Integrated Pest Management (IPM) approach
• Apply precision irrigation.
• Implementation of Precision Agricultural Equipment in accordance with the
purpose of implementation
• Monitor and produce yield maps, evaluate by identifying strengths and
weaknesses for future improvement.
 Team Composition

• Agriculture expert in varieties, fertilizer and nutrition

• Integrated Pest Management (IPM) Expert
• Agricultural Irrigation Expert
• GIS expert
• Information and Communication Technology Expert
 Timeline
Planning Nov 1 - Nov 7

Sample taking Nov 8 - Nov 25

IPM Nov 15 - Dec 12

Iprecision
Dec 3 - Jan 1
Irrigation

Monitor, yield Maps,

Feb 1 - Sep 30
Evaluation

Implementasi Perangkat Pertanian Presisi

Jan 31 End
Sep 30

2019 Nov Dec 2020 Feb Mar Apr May Jun Jul Aug Sep 2020

* Don’t bother about the month, please used this time line as a
reference for implementation period only
Phase II would be the implementation of Agriculture Value Chain –
which not in your scope. The implementation would referred to
“Farmer Corporation” concept
Precision Agriculture and Farmer Corporation