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By Rafaela Mancilha, Logicalis digital transformation architect
Agribusiness is one of the main sectors in Brazil, accounting for almost 25% of the GDP (Gross Domestic Product) of 2017, according to the Confederation of Agriculture and Livestock of Brazil (CNA). Favored by the climate, which influenced a record grain harvest last year, the segment had the highest growth in recent years (13.4%) and expectations for 2018 are no different.
One of the factors that should contribute to the increase of the sector's representativeness in the Brazilian economy is the investment in technology and innovation aiming at the digitalization of the field, which results in larger productions and reduction of losses. Fundamental aspects to face the tight margins with which the producers operate.
Even in the face of this bullish scenario, some sectors have faced some difficulties. The sugarcane harvest, for example, is falling for the third consecutive year. However, there is a challenge that is inherent in all segments of agribusiness: the predictability of risks, the lack of which makes insurance more expensive and makes it difficult to obtain rural credit. The technology, in addition to providing more productivity to the field, can facilitate the concession process by increasing the database and improving risk analysis, thus reducing the value of policies.
The climate, for example, is one of the most important information for various forecasts and analyzes. However, the Brazilian network of meteorological stations is very limited and inefficient, and the lack of assertive climatological data affects several aspects of the rural sector, such as the planning and decision making of the producer about planting, cultural treatments and harvest, and, even, offers and subscriptions to financial services, such as insurance and rural credit, due to high prices and the lack of predictability of risks.
According to the National Meteorological Institute (INMET), we have less than 1,000 meteorological stations in Brazil throughout the territory, with only 25% presenting consistent data collection and history. In the USA, there are more than 25,000 - although the country has only 1,310,000 km² more than ours. In other words, Brazil represents 87% in the US area, but has less than 5% in the number of weather stations.
The restricted number of equipment requires that the information comes from interpolation techniques, which considerably affects the accuracy of this data. Their lack of quality is even more evident when analyzing the tropical characteristic of Brazil, full of microclimates. The consequences of this are inaccurate forecasts that affect producers' decision making, cause socio-environmental tragedies - such as landslides -, compromise the planning of trading companies and industries, and raise the prices of financial services that, due to lack of information from each producer or region, its offer is based on a problematic model, whose pricing is based on the average.
To give you an idea, in Brazil, less than 15% of rural territory is covered by some type of insurance, while in China this number corresponds to more than 65% and is even higher in the United States, which has about 85% of assured production. The difference is extremely significant and the impact on our economy can be huge.
On the other hand, we see the arrival of insurers from other countries in Brazil focused specifically on this sector, having as one of the main requirements, the use of technology to obtain assertive data and information to support the analysis aimed at mitigating risks. This movement can be beneficial for banks and insurance companies, as well as for producers, who constantly face difficulties in planning crops.
Within this context, one of the ways to solve the issue is to increase the number of stations distributed throughout the country in order to generate a more accurate history of the different microclimates that exist in Brazil with a view to improving the sector. The high values of this equipment and the lack of connectivity for data collection represent a challenge for technology and service providers, who need to be creative in order to overcome these barriers.
With this information in hand, institutions will be able to make more accurate analyzes, mitigating insurance risk and linking their payment to the region's data. For example, if it rained more than the minimum for sugarcane production in a given microclimate, but the producer was unable to obtain the expected result, the institution may claim that the impact came from internal factors. On the other hand, if it rained less than necessary, the producer cannot be penalized by the drop in production and will receive the contracted insurance in full.
The technology can also support a greater development of the sector as a whole, by delivering to the institutions that guarantee the plantations, specific data of the region or of a certain culture and, as this history grows, it will be possible to make even more assertive forecasts and offer, even cheaper insurance. In addition, the institutions will be able to offer additional services to producers, such as microclimate information, pest control, crop management, among others, thus increasing the added value of their offers - all based on technology -, accelerating digitization and productivity in the field.
The microclimate information will also help producers, especially if we take into account that climate change is one of the factors that most impacts the results of the harvests and leads to the breakdown of producers. This is because, many of them take the credit to start the plantation and, if something does not go as expected, they are unable to pay the bank and end up breaking or entering into judicial recovery.
In addition, with the data obtained through technology, the producer will be able to make other decisions in relation to the production process, identifying the best date for planting and harvesting based on the history of the region in which it is installed. The knowledge of this information can contribute, even, with decisions related to the application of pesticides, since the climatological condition influences the proliferation of certain pests.
Today, producers are only able to identify their proliferation manually and in person, that is, walking through the plantation. And yet they must be lucky to pass the exact place where the pest is to identify it. However, knowing the history of the region and following the evolution of the climate through technology, it will be possible to determine the application of a pesticide in advance, for example, minimizing losses.
Technology can raise productivity in the field to another level, further increasing the sector's representativeness in the Brazilian economy by enabling better production control and a more assertive return forecast on the harvest, mitigating risks in advance. And, with the reduction in the value of insurance, I believe that there will be an increase in the percentage of insured plantations. However, the benefits do not stop there. I am sure that technology will still have a social role in helping producers not only to maintain their production, but also to increase their return, thus boosting the prosperity of the segment and also of the country.
One of the factors that should contribute to the increase of the sector's representativeness in the Brazilian economy is the investment in technology and innovation aiming at the digitalization of the field, which results in larger productions and reduction of losses. Fundamental aspects to face the tight margins with which the producers operate.
Even in the face of this bullish scenario, some sectors have faced some difficulties. The sugarcane harvest, for example, is falling for the third consecutive year. However, there is a challenge that is inherent in all segments of agribusiness: the predictability of risks, the lack of which makes insurance more expensive and makes it difficult to obtain rural credit. The technology, in addition to providing more productivity to the field, can facilitate the concession process by increasing the database and improving risk analysis, thus reducing the value of policies.
The climate, for example, is one of the most important information for various forecasts and analyzes. However, the Brazilian network of meteorological stations is very limited and inefficient, and the lack of assertive climatological data affects several aspects of the rural sector, such as the planning and decision making of the producer about planting, cultural treatments and harvest, and, even, offers and subscriptions to financial services, such as insurance and rural credit, due to high prices and the lack of predictability of risks.
According to the National Meteorological Institute (INMET), we have less than 1,000 meteorological stations in Brazil throughout the territory, with only 25% presenting consistent data collection and history. In the USA, there are more than 25,000 - although the country has only 1,310,000 km² more than ours. In other words, Brazil represents 87% in the US area, but has less than 5% in the number of weather stations.
The restricted number of equipment requires that the information comes from interpolation techniques, which considerably affects the accuracy of this data. Their lack of quality is even more evident when analyzing the tropical characteristic of Brazil, full of microclimates. The consequences of this are inaccurate forecasts that affect producers' decision making, cause socio-environmental tragedies - such as landslides -, compromise the planning of trading companies and industries, and raise the prices of financial services that, due to lack of information from each producer or region, its offer is based on a problematic model, whose pricing is based on the average.
To give you an idea, in Brazil, less than 15% of rural territory is covered by some type of insurance, while in China this number corresponds to more than 65% and is even higher in the United States, which has about 85% of assured production. The difference is extremely significant and the impact on our economy can be huge.
On the other hand, we see the arrival of insurers from other countries in Brazil focused specifically on this sector, having as one of the main requirements, the use of technology to obtain assertive data and information to support the analysis aimed at mitigating risks. This movement can be beneficial for banks and insurance companies, as well as for producers, who constantly face difficulties in planning crops.
Within this context, one of the ways to solve the issue is to increase the number of stations distributed throughout the country in order to generate a more accurate history of the different microclimates that exist in Brazil with a view to improving the sector. The high values of this equipment and the lack of connectivity for data collection represent a challenge for technology and service providers, who need to be creative in order to overcome these barriers.
With this information in hand, institutions will be able to make more accurate analyzes, mitigating insurance risk and linking their payment to the region's data. For example, if it rained more than the minimum for sugarcane production in a given microclimate, but the producer was unable to obtain the expected result, the institution may claim that the impact came from internal factors. On the other hand, if it rained less than necessary, the producer cannot be penalized by the drop in production and will receive the contracted insurance in full.
The technology can also support a greater development of the sector as a whole, by delivering to the institutions that guarantee the plantations, specific data of the region or of a certain culture and, as this history grows, it will be possible to make even more assertive forecasts and offer, even cheaper insurance. In addition, the institutions will be able to offer additional services to producers, such as microclimate information, pest control, crop management, among others, thus increasing the added value of their offers - all based on technology -, accelerating digitization and productivity in the field.
The microclimate information will also help producers, especially if we take into account that climate change is one of the factors that most impacts the results of the harvests and leads to the breakdown of producers. This is because, many of them take the credit to start the plantation and, if something does not go as expected, they are unable to pay the bank and end up breaking or entering into judicial recovery.
In addition, with the data obtained through technology, the producer will be able to make other decisions in relation to the production process, identifying the best date for planting and harvesting based on the history of the region in which it is installed. The knowledge of this information can contribute, even, with decisions related to the application of pesticides, since the climatological condition influences the proliferation of certain pests.
Today, producers are only able to identify their proliferation manually and in person, that is, walking through the plantation. And yet they must be lucky to pass the exact place where the pest is to identify it. However, knowing the history of the region and following the evolution of the climate through technology, it will be possible to determine the application of a pesticide in advance, for example, minimizing losses.
Technology can raise productivity in the field to another level, further increasing the sector's representativeness in the Brazilian economy by enabling better production control and a more assertive return forecast on the harvest, mitigating risks in advance. And, with the reduction in the value of insurance, I believe that there will be an increase in the percentage of insured plantations. However, the benefits do not stop there. I am sure that technology will still have a social role in helping producers not only to maintain their production, but also to increase their return, thus boosting the prosperity of the segment and also of the country.
Disclaimer: The opinion presented in this article is the responsibility of its author and not of ABES - Brazilian Association of Software Companies
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