Editor’s Note: Our latest Legal Quarterly magazine is out. Get a PDF version online or pick up a copy in Kyiv.
Imagine one of those computer games about farms where one can have a virtual land plot to grow crops, harvest and sell them.
So Ukrainian high-tech company Studio of Agricultural Systems, or SAS, has created something very similar. In the company’s case, however, when one grows crops online, they appear in reality, and so does the money when these crops are sold.
The trick is that the SAS game-like app links its system with real tractors and real fields, while also collecting data about the land from satellites, drones, special small planes, and various sensors across the domain connected to it.
As a result, farmers see maps with fields, the number of plants and their ripeness, tractors moving around, and many other small details, including the amount of fuel in combines, ground humidity and even the soil’s mineral content.
Accessible from any mobile device, this precise information helps farmers keep records, supervise employees, save money, and improve the harvest.
“Farmers have become highly literate in technology,” Dmytro Grushetskyi, SAS founder and CEO, told the Kyiv Post. “The thing is, many underestimate farmers and perceive them as aborigines. They are tech-savvy in reality.”
Beyond agricultural holdings
Post-Soviet countries are dominated by large agricultural holdings, the form of land ownership that, according to Grushetskyi, isn’t that popular in the West. A typical holding owns dozens of farms and controls them through a central management structure.
In Ukraine, for example, there are holdings like UkrLandFarming, Nibulon, and Mironivsky Hliboproduct. These three alone collectively own 1.5 million hectares. Altogether Ukraine has about 100 holdings.
Grushetskyi worked for a holding, too. In 2011, he was the head of control monitoring for Russian-based Black Earth Farming. The firm was looking to automate how it manages its land, and Grushetskyi developed a $2 million high-tech control system for them.
The system allowed monitoring all the firm’s 36 land plots from one location, allowing to view its agriculture machinery, how ripe the plants are on different fields, and keep accounting and history records of all the activities on the fields (useful for seasonal soil rotation).
Grushetskyi is proud of his innovation. He points at a photo on his office wall of monitors with sophisticated graphics. “This is a system I developed for them,” he said.
In fact, in the room depicted in the photo, his own business idea started.
When the system was ready, Grushetskyi understood that it can be interesting for farmers too, who — unlike large agroholdings — couldn’t afford building a remote system themselves, but would like to pay to use someone’s.
But Black Earth Farming refused to sell the system to other farmers. In 2014, Grushetskyi left the company and one more time created a remote tech control system but this time his own, bringing tech to small and medium-sized farmers.
Modern technologies allow farmers to control their land plots remotely from computers, phones or tablets. Equipped with various sensors, farmers can track their tractors and see the amount of fuel in them, count the seedlings on their fields, and even analyze the mineral content of the soil.
Package deal
Grushetskyi launched SAS with a desire to bring “visual revolution to farming” as well as save farmers up to 15 percent on the cost of their everyday operations, according to his estimates.
However, the company’s 65-person SAS develops very little innovation on its own. It rather seeks the best technologies already available in the world: drones, sensors, algorithms and other software from Norwegian, British, American, and Ukrainian firms. Grushetskyi puts them together, integrates their data into one interface, and sells everything as a package deal.
One hectare covered by this package deal costs $3.7 on average in Ukraine per year. So it will cost $15,000 to connect 4,000 hectares to the SAS system. The price is a bit more for European farmers as SAS has a $5 price tag per hectare.
When a farmer signs up, SAS sends its team to scan fields with drones and small planes. After that, the firm does regular scans once every two months.
Timeliness
Agriculture is about seasons and timing: land must be plowed, seeds planted, and harvest collected — all at a particular time. Delays could cost hundreds of thousands of dollars in losses.
One day of delay to collect corn, for example, means minus 3 percent from the total harvest, according to Grushetskyi. Last year Ukraine’s average harvest of wheat from 1 hectare was 7 tons. So 3,000 hectares bring a farmer 21,000 tons of wheat, while a 3-percent shortfall means a loss of 630 tons of corn, or about $100,000 a day.
And Grushetskyi points to another task for farmers — maintenance and proper use of machinery. Farmers can spend $250,000 on a tractor and $150,000 on seeding systems. Machines like these sometimes are needed just once a year.
“If they stand idle, have wrong logistics, then farmers face a problem — they invest money, but don’t meet deadlines and don’t use their investment to the fullest extent,” Grushetskyi said. His system, in turn, shows when it’s time to harvest particular fields as well as the best routes for agricultural machinery across fields.
Core audience
Middle-sized farmers own lands from 1,000 to 5,000 hectares in Ukraine, and Grushetskyi believes they are the core of the agriculture industry as they take up 75 percent of the market. They are also the ones Grushetskyi caters to.
“By focusing on middle-sized farmers, we also make sure that we won’t go out of business because we depend on one-to-two large agroholdings,” Grushetskyi said.
In Ukraine, there are about 45,000 farms today of which about 33,000 are active, according to Ukraine’s Ministry of Ukraine. Their amount increases 1–2 percent a year. They share 4.5 million hectares of the local black soil mostly in southern and southeastern Ukraine.
For them, farming is a high margin business, but with the inflation rate going up about 9 percent every year in Ukraine and competition with the European Union, farmers have to be more efficient or leave the market.
“Farmers earn money but costs grow and margins drop. So farmers need to analyze precisely every element,” Grushetskyi said. “They need precision farming.”
Precision farming, or also satellite farming, is exactly what the global agriculture experts call Grushetskyi’s activity. It is based on observing, measuring and responding to inter and intra-field variability in crops.
According to the AgTech Ukraine association, Ukraine has about 70 tech startups that alike SAS work on introducing precision farming to Ukrainian and foreign farmers. This includes Agrieye, Skokagro, Cropio, SmartLand, eFarmer, DroneUa.
In fact, the agriculture-tech startups are appearing so fast in Ukraine that the government is paying more to it. Acting Agriculture Minister Olga Trofimtseva thinks that one day, Ukraine might even export agricultural tech at the same levels as Ukraine today exports grain.
“We would like to export not only grains, oilseeds, and sunflower,” Trofimtseva told the Kyiv Post, “but also drones and agricultural tech solutions worldwide.”
All the same, investment company InVenture estimates that only 10 percent of the local agriculture industry players use technologies at all in Ukraine, which shows that Ukraine’s agriculture still has unfulfilled potential. Trofimtseva agrees with the data and thinks that farmers should adapt tech solutions faster to manage their challenges more efficiently.
Grushetskyi agrees, but he differentiates between having technologies at one’s disposal and actually using them. Precision farming is not just about gadgets and programs, it’s more about the farmers’ approach — they must be willing to use it — he said.
“Farmers might have all these statistics that we give them, but nothing will happen if they don’t use the data for their benefit,” he said. “I can’t say that people who don’t use technologies will disappear quickly. But they will be less competitive, that’s a fact. Eventually, they will either adapt to tech or leave the business.”
‘Russia? I don’t care where to work’
SAS has 200 clients and considers Eastern Europe as its priority market. The company’s two biggest markets today, however, are predominantly Ukraine and Russia, and despite the war between the countries, Grushetskyi doesn’t want to take sides and leave neither market.
Even one of SAS’s core technologies is Russian bookkeeping software 1С Company, which is banned in Ukraine, but Grushetskyi reported no problems with it working in his system.
SAS has four offices in Ukraine, including its headquarters, and two in Russia as well as one in Romania and Moldova.
“We have 50 clients in Russia, healthy clients,” said Grushetskyi, who always speaks Ukrainian and reads independent Ukrainian media. “Listen, we started there. So whatever happens, we won’t stop working on the Russian market. This is our market, the farmers are the same there.”
“Only fools say, ‘Oh look, he is working with Russians, boo!’ Those who talk like this have never had success neither here nor there.”
The Kyiv Post’s technology coverage is sponsored by Ciklum. The content is independent of the donors.
