Welcome to our first E-zine of 2018.  What a wild start to the year! In between the business challenges being posed by the ongoing drought in the Western Cape, we had the surprise delight of Cyril Ramaphosa finally taking back the reigns of the presidency and seeing the Rand/Dollar back to under the 12.00 level. Then to add to the drama, SA’s very own R 1 Million hunt for the missing/evasive Gupta brother! 

Johan de Villiers

So without further ado, let us discuss the hot topic of IoT or the Internet of Things. IoT worldwide has already become integral to most people’s lives, especially in the form of wearable devices such as fitness trackers and even smart watches that seamlessly communicate with our mobile phones. IoT of in essence is the descriptor used to describe the growing network of data collecting sensors and devices that connect to the internet in one form or another.

One of the sectors in South Africa that may benefit tremendously from the adoption of IoT is the agriculture sector. Smart Farms and Smart Agriculture are being piloted in a number of provinces at the moment with the pay-off the eventual higher productivity that can be achieved in food production as well as the resultant increase in exports and decrease in food costs to the population.

To understand this better, consider how the average agricultural farmer irrigates his crops currently.  A timer switches on an industrial water pivot, say at 8 pm at night and switches off again a 2 am in the morning. This continues daily regardless of the soil moisture content or the weather prediction for the day.  So in essence a lot of over-water occurs. If an irrigation system could be created that uses less water and therefore less energy, the input costs to the farmer would be greatly reduced.

Using Wi-Fi networks and low-power wide area networks, the data collected from sensors spread out over the farms will enable the moisture level in the soil to be monitored in real time.  Together with live weather forecasts, a “smart” irrigation system would know when to decrease or altogether stop irrigating soil that does not require additional water.  Other uses for smart IoT devices include sensors to test soil acidity levels and temperatures. This enables to farmer to increase crop yields further and therefore productivity & profits. Survey Drones may be utilized to map out weeds , identity crops under water or heat stress and allow for effective applications of pesticides with the resultant cost saving.

Some of the other benefits of IoT sensors would be to tag workers on the farm in terms of time and attendance.  This could be in the form of a physical tracker on their belt or an app on their smart phone using geo-location.  The farmer would therefore know when an employee has physically entered or left the premises and remunerate them accordingly.  This form of worker management can be extended to physical assets such as commercial harvesters and tractors. If sensors are fitted to the equipment, usage patterns can be analyzed from the data collected and routes planning optimized. Additionally the farmer may very well determine over which extended period the equipment may be leased to other farmers instead of sitting idle (and deprecating!) on his own land.

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Naturally, the banks and insurance companies like the idea of a financed asset being GPS tracked just from a security perspective.  A trickier part of the IoT equation is how to make it commercially viable for IT companies to enter the field from an income perspective, as it isn’t always clear who would pay for these services. Farmers are notoriously reluctant to part with any additional expenses to their current operation.  Looking downstream towards the procurement companies such as Pioneer Foods, Tiger Brands and SAB may be the solution. Effective crop yields are of great interest to them from a supply and improved margin perspective.

As with any new industry, the early adopters and innovators will certainly face uncertain financial returns in South Africa. Together with the high cost of data and sensors, as well as the lack of government regulation there are certainly tangible risks in the IoT field.  Most experts agree that it could take another five years for the industry to become commercially viable in South Africa. However, the market size may exceed USD 800 million by as early as 2020 according Accenture Digital.

We hope you enjoy this edition of our quarterly e-Zine and thank you for your continued support of First Technology!

Warm Regards

Johan de Villiers

CEO

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