Investment Institute

Investing in rural communities, from agritech to smart villages

  • 20 November 2023 (7 min read)

Smart communities are on the rise – and it’s not just cities that stand to benefit. Smart technology also has plenty to offer in rural and agricultural settings.

From smart cities to smart villages, the smart tech revolution is coming to the rural U.S. Smart technology makes the most of data and analytics to enable better decision-making. Rural use cases for leading technologies, such as agritech, connectivity solutions, IoT, AI, and energy solutions, could deliver substantial returns for today’s investors.

With the Internet of Things (IoT) market projected to exceed $3,352.97 billion by 20301  and artificial intelligence’s (AI) expected CAGR of 19.1% from 2023 to 2032,2 investors are looking at how businesses are bringing smart tech to rural areas.

The agritech revolution: Enhancing efficiency and sustainability

Investing in agritech isn’t just potentially strategic – it could be necessary. Given record-breaking heat waves and water scarcity impacting millions of Americans, 262.6 million acres of crops and 18.8 million beef cattle are experiencing drought.3 Additionally, pest infestations cause 20% to 40% of annual global crop loss,4 and climate change only heightens the risk of pests.5

With smart agritech, farmers can monitor real-time soil conditions, weather, and crop health by deploying sensors, smart devices, and computer vision to make data-driven decisions, optimize resources, and improve crop outcomes. Experts predict the IoT-enabled agricultural monitoring market will hit $4.5 billion by 2025.6

AI-driven predictive analytics generate crop yield and weather predictions, allowing for informed farming decisions. U.S.-based Valley Irrigation (a Valmont company)7 focuses on precision irrigation, using sensors to detect drought or heat stress, while Digital Matter8 offers GPS tracking and geofencing for livestock. Twenty20 Solutions9 employs AI and machine learning for surveillance, and V7 Labs10 utilizes AI-powered computer vision to monitor soil, crops, and livestock and even identify diseases and pests.11

Automation and AI are also cutting labor costs and boosting efficiency. Researchers have used customized tractors and drones for barley farming without human touch,12 while John Deere’s computer vision See & Spray system targets weeds.13

Farmers can improve crop yields, raise profits, and boost performance with agritech. So, it’s hardly surprising that the agritech market is experiencing exponential growth. With a 2022 valuation exceeding $22 billion and a projected $75.8 billion by 2032,14 this sector is set to play a pivotal role in agriculture’s future, offering potential investment opportunities.

Rural connectivity: The rise of smart villages

The rural version of “smart cities,” the “smart village” concept can potentially transform rural areas. But infrastructure investments are needed to ensure connectivity and fully unlock technology’s potential in more remote areas. After all, roughly a third of rural Americans don’t currently have broadband access.15

To embrace what smart villages’ potential, rural areas will need:

  • A broadband fiber network: Broadband fiber networks are essential, as they allow rural communities to take advantage of the latest technology trends. Deloitte predicts over $130 billion of investments are required to make this a reality in the U.S.16
  • 5G and Wi-Fi 6 or 6E: Insufficient 5G or Wi-Fi 6 connectivity hampers rural community development. 5G smartphone demand rose from 3.3% in January 2020 to 17% by the end of 2021,17 driving network expansion across the U.S. and benefiting chip producers like Marvell Technology and Qualcomm.
  • IoT devices and sensors: There will be an estimated 8 billion IoT connections in North America alone by 2030.18 These devices and sensors can collect real-time data from rural communities, helping with water quality monitoring, traffic light efficiency, property protection, and more.

Once these are in place, those in rural areas can take advantage of new opportunities, such as:

  • Remote work and learning: Connectivity demand is high, with 12.7% of full-time employees working from home and 28.2% following a hybrid model,19 as well as American public colleges enrolling roughly 8.5 million online students in 2021 and private schools having 2.7 million remote learners.20
  • Telehealth: While there are 53.3 primary care physicians per 100,000 people in large metropolitan areas, there are just 39.8 in nonmetropolitan areas.21 Improved connectivity would enable remote consultations, monitoring, or AI diagnostics. More people could benefit from wearables like Fitbit, Garmin, and Vitls, a solution offering monitoring and data sharing with healthcare professionals to shorten hospital stays and improve deterioration detection.
  • Smart tech, sensors, and predictive analytics: These capabilities could enhance rural infrastructure and management needs. For example, GeoDigital Insight22  offers 3D data and analytics for vegetation management. Smart trash can solutions like Bigbelly23 or Bin-E24 offer AI capabilities for optimizing waste management.

Smart energy technology and efficiency

Renewable energy is flourishing in rural areas in part due to climate goals, like the U.S. aiming for carbon-free electricity by 2035 and net-zero emissions by 2050.25  And as renewables become cheaper than fossil fuels,26 rural communities are embracing wind and solar power for improved energy efficiency and sustainability.

What’s more, rural areas are adopting smart grid solutions, which can reduce operational costs and fossil fuel dependency, optimize local resource utilization, and extend system components’ lifespans.

U.S. investments in smart grid technology are expected to grow to $16.4 billion annually by 2026.27 Ohio-based Sensus’28 smart meters can help optimize electric, gas, and water systems, while Exelon, the largest electricity parent company in the U.S. by revenue, has deployed over 8.8 million smart power meters and 1.3 million smart gas meters.29

Rural and agricultural technology has the power to transform

Everything from agritech to broadband to smart meters has the potential to transform rural communities and agriculture, leading to a more productive and sustainable future. Not only will these technologies enable those in rural areas to take advantage of the latest technology and farmers to keep up with the growing food demand, but they also present investors with the potential for significant ROI.

References to companies are for illustrative purposes only and should not be viewed as investment recommendations.

Risk Warning: Investment involves risk including the loss of capital.

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