Precision irrigation in agriculture
Precision irrigation in agriculture
Business Model Description
Establishment of precision irrigation systems with sensors and data analysis to maximize agricultural production, increase yields and preserve resources by reducing costs and saving water.
Expected Impact
The use of precision irrigation systems in the agricultural sector will reduce water use and waste and increase productivity.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Cibao Norte
- Cibao Sur
- Cibao Nordeste
- Cibao Noroeste
- Valdesia
- El Valle
- Enriquillo
- Yuma
- Higuamo
- Ozama
Sector Classification
Food and Beverage
Development need
Developing countries have a high dependence on food imports, affecting domestic supply, discouraging agricultural activities and increasing food insecurity (1). By February 2023, 1.5 million people in the DR were in acute food insecurity crisis or emergency, with 54.1% of households in rural areas experiencing a high prevalence of moderate or severe food insecurity (2) (3).
Policy priority
The National Development Strategy (END) establishes in its objective 3.5.3 to increase the productivity, competitiveness and environmental and financial sustainability of agricultural production chains, in order to contribute to food security, take advantage of export potential and generate employment and income for the rural population (4)
Gender inequalities and marginalization issues
Only 25% of women own land in the country. Rural women work at a disadvantage compared to men, with greater difficulty in accessing land, credit, participation in decision-making, specialized technical training and access to agricultural inputs and other government services (5)
Investment opportunities introduction
In the year 2022, the annual growth rate of agricultural economic activities represented 5.0% in their contributions to the Gross Domestic Product. This sector represents opportunities for export and food production whose contribution to GDP in 2022 was 16.18% (6) (7)
Key bottlenecks introduction
Lack of innovation in the food and beverage sector is low to keep creating new products and adapt to new risks. Increased R&D will create a more sustainable and resilient business sector in the face of climate change shocks (8)
Food and Agriculture
Development need
agriculture is a sector that faces climate risks and is important for the Dominican economy. It supplies 85% of domestic food consumption. In 2017, 2 hurricanes caused an estimated US $23.02 million in losses (9). There is a need to improve agricultural productivity through innovation, product transformation and use of better production practices (10)
Policy priority
The Dominican State has the political priority of promoting the development of food systems and achieving food sovereignty and security. Among these are the Strategic Agricultural Sector Plan and the National Plan for Food Sovereignty and Security (11) (12)
Gender inequalities and marginalization issues
Only 8% of women are engaged in agriculture, livestock, forestry and fishing activities. While 70% of the workforce in agriculture is male. In addition, workers in this sector are below the average wages paid in the Dominican economy earning in 2019 an estimated US $1.47 per hour (2)
Investment opportunities introduction
The Dominican Republic is recognized for its leadership in the production and export of food and beverages such as cigars, cocoa, rum, organic bananas, avocados, peppers, among others (13). Eighteen percent of the country has arable land representing an approximate of 877 thousand hectares, of which approximately 10% has irrigation systems (14) (15).
Key bottlenecks introduction
The challenges facing the agricultural sector are related to low crop productivity, increasing returns on investment, market instability, small landholdings, land ownership and poor plantation management. In addition, limited access to commercial credit financing for the sector (16).
Agricultural Products
Pipeline Opportunity
Precision irrigation in agriculture
Establishment of precision irrigation systems with sensors and data analysis to maximize agricultural production, increase yields and preserve resources by reducing costs and saving water.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
5% - 10%
136 thousand hectares with irrigation system technification
The 2021-2036 water pact establishes a public investment plan for the irrigation and agriculture sector. According to projections, it is estimated that USD $1,499 million will be invested by 2036 (18).
The precision irrigation market has a CAGR of 8.60%, led by the Asia Pacific and North American markets. The business model used is B2B and B2C, mobilizing approximately USD 4.55 billion by 2023 (19).
The Dominican government expects to invest in the Innovation, Rehabilitation and Construction of irrigation systems and Construction of night regulation storage ponds with the objective of 136 thousand hectares by 2036 with water technification system (35).
Indicative Return
5% - 10%
Precision irrigation systems vary according to the type of implementation (irrigation, sprinkler, etc.) and returns on investment are different per product. The average internal rate of return can be between 5 to 10% (20).
Investment Timeframe
Medium Term (5–10 years)
Companies offering precision irrigation systems indicate that the return on investment is in the medium term over a period of 3 years. This may vary depending on the type of crop and market conditions (21).
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Business - Business Model Unproven
Impact Case
Sustainable Development Need
The agricultural sector is the largest consumer of water, consuming 82% of the country's water, but wastes 70% of it. This means that the economic productivity of water is low and with a yield of RD$0.003 pesos per cubic meter (19).
Only 10% of the national agricultural production uses advanced technology. The lack and insufficient quality of water affect food security and long-term ecological balance (24).
Gender & Marginalisation
Only 76.8% of the rural population has access to water from the public network. Similarly, 13% of households in the rural area receive water service once a week (25).
18.8% of households surveyed by SIUBEN have access to water supply sources classified as inadequate (26).
Expected Development Outcome
Decrease water use and waste in the agricultural sector.
Increase the number of agricultural producers using advanced technology to make water use more efficient and reduce water waste.
Gender & Marginalisation
Increase the number of households with access to water in rural and semi-urban areas.
Improve water supply systems for households and productive areas without access to an aqueduct.
Primary SDGs addressed
2.4.1 Proportion of agricultural area under productive and sustainable agriculture
Organic agriculture accounts for 4% of the total agricultural land in the Dominican Republic (27).
Increased competitiveness and profitability of the agricultural sector (28).
6.4.1 Change in water-use efficiency over time
In the Dominican Republic, the efficiency of efficient use of water resources is US$8 per cubic meters. This is interpreted as a low efficiency in the use of water resources (29).
Increase water use efficiency in water distribution systems and networks and their final application in irrigation systems 34.9% to 45% (28).
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Indirectly impacted stakeholders
Corporates
Outcome Risks
Lack of financial capacity to invest in precision irrigation systems.
Lack of public and/or private investment for the development of aqueducts in areas without access.
Waterlogging and salinization of soils
Gender inequality and/or marginalization risk: low levels of access to financing for women in the agricultural sector, it would represent a barrier to investing in precision irrigation systems
Impact Risks
Increased of public spending by the agricultural sector due to investment in precision irrigation systems.
Water savings due to the use of precision irrigation systems.
Impact Classification
What
Reduction of water waste in the Dominican agricultural sector
Who
Producers and industries in the Dominican Republic's agricultural sector.
Risk
Only a small number of agricultural producers would have access to precision irrigation systems if cost are high
Impact Thesis
The use of precision irrigation systems in the agricultural sector will reduce water use and waste and increase productivity.
Enabling Environment
Policy Environment
National Development Strategy 2030 creates the basic conditions that favor the synergy between public and private actions for the achievement of the Long-Term Vision of the Nation and the Objectives and Goals of said Strategy (4).
Strategic Plan for the Agricultural Sector (12).
National Food Sovereignty and Security Plan to reduce food insecurity (11).
Water Pact 2021-2036 (18).
Financial Environment
Financial incentives: Foreign investors, whether natural or legal persons, have the right to remit abroad, in freely convertible currencies, without the need for prior authorization (33).
Other incentives: Residence Permits for Investment Program, through an agreement with the General Directorate of Migration, having as a prerequisite the Certificate of Registration of Foreign Direct Investment (33).
Regulatory Environment
Law 5852-62 On land water domain and distribution of public waters (30).
Law 278 Transferring to the National Institute of Hydraulic Resources (INDRHI) all the fluvial works, Agricultural Hydraulic works of Irrigation by infiltration, Irrigation by Canals, etc., to be transferred to the National Institute of Hydraulic Resources (31)
Marketplace Participants
Private Sector
Agricultural production companies such as V&D Agropecuaria, Tropigrown, SWG Dominicana, Rancho Carlos, RAC Exportadora, Quality Agroexport and many others.
Government
Ministry of Agriculture, National Institute of Hydraulic Resources, and Irrigation Technification.
Multilaterals
WFP, UNDP, World Bank, European Union, IDB, USAID, IICA, EISC, and FAO
Non-Profit
Sur Futuro, Fondo de Agua, among others.
Target Locations
Cibao Norte
Cibao Sur
Cibao Nordeste
Cibao Noroeste
Valdesia
El Valle
Enriquillo
Yuma
Higuamo
Ozama
References
- (1) Nieto, A. M. & Reyes, G.E., 2019. Food security and Imports in Latin America and the Caribbean between 1992 and 2016. https://www.revistaespacios.com/a19v40n38/a19v40n38p01.pd
- (2) ONE, 2022. General Report ENHOGAR 2021. https://www.one.gob.do/publicaciones/2022/informe-general-enhogar-2021/?altTemplate=publicacionOnline
- (3) IPC, 2023. IPD Dominican Republic Acute Food Insecurity Situation October 2022 - February 2023 and Projection for March - June 2023. https://www.ipcinfo.org/ipc-country-analysis/details-map/en/c/1156125/
- (4) Law 1-12 National Development Strategy 2030. https://mepyd.gob.do/estrategia-nacional-de-desarrollo-2030/
- (5)ONE, 2019. 25% of women own land in the DR. https://www.one.gob.do/noticias/2019/un-25-de-mujeres-es-propietaria-de-tierras-en-rd/
- (6) Central Bank, 2023. Dominican Republic Economic Report 2022. https://www.bancentral.gov.do/Publicaciones/Consulta
- (7) DGA, 2022. Trade Magazine of the Dominican Republic in 2022. https://www.aduanas.gob.do/estadisticas/informes-boletines/
- (8) IICA, 2021. Dominican Republic: implementing NDC in the agriculture sector. https://repositorio.iica.int/bitstream/handle/11324/20776/BVE22088524e.pdf?sequence=5&isAllowed=y
- (9) MEPYD, 2017. Losses caused by natural phenomena between November 2016 and September 2017. https://mepyd.gob.do/wp-content/uploads/drive/UAAES/Topicos%20de%20Coyuntura/Perdidas%20provocadas%20por%20los%20fenomenos%20naturales%20entre%20noviembre%202016%20y%20septiembre%202017.pdf
- (10) ONE, 2020. The importance of the agricultural sector in economic activity and in the generation of employment generation. https://www.one.gob.do/media/0d1ilonh/bolet%C3%ADnpanoramaestad%C3%ADstico101laimportanciadelsectoragropecuarioenlaactividadecon%C3%B3micamar-abr2020.pdf "11) National Plan for Food and Nutritional Sovereignty and Security 2023-2026. https://sinassan.gob.do/documentos-tecnicossection-container-sinassan/ "
- (12) Strategic Agricultural Sectorial Plan of the Dominican Republic 2020/2030 -Vision 2050-. https://agricultura.gob.do/transparencia/wp-content/uploads/2022/12/Plan-Estratgico-Sectorial-Agropecuario-2020-2030-RV21-05-2020.pdf
- (13) ProDominicana, 2022. Dominican Republic's investment guide 2022. https://prodominicana.gob.do/Documentos/Guia%20de%20inversion%20RD%20ingles%202022%203%20(1).pdf
- (14) World Bank, 2020. Arable land (% of land area) - Dominican Republic. https://data.worldbank.org/indicator/AG.LND.ARBL.ZS?locations=DO
- (15) World Bank, 2022. Arable land (hectares) - Dominican Republic. https://data.worldbank.org/indicator/AG.LND.ARBL.HA?locations=DO
- (16) Superintendency of Banks, 2023. Agricultural credit accounts for 11.5% of the financial system's commercial loan portfolio. https://www.sb.gob.do/prensa/credito-agropecuario-representa-el-115-de-la-cartera-comercial-del-sistema-financiero/
- (17) Alves Souza, S. et al., 2022. Assessing the precision irrigation potential for increasing crop yield and water savings through simulation https://ainfo.cnptia.embrapa.br/digital/bitstream/doc/1147962/1/Lineu-Assessing-the-precision-irrigation-potential-for-increasing-RESTRITO.pdf
- (18) National Commitment to a Water Pact 2023-2036. https://mepyd.gob.do/wp-content/uploads/drive/DCS/Adjuntos/PACTO%20AGUA%20%20-%20Compromiso%20Nacional%20del%20Agua%20-%20Final%2017-6-21.pdf
- (19) Mordor Intelligence, 2022. Precision irrigation market: growth, trends, impact of covid-19 and forecast (2023 - 2028). https://www.mordorintelligence.com/es/industry-reports/precision-irrigation-market
- (20) Álvares, O., et al, 2018. Economic Assessment of Irrigation Systems for Oil Palm Plantations at the Colombian Northern Zone. https://publicaciones.fedepalma.org/index.php/palmas/article/view/12401/12312
- (21) Precision Irrigation - Powering a sustainable agricultural ecosystem to ensure a food future. https://www.netafim.cl/riego-de-precision/#:~:text=El%20retorno%20de%20inversi%C3%B3n%20es,la%20mayor%C3%ADa%20de%20los%20casos
- (22) TNR, 2022. Irrigation Director affirms DR should be able to export water. https://tecnificacionderiego.gob.do/director-de-riego-afirma-rd-deberia-estar-en-capacidad-de-exportar-agua/
- (23) USDA, 2016. Farm Profits and Adoption of Precision Agriculture https://www.ers.usda.gov/webdocs/publications/80326/err-217.pdf?v=0
- (24) TNR, 2021. Claudio Camaño: "57% of the country's water is lost in agriculture". https://tecnificacionderiego.gob.do/claudio-caamano-en-la-agricultura-se-pierde-el-57-del-agua-del-pais/
- (25) Comisión ODS, 2021. National Voluntary Report 2021. https://mepyd.gob.do/wp-content/uploads/drive/DGIP/Informe%20nacional%20voluntario/Informe%20Nacional%20Voluntario%202021-RD.pdf
- (26) SIUBEN, 2018. Quality of life index 2018. https://siuben.gob.do/wp-content/uploads/2020/10/siuben-calidad-de-vida-2018-digital.pdf
- (27) FiBL Statistics, 2021. Key indicators on organic agriculture worldwide. https://statistics.fibl.org/world/key-indicators.html
- (28) MEPYD, 2021. National Multiannual Plan for the Public Sector 2021-2024. https://mepyd.gob.do/publicaciones/plan-nacional-plurianual-del-sector-publico-2021-2024/
- (29) SDG 6 Data. Progress on Water-Use Efficiency (SDG target 6.4). https://sdg6data.org/en/indicator/6.4.1
- (30) Law 5852-62 On domain of terrestrial waters and distribution of public waters. http://idard.org.do/wp-content/uploads/2018/11/Ley-No.-5852.-Dominio-de-Aguas-Terrestres-y-Distribuci%C3%B3n-de-Aguas-P%C3%BAblicas.pdf
- (31) Law-no-278 That transfers to the National Institute of Hydraulic Resources (INDRHI) all river works, agricultural hydraulic works of irrigation by infiltration, irrigation by canals, and irrigation by canals. https://memorias.minpre.gob.do/api/documents/53/download
- (32) Law No. 16-95 on Foreign Investment. https://prodominicana.gob.do/wp/wp-content/themes/ceird/ceirdpdf/Ley-16-95-sobre-Inversion-Extranjera.pdf
- (33) Decree No. 31696 https://faolex.fao.org/docs/pdf/cos177960.pdf
- (34) National Agricultural Precensus 2015. https://www.one.gob.do/media/saqjxqos/informe-final-de-resultados-precenso-nacional-agropecuario-censo-2015.pdf
- (35) National Irrigation Technification Strategic Plan 2022-2025. https://tecnificacionderiego.gob.do/transparencia/phocadownload/PlanEstrategico/Plan%20Estratgico%20Institucional%201%201.pdf