Episode Transcript
[00:00:00] Speaker A: Hey folks, welcome back to the Drone on show. It's Mike. Today we have another episode where I was on the road at the drone convention and I sat down with lots of different applicators at that show, just having casual conversations with them on how they got started and where they're at now. And so today is another one of those episodes where I'm on the road and having a conversation with another spray drone business. Let's get into it.
Okay. We're still here at the End user drone Spray conference here in Alabama. And if you want to introduce yourself who you are and where you're from and then we'll get right into it.
[00:00:34] Speaker B: My name is Valery Yakovenko. I'm the founder of the companies named Drone, UA and Futurology. I'm from Pennsylvania and originally I'm from Ukraine.
[00:00:43] Speaker A: Ukraine. Would you. So the Ukraine war happened. Did you come here because of that or were you coming to the United States? Either way, of course.
[00:00:52] Speaker B: The result, my family flee the war to the United States of America and we find it the safe haven here because of our relations with all the US Businesses we did had before the war. But right now I'm here as an investor because I came after to make our company global. And the United States actually is the perfect launchpad.
[00:01:17] Speaker A: Okay.
[00:01:18] Speaker B: Presence in the United States for any kind of the businesses. It's not only the possibility to touch this market, it is a possibility to go to much larger scale with the possibility to move further and higher.
[00:01:31] Speaker A: Yeah.
[00:01:31] Speaker B: And the whole planet is actually the market and United States is capable to cover this.
[00:01:37] Speaker A: Okay, so you didn't necessarily come here because of the war, I mean, maybe push you here faster.
[00:01:42] Speaker B: It was one of the decision making moments because I had an opportunity to do that and we decided to invest to. To open jobs in the United States and bring our experience.
[00:01:51] Speaker A: That's awesome. So if you could share with me. You've already shared a lot of information off the podcast, but the experience that you have in Ukraine is just mind blowing. Like once you guys hear how much experience that he has, it's just incredible. So let's start with how many drone teams did you guys run drone teams or did you outfit people in Ukraine to run your own drones?
[00:02:15] Speaker B: So basically it is about creating the whole ecosystem. So part of our service provider providers is our clients whom we provide equipment and train them how to work with this equipment. And another part of our business is creating our own service teams. Different stage of the market development. We had different situations. But for example, one of the companies that we had ownership to it is about 112 of drones working simultaneously.
[00:02:42] Speaker A: Jeez. So one company owned 112 drones going out and spraying all types of different crops in Ukraine.
[00:02:48] Speaker B: 100. Absolutely. And this is just one of assets we had more. So basically you can just experience how large it can be. Just one example. In 2021, one of our largest clients in Ukraine, the company named Kurnel, they released a procurement to spray over 75,000 of hectares. This more than 150,000 of acres in three weeks of sunflower with and then with drones. 150,000 for fakers in three weeks with drones. Just one client as an example.
[00:03:21] Speaker A: No way. And your team was supposed to go in there and try to get that done.
[00:03:26] Speaker B: Actually the order is so big, so it is impossible to cover it by one team or one company. So it was some kind of a split procurement. So everybody got their bits. The one with lowest bits obtained the most and better conditioned fields, nicest fields with best quality of operations and who made the lowest offers. Like made everything what remained.
But this is reality. Largest players in very conservative industry started to invest in the drone operations. Just because it is absolutely cost effective. The quality is absolutely enough. And we are using it for years already. So it was the third years of their tests when they decided to put all their crops sunflower into the spraying operations for to provide desiccation. This was to kill the plant of the stable.
[00:04:20] Speaker A: Interesting. So how long have drones been in Ukraine? Like, I feel like you guys had drones or agricultural drones longer than we did in America.
[00:04:29] Speaker B: It's a very funny story. So basically our experiences more than 11 years ago, 11 years in the drone business. And we started with zebrafin, with of course with crop scouting. It was something what we started the first. But when drones came to the spraying stage and we understood that it is possible, it was 2015, 2016. And I was pessimist. I was the one who will tell the market. It will not work, it will not happen.
It is costing too much. You cannot compare it with self propelled springer. And that was the time when DJI released MG1 MG1B drones. So basically the first ones. I even remember engineer who did that. And we didn't have other trademarks in the market. So we just compared the efficiency of this equipment and we were understanding that to spray one acre or one hectare, you have to spend five, six times more than with the self prepared sprayer. And no stupid farmer will do that in next year. Everything changed. So the cycles of the batteries, the number of acreage covered Per one operation increased and it made this price of self propelled sprayer service and the drone spraying service comparable for a hectare. The medium price was around US$12 with VAT per hectare divided by two. And you will get the price for acre, it's quite low, but it is the same price as a self propelled sprayer and a drone. And that moment changed the market.
[00:05:55] Speaker A: Okay, and where, at what level did it just absolutely explode? The adoption of spray drones in Ukraine.
[00:06:05] Speaker B: So the first farmer who is coming to obtain this service, they are some kind of early adopters.
They are trying to test something new to invest in all new technologies. They're trying and without understanding it will work or not. But when those young farmers are launching their YouTube channels and starting to share that that worked. Actually this is changing the neighborhood's behavior. So the neighbors starting to see that these guys using drones, it works. Let's try this here to also. So this is word of mouth strategy. It is boosted by YouTube channels, it is boosted by podcasts. But it started to grow crazy fast. Yeah. And the industry started to be increased in volume every single year. I even cannot tell you the number of in percentage. But like today, right now we are comparing the quantity of attendees to this conference. Dr. Steve Lee told that it is around 70% of increased number of applications to be a part of this conference. Is it the real number to understand the industry growth? I'm not sure.
[00:07:16] Speaker A: Okay.
[00:07:17] Speaker B: I'm not sure. Because the real growth of the market might be even higher.
[00:07:21] Speaker A: Yeah, yeah.
[00:07:22] Speaker B: The same time in Ukraine, everything started from the experience. And at this, at the moment when the farmer can calculate the return of investments, this is a moment growth.
[00:07:32] Speaker A: And so you and I mentioned earlier, not necessarily that the farmers were buying their own equipment. They were, it was just more cost effective maybe for a service provider to apply the same pesticides or whatever it might have been as a ground rig. But they were damaging crops and stuff. And so then the crop yield was increased by using drones. Is that.
[00:07:56] Speaker B: That's correct. So basically there are, there is a term technological tracks. You know that for sure the wheels of the equipment are damaging the ground, damaging the crops. And actually every single pass of classical machinery create damage on the field that you cannot count into your yield because the crops there are being damaged. You can use some kind of high precision positioning system to go track, to track and to go by centimeter to centimeter in the same track with all the technological operation, every single spraying operation or technological operation. But you will damage for sure this part of the field and more Important on high crops such as corn, on turnarounds, no matter how big your equipment, how high it is, you will damage it. Yeah, so this is exactly what happened in Ukraine and it is happening in the United States. There is a big difference. We don't have agriculture aviation in the United states. It is 150 millions of acres sprayed every single season. And we've seen this in the presentation. But in Ukraine, we didn't have it at all.
[00:08:59] Speaker A: Oh no.
No airplanes, no helicopter.
[00:09:02] Speaker B: Some really small teams still surviving, but we were competing not with them. We were competing with classical machinery with self propelled sprayers. This is a difference.
[00:09:13] Speaker A: All right, so that would be a little bit of a difference because currently we do have airplanes and helicopters here. But how do you feel personally if a drone can do the same application as an airplane?
[00:09:25] Speaker B: Basically, we run those tests with the Ministry of Agriculture of Ukraine and with the Ministry of Ecology of Ukraine. And regarding the quality of spraying operations, drones are closer to backpack sprayer and not even to the classical machinery. I'm not talking about the planes at all. So basically the shift of the pesticides that are being created by the drone, they are closer to the backpack sprayer. It is more precise tool than anything possible on the market if it has been used wisely.
[00:09:52] Speaker A: Okay, and so how did you learn how to use a drone properly to lay the best application down for a farmer? Is it just doing it, you know, over and over and over or is it doing spray tests where you take.
[00:10:06] Speaker B: So we did, we did it together with the farmer. In Ukraine. You have a responsible person for the drone applications. And for any other application, it is actually the farmer, the owner of the field, he has, he takes the risks. And when he has an opportunity to test something, he is open for the conversation. And the initial beginning of the market development, it was pretty hard to find the farmer who was risky enough to test this technology. Because we are not spraying overall 2 gallons per acre. We are spraying sometimes even 1 gallon per acre. And it is out of labeling, like we are taking this risk. And the one responsible for this decision is a farmer and his agronomists. But to understand what is the best, what is the best way to use the technology, it is about the collaboration with the farmer. He was using a part of his filly farm field to give to the drone teams to see how it works, if it works nice. And then the same field is sprained by the classical machinery.
[00:11:01] Speaker A: That's so crazy you're talking about this because I just approached a farmer down the road from me that has fields. And I was like, can I just try some testing on your fields? And it's like he has to trust me because it's a cash crop, right? If it doesn't work, then he's not going to have as much. So that's crazy. You guys have been doing that and now I feel like I'm just starting to do it here because the market's just now starting to adopt it.
[00:11:25] Speaker B: It is true. This is the first year when we have seen the real growth of the market in the United States. It is because of the really easier. It is not easy so far, but it is much easier regulation that we do have. But in Ukraine you didn't had any kind of regulation. Like we had the possibility to fly anything, spray anything. And the most important, the person responsible for that was the client. And it was his decision to do that or not. If I was believing in a technology and he was willing to, he just did that. If it worked, he just continued to do the same stuff next year. One important fact we had never experienced relations with client who was denied, who denied to get drone services for the next season. Every single farmer.
[00:12:11] Speaker A: No way it was that good. He wanted it back.
[00:12:13] Speaker B: I want to do it again.
[00:12:14] Speaker A: Wow.
[00:12:15] Speaker B: Yeah. Of course there were situations when some of the pesticides application didn't work. Like there is a fact. And the reason for that might be a temperature, wind, the wrongly selected the pesticides or chemicals. However, in most of the cases and especially started from very simple operations. We've obtained a proof of concept using drones. We do have an important technological phase growing plants in Ukraine. It's called desiccation. When in the end of the season you need to seek the plant on the field. Actually.
[00:12:46] Speaker A: Yeah.
[00:12:47] Speaker B: This way you are getting the lowest possible moisture of the collected yield. And when you are sending it to the elevator, you are not paying additional fees for the gas to seek it out. So you are getting the moisture exactly from the field with the normal condition, with the condition that you want to have. And these operations specifically was done using the drones and was the first one to break the market. This is the.
The service that was done at the end of August and the beginning of September, high peak season for all drone companies in Ukraine. And no matter how many companies you have in Ukraine, how many drones are operating that time, how many pilots are trained, when it is a season of desiccation, clients are standing in the line and phones are read. I believe the same stuff is happening in the United States right now. But probably the technological operation might be different.
[00:13:42] Speaker A: Yeah. Dude, that is crazy. So what was the biggest drone company there? Or yeah, like DJI or xag or was it some brand we don't even know about?
[00:13:52] Speaker B: So basically I personally started with dji, with DJI Agriculture and I became one of the biggest dealers in Europe distributors in Europe that time. At certain moment we have switched to XCG and became one of the biggest distributors in the world, competing with Brazil and other comp and other countries for the supply of drones and drone components. And later everything changed since war started and right now the market is closed. But at the end of the war, XCG had around 52% of the market share in Ukraine.
[00:14:22] Speaker A: Wow. So approximately how many drones would have been in Ukraine spraying crop fields?
[00:14:27] Speaker B: Okay, this is a funny story because you can calculate the exact number for the full capacity drone market in agriculture for every single country understanding the quantity of arable land and we discuss it today with you. So basically Ukraine has around 28 millions of hectares of arable land, more, some kind of lands, search for the reserve more lands for the forest, etc. All of that is agricultural land. But arable land is 28 millions. 28 millions of hectares. It is a job. And for 28,000 of drone teams or 28,000 of drones sold per year. So 28,000 of drones is the capacity of the market. If all the per year being sold. Per year being sold. What?
The same quantity of pilots and the same quantity of supporting specialists. It is actually a workforce of the market. So basically the volume of the market you can calculate exactly by the zone area volume.
[00:15:28] Speaker A: No way.
[00:15:29] Speaker B: Yeah.
[00:15:29] Speaker A: So 28,000 drones to be sold to 28,000 jobs or whatever, every.
You're right.
[00:15:36] Speaker B: Yeah, exactly. But this is the maximum capacity of the market. It is not what happened. Correct, it's what is going to happen. It is a prediction model, because we have other numbers, we have other markets, we have Southeast Asia region where this formula is exactly working. When we are thinking about China, most of our clients were starting immediately to tell oh my gosh. But the drones are there just because the fields are so small, the areas are so difficult to reach, there is no classical machine and everything started to be picked up by hand, etc. The reality is that it is not. The China as a market is different. There are plants and different crops on the south, there are huge areas of cotton farming on the west. And in the medium, you will have the same picture of overage agriculture business all over the world. Just because of the size of the country, the same stuff With Southeast Asia, many fields, many type of drone operations. But in general, you have large number of statistics and this you can apply even for the United States.
[00:16:37] Speaker A: Wow. I'm just sitting here trying to figure out for how long could say it was at its max, right? 28,000 drones needed to be sold every year. For how long, do you think?
[00:16:47] Speaker B: Well, until the.
Since technology is evolving every single year. And in some cases of technology appearance, we see that drones might appear twice per year for technology shift is so fast iterations might exchange every single year. And we see it by the product model that we see on the market every single year. There is some kind of a new drone, new kind of equipment with new technologies inside, etc. There is an issue what to do with all drone fleets. Is it possible to use it for same drone operations and not to buy new equipment? There will be a moment of time when it will be smart to do that. However, we inside our business, we calculate that you are investing in a drone maximum per two years.
[00:17:32] Speaker A: Okay.
[00:17:32] Speaker B: And if we are talking about the acreage, it is about 10,000 of acres per one drone. To make capital investments, return as investments.
[00:17:41] Speaker A: Oh, okay. So you're saying that you'd have to that drone, that one drone would have to cover at least 10,000 acres to make sense of getting a new one. Yeah.
[00:17:52] Speaker B: And the old one you can put to training or for reserve equipment, you name it. But. And the quantity of acres might be also different depending on your crops, type of operations and the volume that you can do during the season by the team. Because if you are working in cash crops, for example, blueberries or orchards, this volume might be not 5,000, it might be not 10,000, it might be just southern, just because that you earn so much per one cash crop. And if you are working with the equipment, with the crops, such as corn or soy, the number might be even bigger.
[00:18:27] Speaker A: Okay, so in Ukraine, how many new businesses, small businesses, entrepreneurs did you see start a drone spray service?
[00:18:39] Speaker B: Oh, it's a difficult story.
I'd say that the moment when we can count that some kind of level was succeeded. It is early 2022 and the end of 2021. At that moment, more than 1.5 thousand of drone operators appeared on.
We had seen that the market was skyrocketing. So it was just the beginning. When DJI planned to sell more than 1.2 thousand of drones in our market in 2022. XCG has other plans, etc.
[00:19:12] Speaker A: So 12,000, is that what you're saying? 12,000 drones?
[00:19:14] Speaker B: 1200. 12.2.
[00:19:16] Speaker A: But okay, that's all right.
[00:19:18] Speaker B: But this never happened because of the war. Because of the war.
[00:19:21] Speaker A: Yeah, but so let's talk prior to the war. There were new entrepreneurs starting this business every single month.
[00:19:29] Speaker B: We had requests from young entrepreneurs to dive deep into the business and they were willing to work with drones. The initial idea of them, it was not about the drones actually, it was about agriculture. The agriculture is a leading industry, one of the key stakeholders in the forming of the GDP in the country. And one of the very sexy business directions with the classically very high level of enter in or enter capital. Usually you had to spend hundreds of thousands and millions of US dollars to build a company capable to serve farmers. But with drones you are capable to do this with several tens of thousands. Buying a car, a trailer, a couple of drones and training a team. And return of investment of this business is actually quite high. You can return all of investments within one season and even get enough of the profit. And this is a real story to buy an apartment for your family. Yeah, and it is usually it was even a family run business. So the father and the son were managing drone operations and for example wife or mom were managing accounting and financial relationship with the clients. And it was creating such, you know, really interesting story of young entrepreneurship. And they are making, they were making business in rural Ukraine, rural Ukrainian areas, outside of some big cities, bringing back jobs to the rural areas.
[00:20:57] Speaker A: That's so cool because it was a way of starting a business outside that normally would never been possible without drones.
[00:21:05] Speaker B: Absolutely.
[00:21:06] Speaker A: Did you see any of so early adopters, people? And it's so sad that you guys, you know, that the war came and everything stopped and you couldn't keep going because you guys would probably, who knows where you're at now. Right. Because it was what, three years already that's been going on and so everything stopped. But you would be way, way, way further ahead than you are now. So but some of those, some of those young entrepreneurs that had just started, did you see them scaling like say they bought, I don't know, one, two drones, two drones one year.
[00:21:36] Speaker B: Oh my gosh. We had situations when the team was buying two drones in the beginning of the season and ended up having almost 20.
[00:21:45] Speaker A: Wow.
[00:21:45] Speaker B: Just reinvesting all the capital that we were earning. It was about huge possibilities, especially for those who had a possibility to talk with young farmers. Because it is, it is about taking decision and taking risk on the farmer's side. And it is, you know, the possibility to find such person that is risky enough to invest in new technologies is a golden possibility.
Those who had this opportunity, they did their fortune.
[00:22:13] Speaker A: Yeah, yeah. So would you seeing that in Ukraine? Because I get a lot of young entrepreneurs or young people that want to start a new business and they're hesitant to do it here in America. What. What would you tell some of those young guys?
[00:22:29] Speaker B: So first of all, this is for a long time in advance, it will be a blue ocean. So basically it is an opportunity not only for just young guys, even for existing drone companies that are. Exactly, exactly right now working in a drone industry, for example, in surveying or in energy business, or providing some kind of mapping for mining operations.
There is situations right now when the competition became quite high and they are looking where to go to get back their marginality. They want to earn more. And in terms of cash, one of the only examples of the market is agriculture. And in terms of the volume, it is endless.
The agricultural market to sell all these thousands of drones is actually bigger than anything else combined. This is one of the reasons why large companies are stepping aside the departments specialized exactly only in agricultural business, just because these business alone might be bigger. For example, Vietnam, the number of sales of agricultural equipment there for the DJI business is bigger than enterprise and consumer markets combined. In one country. The Department of Agriculture is making more profit for the whole business more than classical use of drones for photography or enterprise use, for different kind of smart uses. This is a large machine.
[00:23:50] Speaker A: Yeah. So if, if an entrepreneur is like, I want to start a drone spray business in America, I mean, you would say, according to what you've seen in Ukraine, it's like forward.
[00:24:00] Speaker B: Yeah, Run, take your place. Because the market right now is growing. It's growing by times it is probably growing, like Steve, Dr. Steve Lee mentioned, by 70% per year. Probably this number is exactly correct. Probably my vision is higher. It might grow twice, triple by year. And if the regulation will go down and it will be more easier for to spray up all possible applications, the market will grow even faster. Yeah, but if you are establishing your business here and on this kind of a market, when it grows so fast organically, you are just maintaining your place and your percentage of the market share. You're growing at the same speed as the market does, where you can find investment opportunities to bring back 70% of your investments organically.
Never. You will never find it. And here you are in the beginning of the enormous procedures, enormous opportunities, when this market will bring you to the next level. And you just need to get with the flow. You need just to raise your sail and Drive forward. The only problem and the only issue that the young players has to be aware of, they don't need to grow less than the market does. If they are growing by 70% every single year or growing twice by every single year, they are losing the market share.
[00:25:20] Speaker A: Okay, so say that again.
[00:25:24] Speaker B: The target for the businesses might be ambitious. The company that are right now entering the agriculture service business in the United States, they need to plan to double their volume of operations every single year.
[00:25:38] Speaker A: Or they'll lose some of the market.
[00:25:40] Speaker B: Or they are losing. So this vision, when somebody will get 20 or 30% of return of investment of earn some money and be happy with that might be illusionary that it is a success. It is really a need to understand the real potential of the market and work harder. We have five years in advance when the market will be still almost empty. It will be blue ocean stage. But in five years we will have the same situation as we do see in China, when a lot of drones are on the market, a lot of sellers are on the market and the price are going down every single year, leaving no margin for spraying operations. So in five years, we need to build an ecosystem of robotics in agriculture. It is not about drones. It is about all the processes that are around agriculture. Every single automation is a part of this business. And right now we are talking about aerial applications. Yeah, yeah, but the same team, same people, same talents, they are capable to apply robotics into agriculture business. You are talking right now about land robotics, machinery that is smaller by size and is automated. We are talking about possibilities to work with different kinds of irrigational system or with, with some kind of IoT devices in the fields. We're talking about the future of agriculture and it needs ecosystem. So what we do see right now in the fields, it is just the beginning of the even bigger industry of smart farming.
[00:27:05] Speaker A: Okay, yeah, that's crazy because it's not just the drones. It might be a little machine that goes through the rows and actually plants.
[00:27:12] Speaker B: A seed or something or weeds or clear something.
The number of applications that can appear on the market, they are endless and they will appear because we are living right now and you see how technologies are changing around us.
[00:27:26] Speaker A: Oh, dude, it's crazy. So a young entrepreneur starts in Ukraine, say he comes to you, but he doesn't have the cash in the bank. Were banks loaning on equipment over there?
[00:27:36] Speaker B: Oh, yeah. So basically this is one of the reasons how the market exploded. Oh, we made a. We made a really hard job delivering the message to the market, to the bankers.
[00:27:47] Speaker A: Yeah, yeah. Because that's, that's a challenge we're having right now is like so people want to get loans and I want to hear the story then but I'm going to say it's, it's like it's so new but they don't know how to give to do the loan because they've never had it. So I'm curious to see how your banks.
[00:28:04] Speaker B: It was like speaking with really I'm not one to offend any bankers that we were, we were went to into conversation but it was really hard to deliver them the message that these are not a toys and this is actually farming equipment that is, that can be a subject of the lease or of the loan. And we spent almost half a year showing them and explaining them and showing them statistics of the fail rates about this equipment just to give them an understanding that it is possible that it is an absolutely capable instrument to finance this kind of operations. And it was combined with the insurance policies. So in the United States the situation is much better because you'd already have an insurance market that is willing to invest in new technologies and they are really proactive. But back in Eastern Europe we did had challenges and insurance markets didn't want to play in this field. They didn't want to invest into researches about insurance insuring agriculture. Drones and bank cannot get a loan if the drone is not insured. So we had to work with two stakeholders simultaneously to create those opportunities. And we succeeded in that. We created several really strategical banks. One of them was National Bank Ocean Bank. Another one, another bank was called Agroprospectives Bank. And the miracle is that Agroprospectus bank was actually one of the part of the hugest agriculture holding with hundreds of thousands of acres. So they understood why they need that.
They have assets in their portfolio of the businesses that can share information inside and we've got the green light.
[00:29:43] Speaker A: Wow. Wow. How long did that take you to half a year.
[00:29:47] Speaker B: Half a year we spent just to deliver the message to bankers that we need exactly that product with this rate, I am sorry, APR rate. Yeah. And these can be structure of the loan and you need additional assets to cover the possible responsibility etc.
[00:30:04] Speaker A: So here in America, is that something that you would be talking to banks about or not really.
[00:30:10] Speaker B: The ecosystem in the United States, the drone ecosystem in the United States is quite mature already. So we've seen in the last two years how big it became. So the 2024 was the first year when the market of drone applications really opened the market So I must admit that probably the stage of the market right now is similar to what we have left in Ukraine in 2021.
But the ambitions of these market are much higher and this leads to the situation that it's moving even faster. So right now we see that those talks about the banks, those talks about the insurance are already happening.
[00:30:46] Speaker A: Okay.
[00:30:46] Speaker B: And it is a matter of months, as if somebody didn't take this decision. It will take it soon.
[00:30:51] Speaker A: Yeah.
[00:30:52] Speaker B: And other case we will see here, number of investment opportunities, different drone businesses that will help to provide enough of the cash to the industry to go further. I believe that some of drone manufacturers will be provided. Will be able to provide financing for the clients, even not involving the bank.
[00:31:10] Speaker A: To finance clients like the actual equipment?
[00:31:13] Speaker B: Well, yeah, but to finance the manufacturer operations. And the equipment will be just leased. A lot of different models will appear here on the market in this year.
[00:31:22] Speaker A: So I got to bring up, you said that you're hired by the un, was it?
[00:31:27] Speaker B: Yeah, I'm one of the drone experts of the Food and Agriculture Organization of the United Nations.
[00:31:32] Speaker A: So that way when people are listening to this, they know that what you're talking about is not.
You're not just putting it out there. It's like you actually have to research and do this data for them because you're on a salary.
[00:31:45] Speaker B: Yes, I'm paid for that. And the result that they asked me to deliver is internal instruction how drone technologies can affect different market in terms of horticultures and what effect and what impact it could be do for the yield amount, for the return of investments and for the quality of corpse. And actually quality is one of the questions that we need to special specialize.
[00:32:09] Speaker A: The point out quality. So you actually would say that quality is better using drones than something.
[00:32:15] Speaker B: Okay, so here is the thing. We had an experience in 2022. We had an experience working for blueberry farm in northern part of Kiev. And it was really crazy situation. They needed a service to place fungicides on the field. Otherwise they will be able. They will be not able the business. And this is one of the largest blueberry farms in Europe.
[00:32:35] Speaker A: Okay.
[00:32:35] Speaker B: Organic one. Okay. So that time we provided them service and helped to spray pesticides on more than 500 hectares. It is more than 1.2. I don't know, one more than thousand of 8,000 acres.
[00:32:47] Speaker A: All blueberries.
[00:32:48] Speaker B: All blueberries.
[00:32:48] Speaker A: I don't think I've ever seen more than a lot blueberry bush.
[00:32:53] Speaker B: It is a lot.
Again, organical. Not just blueberry, but organical blueberry.
And time we used this case to showcase it to the Food and Agriculture Organization. The actual statistic how it affect the business. Despite the fact that we saved a lot of number for floor places. It also helped us to acquire enough of analytical data to proceed with calculations what actually it brings to the farmer if he starts to use drones. So our outcomes that we shared with numerous conference of the United nations worldwide. It was done in Hungary, in Kazakhstan and somewhere else. I don't remember. We share information that applying drone operations in horticulture, in blueberries and in for example, berries business leads to increase of quality of lead. Not just quantity, but quality of lead by 3, by far from 3 to 5%. And this is crazy because you are applying some of these services exactly in the time needed for the operation. And you don't waste time waiting until the after. For example, after the rain, the ground will be stable enough to go with the classical machinery. This leads to for the quality increase of the end product. And this is dramatical because it is easy to sell, it is easy to store and the quality is the key to increase the price of end products.
[00:34:14] Speaker A: Okay, so the quality got better because they were able to do.
Yeah, that's crazy. I never thought of that. Is that something you've thought about landing the quality?
That's crazy. Okay, so say I'm. I applied for a farmer and I sprayed his product and my service to put it on. He said that he needed to gain 8 bushels per acre to make it cost effective for him. And he calls me back and he said it didn't do that. That's not necessarily because of the drone. Right? Like how would you, if a farmer calls you and says that, that you know, I need it to get eight bushels an acre more to make this effective. I'm like, when he calls me, I said, guy, it's not just because of the drone, it's also, you know, the chemical or whatever was sprayed on it or the time of the day or whatever.
[00:35:06] Speaker B: Basically, we are coming back in agriculture 10 years ago. Owner of the field cannot blame you at the end of the season because too many factors can appear to be the reason for any kind of mistakes on the field. If there is a problem, it has to be told exactly after the application. And they have a couple of weeks to actually showcase that the problem is existing.
So one of the facts, first of all, we are not talking about the increased yield. We are not selling increased yield. It is a side effect that he will get this benefit, but the original effect is that we are using drones to replace classical machinery operations. He wanted to by classical self propelled sprayer some amount of pesticides that we are offering to do the same. And sometimes he cannot get this service done by classical machinery just because again, rainy seasons and we are going diving into the drones and he is using this service. At the end of the job, he has an understanding of the field cropped. He has a possibility to go in the field and see the quality of the coverage of the leaves. In the meantime, he can place some water sensitive paper just to see the quality of coverage. But the real effect he can see in several days or a couple of weeks, depending on the chemical that you are using. But he needs to see if there is a problem, if there is an effect, changes on the leaves are showcasing if the chemical is working or not. And if it is not, we need to see the reason. If it is working, it is fine, everybody's happy. And there are some situations when we definitely had a problem problem and we had to redo our job. For example. Yeah, I don't know how to call it in, in English matras. So basically this is one of the situations when you have strokes on the field.
[00:37:04] Speaker A: Striping. Yeah, yeah, yeah, yeah. Here, here. So, so I'm gonna show you a picture. This is, this is why I'm bringing it up is like. And maybe you can help me figure this out because this was that farmer, he's like, well, it's striping and it didn't do its job. And I'm like, well, I can't talk.
[00:37:22] Speaker B: That it didn't do its job here on the top.
[00:37:24] Speaker A: Yep, yep. So you see that, that striping, there's dark and then there's light.
Well, he thinks that it didn't do it well because there's dark and light. But I, you know, I'm trying to figure this out, but I'm saying that my drone covered every inch, everything of that field. But where it striped it was an overlap of the, of the chemical. So drone went up 30, 34 foot swath. Then I came back and I had 32 foot route spacing which give me one foot over and one foot over on the next one. Does that make sense?
[00:37:55] Speaker B: Yes, this makes sense. But.
Well, it might be like, I'm not the one who can judge this proper application, but there might be a problem and there might be not overlaps is a bad stuff that is happening in the classical machinery application as well. Okay, so this is absolutely normal situation when we see overlaps, but we want to avoid them.
We don't want to have overlaps because this is a wasting of chemicals. They cost a lot of money and we don't want for them to be wasted. So our mission is to be experienced enough to see to showcase the farmer that on the specific altitude you have specific coverage. And you don't need to have these kind of overlaps not to burn the plants. So because this is unnecessary damage, if we are talking about the not pesticide stuff and you are not willing to kill all the plants on the field if this burns are leading to the loose in the harvest, this is a problem.
[00:38:51] Speaker A: Yeah, yeah.
[00:38:52] Speaker B: So we need to avoid it. So I would love to lower the altitude of drone flying or increase the step of the return.
Yeah. So this is the one. We had another. Other situation. We had a situation when we had one stripe and another bag and in between of them there was no coverage from one side. It was bad planning on the field. And another case that we had and we like again, due to the number of operations, it was often existing situation is when you had these kind of spaces though the input. And it was done because of the weather conditions or some kind of these kind of problems. So basically this is one of the reasons why you need to collect all the data on the beginning of operations about the wind, wind speed, wind direction, position of the.
Of the pilot and the what is actually happening during drone operation. You need to document everything because after things happen like that, you need to prevent them to appear in the future. The client has to be happy.
[00:39:56] Speaker A: Yes.
[00:39:57] Speaker B: And you are responsible for that.
So in every single situation, the result.
[00:40:02] Speaker A: This picture was for fungicide only. So the corn that is light, if I understand it correctly, the corn that is a lighter color would not have died as fast as the color or the drawer. The corn that is dark.
And so it would appear to me that the lighter corn had more product applied to it than the darker corn.
[00:40:22] Speaker B: So it is a chemical burn then. So it doesn't want it needed to be happened that way.
[00:40:27] Speaker A: Well, so fungicide is a fungus that grows and then kills the fungus or kills the fungus. But the chemical isn't burning the corn.
[00:40:36] Speaker B: If in large concentration it might.
And this is one of the cases so it might appear also because of the. And this is especially practical with fungicides. Sometimes some chemicals they need to be used with a large water volume. Volume. And fungicide is among this list. Not all them, all of them, but some part of them. So you need to use higher water application for the spraying of these cases. It was an argue because for us as well, because I'M the one who is given the idea that we can actually spray with one gallon per acre.
[00:41:15] Speaker A: Wow.
[00:41:15] Speaker B: Yep. With some, for example, desiccation is absolutely feasible and it is working.
[00:41:20] Speaker A: Wow.
[00:41:21] Speaker B: But in. And we've seen that and during the conference nowadays today here in the United States, there is a psychological barrier not spraying less than 2 gallons per acre.
So. But even 2 gallons per acre will my 2 gallons per acre in this situation with fungicide might be too low volume. This is why we need an academia approach and approach of the manufacturers of the chemicals. For example, Bayer or basf. They need to to make perfect labeling for these specific fungicides. How to work with drones to prevent situations like that. Because in the field we are just making job.
[00:41:55] Speaker A: Yeah.
[00:41:56] Speaker B: We are just making the task that was put in front of us. We cannot predict some such moments.
[00:42:02] Speaker A: So the reason I brought this up is because it doesn't make sense to me. I sprayed more fields for that farmer same day and none of that was on any of his other fields.
[00:42:12] Speaker B: Okay, but tell me please, there might be a lot of reasons.
[00:42:16] Speaker A: I think it was like hills and maybe moisture. There was more moisture there probably other.
[00:42:21] Speaker B: Chemicals were on this field at the same time. Is this the same chemical?
[00:42:25] Speaker A: Yeah.
[00:42:25] Speaker B: Okay.
[00:42:26] Speaker A: Yeah.
[00:42:26] Speaker B: So it's need to be checked all deeply so. And flight parameters, it is important to double check them because if the drone were too high in the air, it might be bringing overlaps.
[00:42:39] Speaker A: Huh. So on a T. Did you guys have T50s in Ukraine before?
[00:42:45] Speaker B: Now they appear like there are some few of them, but they appear it as the tool later.
[00:42:51] Speaker A: What XAG were you guys flying when at all?
[00:42:53] Speaker B: Our workhorse was XP 2020 and later it was a V40 drones. But the major part of our experience is coming from XP 2020.
[00:43:05] Speaker A: XP 2020 never even heard of it.
[00:43:07] Speaker B: Because it was never on this market.
XCG entered the United States market later and it is really cool drone. I love it so much. I even talked, guys, please like rebuild the factory who made this stuff because it is awesome. I love it so much. Bring it back.
[00:43:24] Speaker A: What did it look like or what was. What was so good about it?
[00:43:27] Speaker B: So it was a Ferrari in the air. It was a very flat drone with the 20 liters, 5 gallons, 5 gallons per acre, 5 gallons of the tank on it. It was flying with the speeds more than 13 meters per second over the fields. And it was competing with T30 that time from DJI. So basically we had cases.
Not T30, T20, T20 and XP 2020. We had cases when one operator with one XP 2020 drone had the same productivity during the work shift as three pilots using DJI T20.
[00:44:10] Speaker A: Wow.
[00:44:10] Speaker B: It was so effective. It was so fast. It was amazingly good.
[00:44:14] Speaker A: Why wouldn't they bring that to the. Why didn't they bring.
[00:44:19] Speaker B: Was a long time ago and that time Artur Chen from Picasso, they just asked us how to work with xcg.
Is it like they were considering entering the market? Right now we see them as really important players, but that time it was just the moment of the decision making.
[00:44:38] Speaker A: Okay, wow, that's so crazy, dude. All the information that you shared, like every time I stopped you and we started talking, I'm just like, you have so much information, so much wealth because you've already gone through it and you're telling me we're gonna go through the same growth and everything that Ukraine did. And you guys would be way ahead of us now if the war would have never happened because you didn't have the restrictions that some of the stuff we have here. And that's why it grew so fast.
[00:45:04] Speaker B: I believe we will be at the size of Brazil in terms of drone applications. And if in America or in Ukraine, we would be the size of Brazil.
[00:45:14] Speaker A: Okay. Do you know how many drones are there?
[00:45:16] Speaker B: Oh, much bigger than us.
I will not mention numbers because I'm afraid to be wrong, but I was really. My vision was 100,000.
[00:45:25] Speaker A: You think?
[00:45:25] Speaker B: No, no, no, no.
[00:45:26] Speaker A: Not 100,000.
[00:45:27] Speaker B: 10,000 more, I believe. I don't want to take a Stell because I wouldn't want to be running. However, my vision was to lead the markets. I didn't as a company in Ukraine. I didn't want to compete with other distributors and make some kind of prize for etc. We made everything possible to avoid that. We. Our target was to create an ecosystem, to create partnerships. Oh my God. Open the courses in universities, run obligatory courses for agronomists. Moving forward with base and giving the knowledge to the market. And our mission was to compete not with somebody in Ukraine. We wanted to compete with Mexico, with Brazil, with Argentina, you name it. We wanted to compete with Vietnam for equipment allocation daytime. And you probably remember that it was some kind of a deficiency of semiconductor after Covid era and nobody could ever get enough of batteries, enough of drones. Everything was in the pipeline of production and there was a really need for the equipment and you will not was not able to get it at that time. I was making really hard moves to get equipment, for example, that was supposed to be working in a Brazil. We wanted it and we Were succeeding in that competing with the market. Right now in the United States it is.
The market is growing so fast. So you cannot tell that somebody could be upfront you nowadays in this conference. I mean, see that dynamics of the market growth is so dramatical. It is terrific. It will outsplay outrace all possible markets in a couple of years. If the temp and the ambitions will be on the same level as we do see? And every single service company that is represented here on this market. It is crazy what is going on here in the United States. It is absolutely limited possibilities. And the volume of the market that doesn't exist anywhere else.
[00:47:26] Speaker A: Wow, that's so crazy. Why do you think Brazil is so far ahead or. Yeah, they'd have more drones than we have right now?
[00:47:33] Speaker B: Well, it is difficult, but I believe that one of the reasons is the possibility to do some stuff with less regulation. Regulation is the key.
Regulation isn't bad. We need to talk about that as well. Regulation is the way to keep the market safe. You don't need to be in a rush if there is cost of life or health on the value. You don't need to be in a rush if there is a possibility to invest in some other markets to see how it will perform. And only when the concept is proven to bring it to the territory of the United States as a proven concept to scale it up later. It is a possibility to use the full force of Americans to grow the market. When all the questions are answered and right now we are on this stage, we know how the technology works. Yeah. We predict how it will develop. We know at the moment service companies will start to buy more drones than the farmers, when the farmers will invest in their own fleets. And we know exactly a year when it will happen. We can predict how many people we need in the industry. We can predict how many technicians we need to prepare in universities.
[00:48:44] Speaker A: Okay, so you need. That's why Steve Lee is helping, I think is because we need college kids to start thinking about getting a degree in this what we're doing. Because like pilots, there's guys I can't say where they're at, but I'm getting them equipped. They have a quarter million acres, 250,000 acres of cotton that they want to spray because they'll save themselves $1.2 million every time they spray 100,000 acres if they can do it with drones. But they need a bunch of them. And so they need pilot to fly these drones.
[00:49:16] Speaker B: Yeah. And this is absolutely new way of pilots. You cannot count on the kids that were flying wedding videos yesterday. They are not ready to work. In agriculture business, the agribusiness is a heavy duty stuff. You need to be ready to dig deep in the dirt. You need to get up in the air at 2am in the morning. You need to get to work done and you don't have time for coffee breaks.
[00:49:39] Speaker A: Come on. Yeah. Like it's work.
[00:49:41] Speaker B: It is heavy work. Yeah, it's heavy. Like I don't believe everybody understands how important and how difficult agriculture is. But it is not about agriculture in the United States. It is about the industry itself. The nature of the agriculture industry is different. So we need new pilots, we need new generations of modern farmers to be ready to get back for hard work. It will be not with the classical machinery, it will be fancy with drones, but it is hard work.
[00:50:13] Speaker A: You got it. Yeah, I tell people that too. Like they think that it's just so easy. I went out and did 11,000 acres in 2014 days. I did that. But it was hard. Yeah. So hard workers. We definitely need that. That's cool. Well, anything else you'd want to add into this thing? It's so much information.
[00:50:31] Speaker B: People are going to be like, keep the industry rolling. This is an outstanding direction of work. This is an outstanding opportunity to place investments. If you are thinking about bringing your work, start to do something in agribusiness. This is a way and invest in drones. Your time, energy and money go there. Work.
[00:50:50] Speaker A: That's cool. Thank you so much. Pleasure. Appreciate it. That's cool.
