M ANAGING   O PEN-FIELD  P EAR   O RCHARDS  WITH  RFID/USN  S YSTEM  Youngduk Yun Department of  Management Science KAIST
M OTIVATION   OF THE  S TUDY <ul><li>To present RFID/USN based business models for open-field cultivation, which drew rela...
C ONTENTS <ul><li>Literature Review </li></ul><ul><li>One Year in the Pear Orchard </li></ul><ul><li>Difficulties in the T...
L ITERATURE  R EVIEW
Classification Studies E NVIRONMENTAL   M ONITORING Perkins et al.(2002) With Motorola Labs, developed neuRFon, which is u...
O NE  Y EAR   IN THE  T RADITIONAL   P EAR   O RCHARD <ul><li>The biggest jobs to grow   pears  throughout seasons </li></ul>
G ENERAL  R EQUIREMENTS   FOR THE  P EAR  G ROWTH
H OW  M AJOR  F ACTORS   A FFECT  O RCHARDS ’ W ORKS O 2 temperature CO 2 humidity level N 2 temperature temperature Moist...
P EARS ’ G ROWTH   P ROCESS  AND   M AJOR  W ORKS cold-damage during flowering/ Spring drought fruits perished during stor...
D IFFICULTIES   IN THE  O RCHARD
F ERMENTATION   OF  F ARMYARD  M ANURE <ul><li>On average, changing manure of animals into ‘fertilizer’ takes 5~10% of tot...
O PERATING  A NTI-FREEZING F ANS   AND  D RIP-WATERING HOSES <ul><li>Manual operations with daily weather forecast (usuall...
M AINTAINING   A DEQUATE   L EVEL   OF   N ITROGEN   AND   M OISTURE  Chemical  Properties Physical Properties Biological ...
M AINTAINING   A DEQUATE   L EVEL   OF   N ITROGEN   AND   M OISTURE  <ul><li>Chemical Factor </li></ul><ul><li>Low organi...
M ANAGING   W AREHOUSING PROCESS  OF   C OLD  C HAIN  S YSTEM Recommended Storage Environment for ‘Shingo’ Pears (RDA, 201...
M ANAGING   WAREHOUSING PROCESS  OF   C OLD  C HAIN  S YSTEM Hong & Cho (2006) Weight Loss and Decrease in Firmness are di...
F EASIBILITY   OF  USN A DOPTION
C ONCEPTUAL  N ETWORK  D ESIGNING Users Sys. manager Consultant Management Server RFID middleware Growth Mgt. server Appli...
C ONCEPTUAL  I LLUSTRATION G G G 802.15.4 802.15.4 802.15.4 Gateway Control Node Gateway Internet (BGN, BcN) office GT:  G...
P EAR  G ROWTH  M GT.  S YSTEM   WITH  RFID/USN * U SERS F UNCTIONS O THER  O RGANIZATION . Production and Circulation Mgt...
E XPECTED  B ENEFITS WITH   THE  RFID/USN S YSTEM
F ERMENTATION   OF  F ARMYARD  M ANURE <ul><li>Moisture level sensor; </li></ul><ul><li>Able to check moisture level at an...
O PERATING  A NTI-FREEZING  F ANS   AND  D RIP-WATERING  H OSES <ul><li>Temperature sensors and Humidity sensors; </li></u...
M ONITORING  H ARMFUL  I NSECTS* <ul><li>Pheromone Emitter, Network Camera </li></ul><ul><li>Attach at the top of small me...
FOR  S TOCKING  AND   D ELIVERING  P ROCESS <ul><li>RFID sensor/reader tech.  for in-processing and out-processing </li></...
C OSTS   AND  B ENEFITS
C OST   AND  B ENEFIT  I NDICATORS* *Adapted and Modified from Pisello(2004) and  Choi, Moon, Kim, Cho, & Park ( 2010) Cla...
IN POINT OF   QUANTITY   E STIMATE <ul><li>Labor Savings </li></ul><ul><ul><li>(time consumed for each work) x (avg. labor...
O VERVIEW   OF THE B ASE  O RCHARD  FOR  A SSUMPTION Image captured from  http://map.naver.com/   : PEARS Warehouse 錦江 ↑ 大...
[1] C OSTS <ul><li>Capital Cost </li></ul><ul><li>Development Cost </li></ul><ul><li>Maintenance Cost </li></ul><ul><ul><l...
[2] B ENEFITS Benefit flow             BENEFIT DRIVERS YEAR  0 1 2 3 4 5 Tangible Benefits             Labor Savings   $2,...
[3]  C ALCULATION   OF  E XPECTED  ROI ->  What if….. Pessimistic   Neutral   Optimistic   <ul><li>< Comparison with ot...
IN POINT OF  QUALITY   E STIMATE
I MPLICATIONS   AND  F URTHER   R EQUIREMENTS
R EMAINING  I SSUES
<ul><li>Strengths </li></ul><ul><li>Increasing needs for local, safe food </li></ul><ul><li>Well-developed IT technologies...
Q&A
A PPENDIX <ul><li>Equations to calculate cost and benefit </li></ul><ul><ul><li>Explanation of NPV, Payback, ROI </li></ul...
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Managing Open-Filed Orchards with USN System

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  • V ARIOUS A PPLICATION C ASES IN A GRICULTURE AND F OOD P RODUCTION
  • These diagram describes major processes that happen in the pear orchard. As you can see in the diagram, temperature, humidity level, oxygen, nitrogen and CO2 level are known to affect pears.
  • &lt; 작업 목록 &gt; 12 월 ~ 1 월 : 전정작업 2 월 ~ 3 월 초 : 퇴비 작업 및 가지 유인 , 꽃눈 정리 3 월 ~ 4 월 초 : 방제 4 월 중순 ~ 5 월 초 : 인공 수분 5 월 중순 ~ 말 : 적과 작업 6 월 중순 ~ 봉지 씌우기 : 6 월 중순 ~ 9 월 말 : 관수 , 배수 , 예초관리 ( 초생재배 하는 경우 ) 8 월 중순 ~ 말 : 조생종 수확 9 월 중순 ~ 말 : 중생종 수확 및 저장 ( 저장용 과실 ) 10 월 : 만생종 수확 및 저장 ( 저장용 과실 ) &lt;Risk from the Weather disasters) April: damages to the flowers due to frostbites. Summer: monsoon season -&gt; drainage, typhoon,
  • Organic manures are natural products used by farmers to provide food (plant nutrients) for the plants. There are a number of organic manures like farmyard manure, green manures, compost prepared from crop residues and other farm wastes, vermicompost, oil cakes, and biological wastes - animal bones, slaughter house refuse. Organic manures have low nutrient content and therefore need to be applied in larger quantities. For example, to get 25 kg of NPK, one will need 600 to 2000 kg of organic manure where as the same amount of NPK can be given by 50 kg of an NPK complex fertilizer.
  • Macronutrients are vital for plants and yet are often present in short supply. This is why most fertilizers aim to provide plants with these essential nutrients,  especially N, P and K. 
  • Based on The system consists of sensor networks for cold-warehouse, open-field orchard, and RFID systems for warehouse to track temperature change of each box
  • Communications between sensors are based on 802.15.4 zigbee technology And the farm office where server is located, is connected with sensor node in each area.
  • This system is expected to improve growth management, shipment, and distribution, And, in the future, it would be possible to connect this system with sales mgt and traceability, reaching to the final customers.
  • Installation of moisture level sensor and temperature sensor enables farmers Also, nitrogen sensor and soil moisture sensor
  • Attach temperature RFID tags on each pear containers, and install RFID reader in front of the entrance of low-temp. storage
  • Frame from Tom Pisello’s work in 2004 – “Return on Investment for Information Technology” Trying to focus on organization level in this table
  • Equations I’ve used to calculate each items, Detailed equations are in the appendix
  • Costs from neutral assumption
  • Benefit calculated based on the neutral assumption Discount rate used to get NPC and payback is from bank of korea, 3-year AA- corporate bond
  • 5-year ROI from the neutral assumption for this system were; And from the pessimistic approach, it was… Finally from the optimistic approach, it was The result showed quite low level of ROI than expected, because other pilot studies in Korea, ROI was
  • The biggest limitation results from the fact that the system should survive harsh conditions such as; While costs of IT are more or less easy to account for, additional benefits are often difficult to estimate. Because benefits depend heaviliy upon market conditions such as production systems and marketing channels, and in case of open filed cultivations, climate would be the biggest factor. Repeated experiments can normally not be conducted and therefore stochastic and systmatic efforts are not distinguishable – it is also one of the reasons why it ‘s difficult to calculated financial revenue for open-field cultivations!.
  • Although Korean agriculture still contains lots of weakness and faces threats from outside I believe that IT could take a role in increasing its competitiveness
  • Managing Open-Filed Orchards with USN System

    1. 1. M ANAGING O PEN-FIELD P EAR O RCHARDS WITH RFID/USN S YSTEM Youngduk Yun Department of Management Science KAIST
    2. 2. M OTIVATION OF THE S TUDY <ul><li>To present RFID/USN based business models for open-field cultivation, which drew relatively low attention from the existing pilot projects </li></ul><ul><li>To estimate financial feasibility of RFID/USN adoption for relatively small agri-businesses which is usually not capable of utilizing big information system </li></ul><ul><li>To congregate related existing studies on RFID/USN models for agriculture and food industry </li></ul><ul><li>Attempted to develop RFID/USN application modules for open-filed cultivation and presume ROI for their validity </li></ul>
    3. 3. C ONTENTS <ul><li>Literature Review </li></ul><ul><li>One Year in the Pear Orchard </li></ul><ul><li>Difficulties in the Traditional Orchards </li></ul><ul><li>Feasibility of USN Adoption </li></ul><ul><li>IT ROI Analysis </li></ul><ul><li>Implication and Further Requirements </li></ul>
    4. 4. L ITERATURE R EVIEW
    5. 5. Classification Studies E NVIRONMENTAL M ONITORING Perkins et al.(2002) With Motorola Labs, developed neuRFon, which is used to sense agri-culutural, environmental and process parameters Vivoni and Camilli(2003) A wireless prototype system to acquire, store, display and transmit real-time geo-referenced environmental data among multiple locations Pierce and Elliot (2008) A regional and on-farm sensor network that provide real-time monitoring applications, a weather monitoring and on-farm frost monitoring Hamrita and Hoffacker(2005) A lab prototype model for wireless measurement of soil temperature P RECISION A GRICULTURE Damas et al.(2001), Evans and Bergman(2003) Developed and tested a distributed, remotely controlled, automatic irrigation system in Spain and US Cugati et al.(2003), Developed an automated fertilizer applicator for tree crops suing Bluetooth network Jensen et al.(2000) Baggio(2005) With measurement of humidity and temp., tried to provide pest and disease information and weather forecast Flores(2003) Conducted a research in Mississippi, to provide various aerial information to farmers which enables precision agriculture through internet M ACHINE AND P ROCESS C ONTROL McKinion et al.(2003, 2004a,b) A WLAN-based data communication system to connect a farm station with machines, such as cotton pickers, spray equipment, variable-rate fertilized applications. Krallmann and Foelser(2002) A remote service system for agricultural machinery to achieve maximum availability and minimum break down time Heimerdinger(2000) Designed a wireless probe system to monitor content of wood during the drying process in real-time with self-powered radio transmitter F ACILITY A UTOMATION Serodio et al.(1998, 2001), A distributed data acquisition and control system for managing greenhouses with WLAN network Morais et al.(1996) A Wireless data acquisition network to collect outdoor and indoor climate data for greenhouses in Portugal Pessel and Denzer(2003) Cai et al(2001) Developed a portable, mobile instrument to measure temperature, relative humidity, noise, brightness and ammonia content within animal-feeding facilities C OLD C HAIN M ONITORING AND T RACEABILITY Qingshan et al.(2004), Ruiz-Garcia et al.(2005, 2007), Proposed and analyzed the use of wireless sensors in refrigerated vehicles Sahin et al.(2002) Accept RFID technology to structure traceability system on data collecting and product tracking Amador et al.(2008) Wentworth(2003) Conducted study on inexpensive and disposable RFID biosensor tags used on food products for history checking and contamination level tracking Craddock and Stansfield(2005) Proposed sensor fusion for the development of smart containers, gathering data from several sources in order to trigger the alarms
    6. 6. O NE Y EAR IN THE T RADITIONAL P EAR O RCHARD <ul><li>The biggest jobs to grow pears throughout seasons </li></ul>
    7. 7. G ENERAL R EQUIREMENTS FOR THE P EAR G ROWTH
    8. 8. H OW M AJOR F ACTORS A FFECT O RCHARDS ’ W ORKS O 2 temperature CO 2 humidity level N 2 temperature temperature Moisture level humidity level Moisture level O 2 P K+
    9. 9. P EARS ’ G ROWTH P ROCESS AND M AJOR W ORKS cold-damage during flowering/ Spring drought fruits perished during storage and delivery process heavy rain, fall drought, and damage from bugs Fail to manage O2, N2 level of soil
    10. 10. D IFFICULTIES IN THE O RCHARD
    11. 11. F ERMENTATION OF F ARMYARD M ANURE <ul><li>On average, changing manure of animals into ‘fertilizer’ takes 5~10% of total production cost (Park,1995; RDA, 2000) </li></ul><ul><li>Moisture level - checked with eyes and hands </li></ul><ul><li>Temperature - also checked manually or with thermometer </li></ul><ul><li>Failure in managing moisture level and temperature </li></ul><ul><li>Can’t get good fertilizers </li></ul><ul><li>Cause pollution from waste water </li></ul>Best Condition for Fermentation (in late winter) Initial C/N Ratio 25-40 Temperature Inside 55-75 ℃ Period (when in the temperature) when supplying airs > 3 days when accumulated > 15 days Moisture Level 65~70% Moisture Level More than 5 times
    12. 12. O PERATING A NTI-FREEZING F ANS AND D RIP-WATERING HOSES <ul><li>Manual operations with daily weather forecast (usually early in the morning) </li></ul><ul><li>Shingo, Won-Hwang: known to be very weak for cold-damage </li></ul><ul><li>In early spring, it is needed to operate fans and drip-watering hoses to prevent cold-damage from late frost. (20~30 days) </li></ul>Pear Blossom stages and freezing temperature <ul><li>inefficient utilization of labor, water & electricity, possibilities of ‘human errors’ </li></ul><ul><li>severely affect production amount </li></ul>Pears Blossom Stage Buds Exposed First White First Bloom Post Bloom Old-temp. 10% dies 90% dies -5 ℃ -6.7 ℃ -14.4 ℃ -2.2 ℃ -3.9 ℃ -7.2 ℃ -1.7 ℃ -2.8 ℃ -5 ℃ -1.1 ℃ -2.2 ℃ -4.4 ℃
    13. 13. M AINTAINING A DEQUATE L EVEL OF N ITROGEN AND M OISTURE Chemical Properties Physical Properties Biological Properties (Properties of Organic Matters) Soil Fertility Preservation of fertility Effectiveness of fertilizer Softness of Land
    14. 14. M AINTAINING A DEQUATE L EVEL OF N ITROGEN AND M OISTURE <ul><li>Chemical Factor </li></ul><ul><li>Low organic matter contents from decades years of farming </li></ul><ul><li>Excessive level of organic matters cause: loss of nitrogen, contamination of underground water, wind erosion </li></ul><ul><li>nitrogen , phosphorous, potassium </li></ul><ul><li>Excessive level of nitrogen may cause: </li></ul><ul><ul><li>increased number of succulent shoot (excessively grown branches) </li></ul></ul><ul><ul><li>increased level of pest and darkness of the fruit skin </li></ul></ul><ul><ul><li> lose its value as product </li></ul></ul><ul><ul><li>‘ mysterious damage’ in winter and ‘frost damage’ in the next spring </li></ul></ul><ul><li> need to manage nutrition level precisely as much as possible </li></ul><ul><li>Moisture Level </li></ul><ul><li>Excessive level of moisture in soil causes oxygen deficiency, which may result in damage of root </li></ul><ul><li>When moisture level of soil gets over 40%, growth rate of roots decline by 50%, and for new branches by 70% </li></ul>Requires considerate decision of fertilization based on soil condition
    15. 15. M ANAGING W AREHOUSING PROCESS OF C OLD C HAIN S YSTEM Recommended Storage Environment for ‘Shingo’ Pears (RDA, 2010) <ul><li>Changes in temperature for each containers cannot be traced after harvest: Shipment is being made without ‘best-by’ prospects and quality control. </li></ul><ul><li>All the documentations are done by humans – possibility of ‘human error’ exists </li></ul><ul><li>If the refrigerator or ventilation fan is broken, listed factors may go out of allowed range. </li></ul><ul><li>Pears are perished due to various injuries, which results in less revenue (frost damage, core-browning, mold) </li></ul>Temperature Relative Humidity Storage Period Freezing Temp. CO2 Level Limits O2 Level Limits 0℃ 85~90% 6 months -1.5 ~ 2.0℃ 2% (maximum) 2% (minimum)
    16. 16. M ANAGING WAREHOUSING PROCESS OF C OLD C HAIN S YSTEM Hong & Cho (2006) Weight Loss and Decrease in Firmness are directly linked to decrease in product value in market! Changes in weight loss rate depending on storage duration, in different level of RH Changes in firmness depending on relative humidity
    17. 17. F EASIBILITY OF USN A DOPTION
    18. 18. C ONCEPTUAL N ETWORK D ESIGNING Users Sys. manager Consultant Management Server RFID middleware Growth Mgt. server Application server Orchard Sensors Temperature, Humidity Sensors N 2 , P, K and O 2 Sensors Network Cam. Heat Sensors for pheromone traps Warehouse RFID Controller Gate Label Printer RFID Reader Temperature RFID logger Warehouse Sensors Humidity Sensors CO 2 Sensors Network Cam. RFID temperature Tag Control Node Gateway router router Control Node Gateway 808.15.4 ADSL router Internet (BGN, BcN) 808.15.4 ADSL
    19. 19. C ONCEPTUAL I LLUSTRATION G G G 802.15.4 802.15.4 802.15.4 Gateway Control Node Gateway Internet (BGN, BcN) office GT: Gateway TS: Temperature Sensor HS1: Humidity Sensor HS2: Heat Detector SS: Soil Moisture Sensor RS: Rain Gauge Sensor NS: Soil Nitrogen Sensor AS: O2/CO2 Sensor Ethernet Ethernet Control Node
    20. 20. P EAR G ROWTH M GT. S YSTEM WITH RFID/USN * U SERS F UNCTIONS O THER O RGANIZATION . Production and Circulation Mgt. Managing Orchard Facility Other Functions shipment distribution *Adapted and modified from Kim, Son, Kim & Kim(2009) Producer Manager Consultant S ERVICES mobile service kiosk internet growth mgt. APC Govt. Agency Tech. Consultant sales traceability Retail Store
    21. 21. E XPECTED B ENEFITS WITH THE RFID/USN S YSTEM
    22. 22. F ERMENTATION OF F ARMYARD M ANURE <ul><li>Moisture level sensor; </li></ul><ul><li>Able to check moisture level at anytime </li></ul><ul><li> sprinkle water automatically over manure as needed, saving water consumption </li></ul><ul><li>Temperature level sensor; </li></ul><ul><li>Able to check temperature level at anytime </li></ul><ul><li> able to know when fermentation end; help farmers plan their fertilizing work </li></ul>M AINTAINING A DEQUATE L EVEL OF N ITROGEN AND M OISTURE <ul><li>Nitrogen sensor and soil moisture sensor </li></ul><ul><li> estimate moisture level and nitrogen level in real-time </li></ul><ul><li>help make decision of when, where, and how much to use fertilizer </li></ul><ul><li>Saves labor cost, fertilization cost, and reduce environmental damage from wasteful usage of chemical materials </li></ul>
    23. 23. O PERATING A NTI-FREEZING F ANS AND D RIP-WATERING H OSES <ul><li>Temperature sensors and Humidity sensors; </li></ul><ul><li>automate anti-freezing operation; </li></ul><ul><li>don’t need to depend on uncertain forecasts and save electronic & labor power. </li></ul><ul><li>Connect water hoses for dripping with sensor networks; </li></ul><ul><li>able to save water sprayed </li></ul><ul><li>Moisture, Raining Sensors; </li></ul><ul><li>to check malfunction of water hoses. </li></ul>
    24. 24. M ONITORING H ARMFUL I NSECTS* <ul><li>Pheromone Emitter, Network Camera </li></ul><ul><li>Attach at the top of small metal cylinder, then attract pesticides around </li></ul><ul><li>Based on the images from network camera and information from heat sensors, figure out how many and what kind of pest breaks out. </li></ul><ul><li>Via mobile communication technology, information is transmitted to farmers and consultants in technical center with alert message </li></ul> let farmers use agrichemicals only when needed with the information of how much and what kinds should be used H Internet (BGN, BcN) Gateway Server 802.15.4 Ethernet Farmers Consulting Center CDMA, 3G
    25. 25. FOR S TOCKING AND D ELIVERING P ROCESS <ul><li>RFID sensor/reader tech. for in-processing and out-processing </li></ul><ul><li> Record kinds, warehousing date, grade, beginning sugar level, at the plastic box level </li></ul><ul><li> Automatically track temperature change during warehousing and delivering </li></ul>FOR O PERATING L OW-TEMPERATURE W AREHOUSE Temperature, Humidity, Power-outage & CO 2 Sensors  Automate ventilation fan, sprinklers, and network camera inside warehouse  Decrease response time in case of power-outage or malfunction which can reduce amount of ruined fruits
    26. 26. C OSTS AND B ENEFITS
    27. 27. C OST AND B ENEFIT I NDICATORS* *Adapted and Modified from Pisello(2004) and Choi, Moon, Kim, Cho, & Park ( 2010) Classification Organization Customers For Related Industries For Related Technologies Benefit <ul><li><INCREASE IN OUTPUT> </li></ul><ul><li>P RODUCTIVITY B ENEFITS </li></ul><ul><li>B USINESS B ENEFITS </li></ul>S ATISFACTION L OYALTY P ROMOTION <ul><li><IN SUPPLY CHAIN> </li></ul><ul><li>N EW B USINESS M ODELS </li></ul><ul><li>L EARN S UCCESS, F AILURE F ACTORS </li></ul><ul><li><IN SUPPORT CHAIN> </li></ul><ul><li>C ONSULTING </li></ul><ul><li>R&D P ARTNERS </li></ul><ul><li>A CCUMULATION OF T ECHNOLOGY </li></ul><ul><li>N EW B USINESS M ODELS </li></ul><ul><li><DECREASE IN INPUT> </li></ul><ul><li>L ABOR S AVINGS </li></ul><ul><li>C APITAL E XPENSE R EDUCTIONS </li></ul><ul><li>T IME S AVINGS </li></ul><ul><li>R AW M ATERIAL S AVINGS </li></ul><ul><li>L OWER S EARCH C OST </li></ul>Cost <ul><li>C APITAL C OST </li></ul><ul><li>D EVELOPMENT C OST </li></ul><ul><li>M AINTENANCE C OST </li></ul>
    28. 28. IN POINT OF QUANTITY E STIMATE <ul><li>Labor Savings </li></ul><ul><ul><li>(time consumed for each work) x (avg. labor cost for the work) </li></ul></ul><ul><ul><li>x (how many times the work should be done) x (expected improvement in % ) </li></ul></ul><ul><li>Capital Expense Reductions </li></ul><ul><ul><li>(unit cost for the capital) x (capital consumed per unit time/area) </li></ul></ul><ul><ul><li>x (total amount of time/area) x (expected improvement in %) </li></ul></ul><ul><li>Productivity Benefits </li></ul><ul><ul><li>Improved Work Efficiency </li></ul></ul><ul><ul><li>Productivity Loss Protection </li></ul></ul><ul><li>Business Benefits </li></ul><ul><ul><li>Business Improvements </li></ul></ul><ul><ul><li>Business Loss Reductions </li></ul></ul><ul><li>C OSTS </li></ul><ul><li>Capital Cost </li></ul><ul><ul><li>Net Costs for system, software, network, other facilities and commodities </li></ul></ul><ul><li>Development Cost </li></ul><ul><ul><li>Total labor cost in constructing new system </li></ul></ul><ul><li>Maintenance Cost </li></ul><ul><ul><li>Total labor cost for maintenance after development </li></ul></ul><ul><ul><li>Rent expense, Electronic Charges, and interest expense if adopted with loan </li></ul></ul>B ENEFITS
    29. 29. O VERVIEW OF THE B ASE O RCHARD FOR A SSUMPTION Image captured from http://map.naver.com/ : PEARS Warehouse 錦江 ↑ 大田 > < 公州 Fermentation facility
    30. 30. [1] C OSTS <ul><li>Capital Cost </li></ul><ul><li>Development Cost </li></ul><ul><li>Maintenance Cost </li></ul><ul><ul><li>Electric Charges </li></ul></ul><ul><ul><li>Depreciation Costs with 5-year Straight-line Depreciation Method for USN sensor devices </li></ul></ul>Items In Detail Cost (USD) Server   Growth Monitoring Database 3000   WEB 3000   USN USN Gateway, Power Supply 4680   Software 680   USN Sensors 30020 RFID RFID Tag and Reader 7950 Others Others 400 Total Expected Cost 49730 Cost flow Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Direct Costs             Development Labor Cost $15,000.00 $0.00 $0.00 $0.00 $0.00 $15,000.00 Temporary Indirect Costs             Capital Cost $48,000.00 $0.00 $0.00 $0.00 $0.00 $30,000.00 Continuous Indirect Costs             Maintenance Costs $0.00 $6,000.00 $6,000.00 $6,000.00 $6,000.00 $6,000.00 Electric Charges for System $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 Total $65,000.00 $8,000.00 $8,000.00 $8,000.00 $8,000.00 $53,000.00
    31. 31. [2] B ENEFITS Benefit flow             BENEFIT DRIVERS YEAR 0 1 2 3 4 5 Tangible Benefits             Labor Savings   $2,530.00 $2,530.00 $2,530.00 $2,530.00 $2,530.00 Capital Expense Reductions   $6,500.00 $6,500.00 $6,500.00 $6,500.00 $6,500.00 Productivity Benefits   $42,000.00 $44,800.00 $47,600.00 $47,600.00 $47,600.00 Intangible Benefits             Brand Competitiveness   $1,000.00 $6,000.00 $8,000.00 $9,000.00 $9,000.00 Total annual benefits   $52,030.00 $59,830.00 $64,630.00 $65,630.00 $65,630.00 Implementation filter 75% 80% 85% 85% 85% Total benefits realized $39,022.50 $47,864.00 $54,935.50 $55,785.50 $55,785.50 Return flow Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Annual benefit flow ($66,730.00) $31,022.50 $39,864.00 $46,935.50 $47,785.50 $2,785.50 Cumulative benefit flow ($66,730.00) ($35,707.50) $4,156.50 $51,092.00 $98,877.50 $101,663.00 Current discount rate Cost of capital 4.25% NPV (Discounted return flow) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Discounted costs $66,730.00 $7,673.86 $7,361.02 $7,060.93 $6,773.07 $43,042.31 Cumulative Discounted Costs $66,730.00 $74,403.86 $81,764.88 $88,825.81 $95,598.88 $138,641.19 Discounted benefits $0.00 $37,431.65 $44,040.97 $48,486.95 $47,229.91 $45,304.47 Cumulative Discounted Benefits $0.00 $37,431.65 $81,472.62 $129,959.58 $177,189.48 $222,493.95 Total discounted benefit flow ($66,730.00) $29,757.79 $36,679.95 $41,426.02 $40,456.83 $2,262.16 Total cumulative discounted benefit flow ($66,730.00) ($36,972.21) ($292.26) $41,133.77 $81,590.60 $83,852.76 NPV (Net present value) $83,852.76
    32. 32. [3] C ALCULATION OF E XPECTED ROI -> What if….. Pessimistic  Neutral  Optimistic  <ul><li>< Comparison with others > </li></ul><ul><li>Mushroom(2008) </li></ul><ul><li>5 year NPV: $3.8 billion USD </li></ul><ul><li>avg. 5-year ROI: 413% </li></ul><ul><li>Fish Farm(2008) </li></ul><ul><li>5-year NPV: $0.5 billion USD </li></ul><ul><li>avg. 5-year ROI: 409% </li></ul>Year 0 Year 1 Year 2 Year 3 Year 4 Year 5   43.8% 88.1% 124.3% 157.9% 138.0% ROI Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Return on investment   50.3% 99.6% 146.3% 185.3% 160.5% BEP (Breakeven Point) Payback [in years] 1.90 Discounted Payback [in years] 2.01 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5   50.8% 102.3% 150.9% 195.9% 171.7%
    33. 33. IN POINT OF QUALITY E STIMATE
    34. 34. I MPLICATIONS AND F URTHER R EQUIREMENTS
    35. 35. R EMAINING I SSUES
    36. 36. <ul><li>Strengths </li></ul><ul><li>Increasing needs for local, safe food </li></ul><ul><li>Well-developed IT technologies and R&D skills </li></ul><ul><li>Government’s will to invest in agriculture  …………………….?? </li></ul><ul><li>Weaknesses </li></ul><ul><li>Labor intensive, </li></ul><ul><li>Small scale - expensive production cost </li></ul><ul><li>Population – numbers and ages </li></ul><ul><li>Inefficient supply chain </li></ul><ul><li>Relatively low IT adoption level </li></ul><ul><li>Opportunities </li></ul><ul><li>Increasing Exports Opportunity </li></ul><ul><li>FTAs </li></ul><ul><li>The Korean Wave </li></ul>S W O T <ul><li>Threats </li></ul><ul><li>Consequent FTAs with </li></ul><ul><li>big agriculture countries </li></ul><ul><li>Global climate change </li></ul>A GRICULTURE OF K OREA
    37. 37. Q&A
    38. 38. A PPENDIX <ul><li>Equations to calculate cost and benefit </li></ul><ul><ul><li>Explanation of NPV, Payback, ROI </li></ul></ul><ul><ul><li>Descriptions of each cost and benefit items </li></ul></ul><ul><li>References </li></ul>

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