The Agtech Adoption Challenge

 The Agtech Adoption Challenge

Current macroeconomic conditions, consumer focus on sustainability, regulations, and changing business models could further drive farmers’ adoption of agtech products, if their concerns are addressed. This is the topic of a new research report by McKinsey and Company, that was published recently.

Read the full McKinsey & Company article here

Adoption Challenge

The article starts by stating: “Agriculture technology (agtech) has an adoption challenge. There are multiple barriers to scaling from an industry perspective—such as fragmentation, lack of standard data architecture, and cross-platform interoperability.”

There are many reasons why uptake of new technology is slow, including high inflation, climate change challenges, evolving consumer preferences, and unreliable supply chains. This hesitance of farmers to adopt agtech is despite an influx of capital and a long list of new available technological solutions to optimise processes and increase yields.

Europe and North America Lead Agtech Adoption

In some areas, agtech solutions are already driving the next level of farm productivity by reducing operational costs and enabling less resource-intensive growth. However, there are significant differences in the use of agtech solutions across geographies.

European and North American farmers lead global agtech adoption, with about 61 percent currently using or planning to adopt one agtech product in the next two years. Farmers in South America (50 percent) follow in agtech adoption, with differences in adoption observed between countries within each region. Agtech product adoption is lowest in Asia, with only about 9 percent of farmers using or planning to use at least one agtech product; adoption varies between countries in this region as well.

Looking at agtech submarkets, farm-management software has the highest adoption among farmers at 21 percent, followed closely by a 15 percent utilization of remote-sensing and precision agriculture hardware. Sustainability-related technology (such as software and hardware that measure carbon emissions and sequestration, and monitor and optimize irrigation systems), and automation and robotics—technologies that are still in their infancy—lag at about 5 percent adoption.

Smart farming using Agtech (image: jcomp on freepik)

Stimulate Farmer Buy-In

The agtech space offers immense opportunities to stimulate farmer buy-in, but more work lies ahead to drive adoption. The study identifies four key areas:

  1. Personalizing products and business models: The current adoption of agtech varies across diverse farm sizes and regions. Moreover, specialty- and row-crop farmers each have distinct requirements for agtech solutions. Agtech players now have the chance to further personalize products and business models, as well as offer more targeted solutions for small and medium farmers.
  2. Making the customer journey easier: Agtech companies could explore solutions to elevate their customer experience. Given differences in the needs as well as the average age of farmers globally, increased product testing that leverages user-experience design principles could help solve farmers’ pain points in a more personalized way.
  3. Renewing trust in data storage and sharing: Considering the hesitancy that farmers express about sharing data, agtech start-ups can build trust by honing their data strategy, streamlining data collection, and gathering only the information that is essential to deliver better products and solutions to farmers.
  4. Integrating solutions versus amassing point-based solutions: Agtech leaders can unlock more value by tapping into data from different sources—such as field-based sensors, satellites, farm equipment, and both public and for-sale private sources—and ensure that their technology can integrate with the large set of solutions already used by farmers.

Conclusion

Farmers are currently facing immense challenges: price increases, extreme weather events, shifting consumer behavior, and a changing regulatory environment. Agtech has an opportunity to play an even more central role—if there is a concerted focus on solving the persistent challenges of the past decade around ROI, cost, and data gathering. When done well, greater agtech adoption can lead to more inclusive and sustainable growth for farmers, and benefit conscious consumers and investors beyond the farm gate.

Space-Enabled Agtech

On Groundstation.Space we write about Agtech solutions in the context of satellite technology, which is an important contributor to precision agriculture (GNSS-based solutions) and land and yield monitoring (Earth Observation solutions). Agriculture is one of the biggest and most important space data application areas.

Read about space-based agriculture solutions, including funding opportunities, in our special agriculture section here.

Space for Agriculture

Remco Timmermans

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