McKinsey Company recently published an article focusing on the challenges agriculture technology faces. Agriculture technology, or agtech, has recently seen a surge in investment. Still, its adoption has been slowed by several barriers, including fragmentation, lack of standard data architecture, and cross-platform interoperability. In addition, despite a high interest in innovation, farmers are often hesitant to adopt agtech due to high on-farm profitability, inflationary pressures, and evolving consumer preferences.
A global survey of 5,500 row- and specialty-crop farmers across four continents found that agtech adoption varies significantly by geography, with North America and Europe leading the charge while Asia lags. Farmers’ main concerns about agtech are high costs and unclear return on investment (ROI). According to the survey, the most widely adopted agtech solutions are farm-management software (21%) and remote-sensing and precision agriculture hardware (15%).
Despite the challenges, five key trends have emerged in the agtech space. First, farmers are becoming more open to innovation, especially as they seek to transition toward more sustainable food systems, which are increasingly enabled by precision agriculture. Second, regulation will likely play an increasingly important role in accelerating growth as governments and consumers demand greater transparency and accountability in the food supply chain.
Third, business models are evolving toward integrated solutions that provide end-to-end support for farmers, from seed to plate. Fourth, there is an opportunity to improve product personalization and build greater trust around data sharing, which will be crucial for farmers to maximize the benefits of agtech. Finally, most agtech startups are struggling to scale, with most deals happening in the seed and series A rounds and few companies receiving later-stage funding or going public.
Read the complete report here.