Key Takeaways
➡️ European farmers are cautious about future profitability, citing weather risks and high input costs.
➡️ Sustainable practices are widely adopted, but participation in formal programs remains low.
➡️ Adoption of biologicals varies by crop type, economic factors, and regulatory frameworks.
➡️ AgTech adoption lags behind the U.S. and Brazil due to high costs and smaller farm sizes.
➡️ Digital purchasing is gradually increasing, though traditional buying channels still dominate.
European Farmer Say Profitability Concerns Hold Back Investment
A recent survey of 600 farmers in France, Germany, and the Netherlands reveals that while many European farmers are integrating sustainable practices, they remain hesitant to invest in AgTech and innovation due to concerns about future profitability. Conducted as part of McKinsey’s Global Farmer Insights Survey of 4,400 farmers worldwide, the findings indicate that 45% of European farmers anticipate declining profits in the next two years, primarily due to volatile input prices, unpredictable weather events, and market instability.
Specialty crop growers expressed particular concern over climate-related risks, with many reluctant to make new investments. By comparison, 57% of U.S. farmers surveyed intend to invest in yield-enhancing products, while only 31% of European farmers plan to do the same.
Sustainable Practices Widely Used, But Formal Programs Lacking
Despite economic concerns, European farmers are actively implementing sustainable farming techniques. According to the survey, 98% of respondents have adopted at least one sustainable practice, with crop rotation (71%) and reduced/no-till methods (56%) being the most common. Variable-rate fertilization is also widely used, covering 83% of total farmland among the farmers surveyed.
However, participation in formal sustainability programs remains low. Soil health initiatives have the highest participation rate at 34%, while carbon programs lag at only 9%. Farmers cite limited availability and uncertain returns as key barriers. The study also found that 66% of farmers would participate in carbon programs if provided with incentive payments averaging €32 per hectare.
Biologicals Adoption Varies by Crop and Economics
The use of biologicals—including biocontrol agents, biostimulants, and biofertilizers—differs significantly based on crop type and regional regulations. While 38% of specialty crop farmers use biological inputs, only 22% of row crop farmers have adopted them. Cost savings and yield benefits are the primary incentives for adoption, though regulatory support also plays a role in regional differences.
Europe Trails U.S. and Brazil in AgTech Adoption
The survey highlights a significant gap in AgTech adoption between European farmers and their counterparts in the United States and Brazil. While 74% of U.S. farmers and 53% of Brazilian farmers use precision agriculture technologies, only 46% of European farmers have adopted at least one such technology.
Smaller farm sizes in Europe—averaging 180 hectares compared to 1,300 hectares in Brazil and 14,500 hectares in the U.S.—contribute to this disparity. High implementation costs and uncertain returns further deter investment, with nearly half of respondents citing these as major barriers. Larger farms are more likely to adopt advanced technologies, whereas smaller farms tend to favor software-based management solutions.
Digital Purchasing on the Rise
While traditional buying methods remain dominant, the survey shows a gradual shift toward digital purchasing. Currently, 26% of European farmers prefer online channels for input purchases, up from 17% in 2022. However, only 5% of farmers sell outputs online, with cooperatives and traders remaining the preferred sales channels. Equipment replacement parts are the most commonly purchased products online, with 30% of farmers opting for digital procurement.
Industry Players Need to Offer High-Impact, Cost-Effective Solutions
With European farmers expressing economic caution and reluctance to invest in new technologies, industry stakeholders must focus on providing high-impact, financially feasible solutions. Strategies such as omnichannel engagement, new risk management tools, and innovative input products could help address these challenges.
Additionally, further professionalization and monetization of sustainability practices could create new revenue opportunities for farmers while addressing environmental concerns. As European agriculture continues to evolve amid economic and climatic uncertainties, industry players have a critical role in supporting farmers through these transitions.
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