The world’s population is estimated to swell up to 9.1 billion by 2050. This is expected to push the demand for food production by 70%. But global agriculture production is estimated to only increase by an annual rate of 1.5% – falling short by large measures. What complicates this problem further is the need for 40% more water and 20% more arable land by 2030 to cope up with this increased food demand.
This seems an impossible feat, considering the multiple factors at play in decelerating overall food production. These are climate change; geopolitical conflicts; pests and emerging infectious diseases; disrupted supply-chains; and lowered agricultural output due to outdated practices.
This is where agritech comes in by providing effective and innovative ways to overcome these challenges. Agritech can simply be summed up as an ecosystem of agribusinesses and technologies converging and complementing each other to improve yield, overall efficiency and profitability.
Apart from using technologies to make agriculture efficient, agritech ensures best practices and sustainability around food systems. Addressing this is the upcoming UN Food Systems Summit 2021, a virtual event, scheduled for 23 September 2021. The event will bring together “thousands of youth, food producers, indigenous peoples, civil society, researchers, private sector and the UN system – to bring about tangible, positive changes to the world’s food systems.”
The market landscape
The global agritech market was valued at $17,442.7 million in 2019, and is projected to reach $41,172.5 million by 2027 – growing at a CAGR of 12.1% between 2020 to 2027. In terms of regions, North America leads the agritech market with 38.59% of the global revenue share, followed by Asia-Pacific with 29.68% and the European region.
Meanwhile in terms of investments, the agritech sector was expected to register a total investment of $30.5 billion with an estimated 3,093 overall deals in 2020 – growing by 34.5% over 2019. The largest investment of a whopping $1.6 billion was secured by Lineage Logistics, a cold chain tech company. The regulatory environment to govern the agritech sector is still in its infancy in most parts of the world. But we are seeing countries taking active steps in developing frameworks that recognises, supports and regulates the implementation of emerging technologies in agriculture.
We are witnessing innovative approaches in this space such as the use of robots to harvest, pick, fertilise and irrigate farm lands; while drones are being used to identify and monitor the health of crops. Exhibit 1 clearly depicts the various sub-categories of the agritech industry today.
Exhibit 1: AgriFoodTech category definitions
Surge amid the pandemic
The pandemic provided a fillip in driving tech adoption among agribusinesses. Take the case of virtual call centres (VCCs) that were set up in Bangladesh to help local farmers, connecting them with vendors and buyers to address the disruption in food supply chains amid the pandemic. By August 2020, such VCCs had benefitted about 30,000 small-scale farmers of which 46% were women.
Another evidence of this growing shift can be gauged by the increase in deal activities among the various sub-categories of agritech. Restaurant marketplaces, which are online tech platforms used for food delivery, occupied the largest share of the pie with 1,356 deals in 2020, growing from 1,071 deals in 2019. This was followed by the innovative food sub-sector, growing to 362 deals from 226 in the same period (Exhibit 2).
Exhibit 2: Category deal activity 2019 vs 2020
The bulk of the agribusinesses comprise small-scale farmers who have budget constraints in implementing digital technologies, which is further aggravated by an unclear picture of what they can gain (ROI) from implementing such technologies.
What is needed is a better understanding and awareness among agribusinesses on how agritech can help cut costs and improve their overall profitability by implementing digital technologies in their day-to-day farming operations.
But this alone cannot suffice, it should be coupled with government policies that incentivise small-scale farmers who plan to adopt such technologies. There is a lack of collaborative approach in the agriculture sector. Most approaches are in silos or not integrated to the entire value chain. An integrated approach is required, bringing together governments, investors, agribusiness leaders, researchers and farmers to effectively impact the adoption of emerging technologies in the agriculture sector.
This will result in greater adoption of technology across the agriculture sector, resulting in growth and wider adoption of agritech and subsequently making such technologies affordable for all agribusinesses.
Climate extremes and changing consumer behaviour are having profound effects on the agriculture industry. Traditional farming methods cannot cope with these changes. And agritech stands to play a key role in saving this dwindling sector – becoming an essential tool in the fight for global food security.
A typical agriculture value chain comprises various stages (Exhibit 3). And agritech has much to offer in each of these stages, bringing better value and output for agribusinesses.
Exhibit 3: Agriculture value chain
Farm inputs can be better planned using soil and crop health parameters, helping farmers make informed decisions to use better quality and quantity of inputs, resulting in higher resource utilisation. In terms of farming, cultivation and harvesting, AI-based crop monitoring, smart irrigation systems and automated harvesting and picking machines can help optimise the entire process.
Meanwhile, controlled atmosphere storages will help ensure prolonged storage life post production. A mix of mobile apps, cloud computing and IoT can help with real-time updates on the distribution and transportation of crops. In terms of retail, e-commerce platforms have unlocked a plethora of market opportunities for agribusinesses to leverage on. Lastly, blockchain-based traceability solutions can help consumers track the source of food on their plates, while warning them of outdated and counterfeit products.
Future of agritech
The possibilities of what can be gained from agritech is immense. The adoption of agritech is imperative now, considering the imminent danger of climate change along with the growing number of mouths to feed. Stakeholders need to start looking at themselves as more of a tech company that is into agriculture and not vice versa. Budget constraints can be addressed by starting small and scaling gradually. Agribusinesses need to be open to the idea of collaborating with the right tech partners in learning and evolving from these partnerships.
The increased adoption of technology in agriculture will further boost the entire agritech ecosystem driving increased investments, innovation and collaboration. These changes need to happen now, to ensure a robust, resilient and sustainable food system world over.