Agtech is the use of technological innovation in agriculture to improve production efficiency and sustainability. As the global population continues to grow amid an unprecedented climate crisis, there is an urgent need to increase the efficiency and sustainability of food production.
The co-founder of a Paraguay-based agribusiness consultancy gave us the view from Latin America, “Our region is in a privileged position in terms of agricultural resources but we still face challenges that require innovative solutions. Even if large farms account for most of the continent’s food production and export, Latin America has, more or less, 15 million smallholder farmers and improving the sophistication of their agricultural techniques has the potential to create USD 13 billion in additional value by 2030.”
“Our region is in a privileged position in terms of agricultural resources but we still face challenges that require innovative solutions.”
Agribusiness consultant, Paraguay
Digital tools are considered crucial for the future of the sector in terms of risk mitigation, financial efficiency, sustainability measures and food preservation. Thus, agtech services include digital advisory, digital financial services and procurement, agri e-commerce, and the use of deep tech such as artificial intelligence and big data, known as smart farming.
A Brazilian land owner confirmed the opportunity, “New production systems, automation, crop and animal genetics are the main innovations of interest. Data is important too, for instance, accurate data on livestock management and platforms to improve the efficiency of feeding, vaccinations, transportation and pasture costs. As such, we are seeing venture capital investors and large agribusinesses launching funds dedicated to these opportunities starting to invest in Latin American agtech start-ups.”
“As such, we are seeing venture capital investors and large agribusinesses launching funds dedicated to these opportunities starting to invest in Latin American agtech start-ups.”
Landowner and farmer, Brazil
Agricultural innovation will be crucial in Latin America as the region is consolidating as one of the main breadbaskets in the world. According to the Inter-American Development Bank (“IDB”), Latin America currently accounts for 13.6% of global agricultural exports, which is expected to increase to 25% by 2025, as shown in a recent study by the Food and Agriculture Organisation of the UN (“FAO”).
Nevertheless, the region is lagging behind Asia and Africa in the deployment of digital agricultural tools. At present, the main providers of agtech solutions are governments and NGOs while the number of users does not exceed 5,000. One of the main challenges in Latin America is to reach smallholder farmers who are looking for solutions to solve knowledge gaps, low productivity, extreme climate change impact, financial exclusion and poor access to markets. The IDB recently emphasised how smart farming tools have shown to increase production between 50% and 80% and cost reductions from 20% to 40%.
In Latin America, funds are looking for developed agricultural networks to help generate value in a region where the main challenge is moving smart farming solutions from their pilot phase to their commercial viability. The agribusiness consultant agreed, “We need networks, networks and networks. To see the Latin American agtech environment grow and provide significant digital agricultural support to smallholder farmers, public bodies, academic institutions, research institutions, agriculture promotion agencies, start-up incubators and private investors need to share knowledge to understand what the needs are and how to tackle them.”
In this context, AgTech Garage, a leading agritech innovation hub in Latin America, opened an agricultural innovation hub in Piracicaba, in the state of Sao Paulo in Brazil ,which currently hosts 40 agribusiness innovation companies, agricultural advisories and investment fund representatives. “BASF [the German chemical company] has a promising agriculture start-up accelerator in Brazil”, highlighted the consultant.