2.1 Solving the unit economics of tech adoption for smallholders Trends such as consumers’ preferences for healthier diets, increased smartphone ownership and high-speed and cheaper internet penetration, advances in AI capabilities, developments in genetic science and water- and soil-management technologies will all positively affect the scale- up of agritech services to between $46,000 and $60,000 million by 2030.27,28,29,30 While adoption may continue to grow in larger farms, its adoption by smallholders in emerging economies may remain challenging. Currently, only a quarter of US farmers use an internet-connected device to access data relating to farming, but the numbers are even lower in emerging economies.31 As reported by McKinsey and Company, 39% of farmers globally are currently using or planning to use at least one technology in the next two years.32 While 62% of European farmers have adopted technology, however, the figure for farmers in Asia is only 9%. One key reason for such low adoption is the high cost of technology, as cited by 47% of McKinsey’s respondents. A critical insight is farmers’ perception of the value of agritech services. In the same McKinsey article, 30% of farmers cited unclear return on investment (RoI) as one of the top three reasons for not adopting agritech. They also shared that their minimum expected RoI is 3:1. Farmers were not able to attribute any change in yield or quality to agritech alone as production is also affected by external factors such as weather. The key to scaling agritech will be to work out the unit economics for deploying and adopting agritech services for farmers and showcase empirical evidence about RoI at farm level. 30% of farmers cited unclear return on investment (RoI) as one of the top three reasons for not adopting agritech. Agritech: Shaping Agriculture in Emerging Economies, Today and Tomorrow 17

Agritech 2024