Despite economic uncertainty, agtech adoption is up for farmers around the world, says McKinsey

“Farmers are willing to innovate, despite macro uncertainty,” says a new global survey of farmers from global consulting firm McKinsey. That’s good news for agtech adoption, as many farmers plan to try new products and practices over the next couple of years.

The survey of 5,500 farmers across nine countries found that 70% of farmers expect profits to remain stable or increase. High crop prices around the world are fueling this cautious optimism.

Other survey findings include:

Farmers are digitizing online purchasing

A preference for digital tools is strongest when farmers are repurchasing, says the survey. Roughly 50% of those surveyed already make digital purchases for at least one product. 

Other areas where online purchasing will grow include parts and equipment maintenance, hardware for precision agriculture and farm management software. 

Cash is still king . . . for now

For 60% of farmers surveyed, cash is still the main method of payment. However, digital payments are “emerging as an important trend,” according to McKinsey.

Interest rates, loan amounts and transactions costs are the biggest barriers to wider adoption. 

The proliferation of startups offering digital payments platforms for agriculture underscores this point. Many of these companies are trying to make digital finance more accessible for farmers around the world.

Agtech adoption differs geographically 

Agtech adoption various considerably from one region to the next. 

Western countries lead agtech adoption right now, with farm management software being the top technology. Precision ag hardware is also highly sought after.

Demand for biologicals for pest control and fertilizers is also growing, with “at least” 20% of farmers using or planning to use them. Here, too, adoption varies by region. The high cost of crop inputs is a major driver for this adoption as farmers seek alternative solutions to expensive chemical solutions. 

Farmers in South America show the most willingness to adopt ag technologies over the next two years. Growth of adoption will rise 8% to 9%, according to McKinsey. South America is also an “early adopter” when it comes to purchasing and repurchasing products online.

So far, Asia has the lowest adoption rates. China, however, has an unusually high adoption rate for digital payments; 66% of Chinese farmers use them versus the 30% average in the rest of the world.

Low adoption for sustainability practices

Though digitization and sustainability are often linked, adoption of the latter is still below 50%.

McKinsey notes that participation in carbon programs is also very low. Returns are currently not high enough for farmers. On top of that carbon programs are often complex. In the words of farmer Ben Palen, who’s also the director of sustainable consultancy at Ag Management Partners, the average farmer thinks carbon markets are smoke and mirrors and impractical.

McKinsey’s survey found that only 5% of growers currently involved in such initiatives globally. 

“Farmer-facing companies should consider ways to support the farmer with adopting holistic sustainable farming practices and help them with the required financing and tools to scale across all acres,” McKinsey partner Vasanth Ganesan said in a statement. “Further, sustainability programs need to be dramatically simplified to access for farms across regions, crop types and sizes. The sector’s focus on sustainability is currently being spearheaded by large farms, but support is needed for smaller farms, too.”

Outside of sustainability, increased price of inputs continues to be farmers’ biggest concern and risk. This will undoubtedly influence overall agtech adoption as well as the adoption of specific tools over the next few years.