The Latin American agtech startup ecosystem may have been slow to emerge compared to other regions in the world, after the US, Europe, India, and even parts of Asia. But over the last few years, increasing numbers of startups from the region have hit the market regionally and overseas. And investment levels are creeping up too — stay tuned for our inaugural Latin American agtech investment report coming out later this month!
But with a sizeable smallholder farming population — 14 million smallholder farmers are responsible for 50% of total production — how is this increased startup activity translating into digital agtech adoption across the region?
Ahead of the World AgriTech South America Summit in Sao Paulo later this month, AFN caught up with Almir Araújo, director of digital, new business model and commercial excellence, Latam, at ag-chemicals major BASF, to get his take.
Araújo, who will be speaking at the conference, has been working on the digital transformation of BASF’s Latam business for the past 10 years. This has involved its internal digitization strategy as well as the development of new digital tools for its farming clients, including farm management platform xarvio and its inputs and financing marketplace conecta. Araújo has also been involved in the company’s Latin American agtech startup accelerator program AgroStart.
How have you seen the adoption of agriculture technologies progress over the past 10 years?
I entered the agriculture sector of BASF in 2014 when we started the digital area for Latin America. So since then, we’ve been working on solutions, methodologies, capabilities, change management, cultural transformation and digital transformation in the organization and with our customers and our partners. And today, I can tell you that we have established in the market good services and products that farmers are using, but this took time.
[BASF] has evolved a lot in terms of its understanding of the importance of digitalization, from thinking in the beginning that it was a nice-to-have to now being a must-have for the organization. BASF included digitalization as part of its long-term strategy from 2019. So now we have innovation, sustainability, customer experience and digitalization as the key drivers of our strategy. This shows the importance of the topic for the agribusiness organization in BASF all around the world, right?
If you go to the farmers, it was the same at the beginning… And now more and more farmers are looking for digital farming solutions or some agtech or fintech solutions to increase their operational performance.
So I see that the adoption is moving but it is important to show the value and the benefit for the stakeholders — internal or external; you need to show the value and you need to show how it works. In agribusiness it takes at least one season; it’s not right on time. You need to mature, you need to try, you need to show the evidence, you need to show that it works, and you need to show that it brings value. If you do that, the adoption will happen, internally, with our executives with innovation problems, and externally, with farmers with solutions that help them to plant and grow better.
Do you think the technologies developed 10 years ago were too early in agriculture?
Technology, in the beginning, is not available for everyone and is not part of their current life’s reality. The technologies may have been very good but did not make sense. So let’s take ChatGPT as an example; it was not part of our lives and only a small group was using it. Now it works for everyone; everyone is using it for something.
In farming, variable rate application, for example, is not something new. It has been on farmers’ machinery for a long time with GPS precision farming solutions, and so on. But just now they are knowing how to use it because there are companies like BASF with xarvio Digital Farming Solutions that are providing “the how” to use this technology.
So we can deliver to farmers application maps and everything ready for them to put in the spray machinery to apply with more precision, only where it’s necessary. This technology was already available for several years, but now more and more, we are finding ways to make it easily used by farmers compared to previous years.
We have some studies that show the adoption curve of farmers depends on the size of the farmer, the region, and the crop. So we see, for example, people that grow in the Cerrado region or the Matto Grosso here in Brazil, they are huge groups. So they try a lot of technologies in parallel. But if you go to different farmers that do not have so much access, it is a different [and slower] adoption curve; it’s a matter of those farmers’ basic realities.
But in the end, what we learned was that it is not about the technology itself — it is not about having the best AI, the best IoT, the best data set; is all about showing to the farmer that they are optimizing [their operations], that they are having a cost-saving; that they are increasing their productivity. If they see this in practice, they’ll say, “I would love to use this service.”
What are some of the biggest barriers to agtech adoption in Latin America today?
The first one is the culture of testing new things and adopting new things. I don’t see in our sector a ready mindset that brings the idea of testing different things, or the understanding that it may involve testing 10 [different tools] to see what will fit and choose one at the end. In our sector of agribusiness, sometimes people wait for the best thing in the world, the safer solution. And it’s not like this, right? You need to experiment. For sure, this experimentation mindset is one thing.
The other thing is the lack of infrastructure. So Latin America has problems with connectivity and this sometimes brings challenges in terms of adoption.
The third topic, I think we need to evolve more and more our innovation ecosystem to bring more farmers and agriculture players to be part of this journey.
And lastly, but most importantly, are the models you are bringing into the field. If we have an amazing startup in our AgroStart program, we put it in front of farmers, and they will try to scale up. But if the business model is not in a format enabling farmers to see a benefit, they will struggle; the technology will not be adopted.
So for example, with xarvio, we created a model that we call outcome-based pricing. Based on the yield curve achieved on your farm, you pay for a service. So basically you have a simple cost for the service. But if you achieve 90% of the economy, this price can be higher, but it’s fair, because it’s a win-win model. So this business model brings optimization and is based on results. Some startups think that their services by themselves will solve everything but the business model behind them is very very important.
What are the biggest challenges in Latin American agriculture today and what keeps you up at night?
Our region is one of the biggest in the world by producers of food, right? So what keeps me up in the night is how we speed up the innovation in our sector to produce more food more sustainably and make this progress faster compared to what we have today. For sure there are a lot of challenges in our region that we cannot control, like weather and other external factors. But what we can control is the development of exponential technologies.
[We need to] put farmers on boards to understand how to use and value the technology. [We need to] mobilize people and mobilize organizations to think in this direction. This is something that makes me move on this mission of digitalization in our sector.
From venture capital funds to industry to channels to farmers; if we have this mindset that we have accountability and we have ownership to develop this digital marketing and make the best use of it, if we advance in this thought, in this growth mindset, not the fixed mindset but the growth mindset, I think that we will speed up our transformation. And by doing that, we will increase our productivity and become a global leader in food exports.
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