The United Nations has predicted that the global population will reach 9.7 billion by 2050, and with it, a greater demand for food. Agtech companies, along with big data and innovative startups, are working to meet this demand by developing new technologies to improve crop production and distribution, while improving sustainability and lowering costs.
The world will need to produce about 70% more food by 2050 to feed an estimated 9 billion people. (World Bank)
Agriculture generates 19%–29% of total greenhouse gas emissions. (World Bank)
The worldwide agtech market was valued at $18.12 billion in 2021. The market is expected to reach $43.37 billion by 2030 at a compound annual growth rate of 10.2%. (Precedence Research)
In recent years, the agtech sector has seen a surge in investment, with $5 billion in funding being allocated to 440 startups in 2021 alone, according to Crunchbase data. This represents a significant increase from the $3.3 billion invested in 422 deals in 2020. While investment did fall in 2022, along with the rest of the tech sector, the interest in agtech remains strong.
Although interest in agtech might appear sudden, it has actually been growing for some time, as several growth drivers have taken hold. For example, shifting consumer habits and needs, which have led to increased demand for sustainable and healthy food options, are now considered mainstream. Another factor is the growing variety of exit options for agtech companies, which has made investing in the sector more attractive to venture capitalists.
The impact of these factors on the agriculture industry has been significant. Technologies, such as GPS mapping and auto-steering systems, have helped farmers become more efficient in their operations, while innovations like drought-resistant crops have helped them cope with increasingly challenging weather conditions. Advancements in data analytics are also enabling farmers to better understand their crops and make more informed decisions about how and where to grow them.
Some of the most promising agtech trends include precision agriculture, robotics and automation, drones, and big data and analytics. Precision agriculture refers to the use of technologies and techniques to optimize crop production by taking into account specific factors such as soil type, moisture levels, and sunlight exposure. Robotics and automation are increasingly being used in agriculture to automate tasks, such as planting seeds and watering plants, while drones are being used for aerial imaging to track crop health and identify problem areas. Big data and analytics are enabling farmers to make better decisions about how to manage their crops and improve their overall production.
The use of big data in the agtech sector is particularly promising, as it allows farmers to make decisions based on clear, objective metrics rather than intuition or entries in the Farmer's Almanac. For example, we are seeing large end-users, such as McDonald's, teaming up with agriculture providers, such as Cargill and the Nature Conservancy, to develop sustainable regenerative practices. In addition, Microsoft and Land O'Lakes are creating a cloud service that combines Land O’Lakes historical and current production data with artificial intelligence and other data streams to suggest better management practices. This kind of partnership can have a significant impact, given that nearly half of the 349 million acres under crop production in the United States are in the Land O'Lakes network.
The ability to access and analyze data has expanded exponentially—along with the data—as companies with this skillset provide services to smaller entities. Agriculture networks that tap into these consultants and data-based companies are able to offer their members the same analytics as the much larger conglomerates and, thus, provide a much broader reach for data-driven decisions.
Overall, the agtech sector is experiencing a surge of investment as investors recognize the potential for new technologies to revolutionize the agriculture industry. With promising trends such as precision agriculture, robotics and automation, drones, and big data and analytics, the sector is poised for continued growth and innovation in the years to come.