Latin America is on the verge of becoming a global agtech powerhouse enabled by digital agricultural solutions at a time when the need for sustainability in the space is at an all-time high.
Digital tools have the potential to help farmers in Latin America to expand and grow on par with their peers globally. With so much room to grow into — compared to nations with already optimized agricultural production systems like the US — the application of smart farm tech and digital analytics is projected to unlock $12.2 billion in additional value for the Latin American and the Caribbean agricultural sector by 2030. That’s $3.5 billion more than North America over the same time.
Not surprisingly, venture capital investors, large agricultural corporations and the farmers themselves (who are in some cases funding their own digital startups) are keenly interested in smart farm tech. This is generating trickle-down growth and potential to profoundly impact Latin American economies.
The global corporate agriculture community must take the time to understand the emerging Latin American digital ag marketplace, build the tools these farmers need and invest in creative solutions that the digital ag expansion promises.
Why is Digital Ag So Hot in Latin America?
Digital agriculture is taking Latin American — especially Brazilian and Argentine — farmers by storm because digital and tech are taking off in every sector in the region.
Federico Mayer, CEO of ClubAgTech — an agtech incubator based out of Argentina’s Cordoba region — estimates there are currently about 115,000 Argentine programmers. Their tech sector is looking to increase that to 500,000 jobs by 2030. Buenos Aires already boasts one of Latin America’s most highly educated workforces. Argentine tech unicorns Mercado Libre (worth $63 billion) and Globant (worth $1.3 billion) announced in September, 2020, that they are investing in scholarship programs looking to sponsor 10,000 new tech-focused students in Argentina. Brazil shouldn’t be counted out, however. Sao Paulo is experiencing a similar increase in digital innovations with $2.8 billion invested in Sao Paulo startups between 2019 and 2020.
LatAm Digital Agricultural Opportunities
Add into the Latin American digital revolution the southern cone’s rapidly growing agricultural sector (aided and abetted by climate change, nearly a third of the world’s renewable water supply is found in South America) and we are seeing a perfect storm for digital ag adoption. Latin American farmers are hungry to capitalize on their growth opportunities, sparking a faster rate of digital adoption than what we saw with early digital solutions offered to North American farmers.
Brazil and Argentina are already agricultural powerhouses in their own right — Brazil is fourth globally for agricultural commodity production. Argentina with several decades of growth in its agricultural sector, still ranks as one of the top global agricultural producers and number six in beef production (Brazil ranked 2nd). These regions also represent some of the largest potential land bases for agricultural expansion — something that will be critical as global populations grow. Brazil alone has an estimated 180 million acres of pasture land (not including rainforest lands) that could be converted to higher-value row crop production.
The demand for more food production plus the land and climate to do it has contributed to farm consolidation plus a remarkable modern-day “frontier” migration. There are thriving agricultural regions eked out from remote areas of western Brazil that didn’t exist a mere 20 to 30 years ago. Farmers moved to where land was accessible, even when they faced significant challenges like no running water or roads.
These farmers, big and small, need digital tools enabling strong roots for their growing operations.
Digital Ag Opportunities Create More Opportunities
The expansion of digital ag, in and of itself, is creating economic growth in Latin America.
As global “Big Ag” corporations invest in digital (and other) agricultural services in Latin America, they bring value to the region. The demand for tech-savvy workers to build Latin America’s digital ag tools is a catalyst for more growth.
Plus, when globally-based corporate agriculture companies work with Latin American farmers, they create more than just immediate job opportunities and tech penetration; the digital transformation of agribusiness in Latin America can be a critical turning point in the region’s agricultural contributions to the world, enabling and encouraging sustainability, increased research and development, and innovation. These areas require (and would attract) new competencies and skill-sets, securing employment growth and modernization well into the future. By providing solutions that support this transformation, international companies have the potential to stimulate agricultural growth in the region while elevating Latin America’s agricultural professionals and highlighting their role in the global economy.
We Won’t Get a Second Chance to Get it Right
We must be very thoughtful as we launch digital tools and tech innovations for our farming community. We cannot cut and paste solutions we developed for North America and expect them to work for Latin American farmers.
Latin American farmers live with an element of risk that — despite how risky farming seems in the US — is not comparable to our North American experience. Latin American farmers don’t have the infrastructure and deeply institutionalized programs (like crop insurance) to fall back on.
Things we take for granted in the US — like nationwide soil maps of all our farmland — do not exist in Latin America (though we are seeing more and more as a consequence of technology adoption). This means we must develop tools starting from a much different foundation, understanding farmers’ needs, learning from and alongside them in order to address their challenges proactively.
And we must move fast, at least if we want to be part of this growth. Already Latin American farmers are collaborating, investing in and creating their own partnerships to build the technology they desperately need.
For those of us that started working in digital agriculture because we were passionate about the ways it could help farmers, the Latin American market is both challenging and extremely rewarding. Digital ag will create the opportunities that will profoundly impact the lives of countless Latin American families, helping to foster development in one of our most critical sectors. That’s an incredible opportunity to be part of. Now, we just need to make sure to get it right.
By Nicolas Loria, Digital Commercial Leader, Brazil & Latin America, Granular