Soaring costs of farm inputs, including fertiliser, crop protection products and labour, are accelerating the adoption of agtech among US farmers, a new survey has found.
The research – carried out by global consultancy firm McKinsey & Company and titled ‘Voice of the US farmer in 2022: Innovating through uncertainty’ – looks at 1,300 US crop farmers.
The study found that 80% of those farmers now cite rising input costs as the biggest risk to profitability.
These pressures are driving the adoption of new products and technologies to “squeeze the most value from each acre”.
50% of the farmers surveyed said that they are planning to use new yield-increase products. Half of the larger farms surveyed (those over 5,000ac) said they were already using precision agriculture hardware, such as drones.
The increasing supply chain costs are also weakening loyalties to traditional farm supply sources in what was previously regarded as a conservative industry, with one-third of farms surveyed saying that brand loyalty is now a lower priority when selecting farm equipment.
Volatile costs and uncertainty are similarly transforming purchasing and selling strategies, with half of the larger farms now aiming to buy inputs earlier in the growing year, and the same proportion planning to sell more crops forward.
According to the research, high input costs are also spurring more sustainable innovation, with 30% of large farmers now planning to use ‘green’ products such as biofertilisers due to the lower cost of these products.
However, the survey also noted that, despite all this, there are still barriers to the adoption of agtech among the surveyed farmers.
Unclear returns on investment, and poor experiences with agtech among growers, continue to hinder farmers from scaling agtech.
When it comes to buying agtech products or services, of the farmers surveyed, 50% of them said that a lack of agtech customisation to their own circumstances, and adequate customer service, are the biggest barriers to online purchasing.
On foot of these survey results, McKinsey has suggested that suppliers of agtech should adopt more agile business models, such as rethinking how they engage with farmers; personalising products and services; and helping farmers monetise the adoption of sustainable practices.
