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Digitalization in Agriculture to Drive the Growth of the Agriculture Equipment Market

   June 12, 2023

There is a growing trend of digitalization in agriculture. In agriculture, digital technologies are being increasingly used in various aspects, including crop management, livestock management, farm equipment management, and supply chain management.

One of the main drivers of this trend is the need for increased efficiency and productivity in agriculture. Digital technologies such as precision agriculture, which uses sensors, drones, and other tools to gather data on soil, weather, and crop growth, can help farmers make more informed decisions and optimize their yields.

Another factor contributing to the digitalization of agriculture is the growing demand for sustainable and transparent food production. Digital tools help farmers to monitor and reduce their use of resources such as water and fertilizers and provide consumers with more information about how their food is produced.

Digital technologies, including the IoT, data analytics, artificial intelligence, digitally delivered services, and apps, are changing agriculture and the food system. At different stages of the agri-food value chain, farm machinery automation allows fine-tuning of inputs and reduces the demand for manual labor; the remote satellite data and in-situ sensors can improve the accuracy and reduce the cost of monitoring crop growth and quality of land or water; and traceability technologies and digital logistics services offer the potential to streamline agri-food supply chains.

In September 2021, the Union Minister of Agriculture & Farmers Welfare launched the initiation of the Digital Agriculture Mission 2021–2025. The Digital Agriculture Mission 2021–2025 is focused on supporting and accelerating projects based on new technologies, like AI, blockchain, remote sensing, and GIS technology, and promoting drones and robots' usage in agriculture operations. For the same, the government of India has signed five memorandums of understanding (MoUs) with CISCO, Ninjacart (63Ideas Infolabs Private Limited (India)), Jio Platforms Limited (India), ITC Limited (India), and NCDEX e-Markets Limited (NeML) (India), to promote digital agriculture through their pilot projects.

As per National Oceanic and Atmosphere Administration (U.S.), since 1980, the U.S. economy has lost more than USD 291 billion due to droughts damage. As per a study by NASA, the changing rain patterns and increased amount of carbon dioxide may decrease the annual crop yields by 25% upto 2030. At present, agritech companies, such as Seabex (France) and Nordetect (Denmark), are focusing on navigating the effects of climate change, food insecurity, and labor shortages through strategic collaborations and investments. In 2021, the agtech sector raised around USD 10.5 billion in investment globally, and in 2025, the global agtech industry is expected to reach approximately USD 22.5 billion.

Overall, the trend of increasing digitalization in agriculture will likely continue as technology advances and the need for sustainable and efficient food production grows.

Increasing Need for Mechanization of Agricultural Operations

The demand for mechanization in agricultural operations has been steadily increasing in recent years, primarily driven by the rising global population and the consequent need to meet the growing demand for food. The global population is expected to reach around 9.8 billion by 2050 (Source: United Nations). Farmers are facing increasing pressure to produce more food to meet the demands of a growing global population, and mechanization has emerged as a crucial solution to increase productivity and efficiency in agricultural practices. Studies suggest that mechanization can lead to a 10–15% increase in food production, productivity, and cropping intensity by 5–20%.

Agricultural equipment has revolutionized farming and has made farming much less labor-intensive than it was in the past. Farmers can perform tasks faster, more efficiently, and with reduced physical effort using advanced agricultural equipment.

The acute labor shortage is a significant driver behind the increasing demand for farm mechanization. In recent years, the availability and affordability of agricultural labor have become major challenges due to the rapid growth of industrialization and urbanization. This scenario has made it increasingly difficult for farmers to find and hire agricultural workers to carry out essential farm tasks such as planting, harvesting, and tilling.

In emerging economies like China and India, farm workers are increasingly migrating from agriculture to other industries, further increasing the labor shortage in the agricultural sector. This shortage is particularly evident during labor-intensive operations that require a significant workforce. These factors drive the adoption of advanced agriculture equipment among farmers to reduce dependence on human labor and increase crop efficiency.

Mechanization also helps to improve the quality of crops by lowering the cost of production. For example, precision farming technologies help farmers to optimize the use of fertilizers, pesticides, and water, leading to healthier crops and higher yields. In addition, mechanization enables farmers to cover larger areas of land in a shorter time, leading to increased productivity, reduced labor costs, and improved profitability.

Overall, the need for mechanization in agriculture operations is likely to continue to increase as farmers look for ways to improve productivity, reduce labor costs, and cope with the challenges posed by a changing climate and growing demand for food. These factors are driving the growth of the global agriculture equipment market.

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