The concerns and pressure on the agriculture industry, factored by the increasing demand for global food production, prompt the farmers to enhance farm profitability despite slowing yield trends in several staple crops. As advancements in technologies across end-user industries lead to an efficient world, the agriculture industry too is gradually incorporating smart technologies on farms for profitable farming. With the introduction of information and communication technologies and advancements therein in the past decade, the agriculture industry has witnessed a revolution. Professionals and experts of the industry across the world are comparing this revolution with the revolution in the previous century when new farm equipment and machinery, pesticides, fertilizers, and high-yield crop breeds led to dynamic growth in crop production around the globe.
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As agriculture becomes a lucrative high-technology industry, professionals with new-age skill sets, companies, and investing bodies are being drawn in rapidly. The development in smart agriculture technologies has not only led to advancements in the production capabilities of farmers but has also introduced transformative business models in the industry.
As the entire agriculture industry incorporates and experiences the growth of these agriculture technologies into the farming cycle, it also faces the challenges associated with its adoption. One of the major restraining factors associated with the adoption is the large capital investments required for its acquisition and operation. Most of the farming communities across the world do not have a strong financial background to execute significant capital formation. Since prices for technologically advanced farm machinery are comparatively higher than that of conventional farm equipment, there is a huge gap in the availability of agriculture technology equipment and its adoption. Moreover, due to dependence on favorable seasons, a farmer is apprehensive of purchasing agriculture technology equipment with upfront costs. Consequently, there is market pressure on stakeholders of the agriculture technology industry to consider and incorporate alternate payment and business models to promote the incorporation of these technologies in today’s subscription-based economy.
High growth in the market is expected to be driven by the growing need to adopt agriculture technologies across the industry, conversion of capital expenditure into operational expenditure for customers, and greater customer retention for service providers. The added benefits of lower costs, scalability, integration, and accessibility associated with ATaaS are also expected to be responsible for the reported growth of the business model. Agriculture is the source of livelihood and sustenance of the economy in several regions of the world.
Hence, the need to adopt advanced technologies in the agriculture industry has driven favorable initiatives, policies, and support shown by governments in countries such as the U.S., Canada, the U.K., Germany, France, Australia, India, and China. In emerging countries, the growth of the market is expected to be driven by rising awareness among governments and manufacturers-turned-service providers about the need to elevate farm produce while evaluating the farm expenditure of their growers. Furthermore, rising concerns over global food security and sustainability have led to extensive investments by governments across the world.
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Agriculture technology companies comprise a combination of equipment manufacturers and software providers in the industry. With the introduction of agriculture technology-as-a-service, these companies have respectively adopted the service business model completely or partially, leading to two service types, i.e., equipment-as-a-service (EaaS) and software-as-a-service (SaaS).
The benefits of affordable pricing models, integration, scalability, and accessibility associated with SaaS are the major reasons behind the reported growth of this service type. Equipment-as-a-service (EaaS) has not been adopted as widely as SaaS since the existing systems and equipment have not been able to precisely predict the equipment failures leading to frequent customer dissatisfaction. The introduction of machine intelligence and Internet-of-Things (IoTs) is expected to improve predictive maintenance and boost growth for EaaS service types.
