Companies that combine technology and financial services have seen significant market growth. Now, investors and entrepreneurs are observing the emergence of a new market: agricultural technology. It can also be called agrotechnology, but it is usually abbreviated as agritech, AgriTech, or agrotech.

Companies in this field combine technology and agriculture to improve agribusiness services, reduce costs, and increase production. Agrotech activities relate, for example, to crop management. Others focus on using intelligent software analysis to predict pests and diseases or on comprehensive 4.0 agriculture concepts.

Brazil plays an important role in this scenario. Agriculture is one of the country’s most important economic sectors due to its extensive land area, abundant sunlight, and natural resources. As stated by Statista, “agricultural production accounts for approximately four percent of the country’s annual gross domestic product value.”

Furthermore, about ten percent of Brazil’s workforce is employed in the agricultural sector. According to the latest analysis by the Brazilian Center for Advanced Studies in Applied Economics (Cepea), the agribusiness GDP grew by 4.62% from January to May 2020 compared to the same period the previous year. This equates to an increase of R$ 76 billion, showing the sector’s continued expansion. By comparison, from January to December 2019, the sector registered growth of “only” 3.81%.

Which Business Areas Are Most Promising for Agrotech Startups in Brazil

The number of agrotech companies is growing steadily. Almir Araujo Silva has been following the sector for several years. He is the Digital Transformation and Commercial Excellence Leader for Latin America at BASF. The international company is always looking for innovative solutions, which is why it founded the Agrostart program to accelerate promising agrotech startups.

In Silva’s opinion, there are many areas in Brazil that still require small or even major improvements. The following fields are the most promising, the expert said in a previous interview with Universo Agro:

• Information technology solutions related to precision agriculture, traceability, crop and business management;
• Process automation.

According to Goldman Sachs Global Investment Research, by 2050, technologies related to precision agriculture are expected to increase global agricultural productivity by 70%, adding R$ 240 billion to the agrotechnology market.

As Araujo states, the Brazilian agribusiness offers a great opportunity for startups, as they profit from a natural innovation advantage over large companies. “In multinational companies, the development and approval process is slower, precisely due to the size of the corporations and the entire process inherent to companies of this scale.” This is why BASF offers a co-creation model for agrotech startups to jointly develop new digital solutions.

Brazilian Agrotech Report Mapped Over 1,000 Startups

In 2019, different market players conducted a comprehensive market study to map agrotech startups in Brazil. The Radar Agtech 2019 report listed a total of 1,125 companies, divided into three categories: before the farm (197 companies), on the farm (398), and after the farm (530).

A surprise, not only for researchers, was the concentration of agrotech startups in the city of São Paulo. The city is home to 262 agrotech startups, 23% of the national total. The second-ranked city is Piracicaba, a city in São Paulo’s countryside recognized as an important innovation hub in agribusiness.

One of the partners involved in the study is the early-stage fund SP Ventures. According to its founding partner Francisco Jardim, “the main goal is to join forces to help develop the sector and boost businesses with innovative technologies that have high impact and growth potential.” But he also believes the agrotech sector needs more venture capital contributions. In 2013, he said, venture capital investments totaled only $30 million. In 2018, the amount rose to $80 million. This shows consistent growth but is still far below that of other sectors.

According to the “100 Startups to Watch” list of 2020, there are eight of the most interesting Brazilian agrotech startups. The list mentions Tbit Tecnologia, Terramagna, Solubio, Safe Trace, Pink Farms, Jetbov, Grão Direto, and Agrotools. Additionally, in the opinion of Francisco Jardim from SP Ventures, the first Brazilian agrotech to achieve unicorn status—companies with investments above $1 billion—could be Aegro.

Brazilian Government Plans to Support Sustainability Initiatives

Companies investing in modern and sustainable technologies can also count on financial support from the Brazilian government. The Ministry of Agriculture, Livestock, and Supply (Mapa) launched a new investment plan for sustainable agriculture in June of this year. The main idea is to help boost the green bond market in Brazil. Additionally, Mapa wants to provide greater understanding and visibility about the scenario of green investment opportunities in Brazilian agribusiness.

In an official statement, the Brazilian Minister of Agriculture, Livestock, and Supply, Tereza Cristina, emphasized that the plan is linked to the signing of a protocol between Mapa and the Climate Bonds Initiative (CBI) in November 2019 in New York. “We want to be leaders in this new trend. Therefore, it is important to strengthen this green financial market in Brazil, committed to sustainability,” she said.