Digital transformation and agribusiness: trends and opportunities in Latin America and the Caribbean
According to estimates, accumulated growth in Latin America would be 14% for agricultural and fishing production in the next ten years. A productivity improvement, enabled mainly by the sector's digital transformation, explains this increase.
IDB Invest and NTT Data have conducted a research series to provide findings, insights, and recommendations on how new technologies are transforming different industries and how access to new tools is crucial to closing the digital gap in the region.
As part of that series, the study "How New Technologies Are Transforming Agribusiness in Latin America and the Caribbean" examines how the region, as a world leader in agricultural production and leading exporter of agricultural products, possesses the natural resources (arable land, drinking water, climate, and biodiversity) to continue evolving, thereby strengthening regional economies.
The digitalization of the value chain of these types of companies exemplifies the technological revolution that is changing the way food is grown, collected and distributed. Using sensors, drones, and Internet of Things (IoT) devices has become common practice to monitor crop growth, improve water management, and optimize production. Another example is the use of artificial intelligence and data analysis to make more informed decisions.
Automation is another key trend that is transforming agribusiness in the region. Robots and autonomous machinery are being deployed on farms to perform tasks such as planting, harvesting and sorting products. These capital investments are profitable in the long term, with an improvement in efficiency and productivity.
Sustainability is another crucial factor that is shaping the future of the sector. Consumers and international markets are demanding food produced in a more sustainable and environmentally friendly way. This leads to more responsible agricultural practices and the adoption of technologies that reduce pesticide use and carbon footprint.
For example, blockchain technology allows the digital transfer of product information through the chain, ensuring the traceability of their characteristics at any phase. On the other hand, biotechnology helps to produce crops with specific nutritional properties, giving the consumer healthier products.
All of the above shows how, in recent years, the sector has sought to reinvent itself through digital solutions that help them be more efficient, increase productivity, and reduce environmental impact. Consequently, companies are leveraging technologies to respond to the challenges of digital transformation.
The absence of talent and digital culture is one of the main barriers to implementing technology. Very few companies still have a Digital Transformation Plan with a holistic vision and a digital education process that allows workers to acquire the necessary knowledge to adopt new tools and practices to be more productive and dedicate themselves to higher-value tasks.
Due to the importance of this sector for economies and the most vulnerable, financing these projects is vital to ensure that companies transform digitally, increasing their productive capacity and favoring the region's development. In this sense, IDB Invest made a capital investment of 6 million dollars in ProducePay. This AgTech company offers financing solutions directly to producers within Latin America.
Other cases of innovation are the evolution of B2B (Business to Business) models towards B2C (Business to Consumer) models. After the pandemic, many businesses had to digitalize to continue their operations. Enabled by the increase in mobile penetration, the growth of e-commerce, and the arrival of digital payments, e-commerce platforms in the agricultural sector were born to sell and buy agricultural products digitally.
Digital transformation and new technological solutions represent a true catalyst for the agricultural sector in Latin America and the Caribbean, improving the competitiveness of companies and farmers. Digitalization drives economic growth, improves food security, and promotes sustainability, thus benefiting the entire region.
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