Monday July 17th, 2023

How to increase agricultural production and also transform the logic of the model as we know today towards a more sustainable and resilient one to climate change? The answer to that question is technology and innovation.

In a recent edition of the Brazilian Embassy in London’s AgriSustainability Matters newsletter, the CEO and co-founder of Agrosmart, Mariana Vasconcelos, predicted a prosperous scenario for agritechs in Brazil.

In the publication by the Brazilian Embassy in London, the CEO explained that Brazilian agro has long been a potency when it comes to science, technology and innovation — and in the future it will have even more opportunities to stand out internationally, as a climate solutions generator and exporter. Technology today plays a fundamental role in leveraging transparency and good practices based on science and data, creating a favorable environment for Brazilian climate and agrotechnology companies, which are capable of developing solutions for agribusiness.

Nature-based solutions (NbS or nature-based solutions) aim to solve environmental, social and economic problems through the protection, restoration and sustainable management of natural ecosystems. In Brazil it is possible to join agricultural production with NbS, by adopting practices such as low-carbon and regenerative agriculture. These approaches not only ensure sustainable growth with lower carbon emissions, but also contribute to increasing the carbon stock in the soil and protecting biodiversity.

With more than 25% of Latin America’s economy concentrated in agribusiness, this market offers great opportunities for local startups that develop solutions which integrate climate, agribusiness and NbS. Agricultural technologies play a crucial role in reducing greenhouse gas (GHG) emissions, with the potential to attract billions of dollars in investments by 2025. Brazil also has research centers, universities and innovation ecosystems that drive the sector’s transformation and promote sustainability.

Undeniable potential

According to the CEO, this market’s potential is enormous: the climate tech sector is expected to have a projected market valuation of US$147.5 billion by 2032, with a compound annual growth rate of 24.2% (2022 -2032). The expectation, therefore, is that new climate techs focused on accelerating this transition from productive systems to more efficient, sustainable and climate-resilient models will emerge in the upcoming years. This  includes Latin America, a region which despite the huge expansion of startups in recent years, has so far not been hit by this market.

The Brazilian innovation and entrepreneurship ecosystem has undergone a fast transformation in recent years, with initiatives from private companies, development agencies, investors and startups boosting the agricultural sector. Highlights include initiatives such as Vale do Agro, located in Piracicaba (SP), and Agro Valley, in Londrina (PR), in addition to renowned institutions, such as the Brazilian Agricultural Research Corporation (Embrapa).

This picture has led to a greater participation of agritechs in Brazilian agribusiness. According to Radar Agtech Brasil 2022, the country has 1703 agritechs, of which: 14.2% work in agricultural machinery and inputs; 41.4% with planting, handling, harvesting, among other activities; and 44.4% with storage and distribution.

According to Mariana, it is necessary to recognize that investments in agritechs still do not match the importance of agribusiness and the food sector in the Brazilian and Latin American economy – which in Brazil is equivalent to around 25% of the country’s GDP. However, she quotes that investors have shown growing interest in this sector, which tends to become an important player in the global ecosystem. Brazil, for example, ranked sixth and Colombia ranked 13th, in the ranking of the 15 countries that received the most investments in agritechs in 2021 – in 2020, only Colombia had entered the Top 15.

She ends by explaining that Latin America has exceptional advantages to absorb these investments. Brazil, in particular, has the largest tropical forest in the world (whose conservation and preservation are essential to fighting climate change), in addition to an extensive agricultural area and a high potential for the development of the bioeconomy and solutions based on nature.