Insight: AgTech & FoodTech Predictions for 2024

By Global AgInvesting

As we enter 2024, activity is expected to accelerate as companies look to raise capital in advance of the upcoming presidential election, writes Adam Bergman at Global AgInvesting. Although the capital markets outlook will remain gloomy for most agtech companies in 2024, there is optimism for those companies that can generate commercial revenue, achieve positive unit economics, and inch closer to EBITDA.

Additionally, the megatrends underpinning the need for innovation throughout the food and agriculture sector, including: increasing food insecurity; the need to develop a more sustainable food system; and consumer focus on health and wellness, have only become more pressing over the past couple of years. This will keep a few areas in the spotlight this coming year: advanced irrigation, ag biotech; alternative proteins; automation and robotics; digital agriculture; and indoor farming.

Water was a prominent issue at COP28, including being the subject of a symposium co-hosted by the UN World Food Programme and Citi on the nexus of food, water, and climate change. Farmers are being forced to implement more efficient water irrigation technologies given the decrease in freshwater availability, prices rising, and regulators becoming more active. However, the primary constraints to mass adoption are that water remains highly subsidized in many parts of the world, the high cost of drip and other advanced irrigation technologies, and financing being a challenge for smallholder farmers globally. As water resources decline and costs rise, pressure will increase throughout the food and agriculture supply chain, including on lenders and insurance providers to provide upfront financing so that farmers can implement more efficient irrigation technologies.

Another issue for the food and agriculture sector is labor availability. Automation and robotics remains the most viable solution being introduced on farms, especially with permanent and specialty crops, which remain more labor intensive. In addition to automation and robotics, there is a growing demand for farm electric vehicles (EVs) which, when coupled with a growing incentive for supporting energy transition in different countries, implies that electrification on the farm is expected to accelerate.