RIO DE JANEIRO, BRAZIL – Feed the world. These three words are key to big business and solving some of the world’s greatest challenges: hunger.
Global agricultural production must increase in the coming years to prevent hunger from advancing. That is common knowledge. Along with technology, dozens of Brazilian agribusiness-related startups have plunged into research and achieved significant progress for the sector.
With an eye on this promising market, international investors have been contributing funds, albeit still limited, to agritech startups. Investing in Brazilian agribusiness is like giving vitamins to a new future “unicorn”, as the startups are called if they quickly become worth more than one billion dollars.
Given these revenue prospects, some Brazilian entrepreneurs are investing in Cyklo Aceleradora de Projetos e Startups Agritech. The facility is located in central Brazil, on a border between four states. It is one of the flattest areas, if not the largest, one of the world’s largest and agriculturally viable.
The aerial view shows us a true sea, totally flat, but rather than salt water, we see food wealth sprouting. The region holds the title of the world’s largest grain producer in terms of production/hectare ratio.
Some of the startups are attentive to new technologies. One of them, accelerated by Cyklo, has successfully developed a technology where CO2 significantly increases the plant size, with no damage to health. Another startup has developed an organic fertilizer, which preserves the same nutritional properties, and can be applied on a large scale.
In the current “batch”, Cyklo is accelerating ten startups, some with the potential to challenge Google Maps, for instance. Such is the case of technology that maps farms. To get an idea, one of the farms in the region has an internal dirt road over 200 kilometers (125 miles) long. In fact, Google Maps is unable to lead us to the farmhouse. Meanwhile, the local startup has developed a system, which not only leads us to the farmhouse, but also maps all local road references.
International investments still scarce
Startups suffer from a lack of funds. The result is the consequence of the instability of the Brazilian economy. However, some international investors are starting to turn their gaze to this wealth that sprouts from the earth. This is the case of the multinational Alvarez & Marsal (A&M), consultancy focused on management and restructuring.
In a recent contract, A&M became Cyklo Agritech’s most recent investor. The investment was carried out through its “Next” venture capital fund, launched this year and focused on startups and innovation.
“Our goal is to feed the world; we have the capacity, area, personnel and technique to do so,” says Pompeo Scola, CEO of Cyklo. The accelerator was inaugurated in the second half of 2019 in the city Luís Eduardo Magalhães, in the western part of the state of Bahia, one of the main Brazilian agricultural centers, with a focus on soy, corn, cotton and high-tech livestock.
Approximately 30 percent of A&M clients are related to agribusiness. “This contributed to our decision to invest in Cyklo, in support of the startups we are accelerating in an effort to develop innovative products that will further boost Brazilian food production,” said the CEO.
The investment, the figures of which have not been disclosed, also aims to deliver solutions that may meet investors’ financial expectations. “The startups we have selected operate in projects that contribute technology and innovation to the field to improve the productivity ratio, that is, to increase the yield of agricultural production per hectare”.
Pompeo Scola points out that Cyklo’s differential is the fact that it is located in a region of high agricultural production, a result of the willingness of western Bahian producers to incorporate technology in their farms. The region has emerged as a producer center due to innovation.
“We are installed near the fields, research centers and the university. This enables our startups to work directly in the place where the solution is developed, which allows them to better understand the issue and address it faster and more efficiently,” adds Pompeo Scola, emphasizing that this was a decisive factor in attracting Cyklo’s earliest investors, which is now starting to welcome new strategic partners.
“With the digitalization of our daily life, it could be no different in the field. And startups are emerging in several regions of Brazil. We have full conditions to take the lead in tropical agriculture. This should be happening on a large scale in the near future,” says agronomist George Hiraiwa, from Londrina, Paraná. The state is one of the national leaders in food production. Hiraiwa is involved in several agritech startups in the region.
A researcher in the area, Hiraiwa stresses the term “biodigital”, the line of research and application of which, according to him, will be the future. “I also envision a great opportunity because much of this planet’s biodiversity is deposited in Brazil. In other words, biodigital will be the future for the coming decades. With it, we will know how to produce food with great safety, healthy and sustainable”, he emphasizes.
Digital Agriculture
Brazilian farmers are increasingly “digital”. And they have passed the US in some points. For instance, 36 percent of Brazilian farmers surveyed make online purchases for the farm, while in the US that number stands at 24 percent, according to a McKinsey & Company research study entitled “The mind of the Brazilian farmer in the digital age.”
Optimists, 53 percent of Brazilians in agriculture use at least one technology or are willing to embrace one within the next two harvests. Virtual reality and drones are the most widely adopted technologies, while there is readiness towards the adoption of remote sensing, telemetry and the Internet of Things “IoT”.
Another interesting feature, particularly for digital marketing strategists, is that 85 percent of Brazilian farmers use WhatsApp. In other words, the sending of messages, materials, and even holding meetings, is entirely possible.
The technology still leaves something to be desired, so much so that 39 percent of all Brazilian farmers consider digital security the main obstacle to online shopping. “Digital security is the main concern in all groups, followed by user experience, with a predominance among young and formally trained farmers. If there was a guarantee of delivery, I would buy more,” the research points out. The publication features reports from farmers who do not trust online shopping because of delays in deliveries.
Increase in productivity
The world’s demand for food is growing. Brazilian farmers know this very clearly. As the survey shows, 50 percent of grain, cotton and sugarcane producers consider expanding crops, compared to 30 percent of coffee and vegetable producers. In addition, 28 percent of the farmers surveyed wish to grow by expanding their arable land and 16 percent by increasing productivity, with Cerrado (tropical savanna ecoregion) grain producers the most willing to expand production by increasing productivity (25 percent).
As mentioned above, it is precisely along this line that many Agritech startups are working to solve these and other challenges. It is indeed a vast field of opportunities.