Why Do So Many Agtech Companies Struggle with International Scaling?

Scaling agtech internationally can be incredibly challenging. Many companies underestimate the complexity involved and fail to conduct thorough market research, understand local farming practices, accurately assess customer needs, and evaluate how their product fits into a new market. Since founding AgTech-Pro three years ago, I've helped numerous companies navigate these challenges, especially across trans-Atlantic markets and, more recently, expanding to regions like LATAM. Scaling across markets is essential for growing any agtech business at scale, yet many struggle or fall short. It all starts with a thorough research of the new market. Here, I’ll break down some key aspects of this initial market research, forming the basis for successful market entry.

1. Start From Scratch

Many companies invest heavily in product development but spend minimal time researching new markets and understanding their new customers. Entering a new region is almost like starting your business all over again. This requires thorough research into the market, customer base, regional stakeholders, and farming practices. I often get asked for quick lists of potential customers, which is for me a red flag as it signals a fundamental misunderstanding of the depth of research needed to break into new regions effectively. Focusing on initial, detailed research will yield more meaningful outcomes than merely seeking an initial customer list.

2. Demographics and Culture

To get a broad understanding of a new market, consider demographic and cultural factors beyond agriculture. What values are important to people? What are typical income levels and cost of living? What is the current economic and political situation?  On the agricultural side, what are the key farming segments, their average age, education level, and size of operations? What is the share of family farms versus corporate farms? This high-level overview sets the foundation for customer segmentation, helping identify specific market segments and defining your target audience.

3. Understanding the Broader Agricultural Market

Once you have a broad overview, dive deeper into the agricultural specifics. Key questions to consider include:

• What are the major crops, land areas, and farm sizes?
• Where are the main growing regions, and what differentiates them?
• What are the most relevant regions for your product?
• Is most of the land owned versus rented? If rented, long-term versus short-term?
• What is the broader Food Value Chain? What are the typical buyers?

For example, in the United States, there’s a significant difference between high-value crops on the East and West Coasts. Similarly, in Brazil, the farming approach in São Paulo varies greatly from Mato Grosso’s large-scale farming practices. Understanding these regional details helps refine your market fit and gives a realistic sense of where to start, as no single product can serve an entire market. It’s also essential to size your market accurately, looking beyond the total addressable market (TAM) to focus on the serviceable available market (SAM) and serviceable obtainable market (SOM).

4. Farming Practices and Workflows

Farming practices vary widely by region, and what works in one place doesn’t necessarily transfer to another. Key factors include:

• Crop calendar and growing seasons
• Crop types (winter or spring crops) and varieties
• Crop rotation
• local pests, diseases, and weeds pressure
• Farming practices and use cases
• Input and equipment usage
• Labor situation

For example, in Western Europe, most wheat is grown as a winter crop, whereas in Western Canada, wheat is primarily a spring crop. Similarly, while large areas of Europe still rely on intensive tillage, reduced and no-till practices are common in LATAM. These are broad distinctions, but depending on your use case, you’ll often need to dive deeper. For instance, in Western Europe, sprayers typically operate at around 7 mph, while in North America, speeds can exceed 15 mph. North American growers focus on productivity and won’t slow down to accommodate your technology that can’t keep pace. Another example is that European farmers tend to back into field corners to plant every square meter, while in Western Canada, growers may leave small unplanted sections to prioritize efficiency over precision, given the larger field sizes. Developing a nuanced understanding of these practices is essential for determining whether your solution fits within the established system, as growers are unlikely to alter their workflows to accommodate new technology.

5. Understanding Local Problems and Pain Points

Understanding regional challenges is essential to gauge whether your product’s value proposition holds. For example:

• In Europe, agtech solutions often focus on reducing input usage due to regulatory pressures and sustainability initiatives.
• In the U.S., productivity often takes precedence, as large-scale operations seek efficiency over input reduction.

These differences can significantly impact how you position your product. While these are high-level topics, it’s essential to dig deeper to truly understand the core problems facing local growers. For example, if your solution targets weed management, is there a pressing weed issue in the region? If so, what types of weeds are common, and how are they currently managed? Additionally, understanding the market’s economic health and sentiment is crucial. A thriving market will generally be more open to innovation, while a struggling one may be more hesitant. These insights are key to shaping your entry strategy and messaging effectively.

6. Financial Aspects

Financial details can shape your product’s adoption potential. Consider:

• What is the average revenue and profit per farm in this region? What is the breakdown of the revenue?
• What are the crop budgets? What is their spend on inputs, up to what is their spent on a specific input like fungicides? What is their cost of production?
• Are subsidies or grants available, and if so, how do they support or influence local farming operations?
• What is the financial situation of most farms? How are they financed?

Subsidies, for example, vary widely across regions and can be vital for a farm’s financial stability. In some regions, subsidies might directly support the type of innovation you’re bringing, while in others, they may not align with your product at all. Knowing these details allows you to align your offering with local financial realities.

7. Understanding the Farming Ecosystem and Influencers

Each region has a unique ecosystem of stakeholders, advisors, and influencers that farmers trust.

• Do the producers rely on external advice?
• Who is making the agronomic decisions?
• What is the position of banks and other financers?
• Who is the ‘technology’ expert?
• What is the role of the Coop, Ag Retailer, local equipment dealer etc.?
• Are there independent groups?
• What are the typical distribution channels?
• What are the big players in the market?

For example, Ag Retail plays a significant role in the U.S. and Brazil, providing input sales, agronomic advice, and custom application services. But even between the regions, there is a difference between the Ag Retail groups. In Europe, Ag Contractors are essential, offering custom services that extend beyond input application and include all the fieldwork and harvesting. Understanding who influences local farmers is crucial, as gaining their support can be vital for product acceptance. In some markets, universities and extension services provide neutral advice and independent validation, which can lend your product additional credibility.

8. Competitive Landscape

It’s essential to understand the local competition and how they’re positioned. Key questions include:

• Are there companies offering similar products?
• What’s their pricing, distribution strategy, and value proposition?
• What is their current scale?
• What is their current setup? Do they have financial pressure?

Local companies often have an edge due to established networks and local insights. However, there can be advantages for newcomers. European companies, for instance, often price products lower due to smaller farms and tighter budgets, allowing them to offer a similar or better product at a competitive price in larger-scale markets.

9. Legal and Regulatory Factors

Understand the legal landscape to avoid obstacles. Important considerations include:

• Import versus setting up a local entity
• Import restrictions and tariffs
• Product approvals and IP protection
• Regional regulations on your product usage

For example, if you are offering an autonomous machine, is that allowed under local regulation, and what are the regional differences? These factors can vary significantly by region and even within countries, potentially impacting your ability to do business or raising costs. In some cases, legal considerations can even become deal-breakers.

10. Broader Agtech Ecosystem

Beyond the farming ecosystem, consider opportunities within the broader agtech landscape. Look into:

• Local industry associations that could provide partnerships or exposure
• Agtech initiatives by larger corporations, which may offer collaboration opportunities
• The local investment landscape and how they operate
• Local influencers, conferences, and media

For example, in the US, average investment tickets are often larger than in Europe or Australia. If your funding needs are modest, you may need to focus on angel investors rather than venture capitalists. Research key conferences and media outlets to enhance your visibility in the ecosystem.

The Importance of Market Research

Taking the time to study a new market can make all the difference. This research might reveal that you're not yet ready to enter, or it might provide a roadmap to help you get there. At AgTech-Pro, we offer market research services and personalized go-to-market support. To help even more AgTech companies, I’m excited to share that we’re launching Bootcamps and cohort-based programs, such as our upcoming LATAM AgMarket Bootcamp, to help companies gain market insights in a group set up in combination with one-on-one guidance. Join us for our webinar this Friday for details, and stay tuned for more programs.

Our goal is to help more agtech companies succeed globally, ensuring that innovative agtech solutions reach farmers everywhere.