Improvement in the standard of living of the rising urban population across the world has led to an increased demand for fresh crop produce and animal protein as well. Rising demand for global food production, along with the pressure of providing a continuous supply of high-quality farm produce, has created an alarming situation for the growers across the world, who are struggling to increase production per hectare. Furthermore, shrinking agricultural lands and scarcity of availability of natural resources raises the urgency to resolve the concern.
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The concerns and pressure on the agriculture industry, factored by the increasing demand for global food production, prompt the farmers to enhance farm profitability despite slowing yield trends in several staple crops. As advancements in technologies across end-user industries lead to an efficient world, the agriculture industry too is gradually incorporating smart technologies on farms for profitable farming. With the introduction of information and communication technologies and advancements therein in the past decade, the agriculture industry has witnessed a revolution. Professionals and experts of the industry across the world are comparing this revolution with the revolution in the previous century when new farm equipment and machinery, pesticides, fertilizers, and high-yield crop breeds led to dynamic growth in crop production around the globe.
As agriculture becomes a lucrative high-technology industry, professionals with new-age skill sets, companies, and investing bodies are being drawn in rapidly. The development in smart agriculture technologies has not only led to advancements in the production capabilities of farmers but has also introduced transformative business models in the industry.
As the entire agriculture industry incorporates and experiences the growth of these agriculture technologies into the farming cycle, it also faces the challenges associated with its adoption. One of the major restraining factors associated with the adoption is the large capital investments required for its acquisition and operation. Most of the farming communities across the world do not have a strong financial background to execute significant capital formation. Since prices for technologically advanced farm machinery are comparatively higher than that of conventional farm equipment, there is a huge gap in the availability of agriculture technology equipment and its adoption. Moreover, due to dependence on favorable seasons, a farmer is apprehensive of purchasing agriculture technology equipment with upfront costs. Consequently, there is market pressure on stakeholders of the agriculture technology industry to consider and incorporate alternate payment and business models to promote the incorporation of these technologies in today’s subscription-based economy.
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Accumulation of the above-mentioned market conditions has led to the introduction of a new business model in the agricultural industry, popularly termed agriculture technology-as-a-service (ATaaS). ATaaS is a business model that allows the customers to procure their desired agriculture technology (equipment or software) as a service under different affordable pricing models rather than acquiring them as a one-time purchase. Two of the most popular pricing models under ATaaS include the pay-per-use (PPU) and subscription models. While the PPU model provides the customers the complete freedom and responsibility of acquiring the agriculture technology as per their requirement, the subscription model asks the customers to use the agriculture technology as per the duration package set by the service providers, for instance, monthly or annually.
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