Agricultural Software Solutions
Agricultural Software Solutions
Business Model Description
Develop and provide innovative technology solutions including automated remote control and monitoring systems tailored to the needs of the agricultural sector to improve operational efficiency, decision-making processes, and sustainability in agriculture by leveraging software, data analytics, Internet of Things (IoT), and other digital tools, while offering a range of services and products to support farmers, agribusinesses, and other stakeholders in optimizing their agricultural practices.
Expected Impact
Result in increased crop yields, optimized resource usage, and access to market information enabling better decision-making.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Albania: Berat
- Albania: Elbasan
- Albania: Korçë
- Albania: Shkodër
Sector Classification
Food and Beverage
Development need
Agriculture constituted 20% of GDP in 2021 while employing 34% of the workforce, yet productivity still needs to improve due to technological deficiencies. Agricultural value chains remain fragmented and are vulnerable to the impacts of climate change, predicted to cause a 1.5 billion m3 of water storage per season (1, 2, 11).
Policy priority
The National Strategy for Development and Integration includes enhancing farm viability and competitiveness of agricultural processing while keeping alignment with European Union standards. Economic Reform Program targets increasing the capacity of farmers to own a greater share of the added value in the food supply chain while promoting locally produced and processed goods under the joint Made in Albania brand (3, 12).
Gender inequalities and marginalization issues
Agriculture is mainly driven by small farms (averaging 1.13 hectares), with roughly half of the population consisting of small, often female, impoverished, and food-insecure farmers. Lack of employment opportunities outside agriculture and low incomes from farming greatly contribute to rural poverty, with nearly 60% of the population living in rural areas at risk of poverty, the highest level in Europe (4, 6, 13).
Investment opportunities introduction
Traditional agricultural methods provide a competitive edge in European markets, as over 95% of the country's medicinal-aromatic plants are exported. Additionally, the country offers a zero VAT on agricultural machinery imports and a reduced 10% VAT on agricultural input supplies. Agriculture is listed as a strategic sector by the Albanian Investment Development Agency (AIDA), covering agro-processing, farms and collection warehouses (1, 5, 15).
Key bottlenecks introduction
Land ownership and utilization are fragmented, while agricultural land markets remain undeveloped. Lack of information on safety standards leads to non-compliance among farmers, resulting in limited market access for exports, with Additionally, farmers face difficulties in modernizing production methods while preserving natural resources and ensuring rural livelihoods (6, 16, 17).
Food and Agriculture
Development need
Amidst significant out-migration at 1.68 million people, comprising 59% of the resident population, and a 21.8% rural poverty rate in 2021, it is essential to enhance productivity and ensure the sustainability of family farms through resilient agricultural practices to realize Agenda 2030 (9, 10, 7).
Policy priority
The Rural Development Programme 2014-2020 Under Instrument for Pre-Accession Assistance (IPA) and The Inter Sectoral Agriculture and Rural Development Strategy 2014-2020 both focus on developing a viable agri-food sector and vibrant rural areas to align with EU standards and cope with competitive pressures (6, 21).
Gender inequalities and marginalization issues
Approximately 1.6 million people reside on farms, with women comprising 47% of this population. However, while women make up 39% of the agricultural workforce, they represent only 4% of farm holders (14, 6).
Investment opportunities introduction
The value chains for vegetables, fruits, and medicinal aromatic plants have witnessed significant expansion in terms of both cultivation areas and overall production. This growth can be attributed to robust export demand, favorable climatic conditions, and various support programs from the Albanian government, IPARD, and other donor agencies (5).
Key bottlenecks introduction
The agribusiness sector grapples with informality, posing challenges for increasing local product procurement. Moreover, it exhibits the lowest value-added per agricultural worker in the region as majority of farming activities are carried out by smallholder farmers on average plots of just 1 hectare (1).
Agricultural Products
Pipeline Opportunity
Agricultural Software Solutions
Develop and provide innovative technology solutions including automated remote control and monitoring systems tailored to the needs of the agricultural sector to improve operational efficiency, decision-making processes, and sustainability in agriculture by leveraging software, data analytics, Internet of Things (IoT), and other digital tools, while offering a range of services and products to support farmers, agribusinesses, and other stakeholders in optimizing their agricultural practices.
Business Case
Market Size and Environment
< USD 50 million
10% - 15%
In 2022, national penetration rate to broadband services reached 81% of households in Albania, up from 37% in 2016, with over 585,000 active connections by late-2022 (25).
The market for digital agricultural software solutions is estimated to be lower than USD 50 million, however agriculture’s significance in the Albanian economy can greatly increase this share (27).
The global farm management software market is expected to demonstrate a CAGR of 14.7% from 2021 to 2028 (26).
Indicative Return
< 5%
< 5%
Agricultural software investments can produce returns up to 5% measured in terms of profit, IRR and ROI according to a key development partner providing concessional project financing to agricultural software solutions (27).
Investment Timeframe
Short Term (0–5 years)
Smart agriculture software investments can produce a positive cash flow in less than 5 years according to a development partner providing concessional financing (27).
Proven payback period for a global farm software Agrivi's farm management software was recorded as a maximum of two years, meaning that direct results on all operational levels can be seen already after two, but in more cases one harvest season (28).
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Market - Highly Regulated
Capital - Limited Investor Interest
Impact Case
Sustainable Development Need
Agriculture remains one of the most important sectors of the Albanian economy, contributing 18% of GDP and some exports. However, production is mainly characterized by very small family farms oriented towards subsistence, and production is burdened by rural exodus, the limited size of farms and ownership of agricultural land, marketing of agricultural products, irrigation and drainage, low levels of use of modern technologies, and weak organization of farmers (25).
The low level of technology and equipment used by an average farmer and low level of knowledge about modern agriculture techniques and processing are among the main challenges in Albania, impacting market competitiveness due to the increased competitive pressures resulting from the EU integration (30).
Despite experiences on the use of digital solutions, both the connectivity in rural areas, digital skills availability, and the high average age of workforce are relevant bottlenecks for the adoption of digital technologies in the Albanian agriculture sector (1).
Gender & Marginalisation
The majority of agricultural activities occur in rural areas that face issues of inequality and poverty, exacerbated by inadequate infrastructure, a malfunctioning labor market, limited access to essential services, and an unfavourable business environment (20).
Female leadership is only found in 6.5% of the farms in Albania, and women often experience exclusion from the decision-making process. Rural, small-scale farms receive limited government investment, resulting in challenges related to market access, distribution efficiency, and adherence to quality and safety standards (31).
Depopulation of rural areas and declining labor force (particularly, among young, women and economically active population) along with high unemployment rate due to the lower educational level, also negatively impact agricultural productivity (30).
Expected Development Outcome
Smart agriculture software solutions will boost economic gains for farmers by eliminating inefficient decision-making, enhancing returns on investment, and significantly reduce production costs.
Investments in agricultural software solutions enhancing digitalization and access to online markets will facilitate SME growth by empowering companies to venture into new markets, optimize their operations, integrate into global value chains, foster innovation, and enhance productivity.
Smart agriculture software solutions will allow for better resource management, reducing wastage of water, fertilizers, and pesticides, which can be particularly valuable in regions with limited resources.
Gender & Marginalisation
Digital tools associated with smart agriculture software can level the playing field, providing small-scale farmers with access to the same information and resources as larger agricultural enterprises, promoting inclusivity and rural development.
Integration of automated or remote agricultural production will contribute to improved working conditions for agricultural workers, particularly for women through new technology lowering contact with chemicals, fertilizers and pesticides, and offering more flexible working modalities (24).
Primary SDGs addressed
2.1.1 Prevalence of undernourishment
2.1.2 Prevalence of moderate or severe food insecurity in the population, based on the Food Insecurity Experience Scale (FIES)
Prevalence of undernourishment recorded at 4.1% in 2021 (33).
Prevalence of moderate or severe food insecurity recorded as 30.2% in 2021, 34% for women and 27.5% for men (33).
Globally, the long-term objective for this indicator is a value of 2.5 (34).
The government has introduced the “One Health” strategy based on the principle of "Health in every policy" and "sustainable development" aiming to create structures and incentives to coordinate measures and policies in a number of sectors, including ensuring food security (8).
15.3.1 Proportion of land that is degraded over total land area
N/A
N/A
9.b.1 Proportion of medium and high-tech industry value added in total value added
Proportion of medium and high-tech manufacturing value added in total value added measured as 4.24% in 2020 (33).
Digital Agenda of Albania (2015–2020), aims to increase efficiency in agriculture (among other sectors) through ICT systems (25).
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Outcome Risks
Smart agriculture technologies often require energy for data collection, processing, and operation of machinery; increased energy consumption can contribute to greenhouse gas emissions (36).
Unless handled and recycled properly, e-waste stemming from the hardware of smart agriculture systems can produce negative externalities contaminating the environment, soil, air, and water (36).
Impact Risks
Farmers may lack the necessary knowledge and skills to effectively use smart agriculture tools. Insufficient training and support can lead to underutilization and suboptimal outcomes (26).
Overreliance on technology can make farmers vulnerable to system failures, cyberattacks, or software glitches, limiting production in case of technical failures.
The initial investment in smart agriculture technologies can be high, and lead to increased inequalities as small-scale farmers may struggle to afford and implement these solutions.
Gender inequality and/or marginalization risk: In regions with limited access to the internet and technology infrastructure, there is a risk of creating a digital divide, where some farmers benefit from smart agriculture tools while others are left behind (26).
Impact Classification
What
Improved agricultural productivity, increased crop yields and enhanced resource efficiency while providing farmers access to market information
Risk
Uneven access to technology and knowledge could exacerbate inequalities in rural communities, reliance on technology introduces risks related to system failures, cybersecurity, and data privacy.
Contribution
Smart agriculture technology investments can be directly attributed to the observed improvements in productivity and resource efficiency, in alignment with the government's Digital Agenda (25).
Impact Thesis
Result in increased crop yields, optimized resource usage, and access to market information enabling better decision-making.
Enabling Environment
Policy Environment
National Strategy for Development and European Integration 2022-2030, 2023: emphasizes the need to develop digitalization to increase quality of services; enhance access to digital technologies and skills of young people and professionals and enhancing digital connectivity for rural development (48).
The Economic Reform Programme 2022-24, 2022: includes development of broadband infrastructure for digital economy amongst its reform agenda, and aligns with the European Digital agenda in terms of adopting ICT application in key fields including Smart Cities, and information systems also covering agriculture (12).
Rural Development Programme under IPA 2014-2020, 2021: covers improving access and quality of services to farmers among its key strategies, including improving ICT capacities and proposes related investments measures such as purchasing new machinery, computer software, and monitoring systems (6).
National Pathways for Sustainable Food Systems, 2021: includes supporting digitalization and ITC as accelerating tools in agriculture and rural development to accelerate progress towards the national food systems goals by 2030 (7).
Financial Environment
Financial incentives: The Rural Development Programme under the Instrument for Pre-Accession Assistance, which commits a total public support of EUR 146.4 million (USD 155.5 million), includes a horizontal objective addressing sharing knowledge, innovation and digitalization in agriculture and rural areas. The government's National Scheme 2022, amounting to ALL 3.2 billion (USD 32.2 million) contains support for automation and digitalization of farm work processes (30, 32, 49).
Fiscal incentives: The government offers zero VAT for agricultural machines both imported and domestically, as well as inputs on chemical fertilizers, pesticides, seeds, seedlings (42).
Other incentives: Donor support projects including JICA and GIZ have assisted the construction and functionalization of digital platforms in agriculture, yet there is limited statistical data on their level of use (29).
Other incentives: The Ministry of Agriculture and Rural Development has set up the Farmer's Portal designed to assist farmers simplify and streamline procedures providing real-time information on market, prices, food analysis, active agriculture support schemes and the funding instruments, veterinary care, offer of agricultural pharmacies, agricultural collection operators, potential agricultural land area for lease, the existing legislation and all sorts of information to help farmers during their daily activities (35).
Regulatory Environment
Law No 9863 on Food, 2008 (Amended 2022): aims at ensuring high levels of protection of human health and consumers’ interests with respect to food products; lays down rules governing food hygiene, business operators’ responsibilities, food quality standards, registration of geographical designations of origin, food labelling and marketing standards, and defines the system of food inspection and sets up the National Food Authority (37).
Decision N. 125 on determining the basic criteria of sectors to be supported and the amount of financing from the Program Fund for Agriculture and Rural Development, for the year 2023, March 2023: approves the 2023 budget for the Ministry of Agriculture and Rural Development, item "Transfer to family budgets" (economic account 606), to be used for increasing competitiveness, registration, construction of markets, energy efficiency, and training and transfer of knowledge, for agricultural and livestock products (38).
Decision no. 41, on the approval of the cooperation agreement in the field of veterinary, food safety and animal feeding, and phytosanitary in the Western Balkans, 19 January 2022: adopts a series of measure in order to facilitate the trade of live animals, food and feed for animals of animal, non-animal and composite origin, plants and plant products (39).
Decision No. 1084 On Adopting the National Cyber Security Strategy and Its Action Plan 2020-25, December 2020: sets out the National Cybersecurity Strategy and its Action Plan 2020–2025, and the responsibilities around The National Electronic Certification and Cybersecurity Authority (40).
Law No 2/2017 on Cybersecurity, 2017: purpose of this law is to achieve a high level of cyber security by defining security measures, rights, obligations and mutual cooperation between the entities operating in the field of cyber security, applying to communication networks and information systems violation or destruction of which would have an impact on health, safety, economic well-being of citizens, and the effective functioning of the economy (41).
Marketplace Participants
Private Sector
Uka Farm, Vodafone, Agrio, Agrivi.
Government
Ministry of Agriculture and Rural Development, Albanian Investment Development Agency (AIDA), National Electronic Certification and Cybersecurity Authority, Ministry of Tourism and Environment, Ministry of Economy, Culture, and Innovation, Albania Investment Council (AIC), Albania Investment Corporation.
Multilaterals
Delegation of the European Union to Albania, European Bank for Reconstruction and Development (EBRD), European Commission (EC), European Investment Bank (EIB), Food and Agriculture Organization of the United Nations (FAO), German Development Agency (GIZ), Japanese International Cooperation Agency (JICA).
Non-Profit
Agricultural University of Tirana, Foreign Investors Association of Albania (FIAA), Albanian Agribusiness Council, Water Users Association, Albania Foreign Investors Association of Albania (FIAA), Albania International Chamber of Commerce (ICC).
Target Locations
Albania: Berat
Albania: Elbasan
Albania: Korçë
Albania: Shkodër
References
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