Smart Agricultural Technologies

Smart Agricultural Technologies

Photo by UNDP Serbia, Vladimir Zivojinovic

Smart Agricultural Technologies

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Technology and Communications
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Technology
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
10% - 15% (in ROI)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
10% - 15% (CAGR)
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
USD 500,000 - USD 1 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Zero Hunger (SDG 2) Life on Land (SDG 15) Industry, Innovation and Infrastructure (SDG 9)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Decent Work and Economic Growth (SDG 8) Responsible Consumption and Production (SDG 12)

Business Model Description

Develop and deliver high-tech solutions to help farmers increase yields, reduce costs, and manage their operations more effectively. Such smart agricultural technologies that are used to improve the efficiency and productivity of farming operations include precision farming (using data and analytics to optimize farming operations), vertical farming (growing crops in vertically stacked layers using controlled environmental conditions, such as temperature, light, and nutrients, to optimize yields and minimize resource usage), livestock monitoring (using sensors and data analytics to monitor the health and wellbeing of livestock), and crop genetics (using genetic engineering to develop crops that are more resilient to pests and diseases, have improved yields, and can grow in challenging environmental conditions). The service can be marketed both in the domestic and export markets.

Expected Impact

Improve crop yields and sustainability, create jobs, enhance resource efficiency and inclusive access to technology.

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

Explore the country and target locations of the investment opportunity.
Country
Region
  • Serbia: Belgrade Region
  • Serbia: Vojvodina Autonomous Province
  • Serbia: Šumadija and Western Serbia
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Technology and Communications

Development need
Serbia generates 10% of its GDP from the ICT sector, which is among the top four export sectors, along with steel, cars, and agriculture. However, there's a need to adjust the regulatory framework and improve digital skills (1).

Policy priority
High-level policy documents, such as the Strategy of Scientific and Technological Development from 2021 to 2025, "Power of Knowledge," and the Electronic Communications Development Strategy from 2020 to 2024 prioritize improving the quality of life of the citizens of the Republic of Serbia through science and technological development (2, 6).

Gender inequalities and marginalization issues
There are only 20% of women in the technology sector, although there is great potential for employment in this area (5). Only 69% of rural households are connected to fixed broadband, compared with 85% in urban areas. This gap significantly hampers access to economic opportunities for a large share of the population (7).

Investment opportunities introduction
Serbia’s technology industry had more than 2,000 firms in 2017, a significant increase from 700 in 2006. The industry revenue nearly doubled during that period. Serbia’s technology industry has the potential to address the country’s economic stagnation and lift people out of poverty (8).

Key bottlenecks introduction
Although Serbia’s tech sector is expected to continue to grow by more than 20% a year, expansion is hampered by a lack of skilled people - primarily with foreign firms hiring as quickly as the educational system can produce them. Universities are graduating new engineers, but it is estimated that the country needs at least 15,000 more to meet rising demand (1).

Sub Sector

Technology

Development need
The current technological structure of the industry in Serbia could be more favorable - the most significant part of production takes place in the least technologically demanding industrial branches. Without specialization, productivity growth, and climbing the technological ladder, there will be no much-needed economic growth and, thus, no higher wages (10).

Policy priority
The development of the technology subsector is prioritized by high-level policy documents, such as the Action Plan for the period from 2021 to 2022, for the implementation of the smart specialization strategy in the Republic of Serbia for the period from 2020 to 2025 (11) and the Smart Specialization Strategy in the Republic of Serbia for the period from 2020 to 2027 (12).

Gender inequalities and marginalization issues
According to a report by the World Bank, Roma communities in Serbia often face discrimination and lack of access to land and other resources, making it difficult for them to benefit from new technologies (4). Additionally, an uneven generational presence in the digital society contributes to age discrimination and a lower quality of life (9).

Investment opportunities introduction
In 2021,135 million USD were invested in domestic startups. In addition, the Serbian technology sector exceeded 1.7 billion USD in export revenue in 2021. The Digital Serbia initiative recognized the potential, so it founded Business Angel Groups, which provide expert advice and investments of up to 219,000 USD and supports domestic startups (13).

Key bottlenecks introduction
The government buys modern technology, but there needs to be adequate training of employees and education sufficiently dedicated to the technological literacy of students, who are faced with computer work only when employed. Also, the elderly and the poor are neglected (11).

Industry

Software and IT Services

Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Smart Agricultural Technologies

Business Model

Develop and deliver high-tech solutions to help farmers increase yields, reduce costs, and manage their operations more effectively. Such smart agricultural technologies that are used to improve the efficiency and productivity of farming operations include precision farming (using data and analytics to optimize farming operations), vertical farming (growing crops in vertically stacked layers using controlled environmental conditions, such as temperature, light, and nutrients, to optimize yields and minimize resource usage), livestock monitoring (using sensors and data analytics to monitor the health and wellbeing of livestock), and crop genetics (using genetic engineering to develop crops that are more resilient to pests and diseases, have improved yields, and can grow in challenging environmental conditions). The service can be marketed both in the domestic and export markets.

Business Case

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Market Size and Environment

CAGR
Describes the historical or expected annual growth of revenues in the IOA market.

10% - 15%

Global market analyses estimate that the smart agriculture market will reach USD 13.5 billion by 2023, growing at an annual rate of 12.4 percent. The fastest growth is predicted in the needs of the USA and Europe (37).

In 2021, the share of crop production in the total value of agricultural production equalled 68.4%, and that of livestock production equalled 31.6% in Serbia. When compared to 2020, the net index of physical volume of agricultural production decreased by 5.6%. Agricultural output at producers’ prices was worth USD 66 billion and the total agricultural land in Serbia was 5.3 million hectares (42).

While conventional agricultural production is still prevalent in Serbia, there is a growing interest in adopting modern technologies and improving efficiency and productivity in the agriculture sector (41).

Indicative Return

ROI
Describes an expected return from the IOA investment over its lifetime.

10% - 15%

Based on semi-structured interviews with relevant stakeholders, agritech solutions are expected to generate ROIs of above 10% (41).

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Medium Term (5–10 years)

The investment timeframe for high-tech solutions in agriculture can vary depending on several factors, including the type of technology, the stage of development, and the expected ROI (41).

Some high-tech solutions in agriculture, such as precision agriculture technologies or automated systems, may have a relatively short investment timeframe of a few years. These technologies often aim to improve efficiency and reduce costs, and the ROI can be seen relatively quickly (41).

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

USD 500,000 - USD 1 million

Market Risks & Scale Obstacles

Market - Volatile

The agri-tech sector in Serbia is considered a relatively new and emerging market, which means that it can be volatile and subject to fluctuations. In addition, the market is still in the early stages, so it can take time for companies to predict and plan market fluctuations (41).

Business - Supply Chain Constraints

In many rural areas, the lack of infrastructure and connectivity can make it difficult for farmers to access new technologies and for companies to provide products and services; for example, difficulties in the transportation of crops, irrigation, and crop protection (41).

Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Extremely high temperatures, which are increasing year by year, have a very stressful effect on plants, which is often reflected in a reduced yield or poorer fruit quality in Serbia (26).

By the food security index, the Republic of Serbia is in 61st place out of 113 countries (22).

Gender & Marginalisation

For farmers who cultivate a smaller area or have a smaller number of cattle, without the support of some financial institution, it is challenging to maintain their business or increase their capacities (38).

Taking on labor-intensive processes in the fields, women in the agricultural sector contribute over 15% of the national economy. Therefore, it is essential to have gender-appropriate equipment and machinery for different farm operations since most are difficult for women to operate (21).

Women in rural areas and those working in agriculture face more challenges in gaining access to new knowledge and information, as well as digital technologies and services. These factors contribute to the fact that women's farms have a lower adaptive capacity, while also limiting the opportunities for rural women (particularly the female agricultural workforce, which makes up the majority of the family workforce on farms) to implement innovative practices.

Expected Development Outcome

New technologies in the agricultural sector could lead to increased crop yields and productivity, which can help improve the country's food security. New technologies and sustainable practices can also reduce costs and increase efficiency (25).

Developing and implementing technologies and practices that can help farmers use water and manage soil more efficiently can help to preserve resources and improve the sustainability of agriculture (41).

Gender & Marginalisation

Smart agriculture technologies can provide farmers with access to knowledge and expertise that can help them improve their practices and increase their yields. This can be particularly valuable for smaller-scale farmers needing access to traditional extension services (41).

By providing gender-appropriate agritech solutions, women will obtain opportunities to secure their livelihood through farming (21).

Primary SDGs addressed

Zero Hunger (SDG 2)
2 - Zero Hunger

2.1.2 Prevalence of moderate or severe food insecurity in the population, based on the Food Insecurity Experience Scale (FIES)

Current Value

14.1% for adult population (2020) (22).

Target Value

N/A

Life on Land (SDG 15)
15 - Life on Land

15.3.1 Proportion of land that is degraded over total land area

Current Value

6% (2015) (23).

Target Value

N/A

Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure

9.b.1 Proportion of medium and high-tech industry value added in total value added

Current Value

21.8% (2014) (24).

Target Value

N/A

Secondary SDGs addressed

Decent Work and Economic Growth (SDG 8)
8 - Decent Work and Economic Growth
Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production

Directly impacted stakeholders

People

Farmers benefit from advanced technology because it makes their work more accessible and more efficient.

Gender inequality and/or marginalization

Small farmers have access to technology they cannot obtain independently due to limited resources, while women benefit from machinery adapted to their needs.

Planet

Environment experiences reduced environmental impact, mitigating climate change, and ensuring food security.

Corporates

Corporates improve their productivity, supply chain management, sustainability, risk management, and innovation, leading to higher profits and a competitive advantage.

Public sector

Government can monitor crop production, weather patterns, and other factors that can impact food security and plan policy interventions accordingly.

Indirectly impacted stakeholders

People

The end-users of agricultural products will benefit from food security.

Gender inequality and/or marginalization

Women and marginalized groups communities, gender-sensitive policies and regulations makers.

Planet

Environment benefits from monitoring of soil and water quality, reducing the use of fertilizers and pesticides, and promoting sustainable land management practices.

Corporates

R&D institutions use smart agriculture technologies to develop and test new crop varieties, breeding techniques, and management practices.

Public sector

NGOs can work with governments, farmers, and other stakeholders to promote more sustainable and equitable agricultural practices.

Outcome Risks

If new technologies and practices are not used responsibly, they can negatively affect biodiversity, soil, and water resources, harming the environment (41).

The use of new technologies such as Internet of Things (IoT) may raise concerns about data privacy and security, as the collection and use of data can raise potential risks (41).

The introduction of new technologies and practices may have unintended consequences that were not anticipated, such as new pests, diseases, or negative impacts on biodiversity (41).

Impact Risks

Lack of adoption of new technologies can lead to a lack of improvement in crop yields and productivity and make it difficult for this area to grow (41).

If new technologies are not accessible or affordable for small farmers, it can widen the income gap between them and more established, larger farmers (41).

If farmers do not have access to technical assistance and training can make it difficult for them to use and maintain new technologies effectively (41).

Women farmers often have limited access to inputs, which can limit their ability to adopt smart agricultural tech (41).

Impact Classification

B—Benefit Stakeholders

What

Smart agricultural technologies can have a significant impact on the food security, income, and livelihoods of farmers. There will be more demand for skilled workers and professionals.

Risk

Limited uptake due to inaccessibility or unaffordability, and the absence of technical assistance and input provision, may limit the impact of smart agricultural technologies.

Impact Thesis

Improve crop yields and sustainability, create jobs, enhance resource efficiency and inclusive access to technology.

Enabling Environment

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Policy Environment

Strategy for the Development of Artificial Intelligence (AI) (2019) indicates that the current connection between local firms applying AI is insufficient to enable multidisciplinary in developing innovative solutions. The advantage of AI is the ability to improve agriculture (27).

In the Smart specialization Strategy of the Republic of Serbia (2020), one of the vertical priority areas is food for the future, which includes high-tech agriculture, food with added value, and sustainable agriculture and food production (28).

The aim of establishing the GovTech program in the Republic of Serbia is reflected in the improvement of cooperation between the state and innovative companies to open up the possibility of regional and international cooperation in many areas, including agriculture (26).

The Strategy of Agricultural and Rural Development notes that the response of the agricultural sector to the described trends on the global market should be sought in innovation, knowledge, and technological progress (29).

Financial Environment

Financial incentives: Rulebook on Incentives (2021) for improving the creation and transfer of knowledge through developing technical-technological, applied developmental and innovative projects in agriculture and rural development (30).

Fiscal incentives: Smart agricultural technologies benefit from tax incentives and tax reliefs and exemptions from paying duties (40).

Other incentives: The BioSens accelerator is the first in this area exclusively aimed at domestic technologically innovative companies, which link their further development to the agriculture and food sector (34).

Regulatory Environment

"Law on Agriculture And Rural Development regulates the objectives of agricultural policy and rural policy development, as well as the way of their realization, registration of farming holdings, recording and reporting, and supervising over the implementation of this of the law (31)."

Law on Innovative Activity regulates the goals and organization of the application of scientific knowledge, technical and technological knowledge, and inventions in improving products, processes, and services as drivers of the development of Serbia (32).

Marketplace Participants

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Private Sector

Companies such as Agrivi, AgriTech Serbia, AgroSense, and Agremo d.o.o.

Government

Ministry of Agriculture, Forestry and Water Management, Ministry of Environmental Protection, AI Council, Ministry of Economy, Ministry of Education, Science and Technological Development, Ministry of Trade, Tourism and Telecommunications.

Multilaterals

Serbia Investment and Export Promotion Agency SIEPA, Food and Agriculture Organization (FAO), World Bank, United Nations Development Programme (UNDP).

Non-Profit

Center for Development of Vojvodina (CDV), Network for Rural Development of Serbia, Network for Rural Development of Serbia, Center for Ecology and Sustainable Development (CEKOR).

Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
urban

Serbia: Belgrade Region

Belgrade hosts many organizations engaged in research and development (R&D) in the field of agricultural sciences. In 2021, there were at least 19 such companies with more than 1,300 employees (33). Additionally, the same region features more than 3,900 active IT companies (39).
urban

Serbia: Vojvodina Autonomous Province

Vojvodina Autonomous Province hosts six R&D agricultural science organizations that employ more than 940 people (33). Also, this region features more than 1,100 IT companies (39).
urban

Serbia: Šumadija and Western Serbia

In Šumadija and Western Serbia, the number of R&D organizations in the agricultural field was six in 2021, employing about 125 people (39).

References

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