Challenges and expectations of European agriculture
What investments are farms planning? - What innovations are in demand?
"The agricultural sector is facing momentous challenges," says Dr. Lothar Hövelmann, Chief Executive Officer of the DLG (German Agricultural Society), Agritechnica’s organizer.
“Russia's war is changing basic assumptions, the European Green Deal is reducing the choice of available farm inputs, the interest rate policy is demanding forward-looking investment planning and climate change requires resilient production processes. This can only be off-set through ingenuity and innovation,” explains Hövelmann.
"Russia's war is changing basic assumptions, the European Green Deal is reducing the choice of available farm inputs, the interest rate policy is demanding forward-looking investment planning and climate change requires resilient production processes. This can only be off-set through ingenuity and innovation,
Investment mood among farmers in Europe
In August 2023, DLG surveyed more than 2,300 European farmers on the business climate and their investment intentions, part of DLG’s "Short Study Agrifuture Insights." The arable farms mostly assessed their operational situation as economically good, while they considered the future business environment to be less favorable. Among pig farmers, the current business situation is viewed positively, a result of higher prices, but there is a lack of stable general conditions for further operational development. Overall, the missing impetus is holding back the business climate.
Among dairy farms in the survey, many are burdened with high debt servicing and higher interest rates following significant expansion investment. With lower producer prices, this has resulted in lower liquidity in 2023 compared to the previous year.
In particular, arable and pig farmers see increasing regulation and agricultural policy as the biggest challenges to their business. For arable farmers, climate change is considered a similarly significant challenge, not to mention cost increases for inputs and arable land. In livestock farming, future interest rate developments will have an impact on refinancing and short-term financing lines.
Where are investments coming up?
Nearly half the respondents stated that they plan to invest in a new tractor in the next two years. For agricultural machinery, particularly attachments, the respondents are primarily concerned with technologies such as precision farming and automation.
Innovations needed for arable farmers
All the groups in the survey focus on energy efficiency, as costs have an significant influence on the bottom line. The above-average interest in slurry innovations shows that environmental protection still requires further technological advances.
Both smart farming and precision farming technologies attract attention due to rising farm input costs. Innovations that can optimize input usage are required. Also as a result of increasing regulation, respondents plan to increasingly focus on efficient and targeted use of inputs and resources.
Mechanical and biological solutions for crop protection are increasingly part of farm strategies as a way of complementing or replace chemical crop protection.
The ongoing topic of interoperability and compatibility between networked agricultural machinery is rated as far more important by respondents from consulting, research and industry than by farmers. According to feedback in the survey, the latter seem to be losing interest in the topic, as it takes time for research findings to be satisfactorily implemented in practice. Even today, many solutions only work partially; there are still problems with data aggregation and processing. Nevertheless, "Big Data" and artificial intelligence (AI) are seen as future innovations for agriculture.
In general, respondents would welcome innovative technical solutions in areas that are becoming increasingly regulated, particularly crop protection. However, respondents also expect more innovative solutions from plant breeding for climate adaptation and plant diseases (resistance). The development of new technologies in the area of fertilizer management is prioritized somewhat less by the respondents compared to these topics.
The need for innovations in sensor-based systems and improvement of data management is rated less important by farmers than by respondents from extension services, science or industry. According to responses, more operator training would be needed and functionality often still needs improvement.
Evaluation of green measures in arable farming
In arable farming, many "green measures" are already being implemented today to use resources efficiently and to adapt to climate change. More than two-thirds of respondents have extended their crop rotation, with a some further 20 percent planning to do so. More than half are already using diesel conservation measures, while a further 40 percent intend to do so. Site-specific application of inputs is already in practice at 38 percent of the farms surveyed, and another 40 percent are planning such measures. Water management is already a day-to-day operational issue for one third of respondents, while 40 percent will require measures in the future.
Conclusion
Agricultural businesses in Europe are already facing up to the effects of climate change or are preparing for them. Over 90 percent plan to invest in new technology in the next two years. They are adapting their farming strategies to rising inputs costs, using them more efficiently thus maintaining productivity.
