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.
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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.
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.
Apart from affordable pricing, ATaaS business models provide the growers with certain features such as easy scalability and upgradation, convenient accessibility, quick deployment, and reliable data backups. By relieving the customers of ownership of agriculture technologies through the service model, the entire responsibility of ownership of assets relies on the service providers, leading to a higher cost of operations for them. Despite these additional costs, by adopting the ATaaS model, service providers are expected to experience better customer retention and recurring revenue. A service model allows the providers to remain in direct contact with their customers continually and receive constant feedback to be able to make their services a better experience for the customers and also retain them for a longer duration.
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The upcoming trend of global agriculture technology-as-a-service is not only prevalent in developed countries, but developing countries have realized its importance as well. The government of several countries has also realized the need and advantages of this business model, and thus their initiatives to promote this business model is expected to further drive the growth of the agriculture technology-as-a-service market.
However, there are certain challenges, which prove to be a restraint in the growth of the global agriculture technology-as-a-service market. As per the preceding figure, the awareness and knowledge about newer technological advancements in agriculture technologies are yet to spread extensively, especially in emerging countries. Price inflation of agricultural produce due to the costly investment of agriculture technologies also brings restraint in the market.
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