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What barriers prevent farmers and firms from accessing agricultural technologies? And how do small-scale farmers and small and medium enterprises (SMEs) use technologies profitably?

A new brief from the Food and Agriculture Organization of the United Nations (FAO) Investment Centre and Innovations for Poverty Action (IPA) synthesizes evidence from 30 experimental and quasi-experimental studies on small-scale farmers’ technology adoption in different countries. 

“The evidence presented in this brief will help policymakers and investors better understand the technology adoption decision of small-scale farmers, factors that inhibit technology uptake, and how farmers can sustain investment in technology and increase profits,” said Nuno Santos, Deputy Director, FAO Investment Centre.

Breaking barriers 

By adopting certain agricultural technologies, farmers could increase productivity and profitability. But small-scale farmers often face barriers to adopting technologies in a financially sustainable manner.

Barriers include lack of capital such as access to credit and savings and market constraints like weak supply chains. Farmers and SMEs may be unwilling to change their farming practices, or they could lack vital information around the profitability of technologies.

The relatively low uptake of technologies amongst small and medium-sized enterprises (SMEs) in low- and middle-income countries (LMICs) means there’s limited evidence on how technologies can boost productivity – or how long it takes for farmers to make profits after they’ve introduced a new technology.

“Smallholder farmers and SMEs face multiple barriers to technology adoption at the same time,” said Claudia Casarotto, Chief Global Programs Officer, IPA. “New agricultural technologies should be introduced alongside other mechanisms that help farmers overcome barriers to their adoption, such as training and infrastructure development.” 

Support for mechanization

High initial investment costs of acquiring and implementing technology can be a big barrier for farmers and SMEs in LMICs – with small budgets and limited resources. To make technologies affordable, governments and development organizations can offer technical assistance, subsidies, grants, or low-interest loans to farmers and SMEs for purchasing or renting agricultural equipment.

For instance, a low-cost voucher scheme was shown to increase agricultural mechanization rentals in India by 30 percent. In the Dominican Republic, vouchers reduced the purchase price of irrigation equipment, which increased adoption by more than 60 percent. 

Farmers and SMEs may also be hesitant to mechanize or adopt technology due to a lack of technical skills and knowledge. They may feel overwhelmed by the complexity of new tools or uncertain about their ability to use them effectively. 

“Promotional campaigns and training for farmers – combined with incentives, subsidies, financial inclusion and access to capital – have been shown to successfully increase farmers’ uptake of technologies in Ethiopia, Uganda, Kenya and the Dominican Republic,” said Casarotto. “Improved access to finance, understanding of market dynamics, support to implement viable technologies, and listening to farmers’ expressed needs can help reduce constraints.”

Adopting climate-smart, resilient technologies 

The brief outlines how policymakers and investors can support small-scale farmers and SMEs to adopt cost-effective agricultural technologies that build climate resilience.

For example, conservation agriculture (CA) can offer a low-cost, labour-saving, and climate-friendly alternative to conventional tillage. It aims to control soil degradation, mitigate droughts, increase crop yields, and reduce production costs – while mitigating climate change by sequestering soil carbon.

Research shows how farmers in East Africa who adopted CA benefitted from higher net returns over time, in part, due to reduced labour and production costs. Yet costs were initially higher and more variable – which could also dissuade farmers from taking up CA.

“Policies and knowledge can play a role in supporting farmers to adopt climate-smart technologies, which can bring multiple benefits – including cost, labour and environmental benefits,” said Atisha Kumar, Economist, FAO Investment Centre.

Engaging with farmers and supporting them in using technology over the longer term is critical. Women in particular often face limited access to markets and time constraints. 

Profitability of technology adoption 

Research on technology adoption programmes often don’t collect detailed data on the cost of production or profit for farmers – or on uptake and profitability disaggregated by gender, age or education level. The brief calls for more research to address these key information gaps. 

What is clear is that the profitability of agricultural technology investments varies, based on factors such as location, market demand, and the specific needs of farmers and SMEs. Appropriate technology selection, incentives, training and market access are crucial. 

Farmers may find the benefits and return on investment (ROI) for technology investments take several years to materialize. With this in mind, farmers and SMEs often need ongoing support for mechanization or transitioning to new technologies. 

Yet, by addressing issues related to affordability, knowledge, and access to support services, stakeholders can empower farmers to harness the benefits of agricultural technologies.