Farmers have become more selective after years of pressure from a weak commodity cycle, but they are increasingly willing to adopt generative artificial intelligence tools — particularly in Latin America, according to McKinsey’s latest Global Farmer Insights survey.
The study, based on responses from 5,500 farmers across 10 countries including Brazil, found that 26% of Latin American producers use generative AI tools, the highest rate among the regions surveyed and well above the 17% global average. Most farmers in the region, however, said they rely only on free tools.
In the US, 11% of farmers said they use paid generative AI solutions — systems able to produce content including text, images, video and computer code. In agriculture, those tools are primarily being used for crop planning and management.
That growth contrasts with what McKinsey described as only a “modest” increase in the adoption of traditional agtech products. The consultancy said the trends are increasingly connected, as farmers turn to AI tools that can compete with products developed by agricultural technology startups.
“Agtech adoption in the US has grown only 2% since 2024, raising questions about how much room remains for growth in mature markets,” the study said.
Farmers are also increasingly comfortable getting advice through digital channels, even as trusted technical advisers retain a major role in purchasing decisions.
The share of producers who prefer online channels rose 14 percentage points from 2024 to 36%. Still, sales representatives remain the biggest influence on purchasing decisions, McKinsey said.
Agronomists also continue to play a central role, with 56% of farmers citing them as a key factor in their decisions.
Biological Inputs
Biological crop inputs are another area of agricultural innovation that has remained resilient despite tighter farm economics, McKinsey said, though adoption “still depends on external support such as upfront financing and government subsidies.”
Use varies significantly by crop type. Among growers of specialty crops such as fruits, vegetables and nuts, 52% reported using biological crop-protection products, compared with 36% of farmers growing commodity crops such as soybeans and corn. McKinsey attributed the gap in part to the higher commercial value of specialty crops.
The same pattern holds for biostimulants: 59% of specialty-crop growers reported using them, compared with 43% of commodity-crop producers.
Latin America again leads geographically. Among grain farmers, 45% said they use biological crop-protection products, compared with a 36% global average. For biostimulants, usage reached 52% in Latin America versus 43% worldwide.
An asparagus grower interviewed for the survey said the risk of exceeding chemical-residue limits had pushed the farm toward alternative products.
“Our product can be rejected or subject to penalties if we exceed certain chemical-residue thresholds, so we have started using products based on algae and vegetable-oil extracts to manage temperature,” the farmer said.
Caution Prevails
McKinsey also asked farmers whether they plan to increase spending over the next 12 to 18 months. Since its previous survey in 2024, the net share of producers planning to raise investment has dropped by 24 percentage points, pointing to a more restrictive spending environment.
In Brazil, the decline was close to the global figure, at 25 percentage points. Argentina recorded the steepest fall, at 49 points, while France was the only country surveyed to post an increase, of 4 percentage points.
While respondents planning to increase spending still outnumber those planning cuts, more than 35% of farmers said they intend to reduce spending on crop nutrients — the first time that threshold has been reached since McKinsey began the survey in 2020.
“Since profitability last peaked in 2021/22, commodity prices have declined while the costs of fertilizer, labor, land, equipment and financing have remained high or volatile,” McKinsey said.
The consultancy said conditions worsened following the conflict in Iran, which drove costs higher. Combined with climate uncertainty and other pressures, that has made on-farm decisions riskier and affected companies serving agricultural producers, McKinsey said.
Rising input costs are farmers’ biggest concern, cited by 53% of respondents. Weather events followed at 45%, commodity-price volatility at 29% and water scarcity at 22%.
Some farmers are maintaining application levels while trading down to cheaper products or postponing purchases.
“Farmers are opting for more economical alternatives, for example switching from branded products to generics, and delaying purchases such as fertilizer and machinery,” the study said.
Among grain farmers seeking cheaper crop-protection products, North America showed the strongest intention to move toward generics, at 36%, followed by Europe at 30%.
In Latin America, 33% of farmers expect to switch to generics. At the same time, a significant 23% said they plan to move in the opposite direction, toward branded products.
McKinsey said those postponed decisions could create pent-up demand that suppliers will need to anticipate as farm profitability recovers.
This story was translated from the original Portuguese with the assistance of artificial intelligence and reviewed by The AgriBiz editorial staff.
