Agrotech Faces Financing, Adoption Hurdles in Mexico: Experts

Innovating in Mexico's agricultural sector requires bridging the gap between advanced technology and local realities, experts on the matter say. According to Santiago Correa, CEO, Sioma, and Miguel Gallo, Director General, Grupo Paisano, startups must navigate significant structural challenges in financing, technology adoption, and land tenure to succeed.

Correa and Gallo noted that Mexico's agricultural landscape is highly diverse, ranging from subsistence farming to ultra-technified greenhouses. This diversity, combined with a fragmented land tenure system of ejidos and small properties, and an aging producer population with an average age of 57, creates a complex environment for new technologies. Correa, whose company, Sioma, scales technology to improve worker productivity, pointed out that solutions that work in other Latin American countries do not always apply to the Mexican context.

Both experts consider the lack of adequate financing for small and medium-sized producers a key challenge to address, as traditional banking models often use risk criteria that exclude the agricultural sector. Both agreed that investment funds need to adopt a more patient and empathetic approach, considering returns beyond the purely financial, such as social and environmental regeneration.

This financing gap exists within a production environment defined by multiple risks, including climate events like droughts and unpredictable rainfall, the volatility of international commodity prices, and low levels of technification. While Mexico exports over US$23 billion in fruits and vegetables annually, formal financing covers only 12% of the future value of these harvests. Traditional credit systems often require detailed physical paperwork and collateral, with approval times that do not align with the needs of a planting and harvesting cycle, experts note.

Despite the hurdles, significant opportunities exist, with the transition to regenerative agriculture a key area for growth. They concluded that startups and investment funds are positioned to connect ancestral farming knowledge with modern tools, which can increase productivity, bring dignity to farm work, and help younger generations see a viable future in the sector. "If the population continues to grow and the land continues to be negatively affected, losing its productive capacity, we need to find better ways to ensure there is a greater volume of food for everyone, and that this food is healthy,” Manuel Aguirre, Marketing and Alliances Manager, Promotora Social México (PSM), told MBN, urging for continuous discussion on increasing the agri-food sector’s capacity to produce more food with less resources.