At a glance
- Global agriculture faces growing pressures from climate change and resource inefficiencies to demographic shifts. These challenges threaten food security and profitability but are also catalysing a transformative opportunity.
- Precision agriculture technologies can optimise input use and automate operations. We see scope for sustainability gains, greater efficiencies and
compelling economic returns. - Our analysis suggests adoption could unlock $15 billion in incremental
agricultural equipment industry revenue by 2035, while improving yields
and reducing chemical use. - The likely adoption curve signals a multi-decade opportunity for capital
allocation and a reshaping of industry dynamics.
Global agriculture faces mounting pressures – from climate change and resource inefficiencies to demographic shifts – threatening food security and profitability. Yet these challenges are catalysing a transformative opportunity. Precision agriculture technologies, which optimise input use and automate operations, are poised to deliver both sustainability gains and compelling economic returns. Our analysis suggests adoption could unlock $15 billion in incremental agricultural equipment industry revenue by 2035, while improving yields and reducing chemical use. The adoption curve ahead signals a multi-decade opportunity for capital allocation into technologies that redefine agricultural efficiency and address myriad environmental impacts.
The root problems threatening global agriculture
Tech solutions are sowing the seeds of change
Figure 1: Existing precision agriculture solution penetration, US soy (USDA, 20248)
Source: Columbia Threadneedle Investments, November 2025.
Farm management software is simultaneously becoming more sophisticated, connecting field operations with administrative functions. These platforms integrate data from multiple sources to optimise decision-making and automate regulatory compliance tasks, creating additional value for farmers beyond hardware improvements.
Sprouting opportunities: adoption is primed to accelerate
Several converging factors support the increased adoption rate of precision agriculture technologies. Regulatory developments, particularly in Europe, are creating tailwinds by limiting agricultural chemical use and establishing clearer frameworks for autonomous equipment operation. Labour shortages are
simultaneously intensifying across major agricultural markets, with demographic trends and immigration policies further constraining labour availability
Figure 2: We project that +55% of revenue growth compared to 2024 will come from precision planting and variable rate fertiliser technologies
Source: Columbia Threadneedle Investments, November 2025
Farmer attitudes toward technology are also evolving, with younger producers more willing to adopt new solutions. Our analysis found that education levels and digital familiarity are strong predictors of precision agriculture adoption, both of which are on the rise among farm operators. Additionally, the growing support ecosystem of dealerships and advisors is helping farmers navigate the transition to more technologically advanced operations.
Market conditions for adoption vary significantly by region. Our analysis indicates North America and Western Europe will drive 76% of precision agriculture growth due to farm size, labour constraints, and regulatory environments. The United States, with its larger average farm size (463 acres) and high equipment spending per acre ($600-1,200), presents particularly favourable adoption conditions. Brazil is emerging as another key market as internet connectivity improves, with larger farm sizes in key regions like Mato Grosso and multiple annual cropping cycles supporting quicker payback periods for precision technology investments.
Reaping returns: our analysis of the investment and sustainability
impacts
Precision agriculture represents a substantial growth opportunity for agricultural equipment manufacturers. Based on our analysis, related technologies could drive $11 billion (+14%) of incremental industry revenue by 2035 as equipment manufacturers capture 30-40% of farmer savings from yield increases and input efficiencies. This growth will fundamentally shift the economics of agricultural equipment, increasing the percentage of agricultural GDP spent on machinery from the historical average of 15% to 15.9% by 2030 and 18.3% by 2035.
Even more compelling is the margin impact of precision agriculture. Precision equipment solutions typically command gross margins 1.5-2x higher than conventional agricultural equipment. Deere’s large precision agriculture equipment achieves 45% gross margins compared to 30% across their overall business, while AGCO’s Precision Planting division operates at margins twice the company average. Our projections suggest precision agriculture could contribute a 4-9 percentage point improvement in gross margins for leading agricultural equipment makers by 2030, with variation depending on company positioning and strategy execution.
We estimate that global adoption of precision agriculture technologies will drive substantial environmental benefits. In our base case scenario for technology adoption, global herbicide application rates per hectare would be reduced by 14% by 2035 compared to 2024, fertiliser application rates reduced by 7% and yields improved by 5%.
Figure 3: We project that North American precision agriculture penetration will be faster than most other geographies, driving improved outcomes and reduced environmental impact
Source: Columbia Threadneedle Investments, November 2025
We see three clear routes through which agricultural equipment manufacturers can capitalise further on this opportunity. First, they can enhance recurring revenue through pushing equipmentas-a-service models. For example, Deere aims to increase subscription fees to 10% of total revenue by 2030. Second, agricultural equipment companies can further commercialise their data platforms and sales to grow revenues. These companies have built up large user bases for their software platforms, with Deere already connecting 455 million acres. We believe that as additional functionality is built into these platforms, these companies can start charging subscription fees and partnering with different commercial data users. Finally, agricultural equipment companies can increasingly offer retrofit solutions to accelerate technology adoption by overcoming the slow replacement cycle of agricultural equipment. In North America, only 7% of planters and sprayers are replaced annually, but retrofits allow farmers to access precision technology without purchasing entirely new machinery. AGCO is particularly focused on the retrofit opportunity.
The bottom line
The convergence of technology advances, regulatory tailwinds, and shifting farmer demographics positions precision agriculture for accelerated adoption. Beyond improving operational efficiency and reducing environmental impact, these technologies offer attractive economics for equipment manufacturers, with highermargin products and recurring revenue streams set to reshape industry dynamics. Our analysis suggests precision agriculture could unlock billions in incremental revenue while delivering measurable sustainability gains.
