Agtech is a growing business (if you’ll forgive the pun), but there’s huge complexity involved in turning mechatronic designs into prototypes and scaling to mass production. This blog looks at the development of the agtech market and what you should look for in a manufacturing partner to help realise your designs and accelerate your industrialisation process.
Globally, the agtech market size is valued at $24.08 billion in 2024 and is projected to exceed $43.37 billion by 2030.
It’s no surprise the agtech industry is growing. The need to increase food production to meet the global population growth and the focus on environmental sustainability are still key drivers. The industry is also benefiting from major developments in advanced digital technologies, robotics and AI among others to boost farming efficiency and profitability.
The giants of agricultural machinery production are looking to connect, digitise and automate their equipment to power the precision farming revolution.
But lack of specialist skills, particularly around sensor tech development and mechatronic integration is slowing down their march to market.
Meanwhile, start-up OEMs are brimming with agtech ideas, but in recent years have faced funding challenges to reach the next level of growth.
Both need support to value engineer their offerings and bring them from prototype to mass markets more rapidly.
Here’s what they need to consider as they evaluate potential outsourcing partners.
First things first – you need to get your own house in order before doing anything else. Assemble a diverse internal team with representatives from Engineering, Quality, Manufacturing, Procurement and potentially HR. Appoint a project leader with executive support who can oversee the entire process. Clearly define and agree upon your objectives as a team, whether it’s entering new markets, outsourcing manufacturing or switching providers. Establish what success looks like for your project, and create a detailed plan with clear milestones and assigned tasks.
The manufacturing partner’s skills are crucial. Look for a partner with experience of agricultural technology, industry standards, and specialised materials and components. They should understand the unique challenges of developing high precision sensor tech and ruggedising products for harsh outdoor environments. Assess their ability to scale production and their flexibility in adapting to rapid technological changes in the sector.
Their expertise can help value engineer complex designs for optimal performance in farming, reducing development time and costs. A knowledgeable partner can also navigate any specific regulatory requirements, ensuring compliance and market readiness.
When evaluating a company’s experience, look beyond their years in business. Assess their track record in agtech or with similar products. Consider their portfolio of successful projects, ability to handle complexities unique to your business and adaptability to evolving technologies. Examine their experience in scaling production, managing supply chains and navigating regulations.
An experienced manufacturing partner brings valuable insights that can streamline your product development and production processes. Their experience can help to anticipate and mitigate potential problems, reducing costly mistakes and delays. Experienced partners have established relationships with suppliers and industry stakeholders, potentially opening other doors to you. Plus, a partner with a proven track record inspires confidence in the C-Suite and/or potential investors, enhancing your product’s credibility.
When evaluating a manufacturing partner’s location, consider factors beyond geographical proximity. For example, a partner with multiple facilities across different regions can offer flexibility and risk mitigation. But also consider time-zone differences for communications and the potential need for on-site collaboration during critical phases like design support. Evaluate the location’s impact on shipping costs, lead times and trade regulations. Also, consider the local labour market, infrastructure and political/economic stability of the manufacturing location.
While digital tools have revolutionised remote collaboration, having the option of face-to-face interactions can sometimes be crucial during complex product development stages. But a strategically located partner can help you navigate regional markets, comply with local regulations and potentially reduce costs. A partner with a global presence can offer the best of both worlds: the ability to work closely when needed and the capacity to serve diverse markets efficiently.
Read our blog to explore the possibilities and pitfalls of offshoring, nearshoring and best-shoring.
The partner should offer comprehensive support throughout the product lifecycle, including design, prototyping, manufacturing and post-sales services. They should be able to assist with initial concept development, provide detailed prototyping services, ensure high-quality manufacturing processes and offer robust after-sales support.
End-to-end support ensures a seamless process from concept to market, reducing the time to market and ensuring that any issues are quickly addressed, which enhances the likelihood of product success. Refined processes and quality control measures, honed over time, can ensure consistent product quality and efficiency.
When choosing a manufacturing partner, prioritise face-to-face meetings where possible. These meetings allow you to make your outsourcing objectives and expectations clear to the other party. Observe their level of engagement and interest in your project. Assess their understanding of agtech-specific challenges and experience with similar projects. Discuss their capacity and determine if your project aligns with their capabilities. Explore their technical expertise, quality control measures and ability to scale. This is a two-way process to find whether there is a good fit between the two companies.
In-person meetings provide insights that can’t be gleaned from written communications alone. They help to build rapport and trust, which are essential for a successful long-term partnership. These interactions help you assess the manufacturer’s true capabilities, enthusiasm and cultural fit with your company. They also demonstrate your commitment to the partnership, potentially leading to more favourable terms or dedicated resources.
The initial visit is just to get an understanding of a potential manufacturing partner, its capabilities and people – this is very different to a full audit (see next point). Observe their operations, and evaluate their expertise and engagement. Overall, think about whether you could work with the people there.
Similar to meetings, a site visit provides crucial insights that can’t be gleaned from emails, proposals or a website alone. Observing their operations first-hand helps you assess their work environment, which often correlates with product quality and reliability. This visit can save time and resources by quickly revealing any potential issues before engaging in lengthy Request for Quotation (RFQ) processes or negotiations.
When conducting a site audit of a potential manufacturing partner, focus on in-depth evaluations of their operations, quality control, procurement and customer service teams. Assess their ability to handle specific challenges related to your product, such as seasonal demand fluctuations or engineering changes. Look at their quality management system, data handling procedures and ability to scale production. Evaluate their problem-solving approaches and flexibility in addressing your unique needs. Pay attention to how they manage build data and implement engineering changes.
A thorough site audit allows you to verify the partner’s capabilities beyond surface-level presentations, ensuring they can meet your specific requirements. By interacting with the team that will directly handle your product, you can assess their expertise and commitment. This helps to identify potential risks or limitations early, preventing costly surprises later on. It also offers another opportunity to evaluate cultural fit and communication styles, which are crucial for a smooth, long-term collaboration.
During contract negotiations, focus on establishing clear, mutually beneficial terms. Discuss crucial elements such as warranty provisions, technology requirements, turnaround times and intellectual property (IP) protection. Ensure the agreement covers product testing, design change protocols and material liability. Negotiate specific technical specifications, batch sizes, unit pricing and non-recurring engineering (NRE) charges. Also, consider clauses regarding confidentiality, quality standards and dispute resolution.
Contract negotiations are a critical step in forming a solid foundation for your partnership. They provide an opportunity to align expectations, clarify responsibilities and mitigate potential risks before commencing work. A well-crafted agreement protects your interests, particularly in areas like IP and quality standards. It also ensures transparency in pricing and operational processes, preventing misunderstandings that could lead to costly disputes. While negotiations may seem time-consuming, they’re an investment in a stable, productive long-term relationship that can significantly impact your product’s success.
Looking further ahead, it’s wise to also think about the operational transfer process and any related issues with a potential partner. It might be worth retaining parts of your existing supply chain initially to minimise risk and ensure continuity. You’ll need to work closely with your new partner to review current supply chain terms, material pricing and lead times. Also, introductions will need to be made between your existing suppliers and the new provider. If transitioning from elsewhere, clarify current and future liabilities, including material forecasts, contract notice periods and ownership of tooling. Decide on a transfer strategy, i.e. whether to work with both providers simultaneously or build up stock internally for safety before transferring.
A well-executed operational transfer is crucial for maintaining business continuity and minimising disruptions to your production. By carefully managing the supply chain transition, you can leverage existing relationships while also benefiting from your new partner’s expertise and resources. Plus, a thoughtful transfer strategy helps maintain good relationships with both old and new partners, which can be valuable for future collaborations or contingencies.
Choosing the right manufacturing partner is crucial for navigating a competitive and complex market. By carefully considering the factors described above, agtech companies can find a partner that not only meets their manufacturing needs but also aligns with their strategic goals. This comprehensive approach helps start-ups to maximise resources, overcome scaling challenges and bring innovative products to market efficiently.