Latin America’s medical cannabis market may be a perfect fit for agriculture technology like precision irrigation.
Latin America is one of the world’s most important agricultural hubs, which has created a major market for agriculture technology, including precision agricultural systems. Innovations in this sector include technologies that encompass every aspect of the crop production cycle, including irrigation. Latin America is quickly becoming a central market for a new agricultural sector — medical cannabis. By 2028, the region’s medical cannabis market is expected to reach US$8.5 billion. Because cannabis is a water-intensive crop, Latin America’s medical cannabis industry represents a potentially lucrative market for tech companies capable of delivering innovative agricultural solutions.
Agriculture technology heating up Latin America
Latin America’s tropical and temperate climates make it one of the most ideal regions in the world for growing a wide range of agricultural products. In fact, agriculture is one of the most important sectors in most Latin American economies. As a whole, these countries are responsible for about 16 percent of global food exports, supplying more than 45 percent of the world’s coffee, 60 percent of the world’s bananas, 30 percent of corn, 50 percent of sugar and 50 percent of soybeans.
The region is considered to be a leader in the adoption of agribusiness technology, according to Ciro Echesortu, agriculture technology program director at NXTP Labs, a tech startup accelerator for Latin America’s agribusiness technology industry. Latin America’s agricultural sector has benefited in recent years from advances in precision irrigation technology, which has contributed substantially to increased productivity. The global precision agriculture market is projected to grow from US$4.84 billion in 2018 to US$10.16 billion by 2024. According to a recent report by Global Market Insights, the precision agriculture market in Latin America is expected to experience a growth rate of 18 percent between now and 2025, mostly due to increasing demand for real-time data and analytics to improve productivity.
Latin America’s emerging medical cannabis market
Latin America’s favorable growing environment makes it well suited for not only corn and coffee, but cannabis as well. The region is home to the first country in the modern era to fully legalize both medical and recreational cannabis. Uruguay’s 2014 legalization of cannabis touched off a movement toward more liberal cannabis policies in the region and led to the legalization of medical cannabis products in Mexico, Colombia, Argentina, Peru, Paraguay and Chile.
Thanks to this wave of cannabis legalization, Latin America is quickly emerging as a cultivation hub for the global medical cannabis market. Cannabis cultivators based in Latin American can export cannabis products at a lower cost than in North America and Europe. With a total population of 620 million people, Latin America’s medical cannabis market also offers another route to global expansion for the world’s leading cannabis companies. The growth potential in this market has attracted the world’s top cannabis producers, including Canopy Growth (TSX:WEED,NYSE:CGC), which launched a Latin American division in July 2018 with an acquisition in Colombia that could be worth US$96 million in Canopy stocks.
That same month, in a deal valued at C$193 million, Aphria (TSX:APH) acquired all of Scythian Biosciences’ (TSXV:SCYB) network of cannabis businesses across Jamaica, Argentina and Colombia. More than 40 licensed medical cannabis producers are currently operating in Latin America, with the majority holding licenses in Colombia.
Colombia’s cannabis market leads the way in Latin America
In terms of global agricultural trade, Colombia is already an established leader. Colombia is the third largest coffee exporter in the world and the fourth largest banana exporter. As a member of the Organization for Economic Co-operation and Development, Colombia has free trade export agreements with most of its neighbors as well as countries in the EU and North America. Within Latin America, Colombia is ranked as the third easiest country in which to conduct business, according to the World Bank’s Doing Business annual report. The country also has the third highest GDP in South America.
The combination of ideal growing conditions and a relatively low cost of labor and utilities has made Colombia into one of the world’s top flower producers. Colombia’s exports of roses, carnations, orchids and other flowers total more than US$1 billion every year. The country supplies more than 70 percent of United States’ cut flower imports.
On top of its ideal growing climate, Colombia’s well-established flower industry has given the country the infrastructure and global trade experience to become a world leader in cannabis production. According to Reuters, Colombia’s medical cannabis exports could surpass the nation’s more traditional export products of coffee, bananas and flowers combined in only a few years.
Colombia is the second largest federally regulated medical cannabis market in the world by population and has the most comprehensive legal medical cannabis framework in Latin America. Under this framework, cannabis companies are allowed to simultaneously hold both cultivation and manufacturing licenses, allowing for vertical integration. Colombia also allows companies to sell and export THC-based medical cannabis extracts. It’s estimated that the nation could soon supply as much as 44 percent of global demand for medical cannabis. Beginning in 2019, Colombia is projected to produce upwards of 40.5 tons of cannabis each year.
Water-intensive cannabis crops and precision irrigation tech
Latin America’s emerging medical cannabis market is providing opportunities for growth to agriculture technology companies. This is especially relevant to those that can offer precision irrigation technology specifically tailored to warm climate cannabis cultivation.
“Cannabis is a water-intensive crop, and optimizing water input through precision irrigation systems can help maximize crop quality and yield as well as reduce costs and increase profit margins,” Ohad Haber, CEO of Israel-based Water Ways Technologies (TSXV:WWT), told Investing News Network. Water Ways has provided irrigation systems to agricultural operators in Latin America for over 15 years. The company’s Data Ways System is a precise irrigation system that collects real-time data from sensors within the crop, enabling cultivators to collect and analyze data and control the system from a mobile device.
“Data Ways reduces water waste and maintains consistency in crop health through smart management tools such as remote sensors that can monitor a variety of metrics including moisture levels, automatically collect data and make rapid irrigation adjustments to ensure all plants are optimally watered and fertilized,” said Haber.
The market for precision agriculture is expected to reach US$10.55 billion by 2025. Irrigation represents the largest submarket for precision agriculture technologies. The rising need for water conservation alongside the booming cannabis market could increase demand for precision irrigation technologies in major cannabis markets such as Latin America.
Recognizing the early entry opportunity in this emerging subsector, established agriculture technology companies are refining their products and services for the cannabis cultivation industry. Through a US$500,000 partnership with Kibbutz Gan Shmuel and Cronos Group (NASDAQ:CRON,TSX:CRON), Water Ways developed a customized cannabis irrigation, fertigation and Internet of Things control system for a 43,055 square foot greenhouse cultivation project in Israel.
The success of this project led Water Ways to leverage its experience in the Latin American agricultural market and implement its Data Ways system when planning a number of medical cannabis cultivation projects in Colombia. The company plans to build out its Latin American cannabis agriculture technology services into other neighboring markets, offering turnkey seed-to-packing project implementation and irrigation solutions to cannabis and hemp cultivators.
Latin America’s ideal climate for growing crops alongside a more liberal government stance on medical cannabis is attracting cannabis cultivators to the region. Latin American countries like Colombia represent an emerging market for not only the billion dollar cannabis industry but for agritech solutions as well. Those companies with proven cannabis-focused technologies that have established relationships in Latin America’s agricultural space could be well positioned to gain a foothold in precision agriculture.
This INNSpired article was written according to INN editorial standards to educate investors.
INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.
As investors continue to prioritize cannabis opportunities in the US, market watchers expect mergers and acquisitions (M&A) to play a role in the future for Canadian companies.
A consolidation trend has been expected in the Canadian cannabis space for some time now based on the size of the market compared to the number of operations in the country.
BioHarvest Sciences Inc. Unveils the Unique Polyphenolic Content of Its Upcoming Olive-Based Nutraceutical
The product will include polyphenols known to have significant health benefits.
BioHarvest Sciences Inc. (CSE: BHSC) (“BioHarvest” or the “Company”) has reached an important milestone in its development program of additional Nutraceuticals. The olive-based Nutraceutical product scheduled for market availability in the second half of 2022 will contain the following unique matrix of polyphenols: hydroxytyrosol, trosol, and verbascoside. These compounds are the major polyphenols in naturally grown olives and are responsible for the high antioxidant activity of olives and olive oil. Importantly, the BioHarvest olive-based Nutraceutical product will provide all the benefits of olives and olive oil with a low calorie count per serving.
Cresco Labs (CSE:CL) (OTCQX:CRLBF) (“Cresco” or the “Company”), one of the largest vertically integrated multistate cannabis operators in the United States, announced today that it will report financial results for the fourth quarter and full year ended December 31 st , 2020 on Thursday March 25 th , 2021 before the market opens.
The Company will host a conference call and webcast to discuss its financial results and provide investors with key business highlights on Thursday March 25 th , 2021 at 8:30am Eastern Time (7:30am Central Time).
Canopy Growth to Participate in BofA Securities Virtual Consumer & Retail Technology Conference on March 11, 2021
Canopy Growth Corporation (TSX: WEED) (NASDAQ: CGC) (“Canopy Growth” or “the Corporation”) announced today that EVP & CFO Mike Lee will be participating in a fireside chat at the BofA Securities Virtual Consumer & Retail Technology Conference on Thursday, March 11, 2021 at 9:30am ET .
Hill Street Beverage Company Inc. (TSXV: BEER) (“Hill Street” or the “Company”). The Company announces that further to its press release dated March 2, 2021, it has obtained TSX Venture Exchange approval to extend the closing date of its previously announced private placement of units (“Units”) until April 7, 2021. Each Unit is comprised of one (1) common share and one (1) warrant, exercisable for one common share at price of $0.11 per share, for a period of three (3) years from the date of Closing. The Company applied to extend the date of closing to allow a greater number of interested investors to participate.
For more information regarding the Company or the offering, please contact firstname.lastname@example.org, or