The increasing opportunities of gaining more insight in process and product characteristics via innovative digital solutions in in stark contrast with the rate at which they are being integrated in the food industry.

Agri-food companies, as an important segment of the manufacturing industry, are facing challenges to become even more efficient in their production processes, both in the use of resources as in utilising raw materials as best and efficient as possible, but they also need to be flexible enough to respond to fast changing consumer demands and changes in global value chains. Furthermore, they need to work with the complexity of raw materials, being biological products, often showing large (seasonal) variations, and that are being transformed into a wide range of high-quality end products with a complex composition. This production process is influenced by various factors and the final product not only needs to be of high quality, tasty and competitive but also – and foremost – has to be safe for human consumption. Additional challenges include increasing quality demands, traceability, a wider product variety, a constant pressure on costs and delivery times, personnel costs, difficulties to attract specialised personnel, etc.

All over Europe, the agri-food industry is typically a SME drive sector with 99% of the companies active in food and drink industry in Europe being SMEs. The agri-food SMEs, as well as SMEs in other sectors throughout Europe, are struggling, more than large companies, to keep up with the pace of digital transformation. The reasons for this are manifold, but mostly they tend to be uncertain of the business case, lack access to technically skilled employees, as the agri-food industry seems to be a less attractive sector for these technical profiles, and access to repositories of well-structured data. SMEs also fear poor or uncertain return on investments.

The increasing opportunities of gaining more insight in process and product characteristics via innovative digital solutions in in stark contrast with the rate at which they are being integrated in the food industry. This discrepancy is due to a number of factors:

• In most situations ‘legacy machines’ need to be taken into account. It is a challenge to integrate those as well in the digitalisation transformation as they are often crucial pieces of machinery that are not easily replaced (investment cost, life cycle, ...)
• There are few “ready to use” digital solutions. All systems have to be individually applied and optimized. For an individual food company, production process, product.
• In addition, integration needs to be executed in such a way that food safety and hygienic processing is not compromised and that all regulations are being met (materials being used, contact with the food product, ...)
• Assessing the technological and economic feasibility (ROI) of integrating a digital solution in a processing line for a specific case is often very difficult as it not only comprises an estimation of the cost of the integration in machinery but also an estimation of the impact/ revenue of applications linked to this digital innovation. Solutions must be economically feasible (low margins due to fierce price competition

In addition, there is a set of barriers that companies, specially SMEs, face when attempting the commercialisation and scale-up phases of innovative solutions, such as is the case of innovative
digital technologies:  (i) Regulatory barriers have a varying impact on scaling up within the Single Market and on cross-border commercialisation of innovation. Some, including regulations enhancing and securing competition, antitrust and mergers and acquisitions regulations, market entry regulations, price regulations or workers' health and safety regulations generally do not present barriers to cross-border commercialisation of the examined innovations; (ii) Market demand is one of the most important barriers to investment. Often, a new market around innovative products and services needs to be built; thus, calls for improvements in ecosystems to ensure wide uptakes; (iii) Financing needs, which vary in terms of the type of technologies used or developed. 

When it comes to financing constraints, a key difficulty is that the right type of finance is not always available; and (iv) Access to talent and skills and, more specifically, the mobility of talent.
To accelerate the digital transformation of the agri-food sector and by doing so also the Green Transition, there is a clear need for financial and advisory support that will take away the barriers and
hurdles for SMEs in the ecosystem for digital innovation in the agri-food value chain to take the leap towards embracing, implementing and investing in innovative digital solu