Agricultural production in mountain areas is particularly exposed to climatic and socio-economic risks. Diversifying agricultural production in mountain areas is incentivised by state policies to ensure labour, income and the protection of landscape and biodiversity alike. Statistic data indicates the potential of mountain regions to enter in agricultural niche production. Such niche production requires thorough mechanization, because adequate workload and safety of labourers are of particular importance. While the need for mechanisation in mountain areas is generally recognised, approaches to the type of mechanisation are divided. Two opposing approaches can be recognised: High-tech, digitalised, state-of-the-art machines on the one hand. On the other hand, the upgrading of existing machines, e.g. retrofitting, to make them compatible for use in extreme mountain environments. Both approaches potentially enhance small-scale farmers production in mountain areas. Besides the particular dynamics of smallholder mechanization, the elevated costs of high-tech solutions are a significant obstacle. Cereal cultivation as example for niche production in alpine areas confirms the challenges of smallholder mechanization. Farmers are interested in growing cereals on alpine lands to complement livestock farming. Taking the region South Tyrol as example, we estimate the available areas suitable for cereal production and potential income. The estimations indicate sufficient suitable areas and yields, so that the production of cereals can become an attractive economic niche. However, cost efficient mechanization of slope areas under crop remains a central challenge. In this regard, the selection of the appropriate mechanization, i.e. high-tech or retrofitting, is of central concern.