Digital agriculture
Digital agriculture refers to tools that digitally collect, store, analyze, and share electronic data and/or information along the agricultural value chain. Other definitions, such as those from the United Nations Project Breakthrough, Cornell University, and Purdue University, also emphasize the role of digital technology in the optimization of food systems.
Sometimes known as “smart farming” or “e-agriculture,” digital agriculture includes precision agriculture. Unlike precision agriculture, digital agriculture impacts the entire agri-food value chain — before, during, and after on-farm production. Therefore, on-farm technologies, like yield mapping, GPS guidance systems, and variable-rate application, fall under the domain of precision agriculture and digital agriculture. On the other hand, digital technologies involved in e-commerce platforms, e-extension services, warehouse receipt systems, blockchain-enabled food traceability systems, tractor rental apps, etc. fall under the umbrella of digital agriculture but not precision agriculture.
Historical context
Emerging digital technologies have the potential to change farming beyond recognition. The Food and Agriculture Organization of the United Nations has referred to this change as a revolution: “a ‘digital agricultural revolution’ will be the newest shift which could help ensure agriculture meets the needs of the global population into the future.” Other sources label the change as “Agriculture 4.0,” indicating its role as the fourth major agricultural revolution. Precise dates of the newest agricultural revolution are unclear. Frankelius considers 2015 as the starting point of the Fourth Agricultural Revolution. Lombardo et al. date the starting point back to 1997, when the first European conference on precision agriculture took place. The World Economic Forum announced that the “Fourth Industrial Revolution” will unfold throughout the 21st century, so perhaps 2000 or shortly thereafter marks the beginning of Agriculture 4.0.Agricultural revolutions denote periods of technological transformation and increased farm productivity. Agricultural revolutions include the First Agricultural Revolution, the Arab Agricultural Revolution, the British/Second Agricultural Revolution, the Scottish Agricultural Revolution, and the Green Revolution/Third Agricultural Revolution. Despite boosting agricultural productivity, past agricultural revolutions left many problems unsolved. For example, the Green Revolution had unintended consequences, like inequality and environmental damage. First, the Green Revolution exacerbated inter-farm and interregional inequality, typically biased toward large farmers with the capital to invest in new technologies. Second, critics say its policies promoted heavy input use and dependence on agrochemicals, which led to adverse environmental effects like soil degradation and chemical runoff. Digital agriculture technologies have the potential to address negative side effects of the Green Revolution.
In some ways, the Digital Agriculture Revolution follows patterns of previous agricultural revolutions. Scholars forecast a further shift away from labor, a slight shift away from capital, and intensified use of human capital — continuing the trend the British Agricultural Revolution started. Also, many predict that social backlash — possibly around the use of artificial intelligence or robots — will arise with the fourth revolution. Since controversy accompanies every societal transformation, the Digital Agricultural Revolution isn't new in that respect.
In other ways, the Digital Agriculture Revolution is distinct from its predecessors. First, digital technologies will affect all parts of the agricultural value chain, including off-farm segments. This differs from the first three agricultural revolutions, which primarily impacted production techniques and on-farm technologies. Second, a farmer's role will require more data analytics skills and less physical interaction with livestock/fields. Third, although farming has always relied on empirical evidence, the volume of data and the methods of analysis will undergo drastic changes in the digital revolution. Finally, increased reliance on big data may increase the power differential between farmers and information service providers, or between farmers and large value chain actors.
Technology
Digital agriculture encompasses a wide range of technologies, most of which have multiple applications along the agricultural value chain. These technologies include, but are not limited to:- Cloud computing/big data analysis tools
- Artificial intelligence
- Machine learning
- Distributed ledger technologies, including blockchain and smart contracts
- The Internet of Things, a principle developed by Kevin Ashton that explains how simple mechanical objects can be combined into a network to broaden understanding of that object.
- Digital communications technologies, like mobile phones
- Digital platforms, such as e-commerce platforms, agro-advisory apps, or e-extension websites
- Precision agriculture technologies, including
- * Sensors, including food sensors and
- * Guidance and tracking systems
- * Variable-rate input technologies
- * Automatic section control
- * Advanced imaging technologies, including satellite and drone imagery, to look at temperature gradients, fertility gradients, moisture gradients, and anomalies in a field
- * Automated machinery and agricultural robots
Effects of digital agriculture adoption
Efficiency
Digital technology changes economic activity by lowering the costs of replicating, transporting, tracking, verifying, and searching for data. Due to these falling costs, digital technology will improve efficiency throughout the agricultural value chain.On-farm efficiency
On-farm, precision agriculture technologies can minimize inputs required for a given yield. For example, variable-rate application technologies can apply precise amounts of water, fertilizer, pesticide, herbicide, etc. A number of empirical studies find that VRA improves input use efficiency. Using VRA alongside geo-spatial mapping, farmers can apply inputs to hyper-localized regions of their farm — sometimes down to the individual plant level. Reducing input use lowers costs and lessens negative environmental impacts. Furthermore, empirical evidence indicates precision agriculture technologies can increase yields. On U.S. peanut farms, guidance systems are associated with a 9% increase in yield, and soil maps are associated with a 13% increase in yield. One study in Argentina found that a precision agriculture approach based on crop physiological principles could result in 54% higher farm output.Digital agriculture can improve the allocative efficiency of physical capital within and between farms. Often touted as “Uber for tractors,” equipment-sharing platforms like Hello Tractor, WeFarmUp, MachineryLink Solutions, TroTro Tractor, and Tringo facilitate farmer rental of expensive machinery. By facilitating a market for equipment sharing, digital technology ensures fewer tractors sit idle and allows owners to make extra income. Furthermore, farmers without the resources to make big investments can better access equipment to improve their productivity.
Digital agriculture improves labor productivity through improved farmer knowledge. E-extension allows for farming knowledge and skills to diffuse at low cost. For example, the company Digital Green works with local farmers to create and disseminate videos about agricultural best practices in more than 50 languages. E-extension services can also improve farm productivity via decision-support services on mobile apps or other digital platforms. Using many sources of information — weather data, GIS spatial mapping, soil sensor data, satellite/drone pictures, etc. — e-extension platforms can provide real-time recommendations to farmers. For example, the machine-learning-enabled mobile app PLANTIX diagnoses crops’ diseases, pests, and nutrient deficiencies based on a smartphone photo. In a randomized control trial, Casaburi et al. found that sugarcane growers who received agricultural advice via SMS messages increased yields by 11.5% relative to the control group.
Finally, digital agriculture improves labor productivity through decreased labor requirements. Automation inherent in precision agriculture — from “milking robots on dairy farms to greenhouses with automated climate control” — can make crop and livestock management more efficient by reducing required labor.
Off-farm/market efficiency
Besides streamlining farm production, digital agriculture technologies can make agricultural markets more efficient. Mobile phones, online ICTs, e-commerce platforms, digital payment systems, and other digital agriculture technologies can mitigate market failures and reduce transaction costs throughout the value chain.- Reducing information asymmetry: Price information affects competitive markets’ efficiency because it impacts price dispersion, arbitrage, and farmer and consumer welfare. Since the marginal cost of digitally delivering information approaches zero, digital agriculture has the potential to spread price information. Aker and Fafchamps find that the introduction of mobile phone coverage in Niger reduced spatial price dispersion for agri-food products, especially for remote markets and perishable goods. Similarly, price information provided by Internet kiosks in India led to an increase in farmers’ net profits as traders lost monopsony power. Other examples of digital platforms for price information include MFarm and Esoko.
- Matching buyers and sellers: E-commerce lowers the search costs of matching buyers and sellers, potentially shortening the value chain. Rather than go through dozens of intermediaries, farmers can sell directly to consumers. Market access services can also solve the matching problem without necessarily hosting online transactions. For example, Esoko sends market information to agents and farmers, connecting them to commodity buyers. All of these matching platforms help smallholders coordinate with buyers and enter both regional and global value chains. Finally, it's important to note that digital technologies can also facilitate matching in financial and input markets, not just producer-to-consumer output sales.
- Lowering transaction costs in commercial markets: Digital payments — whether integrated in e-commerce platforms or in mobile money accounts, e-wallets, etc. — reduce transactions costs within agricultural markets. The need for safe, rapid monetary transactions is particularly apparent in rural areas. Plus, digital payments can provide a gateway to bank accounts, insurance, and credit. Using distributed ledger technologies or smart contracts is another way to reduce trust-related transaction costs in commercial markets. Many retail and food companies have partnered with IBM to develop blockchain pilots related to food safety and traceability, and Alibaba is testing blockchain to reduce fraud in agri-food e-commerce between China and Australia/New Zealand.
- Lowering transaction costs in government services: Digital payments can also streamline government delivery of agricultural subsidies. In 2011, the Nigerian Federal Ministry of Agriculture and Rural Development started delivering fertilizer subsidy vouchers to e-wallets on mobile phones; by 2013, they had reached 4.3 million smallholders nationwide. Compared to the previous program, the e-vouchers cut costs — from 2011 to 2013, the cost per smallholder farmer receiving fertilizer went from US$225–300 to US$22. The e-vouchers also reached more smallholders, increasing from between 600,000-800,000 in 2011 to 4.3 million in 2013. In the second phase of the program, the Nigerian government developed the Nigerian Agricultural Payment Initiative, which distributed PIN-enabled ID cards that hold subsidy information and provide access to loans and grants. Other e-wallet/e-voucher systems for agricultural subsidies exist or have been piloted in Colombia, Rwanda, Zambia, Mali, Guinea, and Niger. Besides reducing subsidy costs, governments can harness digital technology to save time. When Estonia implemented their e-ID and X-Road system, time spent applying for agricultural subsidies decreased from 300 minutes to 45 minutes per person.
Equity
Digital agriculture shows promise for creating a more equitable agri-food value chain. Because digital technologies reduce transaction costs and information asymmetries, they can improve smallholder farmers’ market access in a number of ways:Financial inclusion
Digital agriculture technologies can expand farmers’ access to credit, insurance, and bank accounts for a number of reasons. First, digital technology helps alleviate the information asymmetry that exists between farmers and financial institutions. When lenders decide a farmer's credit ceiling or insurance premium, they're usually uncertain about what risks the farmer presents. Digital technology reduces the costs of verifying farmers’ expected riskiness. The Kenyan company M-Shwari uses customers’ phone and mobile money records to assess creditworthiness. Organizations like FarmDrive and Apollo Agriculture incorporate satellite imagery, weather forecasts, and remote sensor data when calculating farmers’ loan eligibility. Drone imagery can confirm a farmer's physical assets or land use and RFID technology allows stakeholders to monitor livestock, making it easier for insurers to understand farmers’ riskiness. In all instances, low-cost digital verification reduces lenders’ uncertainty: the questions “will this farmer repay the loan?” and “what risks does this farmer face?” become clearer.Second, digital technology facilitates trust between farmers and financial institutions. A range of tools create trust, including real-time digital communication platforms and blockchain/distributed ledger technology/smart contracts. In Senegal, a digitalized, supply-chain-tracking system allows farmers to collateralize their rice to obtain the credit necessary for planting. Lenders accept rice as collateral because real-time, digital tracking assures them the product wasn't lost or damaged in the post-harvest process.
Market inclusion
Middlemen often extract exorbitant rents from farmers when purchasing their harvest or livestock. Why? First, smallholders in remote areas may be unaware of fair market prices. As a result, middlemen accrue significant market power and profits. A study conducted in the central highlands of Peru found that farmers who received market price information via mobile phone SMS increased their sales prices by 13-14% relative to farmers without access to the information. Second, smallholders produce tiny harvests compared to large producers, so they lack bargaining power with middlemen. If smallholders can aggregate or form a cooperative to sell their products together, they have more leverage. Online platforms and mobile phones can facilitate aggregation, such as Digital Green’s Loop app. Third, connecting producers with final consumers can eliminate intermediaries’ monopsony power, thereby raising producer profits. As mentioned above in the efficiency section, e-commerce or other market linkage platforms can connect a small farmer directly to consumers around the world.Potential inequities resulting from digital agriculture
Though digital technologies can facilitate market access and information flow, there's no guarantee they won't exacerbate existing inequalities. Should constraints prevent a range of farmers from adopting digital agriculture, it's possible that the benefits will only accrue to the powerful.- Large farms: When a digital agriculture technology requires lots of upfront investment, only large farms with sufficient assets and credit access will adopt it. For example, large farms are most likely to adopt precision agriculture technologies because of high costs. Increasingly however, automated mechanization is focusing on more but smaller autonomous machines, instead of fewer but larger machines such as observed with machines that still require human control. This trend enables smaller farms to participate in digital agriculture more evenly with larger farms, as the upfront investment becomes more equal relative to the size of the farm.
- Digital divide: The uneven access to information and communication technologies may lead to uneven adoption of — and thereby uneven gains from — digital agriculture. When digital technologies require specific skills, benefits may accrue to digitally literate farmers positioned to take advantage of such opportunities.
- Gender: Given gender-based disparities in ICT access and the gender gap in agribusiness value chains, men seem more likely to adopt digital agriculture. Therefore, digital technologies could perpetuate gender inequalities in the agricultural sector.
- Unskilled labor: Advances in on-farm productivity, particularly through digitized automation and precision agriculture, may threaten low-skilled jobs. According to the OECD, agriculture will be one of the sectors most affected by automation and McKinsey Global Institute projects that automation will displace 15% of agricultural workers in Mexico and 30% in Germany.
- Agribusinesses and service providers: Increased reliance on big data may increase the power differential between agribusinesses/information service providers and farmers. If smallholders lack access to and/or control of their data, they may lose bargaining power vis-à-vis large value chain actors and data collectors.
Environment
However, precision agriculture could also accelerate farms’ depletion of natural resources because of a rebound effect; increasing input efficiency does not necessarily lead to resource conservation. Also, by changing economic incentives, precision agriculture may hinder environmental policies’ effectiveness: “Precision agriculture can lead to higher marginal abatement costs in the form of forgone profits, decreasing producers' responsiveness to those policies." In other words, holding pollution constant, precision agriculture allows a farmer to produce more output — thus, abatement becomes more expensive.
Off-farm, digital agriculture has the potential to improve environmental monitoring and food system traceability. The monitoring costs of certifying compliance with environmental, health, or waste standards are falling because of digital technology. For example, satellite and drone imagery can track land use and/or forest cover; distributed ledger technologies can enable trusted transactions and exchange of data; food sensors can monitor temperatures to minimize contamination during storage and transport. Together, technologies like these can form digital agriculture traceability systems, which allow stakeholders to track agri-food products in near-real-time. Digital traceability yields a number of benefits, environmental and otherwise:
- Reduced food waste: Of all the food calories produced in a year, 25% are wasted between on-farm production and consumers. Traceability systems facilitate better identification of supply-side weaknesses — where is food lost downstream of the farm, and how much is wasted? Emerging digital innovations, such as milk cartons that track milk from “farm to fridge,” can address demand-side waste by providing consumers with more accurate expiration dates.
- Consumer trust: Ensuring food safety, quality, and authenticity has become an important regulatory requirement in high-income countries. Use of RFID tags and blockchain technologies to certify agri-food products’ characteristics could provide near-real-time quality signals to consumers.
- Improved producer welfare: Producers who can leverage environmental certification could sell their products at a premium, because blockchain technologies could enable greater trust in labels like “sustainable,” “organic” or “fair trade.”
Enabling environment
Individual farmers’ perceptions about usefulness, ease of use, and cost-effectiveness impact the spread of digital agriculture. In addition, a number of broader factors enable the spread of digital agriculture, including:
Digital infrastructure
Although a few digital technologies can operate in areas with limited mobile phone coverage and internet connectivity, rural network coverage plays an important role in digital agriculture's success.A wide gap exists between developed and developing countries’ 3G and 4G cellular coverage, and issues like dropped calls, delays, weak signals, etc. hamper telecommunications efficacy in rural areas. Even when countries overcome infrastructural challenges, the price of network connectivity can exclude smallholders, poor farmers, and those in remote areas. Similar accessibility and affordability issues exist for digital devices and digital accounts. According to a 2016 GSMA report, of the 750 million-plus farmers in the 69 surveyed countries, about 295 million had a mobile phone; only 13 million had both a mobile phone and a mobile money account. Despite lingering gaps in network coverage, ICT access has skyrocketed in recent years. In 2007, only 1% of people in developing countries used Internet, but by 2015, 40% did. Mobile-broadband subscriptions, which increased thirty-fold between 2005 and 2015, drove much of this growth. As a key enabler of agricultural change, digital infrastructure requires further development, but growing ICT access indicates progress.
Agriculture's role in the economy
The significance and structure of a country's agricultural sector will affect digital agriculture adoption. For example, a grain-based economy needs difference technologies than a major vegetable producer. Automated, digitally-enabled harvesting systems might make sense for grains, pulses and cotton, but only a few specialty crops generate enough value to justify large investments in mechanized or automated harvesting. Farm size also affects technology choices, as economies of scale make large investments possible. On the other hand, digital agriculture solutions focused on ICTs and e-commerce would benefit an economy dominated by smallholders. In China, where the average farm size is less than 1 ha, Alibaba's customer-to-customer e-commerce platform called Rural Taobao has helped melon growers in Bachu County market their produce all over the country. Other structural factors, such as percent of the population employed in agriculture, farm density, farm mechanization rates, etc. also impact how difference regions adopt digital agriculture.Human capital
In order to benefit from the advent of digital agriculture, farmers must develop new skills. As Bronson notes, “training a rural work-force in Internet technology skills is obviously a key part of agricultural “modernization.” Integration into the digital economy requires basic literacy and digital literacy. In many instances, benefiting from digital content also requires English literacy or familiarity with another widely spoken language. Digital agriculture developers have designed ways around these barriers, such as ICTs with audio messages and extension videos in local languages. However, more investment in human capital development is needed to ensure all farmers can benefit from digital agriculture.Fostering human capital in the form of innovation also matters for the spread of digital agriculture. Some characterize digital agriculture innovation, a knowledge- and skills-intensive process, as concentrated in “Big Ag” companies and research universities. However, others describe small-scale entrepreneurs as the “heart of the action.” In 2018, ag-tech innovation attracted $1.9 billion in venture capital, and the sector has grown significantly in the last 10 years. Although digital agriculture may be concentrated in a few developed countries because of “structure, institutional, and economic barriers,” ag-tech startups have experienced significant growth in Africa, the Caribbean and Pacific, Asia, and Latin America as well.
Policy and regulatory environment
In order for digital agriculture to spread, national governments, multilateral organizations, and other policymakers must provide a clear regulatory framework so that stakeholders feel confident investing in digital agriculture solutions. Policy designed for the pre-Internet era prevents the advancement of “smart agriculture,” as does regulatory ambiguity. Furthermore, a blurry line between personal and business data when discussing family farms complicates data regulation. Unanswered regulatory questions mostly concern big data, and they include:- How to ensure data privacy and security? Farmers have concerns about who can access their data. Their concerns extend to government use of data; German farmers reported a “lack of data security and excessive transparency vis-à-vis the public authorities.” Scholars have issued repeated calls for policymakers to address agricultural data privacy and security.
- How to address data ownership? According to the European Parliamentary Research Service, “it is clear that the farmer owns the data generated on his fields.” The German Agricultural Society and others concur. However, in practice, farmers lack control over data about themselves and their farms.
Finally, when governments and international undertake complementary investments, they can strengthen the enabling environment for digital agriculture. By improving digital infrastructure, choosing digital agriculture technologies appropriate for the regional context, and investing in human capital/digital skills development, policymakers could support digital agriculture.