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Issue paper

Digital technology and agricultural markets. Background paper for The State of Agricultural Commodity Markets (SOCO) 2020

Digital technologies have a high potential to enable further development of the agricultural sector, significantly reshape food value chains (FVCs), and greatly contribute towards more productive, resilient and transparent food systems. This paper provides a non-technical overview of digital technologies that have a high potential to revolutionize the agriculture and food industry, and contribute towards inclusion of small farmers into FVCs.

The particular focus is on digital platforms providing e-commerce services and distributed ledger technologies (DLTs), such as blockchain, as they mutually enable more efficient and more inclusive local and global agricultural markets by tackling their contribution to reducing information asymmetries, transaction costs, and providing financial inclusion of actors along FVCs. Various examples indicate that digital technologies represent great potential benefits for small farmers including increased efficiency of production, direct access to market, inclusion in global value chains (GVCs), and access to finance and insurance services. The further potential of digital technologies, especially blockchain, could change existing linear food value chain models by providing more transparency and trust between the supply chain actors. Finally, by using digital technologies, governments can provide more efficient public services.

Overall, the real impact of digital technologies on the agriculture and food industry will be more evident in the years to come when they become widely accepted by all involved actors, and their usage reaches a critical scale. The role of governments will be significant in enabling adequate environments for innovations and further technological development.

See here the The State of Agricultural Commodity Markets (SOCO) 2020