Technology is Reshaping Global Trade in Agriculture

Ever since people have grown crops, raised livestock and caught fish, they have sought information from one another – about the most effective planting strategy, sources for improved seeds, or the best price in the market. Weather patterns and soil conditions change with time. Also, epidemics of pests and diseases come and go. Access to updated information and the ability to exchange them through internet, mobile and related technologies will allow farmers to cope with such varying degree of changes.

For starters, technology helps to overcome information problems. Preventing losses through early warning systems, including drought warnings, pest outbreaks, forest fire detection, and flood alerts, gives stakeholders enough time to react to emerging threats. The ability to access market information reduces persistent information asymmetries which are caused by the over-dependence on middle-men.  This promotes inclusion of rural and often marginalized producers in regional, national or even global markets.

Agricultural productivity varies dramatically around the world. While credit constraints, scant markets, and a weak supply chain account for some reasons for this disparity, poor agricultural practices and inefficient management are also to blame. With instant availability of information farmers can be aware of new production technologies such as improved seed varieties, nutrient management, and pest control methods, which were not necessarily reaching farmers before, thus raising on-farm productivity.

Agriculture can hugely benefit from major innovations in logistics platform that better link buyers and sellers along the agricultural production chain. A recent study of farmers conducted in Bangladesh, China, India, and Vietnam found that a large percent of farmers in these countries owned a mobile phone and used them to connect with traders to estimate market demand and selling price. More than 50 percent of these farmers make arrangements for sale over the phone. With the growing sophistication and knowledge of value chains, farmers now can work directly with larger intermediaries, capturing more of the produce’s value.

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Before the expansion of mobile networks, agricultural producers were often unaware of market prices and had to rely on information from traders and agents to determine when, where, or for how much to sell their crops. Delays in obtaining this data or misinterpretation of second-hand pricing information had serious consequences for producers, who ended with underselling their products, delivering too little or too much, or having their products wither away.

New technologies like precision farming systems detect nutrient deficiencies in the soil and whether additional fertilizers can be distributed only in areas where there is acute need for fertilizers, instead of fertilizing the entire farm land as was traditionally been done. Irrigation or pesticide needs can similarly be detected and precisely applied. It also supports environmental sustainability as the natural resources are being continuously monitored, and actions are taken accordingly.

Digital technologies even enhance the food supply chain management. Transporting produce requires coordination between producers, truckers, and, at times, warehouse owners and traders. Many producers, especially in remote areas, carry their produce themselves, often by foot, to the nearest collection point. Studies show an increasing dependence on mobiles to coordinate and relay information on transport and logistics.

With globalized food systems, ensuring food safety has become more complex. Smallholder farms turn to cooperatives and aggregators who use digital tools to improve collection, transportation, and quality control. Effective logistics is critical for producers, retailers, as well as consumers for collection, aggregation, and delivery.

Traceability is another area that has become increasingly important for countries that want to reach or expand into new export markets, with increasingly socially aware consumers wanting to see exactly where their food has come from, rather than having to trust misleading and confusing labels. Radio frequency identification (RFID) chips are emerging as a promising solution for traceability. Many companies are leveraging RFID technology to improve traceability and recordkeeping on food quality standards.

The different ways in which technology is being used in Agriculture is becoming sophisticated with the benefits felt throughout the entire food value chain.