New technologies are driving fundamental shifts in the evolving agribusiness value chain, from operational excellence and supply chain balance, to transparency. As a result, food systems will become more productive, efficient, sustainable, inclusive, transparent, and resilient. The use of new technology is necessary to move the world’s agriculture to a more productive path. Over the next few decades, a rising global population will put great pressure on food systems. While the overall demand for food is expected to be met over this timeframe, it is unclear whether it can be met in a sustainable manner. Technological innovation is one lever that can address environmental, social, and economic challenges and opportunities in the growing food and beverage industry.
The Food and Agriculture Organization (FAO) of the United Nations (UN) estimates that global demand for food will rise by 50 percent between 2012 and 2050 to feed a population of almost 10 billion with rising income levels. Further, a rapid rate of urbanization is expected in the coming years, with approximately 66 percent of the world’s population expected to live in urban areas by 2050, compared to 54 percent in 2014. The FAO report suggests that the rising demand for food can be met, but it is unclear to what extent this can be done in a sustainable and inclusive manner.
The agricultural value chain is the sequence of activities and participants engaged in the value-adding process of transforming agricultural goods from inputs — such as seeds, animals, and fertilizer — into food that ultimately reaches consumers. Stakeholders currently operate within an often-fragmented value chain that has undergone rapid changes to meet the emerging challenges and opportunities of the food economy. Opportunities exist for technology to help strengthen agribusiness value chains. While technology is by no means a panacea, it is useful to examine the opportunities it offers in a world where Internet connectivity and mobile phone adoption has accelerated the global flow of information and where advances in automation, artificial intelligence, and continuous monitoring are expected to increase. Human capital combined with technology has historically driven productivity improvements and welfare.Creating an efficient supply chain involves fostering an efficient flow of information, materials, and money between suppliers and customers. Efficiency is only one element of supply chain performance.
There is potential for digital platforms to provide greater value chain balance and reduce system frictions. Not only can platforms connect buyers and sellers, but also they can streamline supporting services and improve overall system efficiency. For example, an aggregator combines its marketplace with options to create contracts, conduct traceability, and access finance and insurance. Since the company brings small sellers together to provide large buyers the volumes they need, small sellers may be able to take advantage of supporting services at lower costs than they would by selling independently. The first mile of agriculture in developing countries, when farmed goods are delivered to the local market, is often expensive, time-consuming, and challenging. It can take from half to a full day to sell produce at the nearest market in rural Nigeria. Digital platforms can enable efficiencies in the first mile, as with AgroDomain platform, a digital marketplace that empowers farmers with access to market & capital, links buyers with reliable suppliers and provides on-demand logistic support for value-chain players. Value-added services such as access to credit, inputs, and mobile payments are layered on top of the distribution platform, delivering additional benefits. While technological innovation has always been important in agriculture, the scale and complexity of food production is increasing alongside natural resource constraints. This raises new questions on the role that technology can play to foster changes in efficiency and productivity in a sustainable and inclusive manner. Many other factors must be in place to complement technology if improvements are to be achieved, including business regulation, skills development systems, public sector governance, trade and tax policies, and other elements.