Digital Transformation of the Agricultural Sector: Pathways, Drivers and Policy Implications

Abstract

The digital transformation of agriculture is enabling the collection of vast amounts of geo-referenced information about growing conditions within the field and facilitating the automated implementation of spatially varying input applications. This has the potential to increase production efficiency, reduce overapplication of inputs, lower input waste and pollution, and improve farm profitability. We discuss the pathways by which digital agricultural technologies have the potential to affect crop management, and current trends and patterns of adoption of digital technologies. We provide insights from the technology adoption literature on the factors that can be expected to influence the adoption of emerging digital technologies and the findings from the empirical literature on the determinants of adoption of these types of technologies. We conclude with a discussion of the design of policy incentives to induce the adoption of digital technologies cost-effectively, the challenges in implementing such policies and the opportunity that digital technologies offer for addressing these challenges.

Who drives the digital revolution in agriculture? A review of supply‐side trends, players and challenges

“…Many studies exist that analyze the new digital technologies and services available to farmers for buying inputs, for digital finance and for accessing farm management information as well as prices of inputs and outputs. An increasing number of studies examine the adoption and the impact of digital agricultural technologies, both in industrialized and in developing countries (see, e.g., reviews by Lowenberg-DeBoer and Erickson (2019) and CTA (2019); also Benami and Carter (2020) and Khanna (2020) in this special issue). However, there are few systematic studies on the industries that provide digital technology and their incentives to supply this technology to different categories of farmers.…”

“…This demand is influenced by a range of factors (cf. Khanna, 2020 in this special issue), which are further explained in the following:…”

“…However, the supply of technologies for digital agriculture also faces challenges. Khanna (2020) discusses these aspects for developed countries. This article focuses on the specific challenges in developing countries.…”

Inducing the adoption of emerging technologies for sustainable intensification of food and renewable energy production: insights from applied economics*

“…While there is some potential for win-win outcomes with their adoption, voluntary incentives for adoption are likely to be limited for various reasons, including high fixed costs of adoption, large learning costs and behavioral preferences, and the absence of any monetary rewards (policy incentives) for providing environmental services. Existing studies on incentives for adopting precision farming technologies indicate this to be the case (Khanna, 2020). Moreover, voluntary adoption may not occur in the right locations or to the extent needed to achieve desired environmental outcomes.…”

E‐commerce's fast‐tracking diffusion and adaptation in developing countries

“…2 2 Digitalization is also occurring in farming and rural finance, as shown in Benami and Carter (2021), Khanna (2020), and Birner et al (2021). …”