Can digital market coordination foster farmers' economic inclusivity?
Availability and flow of data with insights about agricultural markets and the value creation pathways from the consumer to the producer can be unlocked ...
Digitally transforming agriculture and its adjacent activities has a high potential to transform rural livelihoods. From actual production, post-harvest warehousing, agro-processing, and logistics to retail-level breaking of the bulk, these activities can benefit from digitalization's datafication and process optimization. We can easily anticipate increasing food security through digitally transforming agriculture, potentially addressing production and distribution inefficiencies. The digital transformation of agriculture crucially also includes the prospects of increased incomes for farmers and other primarily rural communities. In a future post, I will share my “opinionated sense” of how some sustainable development goals (SDGs) are more important than others. For now, I will focus on agricultural markets coordination.
Among skeptics, harnessing digital transformation for rural economic empowerment and inclusivity begs the question: “What magic can digitalization bring to fix inefficient agricultural value chains?” Institutional voids aggravated by elite capture have characterized markets in the global south for decades. As such, digital interventions not addressing shortfalls among the institutions necessary to function in efficient agricultural markets will likely miss the desired digital transformation targets. Khanna and Palepu (2005) highlighted the failing or absent functions contributing to institutional voids, including information analyzers and advisors - such as on production and distribution, credit enhancers such as third-party certification, and aggregators or distributors of commodities with low-cost matching and value addition. According to Khanna and Palepu, other functions prone to dysfunction were transaction facilitation for support in consummating transactions, adjudication to resolve disputes, and policy-making to regulate and amplify benefits for the greater good.
Strategies for enhancing “market competitiveness” or “market access” are common among development organizations and government practitioners discussing agri-food systems and rural economic development. In the theory of change, this narrative emphasizes gaps in farmers’ abilities as a root cause of the problems at hand. My first impression when I read strategies and project designs that emphasize “market competence” and “market access” for farmers and other stereotypical terms is that they might easily side-step or ignore systemic problems of market inefficiencies and institutional voids. Of course, I must not underestimate farmers’ capacity challenges, such as the need for knowledge sharing on climate resilience and optimized production practices that digital services can ace. Similarly, I cannot gainsay the information asymmetry challenges related to market pricing. However, I argue that overly focusing on farmer competence can delay a more impactful intervention in market coordination. I propose that digital development practitioners prioritize digital platforms enabling market coordination to fill the age-old institutional voids responsible for the agricultural market inefficiencies undermining economic prospects among farmers.
Prioritizing market coordination as a digital intervention should entail unleashing the transformative power of digital platforms to address the enormous and gnarly challenge of institutional voids. Fueled by generativity and network effects, digital platforms can help to grow an ecosystem of actors addressing institutional voids rapidly and exponentially. To avoid ambiguity, I strictly mean digital platforms that architecturally allow modular growth and use multi-sidedness to generate network effects. In simpler terms, information-based services are hardly ever digital platforms in their own right but could be autonomous actors in an elaborate digital platform. With one service provider, however large or powerful, be it a private entity or government agency, digitally transforming agricultural information pathways from production to retail or industrial consumption is unrealistic. Instead, such transformation is realistic when collaborating digital service providers autonomously position themselves with value-adding roles across the value chain stages.
With carefully thought-out digital platforms for market coordination lies the promise of enhanced information pathways for data analytics and fluidity to cut across stages of the agricultural value chains. These can be pathways filled with data from on-farm production, post-harvest storage, logistics and haulage, agro-processing, and other activities as value is created from production to consumption. Among the benefits of such an approach to digitalization are large-scale demand-side aggregation and other sources of macro-level intelligence that inform demand-driven production among farmers. Demand-driven production is crucial for farmers to participate meaningfully in national and global economies. Such informed production can help farmers eliminate guesswork about quality, frequency, and quantity specifications the market will absorb and, more importantly, stabilize off-take prices. Increased certainty about market demand parameters is the empowering mechanism farmers need to inform their investment in technologies and practices for sustainable and resilient productivity enhancement. Only with such certainty among farmers can the demand for digital finance, digital advisory, and other agriculture-focused digital services be specific.
The prospects of autonomous digital service providers collaborating and contributing to a larger digital platform for agricultural market coordination are high if at least two ingredients exist. Firstly, collaborating actors should appreciate each other’s interest relative to the platform’s overall value proposition: “What is in it for my organization, and what can I not get without hurting others in the platform ecosystem.” A data-level collaboration strategy is the second ingredient that will heighten the chances of success for such a sector-wide coordination platform. The collaborative approach suggests voluntary participation among actors in the digital agriculture ecosystem rather than government-mandated compliance. Such a strategy implies consensus on ontologies, metadata schemas, and API frameworks for data interchange among the autonomous actors. As this evokes data governance questions, the situation would be ripe for an agricultural data commons among regions in the Global South. An agricultural data commons for countries in Francophone Western Africa can be the basis for collaborative data ownership and data consumption needed to actualize a digitally transformed agricultural market coordination in the region.
A digital platform for agricultural market coordination underpinned by data commons can facilitate data sovereignty and altruism among individual and organizational actors. The availability and flow of data without undue restrictions, with insights about agricultural markets and the value creation pathways from the consumer to the producer, can be unlocked by an enabling framework for contributing to and consuming from the data commons. Imagine a massive knowledge graph with agricultural (and market) data collectively owned by the region's digital agriculture ecosystem. How about such a platform churning out new intelligence and insights to optimize food systems in the region? Imagine a platform designed to eliminate age-old institutional voids in agricultural markets, inherently advancing economic inclusivity for small-scale farmers and otherwise disenfranchised actors.