A European perspective on the economics of big data

Abstract

Modern information-based technologies, such as self-driving tractors, GPS (global positioning systems), robot milking machines, automated egg production, drones, satellite data and social media, will change farm practices and agricultural structures and contribute to the prosperity and resilience of farming systems. Food chains will not only become much more data-driven but will also move away from a situation characterised by a low level of data integration. This will have a significant impact on such issues as sustainability, food safety, resource efficiency and waste reduction. The economic and social effects of such developments are still to be explored. At first sight they could lead to more closely integrated supply chains that make the farmer act simply as a franchisee with limited freedom, but the opposite could be true. Farmers could be empowered due to greater transparency and easier options for direct sales in consumer food webs (using social media and smart solutions for the ‘last mile’ delivery). Therefore we can see conflicting pressures between the globalisation and localisation of supply chains. As with previous technological developments, not all farmers will invest in new skills and where technologies are labour saving, farms will get bigger. Some farms or regions will become less competitive if the basic infrastructure (eg broadband internet or GPS systems) is lacking. Competition between advisors could increase, if they are able to serve farmers digitally. In addition, part of such value added activities may move from the most remote rural areas to regions with clusters of knowledge and could also become more international in nature. A major issue is that information and communication technology (ICT), combined with higher food prices and demographic changes could fundamentally shift the competitive advantage from family farms to more industrial holdings, leading to radical structural change in agriculture.