Why should policymakers take e-agriculture seriously? Here are five lessons from China on how to reduce food waste, achieve the Sustainable Development Goals, and save the environment.
The Centre for Digital Governance is not affiliated with any of the organisations named herein, nor does it express a specific opinion on the views the author has advanced.
The COVID-19 pandemic has highlighted the critical role of the Digital Economy in driving sustainable economic growth. Companies with existing digital infrastructure were better equipped to face market distortions to seek efficient and diversified supply chain models, while mandatory lockdowns, social distancing measures, and high operational costs drastically impacted those without. From a macroeconomic perspective, the pandemic also exposed disparities in levels of digitalisation between rural and urban areas.
In that context, e-commerce emerged as an effective solution to overcome numerous constraints, witnessing a growth rate of 14% in 2019 and 10% in 2020. To bridge the digital gap and capitalise on the e-commerce ‘boom’, e-agriculture has emerged as a catalyst for fostering steady economic growth in rural areas.
E-agriculture stands for the utilisation of technology to improve production, promote sustainable practices, and foster innovation leading to job creation, increased incomes, reduced migration to urban areas, and progress toward the United Nations Sustainable Development Goals (SDGs). A series of related implementations contribute to its definition, including the three pillars of digital infrastructure, digital literacy, and digital investment. Only by addressing these pillars can governments realise the full potential of e-agriculture through Digital Economy policies and directives.
Examining successful initiatives such as China’s e-agriculture transformation can inspire similar programs in other regions. E-agriculture directly contributed to China’s extreme poverty eradication, as announced by Xi Jinping in 2021, when the central government joined hands with local governments, private industries, and education institutions to digitally transform rural areas.
Each of the entities played a distinct role. The most prominent e-commerce players contributed existing know-how and infrastructure, such as logistics, online payment methods, and the overall digital marketplace. They also partnered with education institutions to develop new technological solutions to reduce the usage of water and chemicals through advanced algorithms. Local governments provided financial assistance and tax incentives, including VAT exemption and subsidies.
This multi-stakeholder approach was fundamental to supporting the central government’s critical national directives, which are the pillar of China’s innovation landscape domestically and internationally. It is imperative to emphasise that, to date, European marketplaces are not yet engaged in similar programs.
The ‘Taobao Village’ and ‘Taobao Town’, a project initiated by the Alibaba Group in 2014, are rural villages or towns with at least 50 households operating their shops on the Taobao marketplace, Alibaba’s leading e-commerce platform. Farmers and small to medium-sized enterprises (SMEs) receive training and financial support in these locations. As of 2021, there were over 6000 villages and towns with an annual transaction volume exceeding RMB 1 trillion or 131.5 billion euros, as reported by the company.
In the two weeks of the largest promotional campaign in the country — Single's Day — farmer-run livestream sales were viewed by 16.64 million online users, resulting in the sale of 35.49 million agricultural products. Zhejiang Province alone supported the project with tens of millions of Chinese yuan.
Recently, Pinduoduo received the 2022 Food and Agriculture Organisation (FAO) Innovation Award for a series of programs to support farmers and digitalise agriculture in China. The ‘10 Billion Agriculture Initiative’ provided training and investment for production to nearly 490,000 farmers, as well as streamlined the distribution chain that included cold chain-based route planning. Some of the numbers the program achieved were overall 30% higher income for farmers and 15% less fertiliser in citrus production. The “farm to fork” business model drastically reduces operational costs as it allows farmers to sell directly to consumers.
As several internet companies have developed their rural development programs, overlapping and interoperability between diverse proprietary technologies may occur. Thus, local governments must enhance coordination and ensure the fairness of funding mechanisms. Another criticism raised outside of China refers to protection of personal information, which is, however, subject to national laws and regulations.
Keeping these issues in mind, policymakers may consider five main points when developing an e-agriculture roadmap:
1. Improving broadband connectivity and infrastructure to enable farmers to access and share data. Smart logistics solutions should include cold chain and automated storage systems.
2. Providing training on how to utilise e-commerce — and live commerce — to increase sales and reach new overseas markets.
3. Providing farmers with access to information and knowledge of real-time weather patterns and sustainable farming practices.
4. Establishing financing mechanisms through crowdfunding and public-private partnership (PPPs) funding.
5. Supporting innovation and entrepreneurship through competitions with startups to develop new technologies to increase food safety, quality, and traceability. Some of the solutions include precision farming for crop monitoring, soil testing, pest and disease diagnosis, pesticide, and water usage reduction.
According to FAO, 30-40% of total food production is lost before reaching the final consumer, significantly impacting food security and malnutrition. Governments can confront the challenge of food losses by prioritising e-agriculture in their development agenda to achieve the ‘SDG Goal 12: Responsible Consumption and Production’, which aims to reduce food waste and losses at retail and consumer levels by 50% (compared to the 2015 baseline) by 2030.
Successful examples, such as Alibaba and Pinduoduo, demonstrate the need for a multi-stakeholder approach, leveraging e-commerce growth to provide farmers with cross-border market opportunities, technological advancements, and increased profitability.
Further reading:
AliResearch (2021). “China Taobao Village Report 2020”. Available at: http://www.aliresearch.com/en/Reports/Reportsdetails?articleCode=167153834769125376
E-commerce Europe (2021). “2021 European E-Commerce Report”. Available at: https://ecommerce-europe.eu/wp-content/uploads/2021/09/2021-European-E-commerce-Report-LIGHT-VERSION.pdf
Food and Agriculture Organization of the United Nations (FAO). “Seeking end to loss and waste of food along production chain”. Available at: https://www.fao.org/in-action/seeking-end-to-loss-and-waste-of-food-along-production-chain/en/
Jiang, Ben (2022). China Big Tech keen to tap rural e-commerce market as Alibaba, JD.com join farmers’ festival. South China Morning Post. Available at: www.scmp.com/tech/tech-trends/article/3193870/china-big-tech-keen-tap-rural-e-commerce-market-alibaba-jdcom-join.
Lulu, Fan (2019). “Taobao Villages: The Emergence of a New Pattern of Rural Ecommerce in China and its Social Implications”. Available at: https://library.fes.de/pdf-files/bueros/indonesien/15198-20180218.pdf
Tan, Don (2022). “Pinduoduo: Applying digital technologies for agricultural and rural Development”. Available at: https://events.development.asia/system/files/materials/2022/03/202203-pinduoduo-applying-digital-technologies-agricultural-and-rural-development.pdf
World Food Program (WFP). “Help end hunger by reducing your food waste”. Available at: https://www.wfp.org/foodwaste
Teaser photo by Elaine Casap on Unsplash.