How ICT is changing the nature of the farm : a research agenda on the economics of big data

Abstract

Modern information-based technologies, such as self-driving tractors, GPS, milk robots, automated egg production, satellite data and social media, will change farm practices and agricultural structure and contribute to the prosperity and resilience of farming systems. Based on macro-trends and niche developments we argue that the food chain will become much more datadriven, based on up to date ICT. It will move away from a situation characterised by a low level of integration of data. This has a large potential impact on issues like sustainability, food safety, resource efficiency and waste reduction.The economic effects of such developments are still to be explored. At first sight it could lead to more closely integrated supply chains that makes the farmer act as a franchisee with limited freedom. But the opposite could be true as well, with more transparency and easier options for direct sales in consumer food webs, using social media and smart solutions for the ‘last mile’ delivery. Like with previous technological developments, not all farmers will invest in new skills andwhere technologies are saving labour, farms will get bigger. Some farms or regions will become less competitive if the basic infrastructure (e.g. in broad band internet or GPS systems) lacks. Competition between advisors could increase, if they are able to serve farmers digitally. That could also mean that a part of such value added activities moves from the most remote rural areasto regions with clusters of knowledge. As Allen and Lueck (2002) showed in their “Nature of the farm”, that family farms are characterised by a low level of specialisation of the farmer’s tasks, as the markets does not provide enoughincentives to specialise. Due to a low profitability with a high level of risk and especially high transaction costs in factor markets as a result of moral hazard, family farms are competitive over more industrial holdings in most types of farming. ICT, higher food prices and demography could change that.