• Digitalisation of the agrifood sector: what does Twitter tell us?

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    Technology is advancing at a frenetic pace and offers the agrifood chain a large number of opportunities to make its production more efficient and sustainable. Moreover, the arrival of COVID-19 has shown that the most digitalised companies were able to continue their activities more readily than the rest. In this article we examine the degree of popularity of the different digital technologies used in the primary sector and agrifood industry based on a text analysis of over 2 million tweets on Twitter. All these technologies are essential to create a connected ecosystem that will make up the Food Chain 4.0 of the future.

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    The unexpected arrival of the pandemic has shown that the most digitalised companies were more prepared to adapt to the new situation and were able to continue to operate much more smoothly than the rest. There is no doubt that, in this new environment, the digital transformation of companies is now unavoidable in order to boost their competitiveness.

    Big data, robotics, the internet of things and blockchain are just some examples of the new digital technologies gradually being adapted by firms, particularly in the agrifood sector. Technology is advancing at a frenetic pace and is offering the agrifood chain a large number of opportunities to produce more efficiently and sustainably. However, statistical information on the degree to which such technologies have been taken up, and the most comprehensive official statistical source1, does not provide information on the primary sector. Below we present a novel analysis of the «popularity»  of new digital technologies in the agrifood sector based on data from Twitter.

    • 1. Survey on the use of information and communication technologies (ICT) and e-commerce in companies, compiled by the National Statistics Institute.
    Twitter as a source of information to detect future trends

    Data from Twitter can be extremely valuable in detecting new trends as it allows us to analyse the popularity of certain terms according to how frequently they appear in tweets. However, it is true that «talking about something» is not the same as successfully implementing the various digital technologies in a company's recurring operations. For this reason the results presented below should be interpreted simply as an indication of new trends that may be taking root in agrifood companies.

    Data from Twitter allow us to analyse how popular the different digital technologies

    are in the agrifood sector according to how often they are mentioned in tweets.

    For this study, data was processed from over 24 million tweets sent by individual users and digital media during the period 2017-2019. Among these, 2 million corresponded to the agrifood sector. Using natural language processing techniques, the tweets were categorised according to mentions of different digital technologies and to the business sector.2 The key to obtaining relevant data from social media is to first define «seed» words or phrases to identify texts corresponding to each of the business sectors, as well as «seed» words or phrases related to the different digital technologies of interest.3 Using a machine-learning algorithm, other words and phrases related to the concept in question that were not initially included were also identified, thus broadening the spectrum of texts analysed. At this stage, it is important to carefully screen for polysemous words (i.e. those that have more than one meaning, such as the word «reserva» in Spanish, which can be used to refer to a hotel booking as well as an aged wine).

    • 2. This analysis was carried out in collaboration with Citibeats, a company specialising in unstructured natural language processing.
    • 3. For example, the «seed» woods and phrases used to identify big data were: analytics, arquitectura de sistemas (system architecture), data mining, database, inteligencia empresarial (business intelligence), Python and SQL, among others (as well as the term big data per se).
    What is the degree of digitalisation of the agrifood sector according to Twitter?

    To assess the agrifood sector's degree of digitalisation according to data from Twitter, we first need to know how common tweets about digitalisation are in other business sectors. The most digitalised industry according to our analysis is the information and communication technologies (ICT) sector: 3.2% of the sector's tweets contain terms related to digitalisation, a result that is not surprising given the very nature of the industry. Next comes finance and insurance with 2.7% of the tweets.

    This percentage is obviously lower in the primary sector at 0.6% but it is similar to the 0.7% for professional, scientific and technical activities. In the case of the agrifood industry, the percentage of tweets on digitalisation is only 0.3%, very close to the basic manufacturing sector (which includes the textile, wood, paper and graphic arts industries), with the lowest percentage among the sectors analysed, 0.2%.

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    Which digital technologies are most popular in the agrifood sector according to Twitter?

    The wealth of data obtained from Twitter allow us to identify the most popular digital tools in each business sector according to how frequently they are mentioned in the tweets examined. According to our analysis, a large proportion of the primary sector's tweets about digitalisation tend to include issues related to big data (45% of all tweets about digitalisation). One clear example of the application of big data in the sector can be found in «precision agriculture» techniques which require large amounts of data to be analysed to optimise decisions and thereby increase production and, in turn, ensure sustainability. These techniques are used, for instance, to calculate the irrigation requirements of crops by taking into account climatic conditions (sunlight, wind, temperature and relative humidity) and crop characteristics (species, state of development, planting density, etc.). To carry out this calculation, real-time updated meteorological data, a large computing capacity and fast data transmission speeds are all required for an automatic irrigation system to be properly adjusted. This technology helps to use water more efficiently, a highly relevant aspect in areas with a Mediterranean climate that are extremely vulnerable to climate change and where water is in short supply.

    Big data, the internet of things and robotics are the most popular technologies in the primary sector,

    indispensable for advancing the application of precision agriculture techniques and smart automated farming.

    Other popular technologies in the primary sector are the internet of things (16% of tweets) and robotics, including drones (10% of tweets). The new digital technologies promise to revolutionise the field of agriculture and stockbreeding by the middle of this century, the same as the mechanisation of farming in the xxi century. Agricultural Machinery 4.0 (which is closer to the robots in science fiction films than to the tractors we are used to seeing on all farms in the country) helps to increase productivity whilst also improving working conditions in the field. This trend towards more automated agricultural tasks has become stronger in the wake of the coronavirus pandemic, as the difficulty in recruiting seasonal workers due to international mobility restrictions has led to increased interest in robotics and agricultural automation. In fact, companies that manufacture robots for agriculture have seen a sharp increase in orders, such as robots that pick strawberries while removing mould with ultraviolet light.14 

    The use of drones warrants particular attention as this has grown exponentially in recent years and applications are increasingly widespread: from the early detection of pests and the aerial inspection of large areas of crops to locating wild boar with heat-sensitive cameras to prevent the spread of African swine fever to domestic pigs.5

    • 4. See Financial Times Agritech «Farm robots given Covid-19 boost», 30 August 2020.
    • 5. See http://www.catedragrobank.udl.cat/es/actualidad/drones-contra-jabalies

    The popularity of various digital technologies in the agrifood sector

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    Blockchain is the technology that stands out most in the food sector (30% of the total number of tweets on the sector's digitalisation) and this comes as no surprise as it has many different applications for the food and beverage industry. Producing a chain of unalterable, reliable records, blockchain makes it possible to guarantee the complete traceability of products throughout all the links in the food chain. Simply scanning a QR code provides access to all the data regarding the origin, production method, veterinary treatments received, ingredients used, etc. A large number of agrifood companies are already experimenting with blockchain as it offers clear benefits in terms of transparency regarding origin, product quality and food safety, aspects that are increasingly valued by consumers. Blockchain technology is also being used to limit food waste, another essential challenge for the sector.

    Blockchain enables the digital verification of food products,

    making them traceable throughout the links in the food chain.

    Compared with other sectors, which tools are particularly significant for the agrifood industry?

    There are some digital technologies that are not very popular across all economic sectors, perhaps because they have a more limited or specific range of application. These are technologies that, despite having a low percentage of tweets in absolute terms according to our study, may be relatively popular for a particular sector compared with the rest.

    To detect such cases, we have calculated a new metric, namely a concentration index which takes into account the relative popularity of technologies in a sector compared with the rest of the sectors.6 By using this methodology, we have found that the primary sector continues to stand out in terms of big data. Specifically, the primary sector concentrates 9.2% of the total number of tweets mentioning big data made by all sectors, a much larger proportion than the 3.1% share of primary sector tweets out of the total number of tweets analysed (as can be seen in the following table, in this case the concentration index is 3). We have also determined that the sector is particularly interested in the internet of things, as already mentioned, but have discovered that nanotechnology is also a relatively popular technology in the primary sector. In other words, although only 3.8% of the tweets in the primary sector deal with nanotechnology, this percentage is high compared with the 1.7% share of nanotechnology tweets out of the total (in other words, this technology is not very popular in general across all sectors but is slightly more popular in the primary sector than the others). This find is not surprising since genetic engineering is one of the fields in which technology has advanced most in order to boost crop yields. For example, by optimising the yield of vines it is possible to develop plants that are much more resistant to extreme weather conditions and pests.

    • 6. The concentration index is calculated as the ratio between (1) the percentage of tweets related to a particular technology and sector out of the total tweets for this technology, and (2) the percentage of tweets by a sector out of the total tweets of all sectors. Values above 1 indicate the technology is relatively more popular in that sector.

    Concentration index for tweets related to each technology in comparison with the other sectors

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    Finally, virtual and augmented reality is also a relatively popular technology in
    the agrifood industry.
    Specifically, the agrifood industry concentrates 6.2% of the total virtual and augmented reality tweets made by all sectors, a percentage that more than doubles the 2.5% share of primary sector tweets out of the total number of tweets analysed (the concentration index is equal to 2.5 in this case). This technology uses virtual environments (virtual reality) or incorporates virtual elements into reality (augmented reality) that provide additional knowledge and data that can be used to optimise processes. At first it may be surprising that this technology is relatively popular in the agrifood industry but its uses are spreading as the industry implements digital technologies in its production processes, in the so-called Industry 4.0. One specific example of how this technology is used is in repairing breakdowns. When a fault occurs, operators can use augmented reality goggles to follow the steps contained in virtual instruction manuals that are projected onto the lens to help resolve the incident. The glasses recognise the different parts of the machine and visually indicate to operators where they should act to solve the specific problem.

    There are numerous examples of new digital technologies being applied in the agrifood sector. We are witnessing a revolution that is destined to transform the different links in the food chain: from the exploitation of data and the use of drones to make harvesting more efficient to implementing blockchain technology to improve the traceability of the final products that reach our homes. In short, the future will bring us the Food Chain 4.0, a totally connected ecosystem from the field to the table.

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Libra, the cryptocurrency of Facebook

Finance is a key sector for the economy. Therefore, any significant innovation in this field deserves to be analysed with caution, and its implications, well understood. This is what we seek to do in this article with the Libra project.

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A brief history of cryptocurrencies: from Bitcoin to Libra
  • Up until now, cryptocurrencies have been considered more as speculative assets than as money itself. The main reason is that their value has tended to be unstableand they have not demonstrated a clear advantage over existing alternatives. For all these reasons, they have not reached a critical mass of users.1 This is largely because Bitcoin and other cryptocurrencies that have followed it are not backed by a government, meaning that their value as a means of payment resides in the expectation that other people will accept it as such. In addition, these cryptocurrencies do not adjust their supply according to their demand, causing even more volatility.2 All this limits their function as a store of value and unit of account.
  • In this context, stablecoins seek to minimise the volatility of cryptocurrencies. To do this, the issuer of the stablecoin links its value to that of another more stable asset, such as fiat currencies (e.g. the dollar) or products (precious metals). To date, however, stablecoin initiatives have had a limited user base, since they are promoted by companies that are either new entrants facing high costs to promote the adoption of their product (Tether) or that target wholesale (JPM Coin). In addition, there are doubts over their scalability because, for now, it seems unlikely that the projects presented to date can process the number of transactions that are processed per second through conventional electronic means of payment.3
 
  • 1. See the article «What can we expect from cryptocurrencies?» in the Dossier of the MR05/18.
  • 2. The supply is governed by predetermined rules that do not take into account the demand for them. For example, the Bitcoin protocol establishes that a circulating supply of 21 million units will be reached in 2040, at which point no more bitcoins will be mined.
  • 3. As a benchmark, VISA has the capacity to process over 65,000 transactions per second.
The Libra project
  • Libra is presented as a private, digital and global currency, and as an alternative means of payment based on blockchain technology. In fact, Facebook has written its own blockchain code and has announced that the transactions will be verified between servers of the members of the Association4 (permissioned network) in order to speed up transaction processing times and serve millions of accounts,5 although the goal is for it to eventually do so in a decentralised manner.
  • Libra has a high potential for adoption since its promoters have a large user base. Specifically, Facebook has the biggest social network in the world, with over 2.4 billion active users. Furthermore, the other members of the Libra initiative are big players that are well established in the payments and mobile applications markets. In short, Libra has a potential scale that other initiatives lack.
  • 4. Libra will be governed by an association of shareholder companies (for now made up of Facebook and another 26 companies).
  • 5. The validator nodes will at first be the founding members of the Libra Association, and a group of 100 validator nodes is expected to be able to process 1,000 transactions per second.
Pines de Facebook
Source: Unsplach.
  • Libra is a stablecoin: its value will be linked to a selection of international currencies. To support its value, the Association aims to maintain, in the form of reserves, deposits and investments denominated in major international currencies, such as the dollar and the euro, for an amount equivalent to the Libras it issues. The evolution of the value of Libra, therefore, should go hand in hand with the currencies that make up the selection. Those wishing to buy Libras will have to do so through authorised distributors (exchange bureaus and banks), which will be able to buy Libras from the Association in exchange for the aforementioned major currencies and sell them on to users in exchange for their local currency.
  • The Association will invest its reserves in liquid and low-risk assets, such as bank deposits (denominated in stable currencies) and short-term government debt securities of countries with a good credit rating. It is anticipated that the performance of such assets will serve to cover operating costs and pay dividends to the founding members.
  • Libra aims to be an alternative payment vehicle and to reduce friction in international transactions. A global stablecoin such as Libra, aimed at retail use, can make cross-border payments and transfers cheaper and easier to carry out by reducing transaction costs. Furthermore, it can reach users who do not currently have access to the financial system, by allowing them to store their money6 and execute transactions using their mobile phone. In fact, the project is also introduced as a tool to promote financial inclusion for the more than 1.5 billion people around the world who do not have access to a bank account.
  • 6. Together with Libra, Calibra will also be created. This is a digital wallet that will store users’ payment information.
How Libra works
Doubts over Libra

Various regulators and supervisors have expressed certain reservations that could hamper, or at least slow down, Libra’s deployment:

  • Data management. Potentially, the Association could have access to large amounts of its users’ personal and financial data. Up until now, the Association has not specified how it will store and manage this information, nor what measures it will implement to ensure they remain properly protected.
  • Fight against illicit activities. The traditional digital payments system is not anonymous, as transactions are processed and recorded by third parties (the bank of the buyer and of the seller, and the card company). All this helps to ensure compliance with regulatory requirements (such as customer’s registration) in order to prevent money laundering and other illicit activities. In the case of Libra, on the other hand, as it is a cryptocurrency the exchange of money could presumably take place in a decentralised and anonymous manner. Therefore, it is not clear how compliance with these regulations will be ensured.
  • Risks of abuse of dominant position. There is a fear that the promoters of Libra could use their current position, which is dominant in some cases, to encourage the use of Libra over other alternatives, which would represent a constraint on innovation.
Criptomonedas
Implications for financial stability

In addition to the considerations above, the size and scope of Facebook imply that Libra has the potential to become systemic. The widespread use of Libra could have major implications for financial stability, some of which are summarised below:

  • The stability of Libra is not guaranteed, rather, it depends on the stability of the assets that back it and on the Association’s commitment to keep the value of Libra stable. However, if Libra becomes systemic in its proportions, this commitment should be reinforced through appropriate regulation and supervision.
  • Libra could contribute to the generation of global episodes of financial instability.7 The Association plans to invest the currencies it obtains from the sale of Libras in low-risk assets (bank deposits or sovereign bonds). If doubts over
  • the cryptocurrency were to arise, for instance for security reasons, and there were a mass selloff, it is not clear whether the Association could meet this demand if a portion of the reserves are invested in assets that are subject to a certain liquidity risk. In addition, the pressure on banks balance sheets in which the Association is a depositor would inevitably increase.
  • Libra could increase economies’ sensitivity to changes in investor sentiment. Libra can facilitate international capital flows because it substantially reduces the transaction costs associated with cross-border transfers. This offers clear benefits, but it could also have significant implications for the financial stability of many emerging economies because, by boosting and facilitating capital flows, it could amplify capital outflows in the event of changes in investor sentiment and risk aversion.8
  • The widespread adoption of Libra in economies with less stable currencies (libraisation) could influence the monetary policy of their central banks.9 Just as the dollar does today, Libra is a good candidate to replace the local currency as a store of value in economies with less stable currencies (where high inflation hinders this function). However, if residents can easily exchange their local currency for a set of stable currencies through Libra, they will take refuge in this asset at the slightest hint of problems in their economy. This could lead to significant episodes of depreciation of the local currency and make it difficult to maintain price stability.
  • 7. See S. Cecchetti and K. Schoenholtz (2019). «Libra: A Dramatic Call To Regulatory Action». VoxEU blog.
  • 8. See M. Pettis (2019). «Facebook’s Libra: Does the World Need Less Frictionless Money?», Carnegie Endowment for International Peace.
  • 9. This already occurs with dollarisation: the tendency of residents to protect themselves from the volatility of their local currency with accounts and contracts denominated in dollars.
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