• 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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What can we expect from cryptocurrencies?

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In 2009, the elusive Satoshi Nakamoto, the pseudonym used by one or several people to maintain their anonymity, published a paper in which he described how to create the equivalent of cash in a digital form, and launched the software that created Bitcoin, the first cryptocurrency.1 Since then, cryptocurrencies have proliferated and their market value has grown dramatically. In this article, we will take a detailed look at what cryptocurrencies are, what the technology that makes them possible consists of and what prospects they offer. As we shall see, although we are sceptical about the foundations that underpin the growth of cryptocurrencies, the technology that underlies them offers a wide range of alternative applications.

Let us start with a short overview of the evolution of the cryptocurrency market. As shown in the table, the market value of cryptocurrencies has undergone a sharp increase in the last two years. However, this euphoria dissipated, at least partially, following rumours in mid-January 2018 that the authorities in South Korea and China planned to introduce restrictions on their use. Also, while the market for cryptocurrencies is extremely volatile, it has not raised major concerns regarding its impact on macrofinancial stability. This is due to the fact that cryptocurrencies still represent a very small fraction of the world’s GDP. At their peak, they barely represented 1% of GDP, which contrasts, for example, with the market valuations of technology companies during the euphoria of the dot-com boom, which reached a value of approximately 30% of global GDP.2

It is necessary to understand what cryptocurrencies are in order to assess how the market has evolved over time. In simple terms, a cryptocurrency is a form of digital money, combined with a payment system. As digital money, cryptocurrencies offer nothing new: the digitised version of money has already been part of our lives for many years, and we use it on a regular basis in the form of electronic bank accounts and debit and credit cards. However, the payment system of cryptocurrencies does represent an innovation. For the first time, we can now exchange money digitally, relatively securely and anonymously, directly between buyer and seller without the transaction having to be processed in a centralised manner by an intermediary, such as a bank.3

This has been made possible thanks to blockchain technology. Before the blockchain, the direct digital exchange of money between users was not possible due to the risk of counterfeit. At the end of the day, an electronic account is nothing more than a computer file, and if there were nobody to check that this file had not been altered fraudulently, the value that appears in the account could be modified or falsified. The blockchain seeks to minimise this risk in two ways. Firstly, it creates a public record of all the transactions that are carried out in cryptocurrency. Any new transaction is added to the chain of previous transactions, hence the name blockchain, and becomes public as well. This allows any user who receives a payment to verify that the other user has the funds to make that payment. For example, if Xavier wanted to pay two bitcoins to Mary through the blockchain, it is possible to check that Xavier had received two bitcoins from Anna previously and, therefore, that he has sufficient funds to pay Mary. Secondly, it establishes a system through which the process of verifying transactions is performed in a decentralised manner and carries a cost.4 This mechanism makes it more difficult for fraudulent transactions to be entered.

As mentioned above, cryptocurrencies have managed to bring the benefits of cash to the digital world. Not only do they make it possible to make payments directly between buyer and seller, but the transactions can also be anonymous. This anonymity is due to the fact that, although the transaction ledger contained on the blockchain is public, the digital signatures used to execute the transactions are protected with encrypted codes that preserve users’ identity.

However, as fascinating as the technical details of cryptocurrencies may be, their future depends on their viability as a form of money. As explained in the article of this same Dossier «From barter to cryptocurrency: a brief history of exchange», economists believe that an item can be accepted as money if it can fulfil three basic functions: being a means of payment, a stable store of value and a unit of account. Let us assess cryptocurrencies according to each of these dimensions.

Firs of all, it seems unlikely that cryptocurrencies will become an effective means of payment. Trust is the main element that underpins any currency. Although the money we use today is a form of fiat currency (it has no intrinsic value), we feel comfortable using it because we know that other people will accept it as a means of exchange. This is the case largely because the currency is backed by a government which forces its citizens to accept it as a means of payment (the currency is legal tender). This is not the case for cryptocurrencies: no government supports their use and, given that they have no intrinsic value, their value as a means of payment therefore resides purely in the expectation that other people will accept it as such.

In addition, the competition from the traditional means of payment is fierce. Compare the 65,000 transactions per second that visa can carry out with the 1,500 that are possible with Ripple, a cryptocurrency specifically designed to increase the number of transactions per second that it can process, or Bitcoin’s 7 transactions per second.5

It is also not clear to what extent cryptocurrencies can become a good store of value. An example of this is the high volatility of their price (see chart). In a comparison with the euro, while in the last four months Bitcoin has lost about 60% of its value, the average annual fluctuation in the value of the euro over the past 15 years has been 1.6%. And Bitcoin is one of the most stable cryptocurrencies.

This volatility is largely due to the point we mentioned earlier: cryptocurrencies have value to the extent to which we expect others to assign it value, something which is highly volatile by its very nature. Furthermore, continuing with the previous comparison, traditional currencies have a stable value not only because governments back them, but because there is a central bank that adjusts their supply at any given time according to the economic conditions that prevail and, therefore, the demand that exists for them. This is vital, hence the key role that the central banks have acquired in developed economies. This is not the case, however, for the majority of cryptocurrencies, the supply of which is governed by predetermined rules that do not take into account the demand that exists for them.6

Finally, cryptocurrencies also do not appear to act as a unit of account. The Bank of England, for example, reports that most sellers that accept Bitcoin update their prices at high frequencies to ensure a stable price with respect to traditional currencies, such as the US dollar or the pound. In addition, it reports that it is not aware of any company that operates in Bitcoin and has its accounts denominated in cryptocurrency.7 As such, it seems that the users of cryptocurrencies continue to use traditional currencies as a unit of account in place of cryptocurrencies themselves.

If that were not enough, cryptocurrencies involve certain added risks. Firstly, the nature of the blockchain means that transactions are not reversible. Therefore, if a transfer is made by mistake, there is no way to undo it. Also, cryptocurrencies can be subject to computer hacks. In fact, some of these hacks have managed to circumvent the system of user anonymity.

Cryptocurrencies also suffer from regulatory risk. As the use of cryptocurrencies has become more popular, governments have begun to regulate their use. In some cases, this has occurred gradually. For example, the US has classified cryptocurrencies as financial assets with regards to their tax treatment. Several countries have also begun to regulate the key players within the system of cryptocurrencies, such as the exchanges where cryptocurrencies can be bought and sold for traditional currencies. However, other states have adopted a more hostile attitude, such as China, where the government has severely limited the use of cryptocurrencies across large sections of its economy. This type of risk is what led to the fall in the value of cryptocurrencies observed in January 2018.

In short, despite the recent euphoria that cryptocurrencies have aroused, we are sceptical about their potential for growth, given the inherent risks they involve and their limited potential to replace traditional currencies. Nevertheless, our scepticism does not apply to the technology that underlies cryptocurrencies: the blockchain. This technology makes it possible to keep a decentralised, comprehensive and public record of any transaction. The technology is still young, and its potential applications beyond the field of cryptocurrencies are vast. We explore one of them in the article of this Dossier, «Digital money in the economy of the future: new possibilities, new challenges». We encourage you to stay on board and keep reading!

Oriol Carreras Baquer

CaixaBank Research

1. See Satoshi Nakamoto (2009), «Bitcoin: A Peer-to-Peer Electronic Cash System».

2. See Mark Carney, (2018), «The Future of Money».

3. In practice, the current digital payment system does not just involve one intermediary, but up to four: the buyer’s bank, the seller’s bank, the company that owns the card and the regulator (usually the country’s central bank). Clearly, this system is far from anonymous.

4. In practice, the verification system is carried out using computers which must solve numerical algorithms derived from the field of cryptography. Thus, the cost of verifying the transactions is materialised through the electricity consumed by the computers. This cost is by no means trifling. As can be seen in the table, the verification system for Bitcoin is estimated to currently consume an amount of electricity equivalent to the annual electricity consumption of a country such as Switzerland.

5. See M. Carney (2018), https://ripple.com and https://blockgeeks.com/guides/blockchain-scalability/.

6. For example, the system for Bitcoin establishes that 21 million units will be reached in 2040 and that new bitcoins will cease to be minted from that moment.

7. See Mark Carney, (2018), «The Future of Money».

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