• 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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Writing the future: the technological paradigm shift and the new economy

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Self-driving cars, robots that cook (almost) as skilfully as some chefs, software that can diagnose diseases, machines that beat humans at chess and game shows... All these inventions already exist... as well as those we have yet to see. In the words of the economists Brynjolfsson and McAfee, these technologies showwe are starting phase two of the second machine age.1,2 Phase one of this second age started in the mid-90s when information and communications technologies took over many routine tasks and changed how companies operated. But this second phase or new paradigm is very different because, for the first time, technologies are demonstrating they can also do non-routine work and learn how to solve problems on their own. This is a rapid, global, irreversible change which will have an effect on all sectors of economic activity. In this article we examine the potential impact of this technological change on the labour market, on the sectoral structure of the economy and on the organisation of firms.

Let us begin with the labour market. One of the key features of the new paradigm is that machines (mainly robots, new operating systems and algorithms) are expected to become more involved in the production process. This will have several likely consequences. Firstly, we expect jobs to considerably evolve over the next few years. As new technologies become integrated within the production process, certain tasks will probably be carried out by fewer workers and some jobs might even disappear (what could be called the «substitution effect»). This is happening already. For instance, in January Amazon opened a store in Seattle with no shop assistants or automatic tellers. However, at the same time other jobs are becoming more important, those in which the work carried out by machines and the contribution made by a worker complement each other. One clear example are those professions (managers, data scientists, statisticians...) that can make use of new digital tools (machine learning techniques, big data and software that makes accurate predictions) to improve their company’s service quality or its production efficiency. As happened in previous episodes of technological change, we expect this complementary effect to be greater than the substitution effect. For instance, 19th-century industrialisation destroyed some jobs in agriculture and crafts but this was more than offset by the boom in manufacturing jobs.

The impact of new types of jobs in the labour market does not end there. The change that is likely to occur in job types is, in turn, likely to significantly modify the skills required by the labour market. Occupations requiring social skills might become more important, such as knowing how to communicate, empathise and leadership, as well as teamwork skills. As new technologies take over an increasingly wide range of tasks, such as automatic learning and more abstract work, many jobs will have to specialise in those complementary skills which these technologies cannot develop, such as the ability to understand human feelings or what we tend to call common sense. Such changes can already be glimpsed in an interesting study which shows that, since 1980, jobs requiring social skills have increased substantially in the US.3

Finally, such changes in jobs are not only likely to increase labour productivity but also its dispersion. Productivity gains will probably vary a great deal depending on each job. It is reasonable to assume that productivity growth will be significant in those jobs that benefit more from the complementary nature of new technologies, while those not benefitting so much will lag behind. This phenomenon can already be seen and it is one of the factors that lie behind the greater wage inequality in many developed countries.4

Important changes are also expected at the sector level. In this case one of the potentially most disruptive phenomena isthat platforms, in addition to providing online products such as music and software, will probably offer an increasing range of physical goods and services, the so-called online-to-offline or O2O platforms. Today digital platforms are already involved in distributing a large number of goods and services. This practice will spread over the next few years but platforms are also expected to play a key role in producing goods and services, and to participate actively both in pre-production stages (R&D, design, engineering) and in post-production (sales strategy, marketing, logistics). In fact, it will be increasingly difficult to classify companies by sectors based on the definitions used today. Once again, Amazon is a prime example. The company that was set up in 1994 as a simple online bookshop currently offers a wide range of its own and third-party products, as well as data storage and processing services for firms.

As we move further down this path, in those sectors where platforms are in charge of the distribution chain, they are likely to forge synergies with other platforms and companies offering complementary goods or services. One such example is Spotify. Users can listen to music on this platform but Spotify also informs them personally, taking into account their musical tastes, about nearby concerts that may be of interest to them, as well as offering them the chance to buy the tickets via its app.

On the other hand, in sectors where platforms are also involved in production, they will become a serious rival for more traditional companies because they will be able to capitalise on a powerful digital structure with a large amount of data, allowing them to offer their clients more personalised services as well as more effective loyalty strategies. These new dynamics may result in a power shift in many sectors from companies to platforms, something which is actually happening already in the mobile phone sector. In 2015, Apple had 91% of the global earnings from the smartphone market. We should therefore expect traditional firms to differentiate their products as much as possible to set them aside from the platforms.

Finally, it is important to remember that this paradigm shift in technology is not only affecting the economy at a sector level but also altering the size of firms and how they operate. New technologies mean the productive structure of firms can be increasingly spread around the world, with more decentralised production and decision-making centres. This trend, which is expected to consolidate over the next few years, means that the relative number of freelance workers,5 company relocations and offshoring will continue to rise, and that firms will operate less hierarchically and become more dynamic and flexible.

As for company size, some authors6 suggest this paradigm shift will result in a new dual structure. Digital advances will help firms offering a higher quality product to expand their production and cater to more markets, encouraging winner-takes-all dynamics to continue. However, there will also be more opportunities for small firms specialising in very specific and sophisticated varieties of a certain product since, thanks to technological advances, companies can produce goods at an increasingly lower costs while consumers can quickly find product varieties that perfectly match their tastes and interests.

In summary, society is going through a paradigm shift in technology which is very likely to have a huge effect on the labour market, the sectoral structure of the economy and how companies operate. Taking the right decisions and being ready for such changes will be vital to make the most of all the opportunities such technologies offer. It is important to remember that technology may be a tool but we are still the ones who make the decisions. The key lies not in wondering what technology will do to us in the future but what we can do with technology.

Javier Garcia-Arenas

Macroeconomics Unit, Strategic Planning and Research Department, CaixaBank

1. The first age occurred with the invention of the steam engine in 1765.

2. See Brynjolfsson, E. and McAfee, A. (2017), «Machine, Platform, Crowd», Norton.

3. See Deming, D. (2015), «The Growing Importance of Social Skills in the Labor Market», Journal of Economics.

4. For more details, see the Dossier «New technologies and the labour market» in MR02/2016.

5. 36% of US workers are currently freelance.

6. See Brynjolfsson, E. and McAfee, A. (2014), «The Second Machine Age», Norton.

 

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