CC BY
24Manucharyan M.G.
Ph.D. in Economics, Associate Professor, Senior Researcher, Head of Department, The Institute of Economics, National
Academy of Sciences of the Republic of Armenia; Armenian National Agrarian University mg-meri@mail.ru
THE ROLE OF DIGITALIZATION IN THE DEVELOPMENT OF THE AGRO-INDUSTRIAL
COMPLEX OF ARMENIA
Keywords: digitalization, agro-industrial complex, development, innovation, investments, digital technologies, agriculture.
Ключевые слова: цифровизация, агропромышленный комплекс, развитие, инновации, инвестиции, цифровые технологии, сельское хозяйство.
Modern management of the agri-food system is an element of strategic economic development that requires the use of innovative technologies, including the digitalization of the sectoral economy. The digital economy is not a separate sector, but a new quality of life, which is the basis for the development of e-government, economy, business and social sector. The transition to a digital economy, being a major policy priority for all countries, is especially important for developing countries, which create «both serious challenges and great opportunities» for the latter. It can make the products of local small and medium-sized enterprises more accessible for export to foreign markets by linking them to global value chains.
In Armenia, digitalization can initially be carried out with the participation of large economies, which can develop industry standards for suppliers, forcing them to move to the logic of digital work, and then involve small and medium enterprises in the process. It should be emphasized that the introduction of digital models and technologies in the Republic of Armenia requires serious investments, and for that it is necessary to attract international investors. The World Bank will support the government in developing digital development strategies, harmonizing the digital environment with the EU and Eastern Partnership countries. It is expected that this will help Armenia to increase its competitiveness by fully expanding the commercial viability of broadband, which in turn may be attractive for wider private sector investment. This will help to accelerate the widespread adoption of broadband across the country, and will especially improve the availability of digital infrastructure in remote rural areas. It will create a favorable environment for the ICT sector to make additional investments and create new jobs.
At present, especially in developed countries, digitalization has penetrated all spheres of human activity. Countries that are rapidly engaging in digital processes are becoming more flexible, able to cope with global change more quickly and effectively. The basis of digitalization is digital technologies, the volumes of which have increased even more, especially in recent times.
The effectiveness of the integration of strategies into the agrarian sector development agenda, one of the most important sectors of the economy, in almost all cases depends on the effectiveness of human-institutional capacity development in the sector, as well as digital agriculture and technological innovation. And this is not accidental, because the development prospects of the sector depend on the rooting of knowledge-based economy1.
The challenges facing the world agri-food system are enormous. In 2019, about 820 million people in the world received inadequate food, along with which the poverty rate increased, which has leaded to an increase in the number of hungry people. In addition, the agro-industrial complex plays an important role in solving biodiversity, the optimal use of natural resources, as well as in the fight against the effects of climate change, and in solving other problems facing the sector.
In order to meet these challenges, it is necessary to introduce digital technologies in the agro-industrial complex, which will give an opportunity to solve these problems. Transmitters used in agriculture, drones, sensors, satellites and robots are examples of digital technology that can revolutionize agriculture, even small-scale farming. Sensors and satellites provide information on soil moisture, temperature, crop growth, and animal feed levels. All this allows farmers to have higher yields by optimizing agricultural practices, reducing the use of fertilizers, pesticides, feed and water. These innovative digital technologies increase the profitability of labor-intensive tasks such as crop health control, crop planting, animal feed, cattle milking, and more.
In agriculture, digital technologies allow to reduce the risks, excluding the human factor, reduce costs and increase crop yields. Reducing the cost of production, increasing product quality and competitiveness, optimal use of resources is the most important problem of digitalization. Digital technologies also generate huge amounts of data that can be combined with other information, stored, and analyzed as part of decision-making processes. Such «big data» has a huge volume, contains a variety
1 Baghdasaryan A. The bases of the low-emission development strategy in Armenia. Perspectives on Energy @ Agriculture / EU Climate Regional Program. - Yerevan, 2020. - P. 61 (in Armenian).
of information resources, and requires new tools for development and analysis, which can be used to interpret the events of the past, to predict the future.
Improving the management efficiency of agricultural enterprises through digital technologies helps to maintain market competitiveness. Working without digitalization means losing the global competition. To make the right production management decisions, you need information, data that allows you to collect technologies such as satellite imagery, high-tech sensors, GPS systems, etc.
The experience of countries with developed agriculture shows that the digitalization of the industry reduces unplanned costs by about 20%, using innovative programs that summarize all the data from the digital technologies received in one window. The latest technologies make it possible to control the production of products from the land to the consumer road, which guarantees quality, meets the needs of consumers.
Digital technologies can make a significant contribution to the sustainable development of agriculture. For example, digital software can help predict climate change and take measures to prevent agriculture from suffering. The information gathered through these technologies makes it possible to avoid unwanted changes or «disruptions», which will not only increase the efficiency and speed of work, but will also lead to the redistribution of information and forces in all parts of the value chain, ensuring sustainable development of the field1.
Digital technologies can provide equal conditions for all participants in the agro-industrial system. These technologies will become key tools for responding to global challenges and to promote sustainable development but at the same time accelerate the transformation of food systems and to control that impact, it is necessary to make serious efforts, which will reduce the side system risks.
Thus, digital agriculture is the application of information and communication technologies in agriculture, including in the fields of crop cultivation, animal husbandry, fish farming and forestry. It covers the whole food system. It includes both traditional technologies such as radio, television, and cell phones, as well as new digital technologies such as drones, satellite communications, sensor technologies, the Internet of Things, and car-to-car communication.
Many countries either already have or are in the process of developing a digital agriculture strategy that will help them plan, create, and implement innovative ways to use digital technologies. Such strategies contribute to the improvement of the digital infrastructure, as well as the creation of digital tools in the village and the use of digital tools in agriculture. The most important component of such a strategy is the creation of a favorable environment (policies, institutions, information, monitoring), which will stimulate the participants in the agro-industrial chain to use innovative digital technologies that will significantly change the living conditions of both producers and consumers.
Armenia can't stay out of the process of digital transformation. As a small open economy that is part of the global economy, the Armenian economy can significantly benefit from the opportunities provided by global economic diversification, thus overcoming the deterrent effect of such fundamental factors hindering the development of the national economy, such as small internal market and lack of scale effect, economic blockade, landlockedness, limited transport, logistics network, scarcity of resources (gas, oil), competitiveness due to other circumstances, limited economic potential. The digital economy allows for the elimination of the traditional boundaries that exist between economies, giving all participants in the world economy equal opportunities to benefit from that economy2.
Agriculture in Armenia has all the prerequisites to become one of the priorities and one of the pillars of a modern, prosperous, diversified economy. The vision for the prosperity of the sector is the transition from traditional small-scale production to modern, technologically equipped, market-oriented, high value-added agriculture, for which it is necessary to increase the competitiveness of agriculture through the digitalization, mapping, mechanization and introduction of innovative technologies. The development of digital agriculture is used as a tool for overall economic progress, productivity and competitiveness.
The main goal of the introduction of digitalization in the agro-industrial complex is to increase the productivity growth in agricultural enterprises through the latest technologies. It is based on modern methods of agricultural production, using innovative technologies, Internet, robotics, artificial intelligence, other electronic services, to increase labor productivity, reduce production costs. The introduction of a digitalization system in the agro-industrial complex enables the operative organization of agricultural activities, saving considerable time and resources3.
Digital agriculture provides an opportunity to meet the existing challenges in different ways. It is considered an ever-evolving phenomenon aimed at promoting agriculture and the sustainable development of rural areas through the use of ICT. The term ICT used in this context includes all information and communication technologies, including devices, networks, mobile phones, services, applications, as well as modern Internet technologies, landlines, televisions, radios, satellites, and other innovative assistive devices.
Digital farming tools and agricultural innovations based on technology in general can dramatically improve and transform the competitiveness and sustainability of Armenia's agriculture over the next decade, while at the same time meeting many of the most important and pressing challenges in the agricultural sector.
Digital agriculture (also known as e-agriculture) involves the design, development, application, data collection, and analysis of innovative information and communication technologies (ICTs) to address a range of food system issues4.
1 http://www.fao.org/3/nc580ru/nc580ru.pdf
2 The problems of forming the institutional system of digital transformations of the RA economy / H. Sargsyan, R. Gevorgyan, K. Minasyan, J. Mkhitaryan, H. Zakaryan. 2020. - P. 7 (in Armenian).
3 Departmental project «Digital Agriculture»: official publication. - M.: Rosinformagrotech, 2019. - 48 p. (in Russian).
4 Strategy of the main directions ensuring the economic development of the agricultural sector of the Republic of Armenia for 20202030. - https://www.mineconomy.am/en/page/1467
The agro-industrial sector can benefit from digital technologies if it is clearly formulated at the national level. Digital agriculture is currently included in strategies, programs and projects as an innovative way of developing rural communities. The main components are the provisions of standards, norms, methods and tools, as well as individual and institutional capacity building and policy support. Taking into account the role of digitalization in the agri-food system, the RA Ministry of Economy has defined the promotion of digital agriculture as one of the priorities of the sector in the strategy of the main directions ensuring the economic development of the agricultural sector of the Republic of Armenia for 2020-2030. The strategy states that the digitalization of Armenia's agriculture will lead to increased competitiveness, and to achieve this goal it is necessary to expand the scope of introduction and effective application of modern technologies. This will be possible through investments in digital farming infrastructure (e.g. farm register, animal numbering system, digitalization of ministry activities, consulting systems). Technological modernization (non-digital) should include the introduction of innovative technologies in various fields of agriculture (for example, hail protection, modern irrigation systems, innovative greenhouses, post-harvest technolo-gies)1.
At present, agriculture is much more than agriculture. It is gradually integrating more and more with other sectors of the economy and this integration requires optimization through digitalization.
Digitalization of Agriculture and the application of many of these innovations in Armenia, among other positive results, will lead to significantly higher productivity, increased resilience to climate change other and hazards, access to high-quality markets, to expand new market opportunities; to improve food quality; and to increase resource utilization and cost-effectiveness. Some of the positive results in the priority agricultural value chains will be visible in a short time. And for more positive results, such as ensuring Armenia's competitiveness, long-term stable investments and urgent actions will be required.
Eventually, the use of other digital technologies will lead to an increase in the high-income stability of farmers, as well as create more favorable economic conditions for agrarian entrepreneurs and investors. At a higher level, digitalization and innovation will lead to faster GDP growth in the agricultural sector of Armenia, faster response of public institutions involved in the agricultural sector, increase in awareness and cost-effectiveness, involvement of women and youth in agriculture and environmental sustainability (e.g. water conservation), climate protection, improving food security, which is noteworthy in agricultural production, and other related economic, such as agriculture, wholesale, retail, transport, logistics, finance, ICT, tourism, and the creation and promotion of new jobs.
Digital agriculture enables farmers to expand production, to reduce costs in the long run, and prevent risks. Digital agriculture is a «gift» for agro-technological organizations, as this field is gradually being pushed towards automation and the use of digital technologies. Thus, digitalization and innovation are cross-sectoral actors for the Government of the Republic of Armenia for a modern, effective, knowledge-based vision of the agricultural sector.
Studies show that the digital economy, in particular digital agriculture, is one of the demands of the 21st century, and that developing countries in particular need to do more to adapt to the global economy. Digitalization is the driving force of agricultural development, for which there are favorable conditions and environment in Armenia.
2030. -
1 Strategy of the main directions ensuring the economic development of the agricultural sector of the Republic of Armenia for 2020-https://www.mineconomy.am/en/page/1467
