Digital Transformation of the Agricultural Sector: Pathways, Drivers and Policy Implications

The digital transformation of agriculture is enabling the collection of vast amounts of geo-referenced information about growing conditions within the field and facilitating the automated implementation of spatially varying input applications. This has the potential to increase production efficiency, reduce overapplication of inputs, lower input waste and pollution, and improve farm profitability. We discuss the pathways by which digital agricultural technologies have the potential to affect crop management, and current trends and patterns of adoption of digital technologies. We provide insights from the technology adoption literature on the factors that can be expected to influence the adoption of emerging digital technologies and the findings from the empirical literature on the determinants of adoption of these types of technologies. We conclude with a discussion of the design of policy incentives to induce the adoption of digital technologies cost-effectively, the challenges in implementing such policies and the opportunity that digital technologies offer for addressing these challenges.