March 2021 agricultural “platforms” in a digital era

PREDICTION: The rise of Platforms in tight value chains 
As outlined in this report, Platforms are most likely to 
appear in sectors where actors are highly fragmented 
and significant inefficiencies exist that limit market 
interactions. Unsurprisingly, many of the current Platforms 
in agriculture have either focused on looser value chains 
with relatively large numbers of actors (not only on the 
farmer side but also on the side of offtakers) or have taken 
a relatively value-chain-agnostic approach (e.g., ag supplies 
marketplaces), where the positive transformative potential 
of Platforms is relatively high. Many agricultural value 
chains, however, are characterized by a relatively high 
degree of business consolidation—in particular, vertically 
integrated agribusinesses. These businesses often play a 
large role in goods and service provision to the smallholder 
farmers from whom they source, whether on an impact-
focused or more commercially minded basis. 
In these types of value chains, we expect the dynamics of 
agricultural Platforms to differ. Platforms are less likely to 
add value for agribusinesses by structuring and organizing 
commodity transactions (e.g., produce and trading 
marketplaces), as these are currently based around vertical 
integration and tight relationships between farmers and 
offtakers. In fact, agribusinesses might see Platforms as 
rivals and, given their relatively high degree of power, might 
impede the emergence of Platforms in these value chains. 
Given their position, agribusinesses might build on their 
existing relationships, knowledge, human capital, and 
physical infrastructure to create their own Platform 
businesses alongside their core pipeline operations. A 
number of agribusinesses are already incorporating digital 
solutions into their business (e.g., Cargill CocoaWise). We 
hypothesize that a number of such businesses may explore 
the Platform option, allowing them to facilitate and oversee 
interactions without needing to directly provide all the 
goods and services they are currently delivering.
In some cases, tight value chains are closely regulated, 
limiting the amount of market-based innovation that Platforms 
can offer. For instance, in Ghana, only licensed buying 
companies may procure cocoa from farmer organizations; 
in Vietnam, only local businesses may purchase coffee from 
farmers. Within other value chains, public entities are often 
directly involved in marketing activities, setting commodity 
prices, and/or providing supplies and services as part of free 
or subsidized programs. Here, too, the opportunities for 
Platforms to add value are limited . 
On the other hand, while many agribusinesses currently 
provide a range of goods and services to smallholder 
farmers from whom they source (particularly in tight 
value chains around export-oriented crops), they often 
see their service delivery models as part of the cost of 
doing business rather than a core part of it. As such, a 
subset of agribusinesses may welcome the emergence of 
goods and service-focused Platforms—whether operated 
independently or by themselves—as a way for them to focus 
on their core business of procurement, processing, and trading 
while leaving service delivery to other market actors.
In summary, while relatively few Platforms have emerged 
with a specific focus on tight value chains, we can imagine 
multiple future scenarios of how such an emergence might 
reshape market dynamics in those value chains.