March 2021 agricultural “platforms” in a digital era


Figure 19: Possible negative impacts of Platforms



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ISF RAFLL Agricultural Platforms Report

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Figure 19: Possible negative impacts of Platforms 
These potential negative impacts should be 
carefully weighed against the positive outcomes 
that can be achieved for users. Additionally, we 
must recognize that an over-reliance on Platforms 
as the game-changer in smallholder agricultural 
markets could lead to a mix of radically different 
trajectories for different types of rural households 
that will shape what rural economies might look 
like. On the one hand a highly digitized, highly 
productive and fast-growing rural economy 
driven by those that are able to engage with 
Platforms, and digital services more broadly 
speaking; in parallel, a lagging, low productivity, 
traditional economy driven by those that cannot 
benefit equally from Platforms, with negative 
implications for inclusion. Now is the time for 
policymakers and donors to ask what the rural 
economy should look like in the short-, medium-, 
and long-term—and what role Platforms can play 
in this transformation. To fully capitalize on the 
promise of Platforms, donors and policymakers
must reconcile their potential to counter market 
frictions and shape interactions for the better 
with their unintended—but very real—downside 
risk of exacerbating existing power imbalances. 
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PREDICTION:
Limits to the winner-takes-all dynamics 
in smallholder agriculture
In many other sectors, highly dominant and 
consolidated Platforms have emerged, completely 
reshaping sectors through their significant market 
power—and, in many cases, prompting concerns 
from the public, traditional industries, and 
regulators. While we expect further consolidation 
of agricultural Platforms to occur as business model 
innovation gradually evolves, we do not believe the 
agriculture sector is likely to see the same degree 
of consolidation as in other sectors.
As noted in this report, we expect the geographic 
scope of network effects to be more limited in 
agriculture than in other sectors, due mainly to 
the highly localized nature of most interactions. 
The relatively high need for capital-intensive 
investments will dissuade Platform operators 
from constantly expanding into new geographies. 
The benefits of scaling to new networks (e.g., 
geographies, value chains, or type of interactions) 
will often be outweighed by the significant 
investments and effort required to succeed. This 
decreases the competitive advantage a Platform 
gains by being active across multiple networks. 
As such, while we expect further consolidation of 
agricultural Platforms compared to the relatively 
fragmented market view of today, we do not expect 
to see nearly the same degree of consolidation 
that we have seen in other sectors, such as 
e-commerce, communications, social networks, 
and sharing economy Platforms.

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