March 2021 agricultural “platforms” in a digital era

c
ould evolve 
into Digital Platform providers
themselves or 
enable companies using their SaaS solutions
to set up a Digital Platform.
This briefing note focuses exclusively on 
Digital Platforms as a new set of business mod-
els emerging in agriculture to facilitate exchange 
between users. The aforementioned paradigm 
shifts toward market-based approaches and digital 
technologies have pushed Digital Platforms into 
the spotlight when it comes to agricultural devel-
opment. These Platforms arguably represent the 
most significant new business model innovation 
in digital service provision, as well as the greatest 
potential for impact on smallholder farmers. While 
there is an extensive research base (and a number 
of support programs) around digital solutions, 
there is very little research on Digital Platforms. 
Digital Platforms are defined by three common 
characteristics:
1. They connect multiple users. Platforms 
are meant to solve market frictions. In the case 
of smallholder agriculture, the primary friction 
is barriers that keep market participants from 
interacting with each other. Digital Platforms 
enable and facilitate interactions between 
multiple users on both sides of an interaction 
(e.g., many farmers have the ability to interact 
with multiple goods or services providers). 
These users can be producers or consumers on 
the Platform—and in some cases (e.g., Face-
book), they can be both. Platforms can connect 
only one type of user (e.g., WhatsApp) or two 
or more types (e.g., Amazon).
2. They generate network effects. Digital 
Platforms are unique in generating value 
through network effects, which refers to 
the impact that the size of a Platform (i.e., 
number of users) has on the value proposition 
of that Platform to its users. In other words, 
even if the specific goods or services facilitated 
by the Platform remained static, the mere 
number of Platform users can increase the 
value created by the Platform. Network effects