Sep 05, 2022 04:57 PM EDT
How Pinduoduo’s “Tech for Agri” Approach Uses Technology to Benefit Agriculture
Agriculture plays an important role in every human society and is critical to ensuring the food security and sustainability of every country. Yet, the wave of digital transformation that has swept other industries and resulted in outsized efficiency and productivity gains has largely passed agriculture by.
The disparity is even more pronounced for smallholder farmers, the majority of whom have neither the training nor resources to use technology to improve their livelihoods.
Pinduoduo presents an interesting case study of a consumer internet company that has been successful in aggregating consumer demand and then directing that demand to deliver positive change in society.
Started in 2015, Pinduoduo began as an as an online retailer of agricultural produce before switching to operating a third-party digital marketplace for multiple product and services categories. Today, it connects millions of farmers and consumers through its e-commerce platform, allowing buyers to discover more agricultural specialties and enabling producers to sell directly to consumers.
It is also the only major consumer internet company to make agriculture its focus.
Pinduoduo has said that it sees in agriculture a sector that has largely missed out on the benefits of digitization. The level of digitization remains low when compared to other industries, which have seen technology drive massive productivity and efficiency gains. Nonetheless, the potential for agriculture to benefit from digitization remains vast.
Digitization of the agri-food value chain can help to address some of the most entrenched challenges besetting agriculture, including:
Low productivity: About one in four of the workforce in China is involved in the agricultural sector but the industry makes up less than a tenth of GDP.
Lack of scale: Nearly 98% of farmers work on farms smaller than the equivalent of two baseball fields, making it difficult to standardize growing practices and achieve economies of scale.
Labor shortage: The rural workforce is aging and dwindling, with young people seeking jobs in the cities.
Inefficient distribution: Food production remains largely unplanned and uncoordinated, with significant wastage along the distribution chain.
Pinduoduo has adopted a holistic "Tech for Agri" approach to drive agricultural modernization. Its key focus areas include:
Increasing market access for farmers through its e-commerce platform
Improving digital inclusion and literacy through training programs
Fostering innovation to deliver a productivity leapfrog
Promoting agritech solutions and horticultural breakthroughs
To date, Pinduoduo has connected more than 16 million farmers to the digital economy. With more than 800 million active consumers on its platform, Pinduoduo is using the economies of scale to create a virtuous circle of innovation and supply-demand matching to deliver economic and social benefits to more segments of society.
Take for example the annual Smart Agriculture Competition that Pinduoduo organizes. Now in its third year, the precision agriculture challenge gathers young agricultural researchers and data scientists from top universities globally to compete to develop easy-to-use, cost-effective and environmentally sustainable agritech solutions for smallholder farmers.
That is not typically a focus area for agritech research and development due to questions of commercial viability. However, the agricultural researchers in the Smart Agriculture Competition have the incentive of using Pinduoduo's platform, with its millions of consumers and agricultural producers, as a testbed and springboard for their ideas and solutions.
Similarly, the farmers are motivated to implement productivity-boosting agritech solutions because there is a huge pool of consumers on Pinduoduo's platform seeking high-quality agricultural produce. For the consumers, they are motivated to shop on Pinduoduo because of its reputation for high-quality agricultural products.
The Smart Agriculture Competition is thus an example of how Pinduoduo's "Tech for Agri" approach seeks to create a "Benefit All" situation by incentivizing the various stakeholders to take part in digital agriculture.
Given that food is a fundamental human need and touches everyone's lives, improving the way food is grown, transported and sold may turn to have the highest returns on investment of any sector in the long run.
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