Abstract
Indonesia is now entering the era of the digital economy. In the agricultural sector, the concept of Agricultural 4.0 was introduced as a form of digitization. The scope of agriculture in this chapter refers to the value chain of agricultural sector in utilizing information and communication technology for interaction between all stakeholders in the agricultural sector, where every activity is recorded so that they can make predictions, dosing, and tracing, with an automatic control system, and done remotely. Applying this technology will optimize results, both in quality and quantity as well as the efficiency of existing resources. The research on the transformation of the agricultural sector in the era of industrial Revolution 4.0 aims to study the digitalization strategy of the agricultural sector in the era of Technology 4.0. This research was carried out using a qualitative approach by conducting literature studies, in-depth interviews, and focus group discussions. This chapter recommends the development of micro farming financing to increase the scale of digital agriculture's economy.
TopIntroduction
The transformation in digital technology, which began in the start of the century brought the old digital economy towards a new one (UNCTAD, 2019) The presence of new digital economy is characterized by the presence of mobile technology, unlimited internet access, and cloud technology (Van Ark, Erumban, Corrado & Levanon, 2016). Indonesia is a country that has great potential for the development of digital economy. The results of research conducted by Google Consumer Barometer and Temasek research (Anand et.al, 2018) stated that “The Indonesian internet economy, the largest and fastest growing in the region, reached $ 27 billion in 2018 and is poised to grow to $ 100 billion by 2025”. Results of the study shows that the main factor that supports the development of internet economy in Indonesia is the large number of internet users in the country.
Agriculture is a sector which has been highly affected by the technological development. Today, many farmers has evolved from using conventional farming methods to incorporate technology. Agricultural technology 4.0 is an agricultural phase whereby practices, methods and techniques incorporates and integrate digital technology, including Information and Communication Technology (ICT) and the internet. Direct connection with outsiders, agricultural sector stakeholders, through the transmission and communication of data into automation and autonomous systems, is a key aspect of this phase. The elements of technology in agriculture 4.0, among others, include: bio and gene technology, agricultural technology, food technology and e-commerce for food products and foodstuffs. ICT and digitized elements act as integrators, functioning as a messenger, communicator system and data processing of the activities of each value chain.
Innovations in technology and the structure of agricultural markets enable the evolution of approaches and products that can help agricultural finance. As noted in the G20 report (2012), sustainable agricultural finance requires an assessment of: a) risks, b) costs/distribution channels, c) bankable opportunities, and d) the right product to the right people. The five areas of research undertaken by the G20 Global Partnership for Financial Inclusion (GPFI), as summarized in the present report, contribute to solutions in these areas. Value chain finance is most relevant to address points a), b) and c). Insurance focuses on a), but is also confronted with b). Demand assessment is critical for d). Technology is the driving innovation for b), and financing for women is relevant for c) and d). While not comprehensive, innovation in these five areas makes an important contribution to global learning (GPFI, 2014).
The agricultural era 4.0 is an era where agricultural actors can interact directly with each value chain nodes: consumers, suppliers, distributors and retailers. Every activity is recorded so that predictions, dosing and tracking can be done with an automated control system, regardless of distance (Eriyatno & Kolopaking, 2019). The concept of agricultural development that has been developed at this time is intelligent agriculture, also commonly called smart farming or precision agriculture. This concept refers to the application of ICT in agriculture. The main purpose of implementing the technology is to carry out optimization in the form of increased yields (quality and quantity) and efficient use of available resources.
In the future, the agricultural business model is expected to develop by adopting robotic technology and the internet of things (IoT) in the agricultural sector, which will bring the agricultural sector towards agriculture 4.0. Agriculture 4.0 also not only affects producers, but also brings consumers closer to farmers. One of the functions of digital agriculture is being able to find out whether a product is produced from a sustainable process or not. Every agricultural activity is recorded, producing data and information that can be used to support other agricultural activities. Currently, the contribution of the agricultural sector to Indonesia's gross domestic product (GDP) has dropped dramatically. It is necessary to restructure the supply and value chains in the agricultural sector through manufacturing development in order to increase agricultural added value. This opens up opportunities for technology 4.0 to strengthen the productivity and value of agricultural enterprises in a broad sense (agriculture, livestock, fisheries and forestry) as a bridging tool to solve problems and challenges in Indonesian agriculture in the future.
Key Terms in this Chapter
Digital Economy: An economy that is based on digital computing technologies, although we increasingly perceive this as conducting business through markets based on the internet and the World Wide Web.The digital economy is also referred to as the Internet Economy, New Economy, or Web Economy.
Agro-Industry: Converting raw agricultural materials into value added products while generating income and employment and contributing to overall economic development in both developed and developing countries.
Agricultural Financial Platform: A center of excellence in agricultural finance in the form of a financing system for agricultural micro-enterprises, which includes practical tools for farmers, agricultural experts, financial practitioners, and knowledge and best practices for policy makers.
Electronic Agrobusiness: Any form of agricultural business transaction in which the parties interact electronically rather than by physical exchanges or direct physical contact.
Industrial Revolution 4.0: The ongoing automation of traditional manufacturing and industrial practices, using modern smart technology. Large-scale machine-to-machine communication (M2M) and the internet of things (IoT) are integrated for increased automation, improved communication and self-monitoring, and production of smart machines that can analyze and diagnose issues without the need for human intervention.