Unlocking the giant opportunity of agribusiness with digital optimization
Digital utilization is the least maximum in the Agriculture, Plantation, Livestock & Fishery sector
Although the digital economy has significantly contributed to the Indonesian economy, not all sectors have experienced the maximum benefits of digitalization.
Based on the Company Perception Survey in the East Ventures-Digital Competitiveness Index (EV-DCI) 2022 report, the agribusiness sector is considered less than optimal in terms of digital utilization. Of the 71 small, medium, and large corporations that participated in the survey, 57.7% of respondents believed that the agribusiness sector is not yet at maximum digital reach. The agribusiness sector includes farming, plantation, livestock, and fishery sectors.
It sounds regrettable as the agribusiness sector is an industry that massively contributes to the Indonesian economy, at around 11% of Southeast Asia’s total Gross Domestic Product (GDP) and 14% of Indonesia’s GDP in 2020. This less than optimal condition and opportunity has become one of the unique concerns of various parties, including East Ventures as the leading investor that supports the Indonesian digital ecosystem.
At the East Ventures Summit 2022* event last July, several founders of the East Ventures ecosystem revealed some of the main factors of the agribusiness sector’s under-utilization of digital solutions. Samuel Tirtasaputra, CEO & Co-Founder of GoKomodo, said that the agribusiness industry’s management is still old-fashioned. Indonesia’s agricultural land is spread across the archipelago and remote areas. Therefore, the flow of information tends to be slower.
“Most of Indonesia’s young talents prefer pursuing careers in big cities and more modern industries. We lack professional expertise in agriculture. That is why technology adoption has been lagging in this sector. Education and proper agricultural practices are still lacking in our country,” said Samuel.
Utari Octavianty, Chief Sustainability Officer (CSO) of Aruna, said that equitable distribution of human resources and digital infrastructure is the key to reducing the significant problems faced by fishermen and coastal communities. Indonesia has 17.000 islands, but not all have internet connectivity or electricity.
The findings in the EV-DCI 2022 survey strengthened the fact. Nearly 80% of the respondents from 71 companies assessed that disparate telephone signal coverage was Indonesia’s main obstacle to digital infrastructure. Meanwhile, 75% of respondents considered that the quality of the telephone signal was poor, especially in remote areas of Indonesia.
As a sector-agnostic venture capital firm and an early believer in the startup ecosystem in Indonesia, East Ventures has also encouraged the use of digital solutions in the agribusiness sector through investment and creating synergy in the digital ecosystem. Currently, East Ventures invests in several agritech companies and supply chain ecosystems to support agribusinesses, such as Chickin, Aruna, Greens, ARIA. and Pasarnow.
Improvements in Digital Infrastructure and Education are vital to optimizing digital utilization
Digitalization is a critical factor for agribusiness, but there are other key factors to unlock the potential of the agribusiness sector to the fullest.
First, increasing digital infrastructure in each region through government policies. The Indonesian government plans to work on the internet network from 2021 to 2022 in 12,548 villages in the 3T (frontier, outermost, and underdeveloped) areas and non-3 T areas, especially in coastal areas, to improve the economy of coastal communities.
In addition, increasing education and training on the internet, social media, and e-commerce also needs to be encouraged. In mid-May 2021, 38.78 million living workers were from the agriculture and fisheries sectors.
Meanwhile, the portfolio in the East Ventures ecosystem not only disrupts the industry with technology but also seeks to improve education for users in the agribusiness sector. For example, fisheries startup Aruna increases fishermen’s knowledge in the fishing industry, connecting them to the right market, price, and global standards. It is essential because there are still many fishermen who live in poverty.
By utilizing digital in the agribusiness sector and encouraging the improvement of digital infrastructure and education, we can help to increase incomes and standard of living for agriculture workers and will lead to making Indonesia a leading agricultural country in the world.
*East Ventures Summit 2022 is the inaugural summit held by East Ventures on 20-21 July 2022 in Bali, Indonesia. With a theme of “Navigating Crisis: Balancing Innovation and Resilience”, East Ventures Summit 2022 gathered the EV family, from LPs, startup founders, and EV team, to enjoy the welcoming dinner, the first offline Annual General Meeting (AGM) after 3 years, panel discussions, Pitching by the Sea, and gala dinner.