The Digital Revolution in Israeli Agriculture

This move is expected to lead to setting up of a digital trading floor for buying and selling fruit and vegetables
July 16, 2019
The Digital Revolution in Israeli Agriculture (Enlarge)

100 entrepreneurs and companies participated in the Ministry of Agriculture’s digital trading floors conference early this month.
This move is expected to lead to setting up of a digital trading floor for buying and selling fruit and vegetables.

 
The Ministry of Agriculture expects that the wholesale trading potential is estimated at about 10 billion Shekels and they hope the trading volume in the digital arena will reach about 15% of the trade in the fruit and vegetable market

The conference presented the current state versus the state the Ministry of Agriculture would like to see once this initiative has been completed. Nowadays, the trading methods in fruit and vegetables are outdated, inefficient and harmful to the quality of the produce arriving at the consumer’s table due to the multiplicity of links in the supply chain, the absence of a quality standard, failure to observe the refrigeration chain and other factors, all of which are detrimental both to farmers and consumers. The outdated method practiced today inflicts not only financial damage, but also social and ecological damage.

The fruit and vegetables change several hands before they complete their journey from the field to the consumer. This makes them more expensive and also diminishes freshness and quality.

Globally the trend is already making itself felt and at the Ministry of Agriculture there is interest in embracing these global trends of electronic trading in fresh produce - setting up an Israeli marketplace for electronic trading in fresh agricultural produce. An electronic trading floor creates a level playing field besides developing sophisticated, advanced trading methods, creating transparency in pricing and consolidating the link between quality and price, reducing depreciation, upgrading the farmer’s status vis-a-vis the traders, increasing competition and no less important - lowering the cost of living.

 

Manager of the Market Research Department in the Ministry of Agriculture and Rural Development, Zippi Sabag-Friedkin: “We believe that in future the space between the retailer and the farmer will be reduced. As a result, costs along the entire supply chain will be cut. We, as the regulator, will drive the process, will lay down the infrastructure, define its characteristics and help with the financing. This entire envelope will be given to a private body that will build and operate the trading floor for the benefit of the entire market. The assumption is that the groups that will rise to the challenge will join hands with the farmers, the transport companies and the programmers”.

The Ministry of Agriculture, the Ministry of Finance and the Israel Innovation Authority two months ago issued a call for support totaling NIS 20 million to support trading floors which will enable direct marketing from the farmer to businesses while slashing links in the marketing and supply chains, all in an effort to reduce the marketing margins, among other things. The object of the technologies which will be developed is to provide suppliers and general public with timely information on trading in fresh agricultural produce.
The goal of this program is to check the effect of the modern, dynamic infrastructure on the business-commercial fresh agricultural produce activity, and to identify opportunities for significantly streamlining the marketing of fresh agricultural produce nationwide. Through the digital trading floor, the farmers’ ability to market their produce will improve, strengthening their standing in the supply chain. There will be fairer trading conditions for those whose bargaining power so far has been weak. This, in turn, will stimulate competition in the marketplace by allowing them easy, direct access to the markets. Besides this, farmers will also be better able to control matters of payment dates, shortening payment lead times.
Besides these numerous advantages, this setting up of trading floors for selling fresh produce will also yield environmental, social and economic benefits. The trading floors will enable voluntary production planning through reducing overproduction and finding the optimal fit between demand and supply. The end result will be a substantial reduction in surplus produce. From the economic standpoint, setting up these trading floors will reduce monopolistic market tendencies; will increase price transparency; will strengthen the standing of the farmer and the consumer and will improve the availability of real-time data on domestic trading for research and development purposes by government ministries.

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