Digital agriculture: The golden key to global market access

As rising protectionism threatens agricultural market access, South Africa has a golden opportunity to embrace digital trade. Buhlebemvelo Dube, economist for trade research at the National Agricultural Marketing Council (NAMC), explains how.

Agricultural trade is crucial in ensuring poverty alleviation worldwide by safeguarding food security and promoting market access. Market access, as well as a healthy equilibrium in terms of global supply and demand for food, is important.

Rising protectionism by various countries through tariffs and non-tariff measures is a significant hurdle to market access, which adversely affects agri-food systems. Swift ratification of digital trade in agriculture plays a substantial role in overcoming some of these challenges by offering more efficient and inclusive trade mechanisms.

It is essential for South Africa to frame its agricultural environment to be conducive for the speedy adoption of digital trade in agriculture to sharpen its market access opportunities and maximise its export earnings. The future of agricultural trade is inclusive, green and promotes sustainability.

Connecting agricultural value chains

Technically, digital trade is underpinned by five concepts: electronic authentication, electronic signatures, electronic documents, electronic payments, and cryptography. This channel connects value actors to the market (importers) both domestically and internationally.

Twain, the farmer and the importer use electronic authentication and electronic signatures to confirm identities, then use electronic documents to enter into agreements, and perform electronic payments through cryptography.

All concepts are crucial when it comes to digital trade in agriculture. Authentication ensures that both the supplier and the consumer are verifiable, and this reduces fraud and builds trust. Interoperability is fundamental in authentication, and this is guided by single-factor, two-factor, and multi-factor types of authentication.

Signatures are used by both parties to enter into contracts electronically. In a digital context, electronic signatures are fit to replace handwritten signatures in the analogue world. An electronic signature refers to data in electronic form attached to an electronic data message that is used to identify its signatory and indicates their approval for the information contained within.

This area is key when considering digital trade in agriculture. Policy makers and the government must intensify efforts to strengthen as well as review key legislations that provide legal effect, validity, or admissibility as evidence in legal proceedings of electronic signatures in agricultural trade. This is central in supporting digital trade in agriculture as it addresses the use of electronic signatures.

Competitors for key commodities in the agricultural sector in developed countries have already established laws that address the issues of legal validity and enforceability of electronic signatures in the context of international trade.

Policy makers can be guided by existing texts, such as the United Nations Convention on the Use of Electronic Communications in International Contracts, UNCITRAL MLES, UNCITRAL MLIT, trade agreements, and JSI texts on e-commerce.

Developing a supportive legal framework

As South Africa and its partners in the Southern African Customs Union (Sacu) periodically assess and review opportunities in trade agreements, it’s important to identify and adopt agricultural digital trade as an opportunity and to leverage it fully so as to robustly intensify market access.

Moreover, using electronic documents in lieu of paper documents, traders minimise delays and costs. There is a need to enable such documents to be legally recognised and accepted as their equivalent of the traditional paper documents. Such a transition requires international standards to facilitate interoperability.

It is further reasonable that the legal framework be guided by the relevant government stakeholders and industry captains. Such a framework can be enforced through Article 10 of the World Trade Organisation (WTO) Trade Facilitation Agreement (TFA) which suggests that “formalities connected with the importation, exportation, and transit requires WTO members to simplify document formalities, including through the use of technology, and to accept electronic copies of documents where the original is held by another administration”.

Furthermore, both the G7 and G20 have adopted statements supporting the adoption of legislation on electronic trade documents to support trade digitalisation.

During the G20 presidency of Saudi Arabia, a solid foundation was laid to enhance digital trade, prioritising electronic payments. South Africa’s G20 presidency can advance these efforts in its Agriculture Working Group and the Food Security Task Force to highlight the importance of technical, regulatory, and usage interoperability in digital trade.

This aligns with priority one of the Agriculture Working Group, which focuses on the Promotion of Policies and Investments for Inclusive Market Participation.

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Safeguarding trade data through encryption

Another area of consideration is the central role that cryptography plays in digital trade. It protects sensitive data, secures financial transactions, ensures the authenticity and integrity of documents, and maintains confidentiality.

This is critical because it protects trade information from unauthorised access and alterations using encryption, decryption, and hashing. Policy makers in the future must rigorously consider cryptography provisions in trade agreements, memoranda of understanding, customs unions, and identify areas of improvement to enhance market access for South African agriculture.

The rise in the use of digital trade and the use of cryptocurrencies has introduced complexities to the payment ecosystem, and this is affecting agricultural trade. Its impact will increasingly be more prevalent in the future, especially on the profitability of export revenues, should it not be taken with urgency.

Thus, it is important for policymakers to ratify digital trade as a catalyst for agricultural market access. This can be intensified through deliberating on digital trade in existing trade agreements as an area of opportunity, strengthening legislation by policymakers to ensure legal validity of digital texts, and advancing digital trade standards in the G20 presidency of South Africa in its Agriculture Working Group and Food Security Task Force.

Buhlebemvelo Dube, economist for trade research at the National Agricultural Marketing Council (NAMC). The views and opinions expressed in this article are those of the author and do not necessarily reflect the views or positions of Food For Mzansi.

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