The Ministry of Agriculture, the Ministry of Finance and the Israel Innovation Authority will be supporting the establishment of digital trading floors for marketing fresh agricultural produce
Are exorbitant marketing margins affecting the cost of living? In this technological world of the 21st century, digital platforms can help address this issue. The Ministry of Agriculture, the Ministry of Finance and the Israel Innovation Authority introduce: Fresh agricultural produce marketing over a modern, digital trading floor - assuring quality, reducing marketing margins, lowering the cost of living, freshness, tightening the link between quality and price, encouraging farmers an small businesses and public transparency.
Israeli agriculture is joining the 21st century with digital trading floors for selling fresh produce: the Ministry of Agriculture, the Ministry of Finance and the Israel Innovation Authority will be extending 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. 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. Moreover, the digital arenas will enable small businesses to take a more central role in local trading. Besides these, the digital arena will affect us, the consumers, as well: the trading arenas will help lower the cost of living by shortening the supply chain and reducing the marketing margin racked up among all these players. It will also create price transparency beginning at the initial bid made by the farmer through to the eventual purchase of the goods at the retail points of sale.
The goal of this new 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.
In recent years, the supermarket chains have doubled their share in retail sales. They now account for 65% of the market, while the leverage in the hands of markets and neighborhood greengrocers has diminished proportionally. 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.
So how will this be done?
These trading floors will enable sale by farmers to retail or institutional buyers. The sale will be done in online arenas - purpose-built trading websites aimed at customers dealing in retail sales or institutional customers (such as: hotels, restaurants, catering companies). The seller will be able to offer his produce specifying its quality, delivery lead time and asking price. The requested and offered prices will be visible only to those who are active on the trading floor. The deal closure price will be transparent to the public without disclosing identifying details. This way, all those dealing in this sector, and the entire consumer population will be able to find out the actual wholesale prices and obtain information on marketing margins.
These days are seeing the launch of the initial stage of the digital trading floors! The Israel Innovation Authority and the Ministry of Agriculture have issued a call for companies to demonstrate digital trading floors for fresh agricultural produce, and the activity of the trading floor and the supply, distribution and marketing chains of the fresh agricultural produce that will be traded on the floor. Companies interested in setting up the digital trading floors are welcome to make their offer. For full details on submitting proposals in response to this call, click here