Digitalization of the Agriculture in Bulgaria

By economic sectors, the Gross Value Added (GVA) for 2018 in Bulgaria was distributed as follows:

· Industry (including construction) - 25.8%;

· Services - 70.3%;

· Agrarian (agriculture, forestry and fisheries) - 3.9%.

The share of the agrarian sector in total GVA decreased by 0.8 in 2018 percentage points compared to the previous year.

According to preliminary seasonally adjusted NSI data, in the first and second quarters of 2019, the total GVA for the country's economy increased by 3.3% and 3.7% respectively compared to the corresponding period of 2018 in real terms.

In Bulgaria, the area with agricultural purpose in 2017 is 5 224402 ha, which represents about 47% of the country's territory. The used agricultural area (UAA) is formed by arable land, perennials, nurseries, permanent grasslands and family gardens. In 2017 it amounted to 5 029529 ha or 45.3% of the country's territory, increasing by 0.2% compared to the previous year. Arable land are the areas that are included in crop rotation, temporary meadows with cereals and legumes grasses, fallow land and greenhouses. In 2017 it decreased slightly (by 0.2%) compared to the previous year, to 3473825 ha, which represents 69.1% of the utilized agricultural area. In the 2016/2017 business year the total number of farmers registered in the register under Ordinance No. 3/1999 is 96476, which is 1827 more than the previous year. As of the beginning of August 2018, the registered farmers in the 2017/18 business year is 92328.

Agriculture is still an important economic sector in Bulgaria. By 2017, it employed nearly 7% of the working population. The useful agricultural surface is almost half the national territory, and by 2018, crop production represented a share of 69,2% of the total value of agricultural production.

According to statistics, in the last five years in Bulgaria more than 1000 decares of new greenhouses have been built - block type - from 5 to 30 decares, but only 5% of the irrigated fields are automated. The agricultural sector in the region needs technological support to be competitive in the European and global market.

The Rural Development Program of the Republic of Bulgaria 2014-2020 states that access to a standard broadband network is provided for almost all households in rural areas (99%), but in sparsely populated rural areas only 60% of households have access. to a fixed broadband network, compared to 90% on average for the country. Only 10% of rural households have access to next generation networks. Broadband penetration in rural areas has increased significantly in recent years but remains low - only 37% of households in predominantly rural areas have an Internet subscription. The use of the Internet by businesses and households for e-commerce, internet banking, information and training is far from potentially possible. As of the end of June 2015, Bulgaria has coverage of next generation broadband infrastructure (> 30Mbps) amounting to 72% of households, but reaches only 2.7% in rural areas, which is well below the EU average of 27.8.

Since the accession of Bulgaria to the European Union in 2007 to 2018, more than BGN 1 billion have been invested in modernization of agricultural holdings in the Republic of Bulgaria alone under the European Agricultural Fund for Rural Development. In the last two programming periods, however, investing in digital solutions has not been a priority. For this reason, there is no clear information on whether and how many of these investments include digitalization and precision farming technologies. It is possible that as part of the investments made so far in modernization of agricultural holdings, this type of digital solutions is included, but due to the lack of indicators such data do not exist. At present, the funds only for investments in digital solutions and technologies for precision agriculture are from Extremely private and depend on the economic capabilities of the individual farm or entrepreneur. For this reason, at the national level there is a lack of comprehensive information about the investments made so far and the level of digitalization and the available technologies for precision agriculture.

With regard to the GVA formed by the agricultural sector, preliminary data indicate a slight annual increase in real terms by 0.1% in the first quarter of 2019 and an increase of 3.9% in the second quarter. [1]

Bulgaria is at the last 28th place as per the Digital Economy and Society Index (DESI) among all EU countries for 2020.[2]

The report of the European Commission on the index for the penetration of digital technologies in the economy and society for 2018 states that the overall level of skills in the field of digital technologies in the Republic of Bulgaria is among the lowest in the EU, varying widely socio-economic groups. Despite the increase in the number of people with at least basic skills in the field of digital technologies from 26% in 2017 to 29% in 2018, Bulgaria remains among the EU countries with the lowest results - only for comparison in 2016 170 million EU citizens or 44% of the total population of the Union have basic or no digital skills.

This is due to the low number of people using the Internet, which accounts for 62% of all people aged 16-74. The adoption of digital technologies by enterprises in Bulgaria is slow. In recent years, a gradually evolving ecosystem of digital and technology entrepreneurs has emerged, but investment in the digital economy is still limited. These insufficient investments, together with the shortage of ICT specialists, are the possible reasons for the slower digitalization in Bulgaria, compared to other Member States. In 2017, the number of digitized enterprises was among the lowest in the EU at 12% -13%. Although Bulgarian companies are significant users of Radio Frequency Identification (RFID), their consumption of social media or cloud computing services remains among the lowest in the EU, at 9% and 5.5% of the total number of enterprises, respectively. The share of SMEs selling online is also well below the EU average, at 7.1% and 17.2% respectively. The sector is not exempt of changes neither. According to the ministry of Agriculture, Food and the Forestry in the “Annual report on the state and development of agriculture of 2019”, in 2018, the gross value added of the agricultural sector to Bulgarian economy shrank by 2 % on an annual basis. However, based on the same report, the value of the gross production from the Agriculture sector showed an increase of 1,5% compared to the previous year. In a nutshell, the impact of the agriculture sector in the Bulgarian economy decreased, but at the same time, its gross value production increased at the same year. This by itself is not necessarily a bad thing, because this decrease can be explained by an increase in the impact of other economic sectors in the Bulgarian economy as a result of investments or a modernization of the economy. Nonetheless, there are many factors concerning this tendency, and the entry of Bulgaria in the European common market might have had more weight than others.

Monitoring the conditions for the development of production in real time, precise control of enemies, tracking "farm to fork", balancing consumption and other new technologies, easing the administrative burden, accurate prediction of stages in crop development - all this is possible with the application of the latest computer, robotic and artificial intelligence technologies. Progress and availability of new sensors connected via the Internet of Things (Internet of things-IoT), precise and Internet-related and geolocation mechanization, Blockchain distributed computer platforms (Blockchain), artificial intelligence systems processing large data sets (Big Data) in real time, robots, satellite systems, drones, ubiquitous access to information - these are the new tools of progress in agricultural business

Access to the EU (European Union) has made a positive impact on the development of Bulgarian agriculture. As we mentioned before, there is growth in the gross value added generated in the sector. There has also been growth in the labor production and investments, and there has been a boost of trade with agricultural goods. European investments in Bulgarian agricultural sector have been responsible for the modernization of it, increasing its productivity and competitiveness.

Currently, EU is the main commercial partner of Bulgaria in the trade of agricultural products. In 2018, agricultural trade with the EU increased by 6% compared to 2017. 75,3% of Bulgaria’s total agricultural exports share shipped to EU and that of agricultural imports – 79%.

This scenario looks very positive for Bulgaria and its farmers. The injection of European money into the sector in form of support programs, modernization strategies and other investments, have shown results.

There has been a tendency to permanently reduce the number of farms, mainly at the expense of small and self-dependent farms. Since the accession of Bulgaria to the EU until 2019, the number of farms has decreased over 3 times. There has also been a tendency to concentrate land in hands of major land holders. By 2019, these holders managed the 83% of the entire national cultivable land. Small-sized farms are of a particular importance to Bulgaria. They employ a large number of workers in rural areas and help in the fight against poverty. Is for this reason that, even though the macroeconomic numbers of Bulgaria can be interpreted in a positive way, there are doubts over the role European and State investments have when it comes to boost small-sized farmers.

The country has adopted a Strategy for digitalization of agriculture and agricultural regions of Republic of Bulgaria in 2019.

The level of existing smartfarming applications is low, but the country takes steps to accelerate the digitalization in agriculture in the period 2021-2027.

The strategy for digitalisation of agriculture and rural areas of the Republic of Bulgaria envisages the following areas of activity to develop the Bulgarian agricultural economy potential: building and development of appropriate digital infrastructure for communication and connectivity; investments in modernization and technologies for precision agriculture; development of digital networks and use of software applications in business management and decision making; awareness, training and advisory services for the development of digital skills and qualifications, research and innovation, partnership for exchange and transfer of innovation, development of experimentation infrastructure and access to it.This area of impact corresponds to Priority 6 "Sustainable Agriculture" in the national program "Bulgaria 2030" and Goal 2 "End of hunger - achieving food security and better nutrition, promoting sustainable agriculture" from the UN Sustainable Development Goals.

As part of the European Union's Sixth Priority, set out in Regulation 1305/2013, namely "promoting social inclusion, poverty reduction and economic development in rural areas, with a focus on improving access to information and communication technologies (ICT) , their use and quality in rural areas ”, the Rural Development Program of the Republic of Bulgaria 2014-2020 provides funds in the amount of EUR 30,000,000 under measure 7.3 - Support for broadband infrastructure, including its creation, improvement and expansion, passive broadband infrastructure and measures to access solutions through broadband infrastructure and e-government.

In the period 2021-2027 digital technologies in agriculture will continue to be a high priority of the European Union. In this context, the EU's Horizon Europe research program will provide € 10 billion for research and development in the food industry, agriculture, rural development and the bioeconomy. As part of the national decisions, as a result of which the country will develop its Strategic Plan for the CAP, Bulgaria will have to identify the relevant funds from the European Agricultural Fund for Agricultural Guarantee and the European Agricultural Fund for Rural Development to set aside for digitization. of the agricultural sector. As a result of the analysis and the identified needs at the end of the Strategy, the necessary European and national funds that the Republic of Bulgaria should set aside for digitalization of its agriculture will be indicated.

[1] https://www.mzh.government.bg/media/filer_public/2020/02/11/agrarian_report_2019.pdf - last accessed October 10th 2020

[2] https://ec.europa.eu/digital-single-market/en/desi - last accessed October 9th, 2020