ENGINEERING FOR RURAL DEVELOPMENT Jelgava, 22.-24.05.2019. 682 IMPACT OF DIGITAL INNOVATION ON DEVELOPMENT OF AGRICULTURE IN LATVIA Baiba Rivza 1 , Daina Vasilevska 2 , Peteris Rivza 1 1 Latvia University of Life Sciences and Technologies, Latvia; 2 Liepaja University, Latvia baiba.rivza@llu.lv, daina.vasilevska@gmail.com, peteris.rivza@llu.lv Abstract. Developed countries are successfully modernizing their economies, rapidly developing innovative technologies dominated by artificial intelligence, automation, and digital platforms. World leaders in the implementation of digital technologies are IT-companies, media, finance, and insurance. Mobile communications and the Internet have a huge impact on all sectors of the economy, and agriculture is no exception. Digital technologies increase production efficiency, complement other production factors, and stimulate innovation, significantly reduce costs, overcome information barriers that impede market access for many small farmers, expand knowledge through new ways of providing extension services and provide new ways to improve management supply chains in agriculture. The main limiting factor is the specificity of agricultural production. And although there are many examples of the positive impact of digitalization in rural areas, they often do not reach the expected level. The main reason is that technology can eliminate only some, but not all, barriers that farmers face. The aim of this research is to study the level of digitization of agriculture in Latvia, identifying the main obstacles to the introduction of digital technologies in the agricultural sector of the Latvian economy. Acceleration of digital transformations in agriculture, the formation of the digital agrarian sector of the economy depends largely on the investment climate in the country, increasing investment in the industry. Keywords: digitalization, agriculture, rural territories, digital technologies. Introduction The growing population of the Earth means the increasing demand for agricultural products. By 2025, according to the United Nations projections, it will be necessary to increase food production by 70 % [1]. Food demand will grow as a result of both population growth and income growth. By 2050, the demand for cereals will reach approximately 3 billion tons. Annual grain production will have to increase by almost a billion tons (2.1 billion tons today), and meat production by more than 200 million tons in order to reach a total of 470 million tons in 2050, 72 percent (58 percent today) of which will be used in developing countries [2]. The agricultural industry can increase productivity and competitiveness, using the latest scientific advances and best practices. Developed countries are successfully modernizing their economies, rapidly developing innovative technologies, dominated by artificial intelligence, automation and digital platforms. By 2020, experts predict, 25 % of the world economy will move to the introduction of digitalization technologies, allowing the state, business and society to function effectively [3]. Digitalization is an important prerequisite for helping rural regions adapt to the modern knowledge-based economy and to promote regional development and growth. Digitalization offers rural firms the opportunity to diversify into new innovative business areas and opens up local products and services for new value chains to the national and global levels. In addition, digitalization can help reduce emigration and brain drain in urban centres and make rural areas a viable alternative for educated young people to live and work. Digital technologies offer opportunities for the development of new types of business, and this can increase the attractiveness of rural areas, especially in the eyes of the younger generation [4]. In short, the social and economic impact is very large: it affects employment and quality of life, market and value chains, competitiveness and opportunities for agricultural and rural entrepreneurs. Despite these opportunities, digitalization remains the prerogative of urban centres, and rural areas are largely ignored by policy makers and decision makers. Central to the digitalization of rural areas are no longer problems connecting to high-quality mobile and broadband services, but rather the need to promote capacity building and knowledge sharing to encourage rural firms to integrate digital models into their business plans. According to expert estimates, during the season the farmer has to make more than 40 different decisions at limited intervals. Many of these solutions, which directly affect the economy of production, are objects of digitalization [5]. The level of digitalization of agriculture in Latvia today is DOI: 10.22616/ERDev2019.18.N485