What are the uses of blockchain technology in agriculture? Today we shall be looking at how this unique technology has found its application in the field of agriculture. For those who are not yet conversant with what the term blockchain means, we can start by defining it so that we can all be on the same page.
Is the use of technology helping with the creation of food security for the entire world? How can farmers and investors actually profit from the state of the agriculture industry in this decade?
A blockchain refers to a timestamped ledger of accounts and transactions that is managed by a network of computers that are not under the ownership of a single entity.
Each of the blocks of the transactions is bound to the other using cryptographic principles, also referred to as a chain. You can actually think of a blockchain as a Google document spreadsheet, for which there are several authors who can contribute to it, due to the locking mechanism.
That said, however, the blockchain is quite complex than the above example, and it has special characteristics that lead to it being such an attractive technological feature for the tagging, storage, and tracking of things that are valuable.
Have you heard the term “Distributed Ledger Technology”? This is actually the technology that is behind the existence of the cryptocurrencies such as bitcoin. DLT is still finding many more applications in today’s world.
Back to the field of agriculture, blockchain has made it possible for various stakeholders to access the truth about:
- The state of the crops in the farms
- the state of the inventory
The collection of the above information is otherwise usually so costly. Simply put, the use of blockchain technology has made it possible for farmers to access up-to-date information that supports the decision-making process.
Let us explore the ways in which this technology contributes to the wellbeing of farmers in this industry
The Application of blockchain technology in the agriculture industry
The optimization of the Food Supply Chain
Blockchain technology has made it possible for information on the origin of various foods to be accessed in real-time, which is something that has led to an increase in customer loyalty and confidence. With blockchain technology, fruits and vegetables that have been sourced from farms that are many miles away from the consumers are as safe as the ones grown in a local farm, since information about them is availed.
With the traditional supply chains, it is close to impossible for the food retailers to certify that various products have been grown under the right conditions, and by a certain supplier.
This is why food retail giants such as Unilever, Carrefour, and Walmart have resorted to the use of blockchain technology to trace and verify the origin of various foods.
At Walmart, for instance, it takes approximately 2 seconds to verify the origin of fruits and vegetables. In the past, this would have taken anywhere from a couple of hours to several days.
The simplification of transactions
Blockchain technology has made it possible for transaction processes to be simplified, and this has made things quite easy for all players in this industry, especially the small-scale farmers who do not have a voice.
Close to $1 trillion worth of food is wasted annually, on a global scope. This wastage is partially attributed to the poor farmers’ inability to access the wide markets. This makes it impossible for them to sell most of the food that they produce.
A blockchain startup going by the name AgUnity has actually tackled this issue by developing a proprietary blockchain-based platform that farmers can use to trade agricultural products. The blockchain has also helped increase trust between the market players. Not forgetting that it has enabled market participants to create small co-operatives in a bid to team up for financial gain.
The enhancement of crop insurance efforts
The agriculture sector has benefitted from the invention of smart contracts. Smart contracts have proven to be very helpful in crop insurance, where farmers are expected to claim crop damages with the insurance companies.
Traditionally, this process takes a long time and is burdensome for both the farmer and the insurance company. These conditions leave such a perfect space for fraud.
Smart contracts that are supported by blockchain technology, make it easy for farmers and insurers since damage claims are usually triggered automatically by the risk factors, such as the changes in weather conditions. This minimizes all operational inefficiencies.
Is this a new dawn for the agriculture industry? Here is what the experts have to say.
Improved product traceability
The present-day world consumer of agricultural products has become more conscious of the food that makes it to their plates. This has contributed to significant demand for organic products. Most of these consumers need to confirm the products’ journey from the farm to their tables. They want to confirm that indeed, no chemicals were added to the food that they purchase.
The information provided on a blockchain is unalterable, and this contributes to the general wellness of those who consume the food products at hand.
Crop and food production
Farmers use IoT sensors to fetch vital data from their farms, such as the state of the soil, the levels of water, and details about the fertilizers used. This information is then sent to a blockchain.
Based on the data that has been saved on the blockchain, the underlying smart contracts can then trigger certain actions. This contributes to the quality of crops produced, as well as an increase in profitability for the farmers.
These are just but the main applications of blockchain technology in agriculture. Other applications that are not widely discussed include:
- Supporting financing decisions for the small farmers
- The facilitation of financial transactions in the emerging nations
- The collection of information related to consumer purchasing decisions
- The reduction of waste- through supporting sustainable business models
- The decrease in transaction fees.
- The elimination of fraud
- The accessibility of data without compromising the privacy policies
- Fair pricing of agricultural products
The use of blockchain technology has definitely played a great role in the development of state of the art farms in which the farmer has more control over the elements that are responsible for the state of the crops in there. As time goes by, we can expect to see smarter inventions in the same lines take their place in the agriculture industry, as various stakeholders strive to achieve profitability. If you are interested in staying ahead of the pack, here is some information that you should definitely internalize on:
The Agriculture 4-part series | The State of The Industry and What To Do About It
That will be all for this article on the key uses of blockchain in agriculture. If you enjoyed it, be sure to share it with your friends, and to drop a comment with your thoughts in the comments section. All the best as you also take a look at my recommended resource.
I wish you well,
Eric, Investor and Team Member at Gold Retired!