Did you know that 1/3 of all the food produced worldwide is wasted? The reason: farmers often just can’t bring their products to consumers early enough! Sounds shocking, right?
Well, this is actually one major motivator for agriculture to turn to blockchain. It’s linking farmers directly to consumers, doing away with middlemen, and disposing of produce much quicker.
Most importantly, it is putting the entire production and distribution process available for verification through a transparent system of record-keeping and transaction-settling. This, for example, allows farmers to log their harvest on the technology, where it can be tracked through processing, distribution, and all the way to the supermarket.
In parallel, consumers turn can trace where products come from by using their smartphones to access chips that contain relevant information on the items that they’re planning to buy.
And to prevent losses due to the damage brought by unexpected calamities on crops, blockchain-enabled remote-sensing of weather data can determine insurance payouts before a destructive storm even occurs.
The Reality of Blockchain in Agriculture
Indeed, blockchain in agriculture deserves attracting growing attention. So what’s preventing it from attaining full fruition?
One area in agriculture that blockchain will have difficulty improving is the supply chain. The process requires a network of sensors and tagging technologies that are simply not yet in place. Efforts are underway to set them up, but achieving smooth interoperability will be difficult since everything needs to be synchronized.
The blockchain itself is also deemed too complicated, making it difficult to convince farmers to integrate. There is a glaring lack of awareness, made even worse by the absence of training programs to help growers understand the technology and consequently invest.
It’s also doubtful whether cryptocurrencies, blockchain’s payment system, can be used in food supply chains due to its volatility arising from speculation and price fluctuations.
Scalability is another issue. Current agricultural technologies cannot sustain the high transaction speeds required for the blockchain to work, especially when it comes to large-scale projects. Issues on the number of systems required and transactions made and the volume of data to process remain.
Add to those concerns regarding user type and volume. Most farmers may not be adept in using technology and so lose the private key that they need to access the blockchain. Some areas may also have a huge number of users that a system may not be equipped to handle, causing inaccessibility errors.
Policy and regulations
All things considered, blockchain will be effective if it can be easily understood and used. There must be a clear policy on how to facilitate payment transactions. And the government must come up with clear regulations to encourage adoption.
Blockchain in Agriculture Applications
Slowly but surely, blockchain in agriculture is gaining acceptance through applications that highlight its benefits. Let’s review some of them.
- With a blockchain ledger, farmers can provide consumers with accurate documentation of the value chain that went into their products. The reports include information such as where crops were harvested, what shipping methods were used, which processors were utilized, and how outputs were distributed to stores.
- Blockchain technology can be used to track crops and provide verifiable information to farmers, distributors, and consumers in real-time. Through it, stakeholders would more easily see and, therefore, understand the entire process that may explain delays, for example, in delivery.
- With an agricultural blockchain in place, it would also be possible for stakeholders to gather logistical information that can help mitigate fraud. Illicit food trade can cost the global economy close to US$40 billion annually. The technology can be used to build an accurate report that would allow governments to streamline investigations on food supply misuse, tax evasion, and illegal delivery diversions in the industry as well.
- Since blockchain is essentially a tamper-proof ledger, the data it provides to any stakeholder is trustworthy. Anyone who has access to it can scrutinize each transaction, allowing complete transparency.
- Blockchain tracking can record data from the Internet of Things sensors to monitor crop quality leading up to harvest, while in storage, and during delivery.
- Blockchain-enhanced agricultural record-keeping allows growers to automatically gather precise information for optimum irrigation, custom fertilization, and targeted pest control. As a result, they can lower expenses and maximize revenues.
- Authorities can easily check each step of the food production process to see where an anomaly began. In cases where product consumption, for example, led to illnesses, the responsible party can easily be identified. That enhances food safety. When products are contaminated, it would also be easy to trace where it occurred and who is at fault. That ensures a greater degree of quality control in that none of the members of the supply chain would wish to be tagged as an offender.
- Blockchain’s smart contracts spare farmers from the long lines of intermediaries, thereby simplifying and hastening the delivery process. That is especially important since most agricultural products have a short shelf life. Speeding up the process can significantly lower food waste and lessen procurement costs.
- Blockchain record-keeping eliminates unnecessary payment delays and can be configured to spread out payments to farmers throughout the year instead of seasonally.
- Blockchain’s peer-to-peer network enables direct transactions between buyers and sellers, thus doing away with middlemen and their commission fees.
- Blockchain platforms use digitized contract documents and automated data-matching to avoid costly duplications and manual checks on agricultural commodity transactions.
- The technology can also help food retailers and suppliers benefit from lower transaction costs since there would be no more back and forths in processing permits and other legal documentation.
- As soon as a piece of machinery is fixed, a mechanic with blockchain access can update its status from multiple locations.
- Blockchain tracks maintenance records in real-time to inform growers which machinery is available, which needs maintenance, and which is being repaired.
- Since data cannot be altered once it is stored in a blockchain, each stakeholder is assured that none of the records have been falsified in any way.
- The transparency that the technology provides can also ensure the reliability of certificates issued to any stakeholder.
- Blockchain’s transparency can also ensure that all laws pertaining to agriculture are beneficial to all stakeholders before they are enacted.
Pilot Blockchain-Related Projects
We have seen how blockchain use has been disrupting agriculture, it won’t be long before we see much-needed improvements and advancements then. But first, let’s take a look at some early strides technology experts have been making in the industry.
AgriDigital is one of the pioneers of blockchain use in agriculture. It developed the first proof-of-concept (PoC) algorithm to help address some of the current challenges seen in the agricultural supply chain.
The company uses an online platform that all stakeholders in the supply chain, including farmers, buyers, operators, and consumers, can interact with and carry out transactions on wherever they may be. This platform also allows users to streamline transactions by automating contract creation, delivery arrangements, and payment processing.
Agriledger, meanwhile, provides small farmers access to regional and international markets for funding. Through the use of smartphone apps that run on a blockchain platform, farmers can easily secure capital for their activities. Agriledger’s social enterprise project relies on the blockchain’s incorruptibility, which levels the playing field for farmers and agricultural cooperatives, big or small.
Provence mostly focuses on ensuring supply chain transparency for all stakeholders. The company allows users to verify if products were harvested in an environmentally friendly manner.
One of its pilot projects allowed users to trace the source of fish sold in Indonesia. It also produced solutions to keep an eye on the supply chain of coconuts and various fashion items. It primarily aims to utilize blockchain technology as a means to provide a universal records layer to improve interoperability across supply chains.
Blockgrain is an Australian startup that harnesses the power of blockchain to connect buyers and sellers of grains without the need for middlemen. The platform brings together growers, brokers, and logistics organizations to track grains from the time they are harvested until they reach consumers. It successfully ran a trial in Queensland wherein it used the blockchain to keep transaction records and process payments using Ethereum-20 “AGRI” tokens.
OriginTrail aims to use integrated databases across supply chains by using both a blockchain layer and an off-blockchain network. It is part of SmartAgriHub, a Europe-wide project, that hopes to make agricultural innovation a reality. OriginTrail mainly tracks the lifecycle of organic dairy and poultry produce from farms to tables.
Ripe is another supply-chain application that uses blockchain technology. But, rather than tracking the lifecycle of food items, it tracks what goes into food. By using blockchain-powered sensors, they trace how food was prepared from the time it was harvested until it reached the store in real-time. Ripe is known for “placing tomatoes on the blockchain.”
Blockchain in agriculture presents a promising solution to the food shortage that results from the rising world population and climate change. And even though first, it must resolve the issues confronting it, a concerted effort between consumers, the business sector, and governments can ultimately get the system off the ground.