Blockchain Will Revolutionize Agriculture
Everybody wants to live in a world without poverty, zero hunger, health, and well-being. And Every farmer wants to be able to feed his own family, and every farmer wants to run a profitable farm.
According to the World Resources Institute, nearly 10 billion people are predicted to live on Earth by 2050; this is about 3 billion more mouths to feed than in 2010. Globally we will need to produce 56% more food. The need to make progress is becoming urgent. Transforming and digitalizing farms and agriculture to create positive outcomes for all stakeholders is an extraordinary challenge.
As innovators and solution finders, we are tasked with designing frameworks and integrating technology that elevates the most vulnerable and the most affected by system inequalities.
The Blockchain Chamber of Commerce believes that we are at a tipping point in history where people and technology can facilitate the People-to-People economy to make the goals of a sustainable and better ecosystem a reality for consumers and farmers.
Blockchain has the potential to revolutionize the way food is tracked, traded, and sold. It has the potential to create better outcomes for both the consumer and the farmer. The key phrase is “potential to revolutionize.”
Why do I say potential to revolutionize? From history, we know that technology is like a knife. It can harm people and make the ecosystem worse for many and leave them further behind, or it can empower people, feed them, and bring them into an ecosystem they were otherwise excluded from.
When we think about how we can use blockchain to revolutionize the system, we must adjust our mindset on how we look at how we’re going to design and create an equitable farm and agriculture ecosystem.
So, what do I mean by we must adjust our mindset. We must selectively forget what we know so that we can learn what we need to know so that we can rethink, reimage, and reinvent to solve for hunger, resilience, and a sustainable food ecosystem.
Disruption is scary. Disruption destabilizes what has always been. But disrupt is what we must do if we what to change outcomes. Using blockchain as the disruptor in agriculture can create more positive results for almost all UN Sustainable Development Goals, starting with SDG 1, No Poverty. Nearly 80% of people who live in poverty live in rural areas. And living in poverty directly leads to hunger. Reaching the goal of no poverty and the SDG2 Goal of Zero hunger are intertwined.
The root cause of poverty and hunger is the inability to use current systems to create industry infrastructures to create sustainable agriculture. The current system favors a few over the rural farmers.
Blockchain technologies can disrupt barriers that contribute to poverty and hunger by bringing a technology whose roots have always focused on creating a distributed people-to-people economic system that brings more economic inclusivity. The Blockchain In Agriculture And Food Supply Chain Global Market Report predicts that the Agritech blockchain market will reach approximately $886.18 million by 2025.
The four greatest impact areas for blockchain technology include Inclusion, Optimization of the Food Supply Chain, Fair Markets, and Traceability.
The first step to inclusion is helping rural farmers go from unknown to knowable. The first step to being part of the ecosystem is the ability to prove that you are who you say you are, that you own the land you are growing your food on. Blockchain technologies are helping the system move from paper to a more reliable digital system based on smart contracts.
When it comes to the formalization of land rights, blockchain technology promises to authenticate landowners and provides a fixed ledger of land use rights transactions. Using smart contracts protects rural landowners in countries, including women who produce ½ of the world’s food but have less access to land and are more vulnerable to corrupt land practices. Country’s such as Ghana, Georgia, and India are developing blockchain and smart contract frameworks to address the protection of people’s land rights, reduce land conflicts, and address corruption and land fraud.
Inclusion also requires moving smaller and rural farmers from the unbanked to financially empowered. Being unbanked means, a farmer doesn’t have access to traditional financial services such as bank accounts, credit to grow their businesses, or business services to facilitate customer transactions. According to the World Bank Group, about 235 million unbanked adults worldwide receive cash payments for the sale of agricultural products.
Many farmers in emerging economies are unbanked because they can’t prove their existence in the supply chain. By moving the agribusiness payments to blockchain ecosystems, small and rural farmers could build trusted and authenticated payment histories, which would help expand their access to traditional credit.
A second benefit would be to build a truly safe and trusted transaction system that could support kick-starter funding and person-to-person funding that could directly fund and support farmers.
An example of a company that is helping farmers with funding is Cultivati. Their blockchain-based platform uses smart contracts to help farmers raise funds for their crops. Farmers can find funding for all stages of farming, including seed growing, plant raising, harvesting, and distribution.
On a community level, blockchain technologies open up a way for local unbanked consumers to easily and safely create transactions backed by smart contracts to buy food from the farmers in their community.
Using blockchain, there is an excellent opportunity to understand how Global Organizations impact the agriculture development they support. According to the International Fund for Agricultural Development, since 1978, they have distributed approximately $23.2 Billion in grants and low-interest loans to projects that have reached an estimated 518 million people. Moving this to a blockchain ecosystem that is immutable and trusted will help organizations better understand what types of loans and grants contribute to sustainable and long-term positive outcomes. The data that could be gathered while protecting personal privacy is important because organizations like IFAD and others that focus on rural farmers and on the most remote regions of developing countries. Purpose-driven organizations could use trusted data to facilitate even better frameworks moving forward.
The second area where blockchain will have a high impact on Farmers is Optimizing the Food Supply Chain. Blockchain technologies can help farmers make more planet-friendly decisions, smarter operational decisions, improve customer experiences, and enhance business outcomes.
Blockchain technology can be used to optimize IoT for agriculture. IoT has been used in agriculture to improve yield and optimize growing conditions. However, the challenge with IoT is that the data is not always accurate, and it’s difficult to connect disparate systems, which can lead to a loss of efficiency and productivity. Blockchain technology can help solve these problems by offering accurate and reliable data about crops, soil conditions, and weather conditions. Blockchain will make it easier for farmers to share their data with other stakeholders such as researchers and buyers while also maintaining ownership over their own information. This will allow them to make better decisions about their crops while also optimizing production in a sustainable way.
The resilience of food systems needs to be strengthened in such a way that the environmental foundations to produce sufficient nutritious food and maintain healthy ecosystems for current and future generations are not compromised. Currently, climate change is one of the biggest threats to food supply chain sustainability. Blockchain and IoT are essential to Climate change adaption and mitigation in agriculture. Farmers can access data to help them better adapt to the effects of climate change. They can use the data to understand if weather patterns are short-term versus long-term trends that need to be considered.
Blockchain technology has the potential to make agriculture and farming more environmentally friendly. According to the Food and Agriculture Organization of the United Nations, industrialized agriculture contributes about 30% of global greenhouse gas emissions. Blockchain will help to reduce the carbon footprint of food production by optimizing energy use and reducing waste.
Blockchain has the potential to transform the agricultural supply chain by providing transparency, security, and trust between growers and buyers. With blockchain technology, any type of information can be recorded and shared across a decentralized network of computers, making it easy to track products from their source all the way to the final product.
Another area where blockchain technology can have a huge impact is food waste and loss. One-third of all food produced is lost or wasted –around 1.3 billion tonnes of food –costing the global economy close to $940 billion each year.
In the industrialized world, food follows a complicated supply chain from the farm to the market and eventually to the consumer. A blockchain ecosystem could bring accountability to inefficiencies and practices that contribute to food waste. Moreover, we can better match supply to demand to avoid the current mismatch that leads to food waste at the retail level.
In developing countries, food loss could be addressed by using blockchain and data to improve post-harvest management and logistics and to build a suitable infrastructure that brings market information that would allow production to better match demand by connecting the grower and the consumer.
Connecting the farmer and the consumer has other advantages. In the past, farmers have been at a disadvantage when it comes to selling their products and transacting with consumers. However, with the rise of blockchain technology and the implementation of smart contracts, farmers can sell their produce directly on a platform that consumers can access without any intermediary involved.
Companies such as Agridigital are giving farmers and growers the ability to sell direct and the ability to establish fair prices for their products. The transparency and security provided by blockchain technology give farmers a say in how their product is priced and allow them to communicate that price directly with buyers. This will help eliminate unfair practices such as price-fixing, which has been an issue in the global economy.
The fourth area where blockchain can impact is food transparency and safety. According to the National Center for Biotechnology Information, 7.69% of the world population — that’s approximately 600 million people — suffer from foodborne diseases every year, and 7.5% (420,000 death) of all deaths annually are due to foodborne illnesses.
In 2020 the USFDA published its blueprint for a New Era of Smarter Food Safety. The blueprint calls for utilizing blockchain to help prevent foodborne illness and track contaminated food to its source. The IBM Food Trust is helping companies to create alignment with the blueprint.
In 2016, Walmart launched a pilot program with IBM to track the pork supply in China using blockchain technology. The program was created in an effort to create more transparency in the food supply chain in China, which has been plagued by safety issues over the past several years.
The blockchain system allowed Walmart to follow the food from farms all the way to store shelves, and vice versa, so that they are able to trace contaminated products back to their source quickly. The pilot program is now the IBM Food Trust has gone global as more governments and companies look to address food transparency.
For rural farmers, blockchain has the potential to transform the agricultural supply chain by providing trust between growers and buyers. This process will help farmers strengthen their relationships with buyers by ensuring that their products are exactly what they claim to be. This is increasingly important as more consumers look for organic produce.
Companies such as Ripe, a blockchain-based platform, connect organic food producers with retailers. The company provides a toolkit for businesses of all sizes to source sustainable food from suppliers, including verification of the product’s organic status.
As we look forward to the future, the most exciting way that blockchain is growing to revolution agriculture is that it is going create a place for rural farmers to tell and valid their stories, share their products and open up more avenues for other people to be part of their journey. It humanizes a journey between the farmer and their customer. It will be disruptive. It will be different, and it will be worth it.
We all want to see a world where there is food sustainability and a path to income for the global agricultural ecosystem that has a sustainable path to income for the farmers who are critical to success.
Decades of progress toward a better system are at a tipping point. We must modernize our push toward creating an equitable and sustainable farm and agriculture ecosystem that aligns with what we say we want to do — make it better and more equitable for all people. How we do this matters. And that is where blockchain technologies will revolutionize the ecosystem.
