Blockchain for Agriculture
Is there value or is it just hype 💭?
We’ve seen the rise of new technologies over the past decade, more recently we’ve seen amazing technology like Artificial Intelligence (A.I), Augmented Reality (A.R), Virtual Reality (V.R), and the 5G network. The blockchain and web 3.0 space has received massive attention in recent times, interesting use cases are being spurred up, and amazing solutions are being built daily.
There have been talks centered around using blockchain to strengthen the Agricultural value chain. This article describes some of the key features of blockchain technology, why everyone is super excited about it, and if it’s all just hype.
What is Blockchain Technology?
The blockchain is simply a ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain called nodes. Each block in the chain contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger. This means every node in the blockchain keeps account, and if one block in one chain was changed, it would be clear that the block had been tampered with. If hackers wanted to corrupt a blockchain system, they would have to change every block in the chain, across all of the distributed versions of the chain. This is extremely difficult, energy-consuming, and time-wasting. It would be like changing everyone’s ledger, and every transaction following the tampered block. The difficulty of this task is tagged as impossible. When more blocks are added to the blockchain, the security is significantly increased and the ledger gets harder to corrupt.
It’s also important to note that blockchain is not Bitcoin or any other cryptocurrency, rather these cryptocurrencies operate on the blockchain technology
Blockchain for Agriculture.
Now that we have an idea of what a blockchain is, we then explore how this technology can be used in the Agriculture industry. I’ll outline my top two use cases.
- Agricultural insurance:
Blockchain technology comes with many perks, one of which is called “smart contracts”, enabling you to execute contracts without having to trust the other party, in fact, you can enter into smart contracts with your enemies and be rest assured. These contracts are special because they self-execute without the need for an administrator or middle-man.
These smart contracts can provide better insurance schemes for private farmers, financial institutions, and other actors in the agriculture supply chain.
Smart contracts can eliminate the human factor from assessing insurance claims, thereby making the claim process simpler, faster, and more transparent. Smart contracts can also minimize the risks of false claims and corruption among insurance providers, as no actor will be able to alter insurance policies once they’re agreed upon.
There is also transparency regarding transactions, history, and financial agreements made. Access to these irreversible agreements can allow small farmers to pay for machinery and inputs partially or after delivery and guarantee fair market pricing.
2. Farm Produce Traceability
The food supply chain has gotten to a point where it has become very complex, new products are being made daily as people get creative with food. There is however a need to be able to track the food supply chain history to promote food trust and increase food safety.
Consumers want to know where their food comes from. In the past, players in the food value chain are only aware of their direct contacts, i.e the people before and after them on the chain. They are completely unaware of the other players and the journey of the farm produce.
Traceability also gives the ability to spot points of food contamination in seconds, which would usually take weeks. It could help solve problems of poisoning, effectively prevent or rectify outbreaks, and even validate food origin and improve credibility since the actual farm can be traced back.
Even though blockchain technology brilliantly solves these challenges, there are still other issues that arise.
- For the blockchain-enabled food supply chain system to be effective, there must be participation from all parties and points of contact involved. Additionally, data integrity lies in the hands of the data collectors and needs a system of validation to avoid tampering during the initial collection.
- Too much transparency in the food supply chain can also cause harm to the chain. Transparency can be used as a strategy to exploit the market pricing dynamics. Since the participants earn profits through margins along the chain, they will be naturally hesitant to provide too much transparency that may expose pricing and hedging strategies
Conclusion: Is blockchain the future of the food supply chain?
Many top tech companies already offer blockchain for supply chain solutions; Microsoft’s Track and Trace, Amazon’s Blockchain for supply chain, and even more specific to agriculture is IBM’s Food Trust technology built in collaboration with Walmart has years of research and perfection.
The use cases of blockchain technology are growing fast, even though it has begun to transcend different industries, there is still more work to do.
References
Edengreen. (2022, March 29). Blockchain Technology in Agriculture. Retrieved from Edengreen Technology: https://www.edengreen.com/blog-collection/blockchain-technology-in-agriculture
Euromoney Learning. (2022). Blockchain Explained. Retrieved from Euromoney Learning: https://www.euromoney.com/learning/blockchain-explained/what-is-blockchain
Intellias. (2022, January 28). How to Apply Blockchain Technology in the Agriculture Supply Chain. Retrieved from Intellias: https://intellias.com/how-to-apply-the-blockchain-to-agricultural-supply-chains-while-avoiding-embarrassing-mistakes/
