Blockchain and Agriculture: A Distributed Ledger for Better Food Distribution
Blockchain. It’s a technology that has gained an enormous amount of hype over the past couple years, especially as it pertains to Bitcoin and other cryptocurrencies. But the applications of blockchain technology are much more far reaching than just digital cash. Blockchain is essentially a network of computers that create a decentralized record keeping system. Each computer stores a “block” which is basically a piece of time stamped data which is linked to another computer where another block is stored and so on, thereby forming a chain. One of the main strengths of the blockchain system is that the blocks are cryptographically locked so that only the original data owners and those they grant permission to can access them. This allows for a ledger of assets and transactions that cannot be hacked or tampered with. It is a way to simultaneously achieve higher confidentiality as well as transparency and the implications for many sectors — especially agriculture — are tremendous.
One key benefit of using the blockchain for agriculture is that it brings transparency to the food chain and allows for an unprecedented level of traceability. Food safety is an area in which the blockchain is being employed to ensure ideal conditions from farm to market and to allow for quick source detection in the event of food related disease outbreak. Another benefit of increased traceability is that it allows a buyer to know where his or her food came from, who grew it, and when it was harvested and processed. Access to all this information could create more consumer awareness around sustainable agriculture practices and food chains and prevent food fraud and false labeling. Increased transparency also creates huge potential to reduce one of the most pervasive issues in our food system: food waste. Much of the food waste around the world can be traced back to inconsistencies in the supply chain, whether it be not recording inventories, not informing supplies, or not taking quality into account. Blockchain allows us to track the journey of the commodity and the conditions under which it was kept to ensure successful handling and delivery.
Incorporating the blockchain into food system operations could also increase efficiency and reduce transaction costs. Many farmers today use a combination of apps, software, spreadsheets, pen and paper, and memory to keep records. The blockchain is a single source of data for a farm that can minimize the stress of maintaining multiple record systems and save time and energy in the value chain. It can also enhance the efficiency of large transactions. Think about a sale of tens of thousands of tons of some agricultural commodity. A sale of this magnitude would be incredibly complex with rules about elements such as payment and transfer of ownership, and elaborate receipts going to various agents. The blockchain significantly cleans things up and immediately catches human typos. Louis Dreyfus Co., a company that buys and sells food among other things, conducted what they say is the first agricultural commodity trade using blockchain in which they sold 60,000 tons of US soybeans to the Chinese government. The blockchain reportedly cut the entire transaction time down dramatically and according to one company involved in setting up the trade, the total time for all the logistics was reduced by 80% due to greater efficiency. For example, because the information provided through the blockchain is reliable, documents and certificates can be trusted and many back office processes can be eliminated.
Blockchain can also allow for the opening of new agricultural markets. Blockchain creates trust and accountability amongst players, so market players that previously could not establish trust because they lived far apart or didn’t have the proper protocol or the mens to develop a new relationship, could now do business without a middleman needing to broker the transaction. This could give new players in underdeveloped markets a greater opportunity to participate in the agricultural economy.
At Foodshed.io, we are integrating blockchain technology into our distribution process to enhance traceability and efficiency. We envision a world in which you can easily find out the where your food came from, the date your food was harvested, and who it has been handled by. Access to this knowledge will help consumers understand the impact of growing and shipping food and enable them to make informed, responsible food purchasing decisions. In our complex and sometimes formidable globalized economy, a network with transparency and traceability is essential to ensuring a sustainable and equitable food supply chain. Blockchain can help get us there.
