Blockchain in Agriculture
With
40% of the global workforce, agriculture sector presents 6.4% of the entire
world’s economic production and its total worldwide production is
$5,084,800 million. If you have ever visited a farm, you would have seen that farmers
have complicated ecosystems with seasonal financing structures, careful timing
and a lot of moving parts.
After
the food leaves the farm for the market, it becomes a part of the vast supply
chain involving a lot of intermediaries. Everyone would like to know where the
food has been produced before it is served on the plate. What if you could
check the quality of food before you eat it? It could become possible with the
use-cases of blockchain in executing contracts and tracking information
transparently. Blockchain agriculture is one of the compelling use cases that
makes the process of growing and supplying food simpler. The agriculture supply
chain can provide all involved parties with a single source of truth.
Applying
Blockchain to Agriculture
According
to ReportLinker, the blockchain in food supply chains and agriculture is
estimated to be USD 60.8 million in 2018 and is projected to reach USD 429.7
million by 2023. The Dutch Ministry of Agriculture, Nature and Food
Quality financed the first research project, “Blockchain for Agrifood”
that has been proposed to explore blockchain implications for agrifood. Pilot studies indicate that blockchain technology
enabled food to be traced from farm to grocery store in just a
few seconds.
Blockchain
also helps to keep tabs on abundant commodities and reduce cases of illegal
harvesting and shipping frauds. The United Nation reveals that
food frauds cost the global economy around $40 billion per year because of
illicit trades.
Procurement Tracking
The
challenge for the agriculture sector is to track and pay for the delivery of
foods. Nowadays, the process depends on a third-party for coordinating the
goods delivery. The sellers usually have an agent who ensures that the goods
are delivered safely and buyers have an agent to recommend payment and audit
the delivery. The involvement of multiple agents adds high costs to the system
and makes the entire process time-consuming. With the blockchain, the whole
process can be simplified to a single distributed ledger. Commodity buyers can
directly interact with the supplier that speeds up the process and reduces the
time to settle a payment. Also, the companies can save on additional agent fees
and farmers can receive a larger share of sales directly with a blockchain
based solution.
With
the features like traceability and auditability, farmers can directly sell
crops or food to the restaurant or individuals without the need for
intermediaries.
Crop and Food Production
With
the help of smart farming, IoT sensors could fetch important information like
the temperature of the soil, water level, fertilizer details and more and send
it to the blockchain. Based on the data saved in blockchain, smart contracts
could trigger and execute the specific actions. It will help in enhancing the
quality of the farming process as well as produced crops.
Weather crisis control
Farmers
have to face the issues of unpredictable weather conditions throughout the
year. Monitoring and predicting such factors can be crucial for better crop
survival. Due to excessive rains, it becomes difficult for grown crops to
tolerate flooding. Consumers are never aware of when did the crops suffer bad
weather conditions and why did market face high surge pricing. As it is
possible for the involved members to trace the weather conditions from the
blockchain solution, farmers can quickly request and receive insurance claim
through smart contracts.
Managing Agricultural Finance
Lack
of transparency in credit history and agreements are some of the significant
problems confronting between smallholders and financial inclusion. Today,
financial services do not only allow smallholders to invest in farming but also
help them in resolving liquidity constraints.
As
a result, it becomes challenging for buyers to pay farmers, restricting
smallholders to sell crops at comparatively lower rates. With blockchain, the
agricultural finance process becomes more transparent and fairer, yet enables
shared control accessibility.
The
agriculture industry needs to do a lot of work to maintain and build consumer
trust when it comes to the food quality check. A blockchain based agriculture
solution holds a lot of promise for the agribusiness industry with its ability
to bring transparency in the system.
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