Realizing the full potential of Blockchain In Agriculture
Blockchain technology has proven its usefulness in the IT, financial services and crypto industries. However, it has several uses other than being the underlying technology for leading cryptocurrencies such as Bitcoin and Ethereum. Various firms around the world have taken advantage of this emerging technology and leveraged it to improve supply chain management, identity management as well as healthcare. Blockchain’s use cases in the agriculture sector are less heard of, but the technology has proven its usefulness in this $2.4 trillion sector as well. According to ReportLinker, the blockchain in food supply chains and agriculture ecosystem was estimated at $60.8 million in 2018 and is projected to reach $429.7 million by 2023.
Blockchain’s use cases in agriculture
Like many industries, the agricultural sector consists of several steps between farming and product packaging that make up the supply chain. The involvement of multiple steps increases the need for traceability and transparency to ensure the safety of crops. This is where blockchain technology comes into play. Blockchain’s ability to store and manage data enables traceability, which aids in the development and implementation of intelligent farming and index-based crop insurance systems.
With the cooperation of stakeholders involved in the supply chain, blockchain technology can be used to improve traceability, efficiency, food safety and quality control. Farmers can use this technology to ensure that their crops are sustainably produced and delivered to the end user. Meanwhile, end users can rely on blockchain technology to ensure the quality of crops is up to the mark and track the supply chain to ensure it was not tampered with. In addition to that, blockchain technology can also be used to facilitate payments between the parties involved in the supply chain, including farmers, wholesalers, retailers and customers. This leads to fair prices by eliminating the need for middlemen.
Companies offering blockchain solutions for the agricultural sector
Blockchain technology has yet to revolutionize the farming industry the way it has taken the financial sector by storm. However, those involved in agriculture are beginning to realize what this new technology can offer in terms of smart contracts for farmers, farm management and data sharing, supply chain financing, as well as certification and standards compliance. While the potential benefits of blockchain in agriculture are promising, it is important to note that implementing blockchain solutions requires careful consideration of technical, regulatory and organizational challenges. In addition, scalability, interoperability and privacy are key factors for the widespread use of blockchain technology in the agricultural sector.
This is where heavyweights like IBM come in. The technology giant is one of the few mainstream companies that has subsidiaries directly involved in facilitating blockchain solutions for the agricultural sector. The IBM Food Trust is a collaborative network of growers, processors, wholesalers, distributors, manufacturers, retailers and others, increasing visibility and accountability throughout the food supply chain. Built on the IBM Blockchain, this solution connects participants through a permissioned, immutable and shared record of food origin, transaction data, processing details and more.
AgriDigital is another blockchain solutions company based in Australia, which caters to clients in the agriculture sector. This company enables farmers to manage their supply chains, from planting to harvesting, by digitizing the process and providing real-time tracking of inventory, pricing and logistics. AgriDigital also offers a blockchain-based platform for grain trading, which reduces the likelihood of fraud and mishandling by eliminating the need for middlemen. AgriLedger, Ripe.IO and AgriChain also offer blockchain solutions for the agricultural industry. These solutions are about improving traceability and transparency in the supply chain.
Barriers to the use of blockchain in agriculture
A report published by Forbes earlier this year cited research by business consultancy McKinsey, while stating that agriculture could realize $500 billion in added value by 2030 through increased use of connectivity and technology. According to the report, blockchain can only deliver increased optimization and transparency in food and agriculture if the sector embraces data sharing. The success of blockchain in agriculture largely depends on farmers sharing theirs data with agricultural companies developing digital technologies. The World Economic Forum (WEF) believes that blockchain technology will eventually become an important element in the agricultural sector if it meets the growing demand for transparency. “This can be done by validating the source of the entered information and increasing automation to reduce the risk of human error and prevent data from being deleted,” the WEF added.
Concerns regarding misuse or misuse of blockchain technology have also been raised, with respect to the agricultural sector and food security. For example, privately owned blockchains can be vulnerable to hacks or maladministration. There may also be a gap in awareness and education about this technology among small-scale farmers. To ensure the success of blockchain in this sector, its implementation must be decentralized to accommodate small-scale farmers. In addition, those who lack the digital skills required to engage in blockchain technology must be educated to ensure that everyone is able to utilize this technology for their agricultural operations.