The role of blockchain and how it can impact the Agritech sector

The role of blockchain and how it can impact the Agritech sector

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By Pushkar Limaye

The Indian Agritech sector is struggling with a number of challenges, ranging from supply chain inefficiencies to transparency issues and limited access to credit and markets. These challenges come at a cost, with staggering economic implications. According to recent studies, the Indian agriculture industry suffers an estimated double-digit percentage of food waste due to inefficient supply chains, resulting in an annual loss of approximately INR 92,000 crore ($12.4 billion). In addition, excessive fuel consumption in agriculture contributes to high operating costs, with an estimated 20% to 25% of total expenditure allocated to fuel consumption.

Amidst these formidable obstacles, however, lies an innovative solution: blockchain technology. As the founder of Carnot Technologies, a pioneering telematics company that transforms tractors into smart machines, I believe blockchain has the power to revolutionize the Agritech sector, addressing these economic challenges head-on. In this article, we will delve into the transformative potential of blockchain, and explore its impact on efficiency, transparency and profitability in agriculture.

Transforming a massive lending industry:

Blockchain technology has the potential to revolutionize lending and leasing companies in agriculture, especially in connection with tractors and harvesting machines. Almost 4 million tractors are rented out for farm work in India. By leveraging blockchain, lenders and landlords can create a transparent and secure platform to manage loan agreements, track ownership and facilitate payments. This is especially true for lending companies that manage thousands or hundreds of thousands of assets.

Carnot is already using the Krish-e Smart kit platform to provide more transparency and accountability to both individual owners and leasing companies; the next step in our development may be to incorporate blockchain technology.

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Blockchain’s immutable ledger ensures the integrity of ownership and usage records, minimizing the risk of fraud or disputes. This increased transparency and efficiency will attract more lenders to participate in the agricultural sector, giving farmers improved access to necessary equipment and financial resources. This could ultimately play a pivotal role in India’s farm mechanization story – a mission Carnot is proud to be a part of.

Improve transparency and traceability:

We strongly believe that transparency can solve financial losses at every stage of the value chain. In fact, the core issue our Carnot powered Krish-e Smart Kit solves is the transparency of the tractor work done.

By harnessing the power of blockchain, we can overcome these challenges across the spectrum. Blockchain’s decentralized and immutable ledger ensures that every transaction, from farm to plate, is recorded and verified. This unprecedented transparency enables fair pricing for farmers, eliminating income loss due to information asymmetry.

Streamlining supply chain management:

Inefficient supply chains lead to significant economic losses in the Agritech sector. Blockchain technology offers a compelling solution by streamlining supply chain management. With its ability to eliminate intermediaries, reduce paperwork and minimize delays, blockchain enables seamless transactions and optimized inventory management. Imagine a shipment of fresh produce sitting for 3 days at a fulfillment center just because of incomplete paperwork!

The real-time visibility provided by blockchain empowers stakeholders to make data-driven decisions, optimize routes and reduce fuel consumption. By eliminating manual processes and reducing food waste, blockchain can help the industry recoup significant financial losses.

Facilitating access to financing:

The lack of access to finance is a major constraint facing farmers, hindering their productivity and profitability. Blockchain can clean up the financial landscape by providing a decentralized platform for access to credit, insurance and crowdfunding. By leveraging the blockchain’s transparency and traceability features, lenders and financial institutions can make more accurate assessments of farmers’ creditworthiness, reducing default rates and associated financial losses. Furthermore, smart contracts powered by blockchain automate loan disbursements, repayment schedules and insurance requirements, significantly reducing administrative costs and increasing the efficiency of financial transactions in the Agritech sector.

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This also aligns with our core philosophy at Carnot – to bring financial products to the underserved, as we have done with our first of its kind working capital loan for tractor owners/

Promoting sustainable practices:

Sustainability is not just an environmental imperative; it also has significant economic consequences. Blockchains can play a central role in promoting sustainable practices in agriculture. By providing a transparent and tamper-proof platform for recording and verifying data on environmental impact, land use and yield, blockchain enables farmers to make data-driven decisions that optimize resource utilization and reduce operating costs. In addition, by incentivizing sustainable practices through blockchain-powered systems, such as rewarding farmers for adopting environmentally friendly techniques, the sector can save money while contributing to a greener and more sustainable future.

Challenges and the way forward:

While the potential of blockchain in the Agritech sector is immense, challenges such as scalability, interoperability and regulatory frameworks need to be addressed for widespread use. Collaboration between government agencies, technology providers, financial institutions and farmer associations is essential to create an enabling ecosystem for blockchain implementation. Furthermore, continued research and development is essential to refine blockchain solutions and drive their successful integration into the sector.

Conclusion:

Carnot Technologies and Krish-e have an overall mission to improve the farmer’s results. With growing farm mechanization, improved access to finance and expert farming advice, the Indian agricultural sector is well on its way to total modernization. A blockchain system to provide transparency and scalability to each of these verticals has the potential to make this transition faster, more cost-effective and built to last.

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The author is co-founder, CTO, Carnot Technologies

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