Blockchain in Agriculture: Its Impact on the Agriculture Sector

The global Blockchain market is projected to stand at 39 bn USD by 2025 as the technology forays into multiple sectors, apart from finance and FinTech. While the financial sector continues to rule the segment, Blockchain is extensively marching into supply chain management and the Internet of Things or IoT. 

And, when it comes to supply chain management and the Internet of Things, one core public sector emerges as an iconic use case – Food and Agriculture. 

Before we move on to the world leaders\’ stance on Blockchain agriculture technology, let us have a quick peek at some compelling stats.

The following visual shows the global Blockchain market value in the agriculture and food segment, from 2017 to 2028:

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The market value shows terrific growth over just a period of 5 years and when it comes to stakeholders, everyone, ranging from the UN body FAO to tech leaders, like IBM, is supporting blockchain agriculture.

What Is Blockchain Agriculture?

Blockchain agriculture refers to agriculture and agribusiness being done with blockchain technology. Basically, all the stakeholders, such as farmers, farm produce wholesalers, food processing industries, and the supply chain operators involved in every step from “farm to our plates,” are using Blockchain technology in agriculture and agribusiness. 

Blockchain is a distributed incorruptible ledger that keeps track of accounts and transactions related to everyone involved in agriculture and core farming. Transparency, accountability, and incorruptible nature are three core strengths of blockchain that make it of immense importance in modern-day farming. 

Blockchain agriculture market will encompass all the segments, such as:

• Agricultural Insurance
• Land Registrations
• Agricultural Supply Chains
• Fisheries
• Forestry
• Agribusinesses 
• Sellers 
• Suppliers etc

Next, we discuss how Blockchain Agriculture works and why it is so crucial in the times ahead.

How Does Blockchain Work in Agriculture?

Some direct applications of blockchain in agriculture and agribusiness are:

• Smart Farming 
• Food and crops supply chain 
• Transactions of agricultural products
• Agricultural Insurance 

However, the Food and Agriculture Organization or FAO identifies blockchain technology as one of the Information and Communication Technologies or ICTs and describes 8 ways of using ICTs in agriculture, as shown in the following visual:

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1. Smart Farming

Smart farming or smart agriculture uses various innovative technologies, such as IoT and blockchain, to improve the reliability and efficiency of the farming processes. Apart from IoT and blockchain, some other notable technologies used in smart agriculture are sensors, machine learning, data collection & analytical machines, aerial vehicles such as drones, etc. 

While smart farming technologies have been there for quite some time now, there is a lack of proper management and utilization of the data collected. Also, there is no standardized comprehensive security system. 

The traditional agriculture system has a centralized management, which makes the data vulnerable to various inaccuracies and distortions. Also, the data collection is subject to misinterpretation, redundancy, etc.

Furthermore, the entire system is highly vulnerable to data breaches and cyber-attacks. 

Let us try to understand the situation with the help of an example. Generally, the government bodies manage and control the environmental monitoring data. These bodies can manipulate the agriculture or farming-related decisions by manipulating this data keeping their interests in mind. 

Now, in blockchain agriculture, all the stakeholders can generate, collect, access, and store data of all types, such as seed data, agricultural produce data, etc. Blockchain technology ensures transparency in the entire process, and data storage is extremely secure and incorruptible. 

This is because the technology is decentralized. Also, all the transactions are time-stamped. Hence, everything ranging from the ease of data distribution to minimizing data loss and distortion is extremely easy. 

Take a look at the following visual representing a smart farming model:

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Here, all the devices and entities involved in farming, such as animals, machines, vehicles, sensors, etc., are connected via IoT, and all the stakeholders can access the data securely. The farmers can collect, enter and access the data in the cloud securely and transparently. 

2. Food and Crops Supply Chain

The supply chain of food and crops is assuming a more intense stance with the rise in the world population, market competition, and the forces of globalization. However, many problems still persist, namely, food safety and ingredient quality, traceability, provider trust, supply chain efficiency, etc.

Apart from putting a burden on the economy and our society, these issues also directly impact the health of consumers.

Blockchain technology can resolve these issues by implementing trustworthy relationships between producers and consumers. To boost the supply chain transparency, the stakeholders can offer individual product information, such as the entire journey of the processed baby food mentioned on the back of the pack – right from the type of the seeds used to the place of origin, processing, and packaging.

As all the information is stored in the decentralized blockchain ledger, all the parties involved can rest assured about the legitimacy and credibility of the information. 

This, in turn, comes with various benefits that we will discuss in the sections ahead.

3. Transactions of Agricultural Products

The Blockchain agriculture market is extremely transparent, where all the farmers are able to sell their produce at the best prices to the processors and other entities involved. Similarly, the people working in the processed food markets can also justify any increase in the prices because of any damage to crops because of weather changes or sudden trends in farming.

Finally, the consumer can trace the origin of every ingredient involved and can confirm the freshness, purity, and processing techniques of the good they are about to consume. 

Hence, the Blockchain agriculture market offers two major advantages:

• Information security 
• Supply chain management

Finally, the technology also improves the overall safety and security of the payment process via various means, such as zero-transactional fees, etc. In the future, using cryptocurrency for the blockchain agriculture market will also aid in lowering the transactional cost further.

4. Agricultural Insurance

Global climate change has spurred a lot of changes in the agriculture and farming ecosystem across the entire globe. From weather extremes bringing down the agricultural yield to minima to seeds that fail to produce optimum results because of weather changes – the quality and quantity – everything is getting affected.

To help farmers recover from the losses and to continue with their lives, the governments offer agriculture insurance schemes. However, the entire process starting from filing the application to getting the amount is a long one. And, a number of farmers don’t even know the process minutes to avail the benefits. 

The most common form of farming insurance is indemnity-based insurance, where an insurance expert comes for inspection of the damages and then approves the application.

This process, however, suffers from a number of disadvantages, such as:

• Damage assessment
• Lack of insurer information
• Biased application processing
• Lack of insurance remission to people located in the far-flung or unreachable areas etc

Now, using blockchain technology in agriculture will facilitate index-based insurance schemes. In these schemes, the insurance remission is gets triggered on the basis of the measurement of an index; instead of calculating the damage. 

Some other benefits of this type of insurance are:

• Payments become timely
• Automated information gathering regarding the weather and regional effects of weather changes
• Smart contracts for proper and rightful processing of insurance money
• Automatic accessing of incorruptible data sources

Why Should the Agriculture Sector Adopt Blockchain Technology?

The world population is going to hit the 9 billion mark in 2035, and to meet the food demands of the rapidly growing population; global agricultural production has to increase by 48.6%. 

This is impossible unless the farmers do farming differently and the companies and consumers avoid wastage. Technology allows everybody to gather data-driven actionable insights to make all this possible, and hence, the Blockchain!

The role of blockchain technology in the agriculture and food industry is represented as follows:

Recent stats suggest that the value of blockchain technology in agriculture is expected to show tremendous growth in recent future, and the trends for various parts of the world are shown below:

Source

While the world is looking askance at the technology-led farming and agriculture innovation, the leading business organizations like IBM are already working in close association with farmers and various other stakeholders of the industry. 

The IBM Food Trust is a result of this association and is empowering the industry with many benefits of blockchain agriculture, such as:

• Supply chain efficiency

With all types of transportation, logistics, and weather-related data readily available, the stakeholders such as blockchain agriculture companies can easily avoid the bottlenecks. This will impart speed to the overall supply chain and will remove all the redundancies as well.

• Food waste

The blockchain ledgers will offer detailed insights into the major hotspots of food waste and will thus help in curbing down the root cause of food wastage.

• Brand trust

As the end-users or consumers can access all the information regarding the sourcing of the ingredients, the place of origin, and the reasons for the pricing, they can rest assured that they are being charged the right amount. Further, the consumers can also develop trust in the brands with rightful information readily available. 

• Sustainability

The farmers can partner with blockchain agriculture companies to get manless devices and gadgets to perform sustainable agriculture. Some examples include drones for sprinkling seeds and insecticides and sensor-based sprinklers for making the best possible use of available water.

• Food fraud

As every stakeholder gets access to the right information and at all times, there can be no fraud in any process, such as – insurance, crop selling, prices, ingredient sourcing, and weather data. 

• Food safety

The supply chain and logistics operators can derive actionable insights from the historic data to check the best time, stage, and ways to transport crops and processed food items. This will also improve the handling, processing, storing, and packaging activities to ensure food safety at all times.

• Food freshness

As the supply chains get faster and more data-driven, they can play an important role in ensuring food freshness. Blockchain agriculture companies can take more specific decisions regarding the processing of raw products and delivery of finished goods to offer fresher and better quality consumables in the market.

Take a look at the following visual to understand how blockchain technology in agriculture boosts quality and assurance systems:

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Hence, using blockchain in agriculture will offer 6 direct benefits that are core drivers in the industry:

• Transparency
• Security
• Streamlined Operations
• Analytics
• Customer Engagement and Satisfaction

Applications of Blockchain in Agriculture

In agriculture, blockchain finds a wide range of applications, and as the global adoption of the technology advances, many new applications will be added to the pool. 

Broadly, the blockchain applications in agriculture and agribusiness find relevance in financial, livestock, energy, environmental, logistical, cattle breeding & livestock, and industrial management sectors.

Some specific use cases in each of these industries are shown in the section below:

1. Farm Inventory Management

The majority of the farming organizations are grappling with innovative technologies to deal with the inventories. They lack the professional skills and expertise required to leverage cutting-edge technologies optimally. 

Apart from leading to confusion, this is also spurring wastage of farm produce and agricultural resources and the farmers bear all these losses, who, in turn, don’t have the required tools and expertise to tackle the issue.

Powered with blockchain technology, the farmers can monitor the inventories and manage them with much ease. 

They will have a proper understanding of various facts and actions they must take, such as:

• Storage climate
• Time by which the product will expire
• Best actions to be taken at different stages of farm produce

2. Loans for Small and Midsized Farmers

Farmers, small to medium-sized agribusiness owners, and farm produce processing companies require micro-financing from time to time. These small loans help them in keeping the businesses running, but the bank loan interest rates are high.

This loan cycle puts the farmers and small business owners under a financial strain, and they tend to take another loan, which ultimately leads to poor financial well-being. 

Blockchain, on the other hand, can help the farmers get connected with the global network of lenders to get micro-loans so that they can choose the best possible interest rates. These global connections are all fair, tested, and become of paramount importance for the agribusinesses participating in international trading, such as seafood and regional specialties. 

3. Land Registrations

Being an incorruptible, global, and always online ledger, the blockchain records of land registrations will empower the farmers and landowners down at the grass-root level. Linking the land registration records with the universal identities of the owners will safeguard their ownership in all cases, such as wartime, floods, or earthquakes. 

In India, the United Nations Development Programme (UNDP) is working in association with many partners to make the land registry more reliable and to record the transaction records throughout the land sales. This is one of the core applications of Blockchain agriculture in India and is rapidly gaining popularity there. 

4. Fisheries and Forestry

In the fisheries sector, blockchain technology can be used to:

• Detect and deter illegal, unregulated, and unreported fishing
• Protection of endangered marine ecosystems
• Trace the illegal fishing and betterment of supply chains

Likewise, the technology also finds applications in the Forestry segment via rural poverty alleviation and forestry economic development. China and Spain are the classic examples of a use case in forestry, where blockchain is being used for forestry development and transparent wood supply management, resp. 

5. Pricing Information

The prices of the farm produce and agricultural goods tend to fluctuate a lot, and any increase in the prices is met with a frown at many levels – stockists, food processing companies, and the consumers. 

In fact, many times the farmers are unable to sell their crops at reasonable prices because of the lack of availability of proper buyers or high regional competition or hegemony in the market. This leads to the poor financial state of farmers and small business operators. 

However, by using blockchain technology, consumers can access information and detailed reports with factual data to justify the increase in prices. For example, suppose there was a flood in one of the major wheat-producing regions, which led to a rise in the prices of wheat.

The consumers can scan the QR code present on the wheat packet and get to know all these details, so as to understand the price fluctuation in a better way. 

The farmers can also identify the best markets to sell their products and can see the prices that the other buyers are offering. 

This transparency in the entire ecosystem will strengthen the stakeholders at all levels and will certainly empower the farmers and small agribusiness owners. 

Benefits of Blockchain in the Agriculture Sector

Implementing blockchain technology in agriculture comes with many benefits, such as quality control, food safety, and food wastage management. Below, we discuss some of the most consequential advantages for all the stakeholders. 

1. Transparency 

Being a decentralized incorruptible ledger, blockchain is extremely transparent to all the participants. So, be it the farmers, stockists, food processing companies, or consumers – everybody has a transparent view of data and information. This information extends beyond the simple sale, purchase, or pricing data, such as climate data, ingredient sourcing, logistics, supply chain information, seed quality, and food quality.

Hence, the chances of fraud are extremely minimized.

2. Food Safety & Security

Blockchain agriculture companies have a transparent view of supply chain stats and can effectively remove the ineffective processes from the same. They can ensure optimal quality control conditions, such as opting for precision farming and leveraging IoT devices to counter the impact of weather extremes on crop production. 

These devices will help farmers tackle various conditions, such as pests, soil quality changes, and identify the exact irrigation needs for optimal production. 

Connecting these devices to the blockchain ledger and consistently updating the results will allow the farmers to ensure crops\’ safety. 

Likewise, the companies can ensure the quality of processed food items by keeping track of their expiration dates, etc.

3. Customer Engagement

In an information-obsessed world, the brands are not leaving any stone unturned to offer their customers as much information as possible to make their purchase experience better. As the blockchain agriculture market promises transparent information dissemination, the customers can check all the facts related to sourcing of ingredients, type of seeds, regions of ingredient, and even the name of the farmers responsible to grow them.

Thus, the customers can always rest assured that all their food items are made of quality ingredients and can verify the information claimed by the brands.

Such experiences and offerings from brands will certainly fuel the customer experience and keep them engaged for years to come.

4. Streamlined Operations

Properly managed logistics and supply chains are the heart of every agribusiness supply chain and blockchain has the potential to facilitate this. It can streamline the logistics and supply chain processes that can be reproduced in real-time with the help of digitization and automation. 

What makes this technology massive support for logistics and supply chains is its ability to cater to all the stakeholders, ranging from providers/producers to retailers and consumers.

5. Tracking Pathway

Blockchain agriculture will come with robust and insightful tracking features, such as:

• Tracking ownership rights to land, crops, and patents
• Tracking and distribution of locally produced goods
• Tracking products as they pass through the supply chain

If you are skeptical about the power of such core insights, then let us understand this with the help of an example. A recent study done on the tracking of a mango package from the supermarket to the farm took 6.5 days when done with traditional statistics, and just a few seconds when done with blockchain!

Thus, blockchain will empower the agriculture industry with swift and reliable tracking pathways as well!

6. Reducing Financial Risk

The agribusiness and agriculture industry suffers from many potential risks and blockchain can tackle all of them, as discussed below:

• Fast and bias-free processing of insurance claims for farmers
• Smart farming for minimizing the effects of weather extremes on crops
• By-passing paper-heavy settlements between stockists and sellers and establishing transparency across the entire supply chain
• Ensuring good hygienic conditions throughout the journey of crops from farms to our plates
• Identifying contaminated products and food items to avoid financial frauds at the consumers\’ end

Hence, blockchain agriculture will be a financially secure and transparent ecosystem where there is no wiggle room for fraud and misleading information.

Blockchain in Agriculture: Case Studies

Apart from the case studies from FAO and MDPI that we have mentioned earlier in the text, there are a number of other reliable and insightful case studies that offer a much detailed overview of the applications, use cases, and benefits of blockchain agriculture. 

Some of the most notable ones are shared below:

• Blockchain in Agriculture Traceability Systems: MDPI
• Blockchain Technology and Traceability in the Agrifood Industry: Wiley
• Blockchain Technology for Agriculture: Applications and Rationale

Blockchain Agriculture: The Present, The Future and What “Not” To Do

While blockchain is one of the growing innovative technologies that are all set to change the processes, core functions, and business models across the globe, there still is a lot to consider.

For example, do the companies really want to offer the details on the entire journey of the crops from farm to plates? Or, are the farmers ready to embrace smart and precision farming? 

While the mass adoption and large-scale implementation of blockchain in agriculture are still going to take a while, the technology is here to stay and revolutionize the world, as we know it!

So, join hands with Parangat – a leading blockchain mobility solutions and app development platform – and join the wave of this Fourth Industrial Revolution to reap immense benefits from its mass adoption.