Identifying practical applications of Blockchain technology in the agriculture sector
Blockchain has so far been most useful in the agriculture sector in terms of understanding the source and journey of produce. This is vital for both farmers and consumers: it allows farmers to negotiate better prices throughout the supply chain, while giving consumers confidence in the knowledge of exactly where produce they buy comes from. This is key aspect when considering the growing lack of trust in the sourcing of produce sold in markets.
What aspects of Blockchain technology could the agriculture community adopt?
It is essential for smallholdings and agricultural concerns to be able to keep track of their transactions and contractual obligations with buyers, suppliers and other stakeholders in order to maintain accountability. This minimises fraud, maximises transparency, and ensures that each link in the supply chain is satisfied. The connection between commodity buyers (such as Starbucks and Coca Cola) and farmers can now be monitored more closely, and distribution channels streamlined yet further.
Firms operating within the agricultural sector often have extensive contractual obligations to a multitude of stakeholders, and many FinTech innovations – notably the Blockchain – can have a beneficial impact on contracting, particularly in areas such as hedging contract and pre-sales of harvests.
One of the most obvious uses for Blockchain is in data monitoring. Now, farmers have an opportunity to capture data in real-time that will help them plan their spaces more effectively and maximise the success rate of their harvests. For instance, wireless sensors can be integrated into fields to monitor crop growth, harvesting, and subsequent yield, with all of the data recorded onto the Blockchain. Over time, this information will become an invaluable resource to the farmer.
MINIMISING HUMAN ERROR
Minimising Human Error
There are a multitude of ways in which Blockchain can take tasks away from the workforce and automate them in order to minimise errors. It is often an individual mistake that causes physical and financial losses in the agricultural sector, and so adopting technological innovations can minimise the amount of resource that is wasted or misused. Also, Blockchain can present information to farmers regarding tainted products throughout their supply chain: what types of crop are they; where were they grown? By drilling down into this data set, the farmer can then minimise future losses.
COMPANIES USING BLOCKCHAIN
Companies in the agriculture industry have started to use Blockchain technology to create systems that will record the journey taken by produce through the supply chain by utilising the power of a shared secure ledger. Older agricultural models are also seeing a resurgence, using the Blockchain to improve upon established practices.
Farmshare utilises Blockchain currency to buy, sell and trade cryptographic tokens that can be exchanged for weekly deliveries of locally-produced organic food. The project is an evolution of the CSA model that has been around for decades, which takes advantage of the Blockchain’s potential for creating new forms of community property ownership, collaborative labour relationships, and locally-oriented alternative economies.
"FarmShare is an evolution of the community supported agriculture model, which takes advantage of the blockchain’s potential for distributed consensus, tokenbased equity shares and automated governance"
William E Bodell - FarmShare Inventor
Filament lets you build a connected business without becoming an expert on security, scalability, or network stacks. Blanket a factory in sensors, or control the streetlights of an entire city - Filament's standalone networks span miles and last for years, all without WiFi or cellular. The Filament Tap lets you deploy a secure, all-range wireless network in seconds. Taps can talk directly to each other at distances of up to 10 miles, and since each Tap has BLE, you can connect them directly to your phone, tablet, or computer. With built-in environmental monitoring, a USB port for your own sensor or device, and a battery life of up to 20 years, it's the perfect grab-and-go connectivity solution.
"Filament is a startup that is taking two of the most overhyped ideas in the tech community—the block chain and the Internet of Things - and applying them to the most boring problems the world has ever seen"
Skuchain applies the cryptographic principles developed in the Bitcoin network to security and visibility for the global supply chain. As goods travel from manufacturers to distributors to consumers, the crucial electronic information about what the item is and where it came from becomes disconnected from the SKU itself. A Blockchain offers a universal, secure ledger by which SKUs can attest digitally to their origins and attributes. Skuchain is building a system of next generation identifiers in the form of both barcodes and RFID tags to digitally secure the transfer of goods across the entire global economy. While most anti counterfeiting systems rely on copy resistant labels, holograms etc., Skuchain relies on the uncopyable nature of a Blockchain ledger to solve the problem of supply chain integrity. Skuchain's system will provide cryptographic proof of each SKU's origin and supply chain that can be verified all the way to the point of consumption.
"Fundamentally, a Blockchain is good for helping parties that don't trust each other to share data very securely. In a supply chain, you have got these companies that are doing business with each other but aren't related and don't really trust each other, that have to exchange goods and money."
Travis Giggy - Head of International Business
Provenance uses Blockchain technology to document the supply chain of materials, ingredients, and products to provide consumers with greater transparency about their authenticity and origin. Its use of the technology - in the format of a real-time data platform - allows the end user to see each step of the journey the product has taken: where it is, who has it, and for how long. Producers can benefit from this increased authenticity when telling the story of their goods.
"What we see as really exciting with the Blockchain is that there is finally a method of gathering this data from far-flung areas where products are being produced and having that connected to an open ledger that isn't governed by anyone... So it can be committed there and also help people who are already gathering that information – such as certification providers – to do so in a more interoperable way from the get-go."
Jessi Baker - Provenance CEO
ISSUES SOLVED BY THE BLOCKCHAIN
While agriculture is the most significant sector in rural areas and provides a livelihood for 70 per cent of the world’s poor, it is also the industry that provides the biggest disconnect between supplier and retailer. Using Blockchain, however, a more direct link can be established, ensuring that farmers receive fair payment for their produce and enabling retailers to verify that they are getting what they’ve paid for.
PRODUCE TRACKING ISSUES
Produce Tracking Issues
One of the greatest problems facing multi-national companies who rely on agriculture is tracking down and paying for produce. While this process would previously have been reliant on the involvement of a regionally-based third party, using Blockchain, commodity buyers are able to deal with their supplier directly and transfer payment via mobile. Naturally, this saves the company money in agents’ fees and also ensures that the farm supplier receives a fairer share of the profits.
TRACING ORIGINS OF PRODUCTS
Tracing Origin of Products
By establishing a Blockchain-driven ecosystem for the registration, payment, and transport of crops or other agricultural produce, buyers can also verify that the product they are receiving is exactly what they paid for. With every step of the transaction process recorded on the Blockchain, if a supplier claims that its coffee beans are ethically sourced from Colombia, for example, this can easily be confirmed by tracing the journey from farmer to coffee shop, alleviating concerns about misrepresentation.
REDUCING MULTINATIONALS' INFLUENCE
Reducing Multinationals’ Influence
Blockchain can also be utilised to solve a number of existing problems in community-supported agriculture, including governance, distribution, and equity shares. Blockchain-supported systems such as FarmShare enable shares in harvested crops to be electronically distributed to members, creating self-sufficient local economies. This in turn generates greater involvement within the community, and ensures there are incentives for local agriculture to be run more effectively.
With crop prices fluctuating wildly based on demand, weather, and global production levels, Blockchain can provide an easy solution for both buyers and suppliers seeking to negotiate a fair price for their product. By providing both parties with access to information on similar transactions, as well as on the current stock price of goods, even suppliers in rural areas are able to determine what their harvest is currently worth and sell it to distributors at a price that reflects global market conditions.
The agricultural industry could see increased global exchange of produce through the exchange of digital products and currency. This could affect everyone from rural farmers selling to consumers across the globe, to large nations accurately tracking their aid relief. This could lead to fairer distribution of goods and currency amongst some of the poorest regions of the world, as well as increase community-based agricultural models on a global scale.
Community supported agriculture is an alternative economic model for the production and distribution of locally grown food. in which a community of shareholders funds the operation of a local farm at the beginning of the growing season in exchange for weekly deliveries of fresh produce and other food products (such as eggs, dairy, meats, etc). Although Farmshare has made a start with using Blockchain technology to create CSAs, there’s still huge potential for farming communities around the world to adopt this model of finance and distribution.
ACCOUNTABLE RELIEF DISTRIBUTION
Accountable Relief Distribution
The average food and agriculture supply chain represents a loosely-coupled large-scale network with a minimal degrees of communication and trust between individuals. It involves hundreds of actors, thousands of processes, millions of products, and (potentially) billions of data points. But this data-hungry industry that has historically not been very well served. Regulatory pressure, food crises, and scandals are major drivers for greater data integration. Meanwhile, a recently-published report from the WHO’s International Agency for Research on Cancer that placed processed meats in the same category as asbestos and tobacco will certainly feed the need for greater supply chain transparency, and thus the need for data integration. Current solutions to deal with these issues are mainly focused on regulation and certiﬁcation. Today’s technologies are having a hard time responding adequately and cost-effectively. The costs involved are crucial, because the margins in the food system are very tight. Blockchain technology removes the need to formally identify both parties to the transaction, achieving major cost savings - Wilco Schoonderbeek - Linkedin Pulse
RURAL FARMER FINANCING
Rural Farmer Financing
Agriculture is the most significant sector in rural areas and provides a livelihood for 70 per cent of the worlds poor. What's now, there are 500 million smallholder farming families that grow and harvest more than 70 per cent of the world's food. A persistent issue for agricultural finance has been how to cost-effectively and securely provide financing to rural smallholder farmers in such manner that fraud is minimised while accountability and transparency is promoted. Recent and forth coming research by the Technical Centre for Agriculture and Rural Cooperation (CTA) reveals that cell phone-based crop payments by large multinational, regional, and local commodity buyers (e.g., Hershey, Starbucks, etc.) to farmers can create a mobile money ecosystem of cashin/cash out agents that can subsequently be leveraged as a distribution channel for the provision of targeted credit, savings, and microinsurance products to farmers. Mobile money is simple, convenient, affordable, and is disruptively innovative for agriculture finance - Lee Babcock - Digital Curreny Council
REMITTANCES TO RURAL AREAS
Remittances to Rural Areas
Diaspora remittances into agricultural areas in developing countries amount to four times the global overseas development funding for agriculture provided by donor countries. This has occurred in spite of the expensive fee constructs and inconvenience of traditional money transfer organisations. Integrating international Blockchain remittance payments into this next generation of mobile money – into rural areas – will further enhance the economic value proposition for rural rollouts of mobile money, enhance the efficiency of the entire commercial agricultural process, likely increase the volume of international remittances, and expand the target market of BitPesa, Rebit and similar startups as well as furthering mainstream the use of the decentralized blockchain payments system. - Lee Babcock - Digital Curreny Council
“The food agriculture industry has a strong need for supply chain intelligence technologies that support the traceability of critical product data through our supply chain across all affected businesses.”
Wilco Schoonderbeek -
VC & Private Equity professional
“Additional data... can also be tracked on the Blockchain, allowing conscientious consumers to make decisions about their food based on ethical concerns about energy sustainability or fair labor practices.”
William E Bodell -
"In a recall, farmers could quickly match tainted product to supply chain records. They could more accurately trace where their food went and assess the size and expense of the recall."
David Schatsky -
Senior manager at Deloitte
Blockchain Community Supported Agriculture
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If you know of a practical application of Blockchain technology in the agriculture sector that isn’t currently featured here, please send us your submission. There are many companies and uses of Blockchain technology that we haven’t featured in our initial launch, but we want to build a comprehensive resource outlining the practical applications of Blockchain technology and will be building this resource further in the future.