We are what we eat. Considering the conditions of today’s environment, many people could call themselves “toxic” not as a joke. While some modern farmers do their best to keep their food organic, another part uses antibiotics and pesticides to boost their profit.
Blockchain technology can expose dishonest parties by unraveling every action in the supply chain: from seeding and cultivation processes to the moment when the end customer finally eats the food. It will benefit the agriculture industry, making it more fair, transparent, and secure.
In this article, I want to show you how blockchain can benefit the farming industry and what challenges we should overcome to build a safer future. Let me know what you think about the potential integration of these industries: maybe you are more skeptical about it.
The Concept of Blockchain in Agriculture
Blockchain is a distributed technology using which people can build secure, transparent, and tamper-proof systems. It’s nearly impossible to change or remove data from it.
Blockchain systems consist of a chain of blocks, where each of them contains a transaction record and a reference to the previous block. Every block is timestamped and encrypted by cryptography. This immutability makes it a perfect system for recording and storing important data.
The agriculture industry is full of sensitive data, such as the provenance of goods, fertilizers lists, supply chain info, and thousands of financial transactions. It is still a complex and fragmented industry with many pain points that blockchain can solve.
Here are 5 main challenges for agricultural blockchain:
- Food safety. Blockchain systems can track food movements from farm to fork, ensuring its genuineness, leading to fraud and foodborne illness prevention.
- Traceability. Blockchain systems can track the provenance of various goods building trustful relationships between each party involved.
- Supply chain efficiency. Blockchain can streamline documentation and transactions, improving supply efficiency with food security and reducing costs.
- Accounting. Blockchain tools can facilitate secure and transparent transactions, reducing fraud and improving access to financial services for farmers.
- Risk management. Blockchain-based tools can manage risks in agriculture, such as weather volatility and crop diseases. This can help farmers to reduce their losses and improve their profitability.
Blockchain’s smart contracts will automate most financial and insurance interactions between parties. For example, once a big corporation receives potatoes from a farmer, smart contracts automatically send them money. If potatoes were spoiled, it would be easy to find who is guilty: farmer, logistics firm, or corporation. The guilty party will pay for an accident.
Farm to Table: The Importance of Transparency
Modern consumer trends are demanding. People want full transparency and traceability in their food sources. They want to know that their food is healthy, organic, and handled with care.
They want to know that food is safe to eat and doesn’t carry any diseases. Many end consumers are also concerned about sustainability. They want to know that their food is environmentally friendly.
Consumers are also interested in personalized nutrition. They want to know what food fits their individual preferences. And blockchain tools can keep all nutrition info in a distributed ledger.
But as of today, people should realize that it would be hard to implement blockchain in every step of the food chain. The food supply has too many parties involved, and a huge part of it doesn’t know how to use computers, not to mention blockchain.
Many small and middle-size farmers are people in their 40s who just learned how to properly use Excel. It may be too hard for them to understand blockchain, and run decentralized tools on their farm.
Blockchain Solutions in Agricultural Traceability
As I previously said, blockchain is a decentralized and secure technology providing tamper-proof transactions. It’s almost impossible to hack and change the information in the chain since it has a direct reference in all later blocks.
To create a traceable ledger, each product should have an identifier. It helps to track the good throughout its journey from farm to fork. The data can include the good's origin, production methods, and location at any given time. Everyone with access to the blockchain network can check the info there, making it a fully transparent record.
It can reduce food fraud by providing immutable and transparent food movement records. It becomes easier to identify potential risks and prevent them in the future.
Blockchain increases logistics efficiency by streamlining documentation and transactions. It boosts sustainability since there is no need for excessive paperwork: everything is stored digitally.
One of the most famous examples is the IBM Food Trust. It is a blockchain-based platform that can track the food movement from farm to fork. Many big businesses, like Walmart, Tyson Foods, and Dole have already used this platform to record food data, improving its traceability and safety for an end client.
All parties involved in IBM Food Trust can trace products in one click to mitigate waste, cross-contamination, and the spread of foodborne illness.
Benefits of Implementing Blockchain in Agriculture
Blockchain can benefit agriculture in many ways. As I said in the IBM case, this technology enhances farmers' trust and credibility among consumers. It provides a transparent and immutable record of the production process.
Consumers can check food safety and sustainability, ensuring it doesn’t harm the environment.
Transparent records can reduce fraud and product mislabeling so consumers get the correct products. This technology also improves logistics management by streamlining documentation and transactions. AgriDigital is a great case of how blockchain can benefit each party involved in the agriculture tech business:
- Farmers who want to manage their products from seed to payment stages;
- Side operators who want to connect all your teams in one place;
- Traders that want to sell high-quality foods in one click;
- Brokers who want to simplify the management process.
Blockchain implementation will reduce costs and food waste. Sellers can see demand in real-time and deliver more food to the points with high demand and ship less food to the places with low demand. By understanding the production methods, end consumers can make more sustainable food choices.
Potential Challenges in Blockchain Implementation
Both agriculture and blockchain are complex industries. While connecting them, developers meet many challenges.
Adoption is the first one. Small and middle-sized farmers are not the most tech-savvy people in the world. They know everything about agricultural tech, but it will take many years to teach them about blockchain specifics.
It’s vital to ensure that each party involved has access to the blockchain, even when it’s a small farmer. Otherwise, we may end up in a new monopoly and even bigger centralization of agricultural blockchain. Thus, it is crucial to give access to the technology to all parties.
Another challenge is the resistance to change among traditional agricultural communities. Many big businesses are fine with current affairs when they buy in bulk from small farmers for cheap and set a 500-1000% margin for the same goods to end customers.
On the other hand, many small farmers may think blockchain is another gatekeeping approach for big businesses. They may reject using it. Thus, it is crucial to educate small agro-businesses about their opportunities with blockchain.
Another huge challenge is the implementation costs for small-scale farmers. They need to run specific hardware and hire blockchain experts to manage the network. It may turn out too expensive for them. So, many small businesses will need to cooperate to survive.
Every party involved should keep an eye on data privacy. Blockchain is a secure technology, but there is always the risk of data breaches. Food data is sensitive, so stakeholders should be confident in the network's safety and ensure it will stick with future regulations.
As of late 2023, there are no standards or regulations that set standards for the collaboration of those two industries. So, businesses should be aware of regulatory uncertainty at least for a few years. But at the same time, companies and farmers can take advantage of promoting laws that suit their needs.
Future Projections: Blockchain in Global Agriculture
Blockchain and agriculture collaboration is still a question of far perspective. It's a matter of years or maybe decades. Agriculture is already a complicated industry and in the beginning, blockchain will make it even more complicated.
But as time passes, new tools will improve goods traceability by showing product origins and logistics in the tamper-proof ledger. If farmers are fine with AI services usage, those combinations help them identify potential problems even before they become obvious.
Blockchain can automate many logistics processes, like inventory tracking and payments. It will reduce costs, improve the delivery speed, and build trust between farmers, retailers, and consumers.
Blockchain tools can track food waste and identify potential problems in the early stages. It will promote sustainable farming practices reducing overproduction.
Blockchain also can track resource usage, so farmers will make more informed decisions about their practices. It can significantly reduce agriculture’s environmental impact.
For instance, blockchain tools can track the irrigation process to identify areas with wasted water. During winter months, blockchain can track how much energy the farm may need to keep the greenhouse working.
Many experts have the same forecasts. They think that blockchain implementation won’t be a fast process, but it will become an integral part of agriculture. Frontiers’ research shows that blockchain will unlock new smart agriculture tech opportunities and streamline all business processes including insurance.
Blockchain has the potential to disrupt many industries, including agriculture. Decentralized tools can boost food safety, traceability and enhance supply chain efficiency. Blockchain services can manage risks in agriculture, such as weather volatility and crop diseases. This can help farmers to reduce their losses and improve their profitability.
On the other hand, consumers can check sustainability, ensuring it is safe and doesn’t harm the environment. Transparent records will leave no place for fraud, improving customer experience and promoting trustful relationships between all parties.
To achieve it, we need to beat adoption challenges. Blockchain is a complex industry while the primary part of farmers are small farmhouses that can’t buy complex machines and hire a blockchain expert to run digital documentation. There are also no regulation bases, so small and modern farming enterprises are less likely to invest in new technologies.
If we want to see a “blockchain utopia” in agriculture, we should invest in digital education among the farming communities. We, as the blockchain community, need to build a set of laws benefiting each party involved: from small farmers to end consumers.
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