Blockchain in Agriculture
Updated: Mar 1
As I mentioned in a previous post, I firmly believe innovation lies at the crossroads of different industries. This is the case for agriculture, which is being disrupted by digital innovations such as IoT, low-cost satellite images, machine learning and a.i., big data, and blockchain.
Agriculture is closely tied to poverty. Most of the people at the bottom of the pyramid are subsistence farmers. Agriculture currently presents the most significant opportunity for entrepreneurs in the developing world. According to the World Bank, "agriculture can help reduce poverty, raise incomes and improve food security for 80% of the world's poor, who live in rural areas and work mainly in farming".
As the image below shows, innovation occurs in all aspects of agribusiness. I am interested in soil/irrigation monitoring and management and in the traceability of the food chain.
Blockchain applications in Agriculture
Blockchain, as a means of decentralized value exchange, could prove to be disruptive to the existing agricultural business models. Nevertheless, it is not blockchain solutions per se that will create value, but instead, asking what parts of the farming value chain could benefit from blockchain,? and who will stand to benefit from these solutions?
Blockchain applications are being used for tracing the origin of agricultural products (i.e., certification and compliance and for optimizing the food supply chain), to simplify transactions for farmers, finance the procurement of commodities and other raw materials, for e-invoicing providing greater transparency of what has been invoiced and the progress of payments, creating insurance products, and even for automating farmer's subsidies.
Some startups that are using blockchain solutions for agriculture are:
AgUnity - developing and deploying low-cost, blockchain-based technology solutions to build efficient digital supply chains.
Hara - blockchain-based data exchange for the food and agriculture sector.
AgriLedger - assists farmers in tracing food sources, obtaining more straightforward financing, and storing transaction data.
Ethichub - created a DEFI token to facilitate the financing of coffee growers.
I am convinced that the current agroindustrial model is not sustainable. A circular economy model is the future of agriculture, mainly because of the challenges posed by climate change. There are opportunities for blockchain-based solutions to enable circular business loops via agricultural product tracking. With the use of blockchain, all products will be capable of being traced from their origin to their sale and subsequent recycling, enabling new business models that will offer an alternative to the commoditization of agricultural products and will help to connect farmers with consumers, increasing farmers' profitability (selling their products at fair prices and lowering transaction fees). Other positive consequences will be making farmers bankable since they will gain an identity and be integrated into the supply chain rather than at the mercy of intermediaries and predatory lenders.
Distributed ledger technologies (DLTs) have the potential to transform the global food system by introducing important efficiency gains along value chains and improving trust, transparency, and traceability. While large actors are likely to make fast and significant inroads in exploiting DLTs, small farmers and processors also stand to reap significant benefits, provided the technology is made accessible to them.
Director, Trade and Markets Division, FAO
This post was first published in GastonBilder.com