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Long Story Short: Can Blockchain Revolutionize the Agricultural Industry?
How can Blockchain Help Accelerate
the Agriculture Industry?
Blockchain technologies can present new possibilities and help accelerate the process of the agriculture industry by improving both supply chain management and financial transactions for farmers. These improved supply chain management and the financial process can benefit the agriculture industry on all scales, providing plenty of future value to both farmers and consumers. The development and implementation of new technologies into the agricultural industry can drive both social and commercial causes.
Supply Chain Management: Blockchain technologies can be efficiently used to identify the origins of farm products. A blockchain system can be applied to appropriately label products and trace whether the food product is certified organic. These systems can also trace any incident of fraud, mislabeling, or possible contamination. The blockchain system developed by Provenance allows farmers to trace the supply chain of poultry, and provides consumers greater transparency, showing the companies’ integrity as they can identify the source of poultry from breeding to the table. Consumers are granted access to information showing the premium poultry product provided to them. The Australian company, Agridigital is using blockchain technologies in the grain industry, allowing farmers and consumers to track the grain as it moves through the supply chain.
Transaction Processes: Blockchain platforms can manage financial transactions, increasing the speed of the processes and allowing farmers to receive payments at an increased rate while making sure those payments are secure. This process will help to improve the overall speed and quality of services offered in the agricultural industry. Blockchain systems also increase the availability and accuracy of financial systems to farmers. These blockchain financial systems can be simplified through transactional wallets, providing farmers with easy-to-use and access interfaces that can be further scaled worldwide. Blockchain platforms can scale easily through multiple countries without needing to be shifted to conform to each region’s monetary regulations.
Reduced Costs: Social enterprises are using blockchain systems to provide the agricultural industry with the ability to buy virtual currencies that can be used during periods of drought. These virtual coins will provide farmers with a safety net in case severe, long-term periods of drought cause diminishing crop yields. These virtual currencies can be used by farmers depending on analyzed satellite weather conditions and transferred to a virtual wallet. Blockchain companies have begun developing blockchain systems combined with machine learning to efficiently manage the supply chain for coffee and reduce production costs. Artificial intelligence can be implemented into the blockchain to rapidly and accurately weigh and price coffee products, and then distribute payments right to farmers’ virtual wallets.
Third-Party Programs: The agricultural sector and farmers struggle with tracking and paying for delivered crops and food products. Many farmers will use third-party programs to deliver products. Farmers will hire an agent who will ensure the products are delivered safely, and the buyers will have their own payment and audit systems. The involvement of these third-party agents increases the costs for farmers and decreases efficiency. Farmers face difficulties in transparency of financial agreements and documented credit history. Smallholders are unable to receive the necessary financial investment for farming systems, which creates liquidity issues. Smallholders will need to sell crops at lower rates for buyers to process the payments to farmers.
Fraud: Blockchain supply chain also helps reduce cases of fraudulent shipping and harvesting by keeping track of the product. A report by the United Nations shows that around $40 billion in damages occurs globally each year through food product fraud due to illegal trading. Difficult-to-trace paper records have previously been used for tracking product, so it can take days to spot if or where an issue occurred in the supply chain system.
Contamination: The contamination of food products poses a serious threat to the agricultural industry. The World Health Organization (WHO) reported that food contamination results in over 400,000 deaths each year, with 1 in every 10 people getting sick from contaminated foods. Many cases of salmonella or E. coli were documented last year, leading many people to fall ill. Tracing these food product contaminations back to the original source and determining which product was the cause is difficult and costly. Contamination can lead to large quantities of food products being thrown away and cause more people to become sick during the time taken to identify the issue. The agricultural industry needs to develop a system of trust between its consumers and buyers who know that the food product has been appropriately quality checked.
New blockchain agricultural systems and applications can be introduced, replacing currently existing systems. Blockchain supply chain and tracking applications are unalterable and provide trusted information, eliminating the need for a third party. These newly implemented systems will allow farmers to receive timely and secure payments through virtual contracts. Blockchain will also provide farmers with the necessary information to increase crop yields, watch weather reports, and prevent contamination.
https://nextbillion.net/blockchain-for-agriculture/, Nikki Brand, May 17, 2018