Even though the implementation of blockchain technology in the agriculture industry is in its early stages, it is foreseen that it will revolutionize everyday activities from farm to table and address plenty of the current agri-related concerns.
According to research, the global market size is anticipated at USD 133M in the year 2020 for the Blockchain in the agriculture and food supply chain. It is estimated to rise at a CAGR of 48.1% to reach USD 948M by the end of 2025.
In this post, we discuss how the Blockchain is helping the agriculture sector and the use cases of this technology in the farming industry. First, we understand what Blockchain is in Agriculture. So let’s get started.
What is Blockchain in Agriculture?
Blockchain is a ledger of transactions recorded by the participants. The objective of blockchain technology is to boost transparency and accountability. That is the reason it is getting massive acceptance in modern farming.
Blockchain in agriculture enhances the volume of reliable data of inventories, farming contracts, and the general state of the farms. Acquiring this sort of data costs much in the traditional methods, but the Blockchain is transforming the processes.
It is now feasible to enhance the food supply chain quality. It helps to maintain the trust among customers and farmers by regularly monitoring the provenance of different foods.
As Blockchain is a reliable approach to store information, it enables data-driven innovations in the epoch of modern farming. When integrated with the smart contract, it smoothens the transactions among different stakeholders. However, there are also some other contract management software available that uses the same technology to mange these kind of contracts!
Let’s move forward and take a deep dive into the use cases of Blockchain in Agriculture.
How Blockchain Use Cases Transform Agriculture?
#1. Product Quality Control
Due to a lack of proper storage and transportation, fruits and vegetables get wasted. Most of the products become useless before leaving the farm. It happens because a farmer, supplier, or freight carrier can not control the signs of environmental changes such as moisture, heat/cold, product ripeness, CO2, etc.
Blockchain technology leverages special sensors to monitor the storage and transportation of the products. It collects the essential details and performs real-time recording in a decentralized distribution book. It helps the farmers, distributors, and consumers to identify the condition of the product. They can prevent it in advance if possible.
#2. Enhancing Supply Chain
The market of agricultural products is worldwide. The food you purchase from the market gets shipped from different countries. The supply chain of the Agricultural industry is complicated and unclear. Shipments change hands many times before delivery at the final destination. It is hard for farmers to discover the information of at what price their products get sold. The lack of accurate data is susceptible.
Blockchain technology helps to reform the instability by recording transactions in real-time. It offers up-to-date supply and demand information to involved parties. Farmers can optimize the prices and quantity of the products for the market. Consumers also are confident as they can monitor their goods to the manufacturer.
Blockchain also keeps records of the transaction history. It helps parties to perform all dues on time and complete the transaction without any involvement of intermediaries.
#3. Updating FMS
According to Grand View Research company, the global market of FMS (Farm Management Software) reached $1.5B in the year 2017. It anticipates raising $4.2B by the end of 2025. This growth is because of constant water shortage in the arid area, population growth (more food products), and the development of advanced technologies.
Blockchain database architecture offers transparency and security of data storage. Transparency is necessary as the new FMS offers open access to data for all parties. Each participant needs to ensure that the information is authentic and secure from malfunctions.
#4. Fair Pricing
Most of the profits from the sale of agricultural products get collected by the mediators and retailers, agents, etc. On the other hand, earnings of farmers-producers of basic goods remain very low.
Blockchain eliminates the need for intermediaries, so farmers can directly participate in contracts with retailers with more suitable terms and conditions for their products. Blockchain technology makes the market more open. So it is possible to pressurize parties that receive high profits. Farmers can also leverage blockchain technology to generate a kind of international trade union to safeguard their rights.
#5. Agriculture Production Crowdfunding
Businesses in the Agriculture sector include transaction costs that generally occur in a short time frame. In many modern countries, farmers take funds from banking entities in more or less favorable conditions. In many countries, a bank loan gets distributed on terms like if a farmer might be late for a one-time payment, a bank can bankrupt the farmer.
Blockchain technology will make the funding market global. It aids farmers to get a loan in any of the structures with their acceptable terms and conditions. Blockchain also helps to develop crowdfunding models through which a common man can fund agriculture businesses from any of the regions.
#6. Insurance for Small Farms
Uncertainty in the production because of the unpredictable environmental changes and pest damages, many fluctuations in food prices, a lengthy production cycle, etc., generate critical conditions for agriculture insurance. Particularly, in the countries where there are complications with access to budget-friendly loan funds. It is the reason Agriculture insurance is costly and usually quite inconceivable.
In the case of loans, Blockchain can localize the insurance industry. So that farmers can insure on more favorable conditions with the companies.
#7. Track History
When you buy any food product, you are not aware of the chemicals used for its refinement, how it is stored, any abnormality in the DNA, and where it grew (in the field, greenhouse, basement). Additionally, you do not know who raised the product.
Those involved with the processes of growing crops, farm animals, or fish can monitor the history, with the help of blockchain technology. It is possible to track everything from the fertilizers’ chemical composition to DNA.
In a Blockchain, the data is highly secure and inviolable. Anyone can expect an efficient product supply, fairly priced, and enhanced product monitoring. It will also enable farmers with real-time stock management.
All the data starting from seed purchasing to harvest and selling at POS systems, everything can be recorded on the Blockchain. It will significantly aid farmers and consumers in estimating, tracking, and managing the risks across the agriculture processes. It can also help in easing the rural area’s troubles in developing countries.