The agricultural sector’s supply chain of food products has become more extensive and longer than ever before, thanks to globalization. However, many issues in the food supply chain such as quality, supply chain inefficiency, traceability, and food safety persist. These burdens impact not only the economy but also the society at large, threatening consumer health.
Blockchain technology can help solve most of these problems by creating an environment that allows trust to be built between producers and consumers. In addition, transparency can be significantly improved by providing specific product information on the blockchain.
Blockchain also has severe consequences for both farmers and businesses; while it allows companies to increase the quality of products and thus improve their competitiveness in the market, it also makes it very unlikely that companies selling low-quality or fraudulent goods will survive for very long if they persist in their sloppy practices.
From the consumer’s perspective, blockchain technology can be crucial in providing consumers with trustworthy and accurate information about the process of making their food. It is a great tool to address diverse consumer concerns regarding their meals’ safety, quality, and sustainability. Furthermore, since consumers understand the food production process, it grants them more freedom of interaction with the people who produce their food.
(Source: Demand for information about food)
When considering the advantages of blockchain from a regulator’s perspective, it’s evident that blockchain technology can provide reliable information to organizations to implement effective regulations.
Due to the numerous applications of blockchain technology in food supply chain management, many organizations have started incorporating this technology into their operations. For instance, brands like Wal-Mart, JD.com, and Alibaba are all using traceability programs based on principles of blockchain to monitor the entire sales flow, food processing, and production.
The mysterious cryptocurrency has made most people believe in a possibility that could transform lives. While the likelihood that a revolution will occur is highly unpredictable, keeping an eye on the latest technology is worth farmers’ time.
It is crucial to know the distinction between the blockchain, an instance of a database known as a distributed ledger, and Bitcoin, a kind of cryptocurrency or token.
Imagine the blockchain network as the size of a giant spreadsheet that anyone can access and utilize in real-time. The benefit of the blockchain is any change to the ledger can only be made if the other users agree whether the modification is justified. This immutability of blockchain technology means that it could theoretically provide the transparency of traceability and accountability to the food supply chain. So what exactly is it that farmers can benefit from this new technology? Your imagination only limits the answer. However, the majority of potential applications are theoretical technology and processes that reside only in the minds of forward-thinking individuals. The possibilities are exciting.
The most typical scenario currently being debated in agriculture is as follows:
First, the farmer cuts the field.
Every time they unload the grain, the information about the area where the grain was harvested is uploaded to the blockchain system via precision agricultural equipment.
This process repeats each time the grain is transferred.
Finally, the outcome is that the customer can access a reliable and complete ledger of the product from the field until the plate.
However, this chain is far from perfect, and numerous issues arise in this situation. For example, there is a co-mingling of grain, and most farmers aren’t really comfortable about the privacy implications. This could be an unnecessarily complicated way to track a product’s movement throughout the supply chain. However, it should clarify the blockchain’s mechanics and provide farmers with an understanding of the basics for the day when every precision agriculture discussion will include an exchange of ideas about blockchain technology within relation to traceability.
Beyond traceability shortcomings, there is a myriad of other concepts being explored by farmers and organizations. For instance, there are many ways to utilize blockchain technology to inhibit production risk. Crowdsourced underwriting of crop insurance could be one of those solutions. Cryptocurrencies are also a great way to make international trade transactions easier; the concept of distributed ledger can also be utilized to monitor the land title. It will be fascinating to see what opportunities are created by this technology in the next few years.
Blockchain technology has the potential to improve access to financing in developing countries, too. Agriculture employs more than one billion people worldwide, and many of them are smallholder farmers from developing countries. Unfortunately, for most of them, the cost of access to capital is an enormous challenge.
Since cell phones have been ubiquitous, mobile banking offers new financing possibilities, such as micro-financing. However, due to an absence of transparency and consequently excessive risk, the current model has a lot of small transactions with extremely high service fees.
Blockchain has the potential of already solving this issue for farmers and financiers. Examples include the agri-ledger from the UK BitPesa in East Africa and Rebit in the Philippines.
The farmers have been enthusiastic about adopting technologies that make sense and provide tangible benefits. Blockchain technology can be a powerful tool to address major issues in agriculture. The main challenge for blockchain and Agtech, in general, is connecting the technology with feasible business models and compelling instances.
In simple terms, blockchain must be able to reduce time and cost as well as move agriculture forward, creating new areas of value. If we can get beyond the hype and instead improve our business practices, the future of agriculture is blockchain and cryptocurrency.
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