Blockchain in Agriculture – How is it Used?

Inez Bartosińska

Not every challenge in the agricultural industry is directly related to what is happening on the farm. Many problems go beyond the field and are related to logistics, transport, and trading. Some examples are supply chain inefficiency, food fraud, or poor safety measurements. These everyday obstacles must be overcome in order to achieve good results and ensure great quality of services and products. A blockchain is a technological tool that could be the answer to these problems. It can improve your company’s general workflow and processes. 

Read also: What is Blockchain in Transportation? How is it Used?

Additionally, blockchain has the potential to add market value to your business and enhance your trading rate. What is blockchain? How can it improve the agriculture industry? Finally, what are the examples of blockchain technology in farming? Keep reading to find out.

Agriculture market overview

Agriculture is one of the most profitable branches of the world’s economy and, at the same time, the one for which there is the greatest demand. The agricultural industry includes the cultivation of land, plants, forests, livestock, crops, and even aquaculture or horticulture. But also the sale and management of a range of agricultural-related services and products such as fabric, biomass, medicinal products, dairy export, and many more. 

It is estimated that by 2050 the global population will increase to nearly 10 billion, and with natural increase, the demand for better agricultural productivity will rise. 

In 2021, the global agricultural market is expected to grow to $ 10,181.92 billion at a compound annual growth rate (CAGR) of 6%. Such a development is mainly due to changes in the business activities that resulted from the COVID-19 pandemic, which previously hindered the market due to numerous restrictions on social distancing and moving to remote work. For farmers, this has created many operational challenges that they still have to deal with. As the market has partially adjusted to the ‘new normal’ and is making further progress, experts estimate that the market will reach $ 13133.95 billion in 2025 at a CAGR of 7%.

The worldwide pandemic is not the only factor challenging today’s farming industry. Lack of human resources and the growing demand for advanced agricultural solutions in many countries drive the development and introduction of drones, agricultural robots, or blockchain technologies. Countries that can boast about the greatest technological development and have the highest contribution to the global agricultural economy include Australia, New Zealand, China, the USA, or the Netherlands. Let’s see how blockchain technology improves agricultural business around the globe.

How is Blockchain used in agriculture?

Blockchain technology is based on a decentralized and distributed database or ledger of transactions and events, functioning as an ascending one-way list of records nominated as blocks. Each block has a link to previous blocks created using cryptographic functions and timestamps. How can a digital ledger like this be used in agriculture? 

The main goal of this technology is to store and send information about concluded transactions securely. 

The use of data has already become essential for the agricultural sector to improve productivity and sustainability. Blockchain technology can increase productivity, transparency, and trust within agricultural supply chains. In addition, such a solution also results in building trustworthy relationships between partners.

Usually, gathering information about farm status, inventory, and contracts can be costly. However, thanks to the blockchain, you will be able to track every step on your roadmap; for example, traceability of food will allow you to create reliable supply chains and be more credible to your customers.

Blockchain can be combined with other technologies such as smart contacts, which will allow for hassle-free and timely payments between stakeholders. In the following, we will discuss the uses and examples of blockchain technology in the agriculture sector in detail.

How Blockchain can revolutionize the agriculture industry?

The growing challenges faced by the agricultural sector make it difficult for many businesses to maintain even the minimum required market performance. Fortunately, by introducing blockchain technology in agriculture, enterprises have a chance to preserve good sustainability.

Some of the challenges that the agriculture industry struggles with include poor inventory management, lack of fair pricing, inefficient supply chain, or lack of transparency, to name a few. Blockchain has the potential to help businesses overcome these issues and revolutionize the agriculture industry by providing scalable and profitable tech-based solutions. 

We can discover the biggest potential for blockchain to revolutionize the agriculture market by considering the growing demand for traceability of food origins. Now, imagine a system where each product has a QR code entitled to it. By scanning this code, customers instantly get to know the exact location of the product’s origin and all other related details. 

The supply chain begins with the supplier of some agri-product, who records these products in a digital ledger – the information includes product quality, cultivation methods, every step of the transportation, and more. After submitting the data, the Digital Ledger Technology (DLT) will enable you to track, validate and refresh it in real-time. Thus, the whole industry and its parties will benefit from this solution.

How Blockchain will improve the agriculture sector?

Blockchain has the potential to improve agriculture on many levels. Let’s see what they are.

Improving Agricultural Supply Chain

Farm companies face some common problems related to the food supply chain. It is mainly about the quality and safety of the transported goods, food traceability, and supply chain inefficiency.

Keeping food fresh should always be a priority, and under no circumstances can it expire before it reaches its final destination. Also, food traceability needs to be improved so that customers have quick and seamless access to data such as the product’s country of origin. Finally, for all parties involved in the supply chain to be satisfied, real-time insight into the exact location of the goods should be provided to ensure that the goods reach their destination in safe conditions. Unfortunately, these requirements are often unmet, and the system is too slow to meet today’s market standards. So how can blockchain improve this system?

For example, by introducing a solution that enables uploading authenticity certificates to the blockchain or a tracking platform that allows consumers to scan QR codes of the product and get information related to it. 

Improving Food Production

Combined with IoT, blockchain adaptation can start straight on the field. Linked together, these two technologies open up a broad spectrum of new opportunities for farmers; for example, IoT sensors collect data on the conditions that prevail in the field and are then structured by a blockchain system. In this way, farmers can carefully analyze their actions and create patterns for the future, resulting in saved resources and improved management.

Improving Environmental Sustainability

Reasonable use of natural resources and reducing environmental impact through blockchain and other modern technologies is defined as smart agriculture. With the implementation of blockchain, it is much easier to achieve sustainable production and distribution. For instance, the digital ledger allows building a decentralized system that protects data from corruption and cyber attacks. With blockchain, all information is secured, verified, and unchangeable. Thus, it remains safe and secure at all times. 

Improving e-Commerce Agriculture Business 

Building trust and credibility among customers is the most important task if we want to sell goods online. It is also necessary to provide convenient payment methods and the ability to monitor orders, both on the business and customer sides. Blockchain involves encryption, so it can help keep e-Commerce platforms secure and all the information stored on them safe. Moreover, it allows easier access to the online marketplace for small companies. So, even products made by a household have a chance to thrive on the agricultural web market. As for seamless transactions, blockchain technology enables customers to use cryptocurrencies among various options and keeps the processes trouble-free.

Examples of blockchain technology in agriculture

Let’s discuss diverse real-life use cases of blockchain technology in the agriculture industry.

  • Anchor – a brand of dairy products founded in New Zealand that uses blockchain to improve supply chain transparency and traceability. Their main goal is to enhance consumer confidence and build a trusted trading environment.
  • Unilever – a multinational consumer goods company, uses blockchain to restrain deforestation by introducing transparency and traceability into its supply chain process. Previously, the company adopted blockchain to restructure the way demographic and location data are collected, saved, and verified.
  • Demeter – new smart agriculture marketplace based on blockchain and providing modern technology solutions across the supply chain. The company’s goal is to develop and enable next-generation agricultural businesses with the orchestration of blockchain and other modern technologies. 
  • TE-FOOD – a solution for food traceability based on blockchain technology for global food supply chains. The tool is a public-permissioned blockchain that allows for public data sharing. But, writing data to the blockchain or validating transactions requires additional security measurements.

Benefits of blockchain in agriculture

Many agricultural companies choose to improve their workflow with blockchain technology. It is a solution that benefits farmers and customers. 

Enhanced transparency and traceability – blockchain technology helps many farmers meet growing customer’s demands regarding transparency and traceability in the agricultural supply chain. This solution enables them to share data about transported products on a digital ledger in real-time so that everyone can access it just with a QR code and a smartphone. 

Improved safety – real-time tracking of goods allows you to spot any anomalies in the process and thus react quickly. So if an accident occurs and the delivery is delayed, the company can immediately arrange a new shipment or notify stakeholders about the delays. In addition, since the information entered into the blockchain is impossible to change, it is reliable and resistant to counterfeiting.

Providing fair pricing for farmers – payment transactions in selling agricultural products usually take up to several weeks. Moreover, traditional payment methods such as bank transfers often subtract some of the farmers’ earnings. Thanks to smart contacts based on blockchain, farmers can get paid automatically as soon as products reach their destination and are verified. Smart contacts would also eliminate intermediaries who charge a commission and make it difficult for farmers to maintain fair prices.

Improved farm inventory management – despite technological developments, many farms cannot adapt to advanced inventory management solutions. This can lead to waste of products and resources and significant losses for farmers. Blockchain-based technology is perfect for streamlining this process, for example, by giving you access to functions such as keeping track of the storage environment and notifying you when produce will expire.

Future of software technology in agriculture

In the coming years, we will observe certain phenomena progressing one after another: a growing population, an increase in demand for agricultural products and services, and, consequently, the need for innovation. Blockchain as one of the modern solutions can address various needs in the agriculture industry, such as food tracking, food quality and safety, analyzing weather and soil conditions, and many more. 

We will certainly notice that many agriculture companies are introducing blockchain technology into their resources. It will allow them to build robust processes and enhance trust between all the parties involved in food production and management.

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