By Dileep Seinberg
By 2025, the agricultural market in India is expected to be worth US$24 billion, according to a report. The retail sector accounts for 70% of sales in India’s food and grocery market, making it the world’s sixth largest. The primary force propelling the industry is India’s rapid population growth. Rising incomes in both rural and urban areas have contributed to a greater demand for agricultural goods across the country. Market growth is also being spurred by the introduction of new e-farming software and the rising popularity of cutting-edge methods such as blockchain, artificial intelligence (AI), GIS, and drones for aerial surveillance and remote sensing.
Players in the agriculture ecosystem are becoming aware of how cutting-edge technology, such as blockchain’s improved data management capabilities, can improve the efficiency of the supply chain, lower transactional friction, foster stakeholder trust, simplify compliance, and lower the cost of contract execution. Agribusinesses, the government, farmers, and food consumers will all benefit from blockchain. The agriculture industry needs the blockchain’s potential to improve food safety and sustainability while reducing transaction costs and time, streamlining logistics and processes, increasing tracking and traceability, and lowering transaction costs.
This article discusses some of the significant use cases of blockchain technology in agriculture.
Transparent transaction management
With the help of blockchain, agricultural businesses, including small farms, can keep track of their transactions and legal obligations to customers, vendors, and other stakeholders. This technology helps monitor commodity buyer-farmer relationships and streamline distribution channels. This reduces fraud, improves transparency, and helps ensure supply chain satisfaction.
Blockchain technology could improve farmers’ and buyers’ inefficient financial transactions. It may speed up the settlement for farmers, buyers, and financial institutions by enabling real-time payment on delivery. Thus, farmers receive immediate payment, and purchasers save money and time while increasing industry competition. Furthermore, increasing settlement efficiency, trust, and transparency can reduce risk and give banks access to new sources of funding.
Improved Financial Support for Developing Countries
Blockchain also has enormous potential for creating and improving financial access in developing countries. Access to affordable financing continues to be a major obstacle for many of these nations’ farmers. Mobile banking paves the way for new forms of financing like microfinance, but the prevailing paradigm is characterised by numerous low-value transactions fraught with high risk due to a lack of transparency. Blockchain can and is already assisting banks and farmers in resolving this issue.
Efficient Smart Farm Contracts
The idea of “smart farms” may be introduced as a result of the integration of all these various blockchain-based applications in agriculture. These sustainable farming methods improve the quality of the environment, integrate technology with biological cycle controls, and make farm operations profitable. Thus, smart farming involves collecting and sharing large amounts of data on farming methods, weather, and animal health. Smart farming uses a lot of digital tools and remote sensors to get the information it needs in advance, such as fertilisers, soil mapping, crop yields, and the machinery used. Sensors are also used in smart farming to detect animal health issues and upcoming reproductive events. This type of livestock data is gathered by keeping an eye on the movements of the animals as well as their body temperature, pulse rate, and tissue resistivity. Additionally, GPS is used to determine where they are. Some companies are investing heavily in establishing a smart agricultural supply chain in rural areas of the country.
Agriculture Insurance: Safety Net for Farmers
Index-based insurance was created as an alternative or supplement to traditional agriculture insurance. In this case, the payout is based on a measurable index, like the amount of rain at a nearby weather station, instead of a real loss.
Index insurance can benefit from blockchain technology in two ways. First, a smart contract can trigger timely and automated payments based on weather data. Second, a smart oracle can automatically integrate weather data and other relevant information, such as plant growth data or farm machinery data, to reduce basis risk and streamline index determination and payout.
Land ownership tracking is another use for blockchain technology, particularly in developing nations. Most land in South America, Africa, and Southeast Asia is unregistered. These nations frequently struggle with land title fraud, leaving the poor, who hold the majority of their wealth in land, at risk. A growing number of nations in these regions are considering using blockchain technology to create a secure land title record tracking system.
Minimising Human Error
Blockchain can also reduce agricultural losses from human error. Blockchain technology can automate many tasks, reducing resource waste. Blockchain can also provide farmers with details about contaminated products throughout their supply chain, including the kinds of crops involved and the location of the crop’s origin. The farmer can reduce potential losses by digging deeper into this data set.
Data monitoring is unquestionably the most prominent use case of blockchain. It enables real-time data collection for farmers. To track crop growth, harvesting, and yield, for example, wireless sensors can be incorporated into fields. The data is then stored on the blockchain. They can use that to maximise the “success rate” of their harvests and plan their area more efficiently. This information would eventually be of immeasurable value to the farmer.
Blockchain technology can boost trust, streamline supply chain information sharing, and lower agricultural transaction costs. Blockchain can transform the agriculture industry, but there are still many roadblocks to overcome. The agriculture industry is ready for change, and blockchain technology could be a game-changer. The potential benefits of blockchain technology for conventional farming methods remain to be seen.
The author is Founder, ThinkChain, AgroChain