By Pushkar Limaye

The Indian Agritech sector grapples with a multitude of challenges, ranging from supply chain inefficiencies to transparency issues and limited access to credit and markets. These challenges come at a cost, with staggering financial implications. According to recent studies, the Indian agricultural industry suffers an estimated double digit percentage food wastage due to inefficient supply chains, resulting in an annual loss of approximately INR 92,000 crore ($12.4 billion). Additionally, excessive fuel consumption in agriculture contributes to high operational costs, with an estimated 20% to 25% of total expenses being allocated to fuel consumption.

However, amidst these formidable hurdles lies an innovative solution: blockchain technology. As the founder of Carnot Technologies, a pioneering telematics company that transforms tractors into smart machines, I believe that blockchain has the power to revolutionize the Agritech sector, addressing these financial challenges head-on. In this article, we will delve into the transformative potential of blockchain, exploring its impact on efficiency, transparency, and profitability in agriculture.

Transforming a massive lending industry:

Blockchain technology has the potential to revolutionize lending and leasing businesses in agriculture, particularly in the context of tractors and harvesters. Almost 4 million tractors are rented out for farm work in India. By leveraging blockchain, lenders and lessors can create a transparent and secure platform for managing loan agreements, tracking ownership, and facilitating payments. This is especially true for lending companies that manage thousands or hundreds of thousands of assets.

Carnot is already using the Krish-e Smart kit platform to bring more transparency and accountability to sole proprietors and leasing companies alike; the next step in our evolution could be to incorporate blockchain technology.

Blockchain’s immutable ledger ensures the integrity of ownership and usage records, minimizing the risk of fraud or disputes. This enhanced transparency and efficiency will attract more lenders to participate in the agricultural sector, providing farmers with improved access to essential equipment and financial resources. This, ultimately, could play a pivotal role in India’s farm mechanization story – a mission Carnot is proud to be part of.

Enhancing Transparency and Traceability:

We are big believers that transparency can solve for financial losses at every step of the value chain. In fact, the core problem our Carnot powered Krish-e Smart Kit solves is that of transparency of tractor work done.

By harnessing the power of blockchain, we can overcome these challenges across the spectrum. Blockchain’s decentralized and immutable ledger ensures that every transaction, from farm to plate, is recorded and verified. This unprecedented transparency enables fair pricing for farmers, eliminating revenue losses due to information asymmetry.

Streamlining Supply Chain Management:

Inefficient supply chains lead to substantial financial losses in the Agritech sector. Blockchain technology offers a compelling solution by streamlining supply chain management. With its ability to eliminate intermediaries, reduce paperwork, and minimize delays, blockchain enables seamless transactions and optimized inventory management. Imagine a shipment of fresh produce sitting for 3 days at a fulfillment center just because of incomplete paperwork!

The real-time visibility provided by blockchain empowers stakeholders to make data-driven decisions, optimizing routes and reducing fuel consumption. By eradicating manual processes and reducing food wastage, blockchain can help the industry recoup significant financial losses.

Facilitating Access to Finance:

The lack of access to finance is a major constraint faced by farmers, hindering their productivity and profitability. Blockchain can clean up the financial landscape by providing a decentralized platform for accessing credit, insurance, and crowdfunding. By leveraging blockchain’s transparency and traceability features, lenders and financial institutions can make more accurate assessments of farmers’ creditworthiness, reducing default rates and associated financial losses. Furthermore, smart contracts powered by blockchain automate loan disbursements, repayment schedules, and insurance claims, significantly reducing administrative costs and increasing the efficiency of financial transactions in the Agritech sector.

This too sits squarely with our core philosophy at Carnot – bringing financial products to the underserved, as we have done with our first-of-its kind working capital loan for Tractor Owners/

Promoting Sustainable Practices:

Sustainability is not just an environmental imperative; it also has significant financial implications. Blockchains can play a pivotal role in promoting sustainable practices in agriculture. By providing a transparent and tamper-proof platform for recording and verifying data on environmental impact, land usage, and crop yields, blockchain enables farmers to make data-driven decisions that optimize resource utilization and reduce operational costs. Additionally, by incentivizing sustainable practices through blockchain-powered systems, such as rewarding farmers for adopting eco-friendly techniques, the sector can save money while contributing to a greener and more sustainable future.

Challenges and the Way Forward:

While the potential of blockchain in the Agritech sector is immense, challenges such as scalability, interoperability, and regulatory frameworks must be addressed for widespread adoption. Collaborative efforts among government agencies, technology providers, financial institutions, and farmers’ associations are vital to create an enabling ecosystem for blockchain implementation. Moreover, continued research and development are essential to refine blockchain solutions and drive their successful integration into the sector.

Conclusion:

Carnot Technologies and Krish-e have an overarching mission to improve farmer outcomes. With growing farm mechanization, improved access to finance and expert farm advisory, the Indian agriculture sector is well on its way to total modernisation. A blockchain system to lend transparency and scalability to each of these verticals has the potential to make this transition faster, more cost efficient and built to last.

The author is co- founder, CTO,Carnot Technologies

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