Blockchain in Agriculture: Benefits, Use Cases and Platforms That Are Disrupting the Industry
28 January, 2021
Agriculture has always played a vital role in the promotion of life and wellbeing across the globe. But it is in dire need of innovations that would improve and simplify the work of farmers and help their customers know their food better. One technology is ready to offer new methods of work and interaction between producers and consumers and solve many industry problems — and that is the already well-known blockchain.
Blockchain has been a buzzword since the inception of bitcoin, but when it comes to embedding this technology in enterprises, cryptocurrency is not what businesses are looking for. It is blockchain technology itself that matters. This innovation is currently transforming many industries, including agriculture.
Agricultural trends are directly related to what is happening to the world’s population, namely continuous population growth, urbanization, and globalization. As of January 2021, there are 7.8 billion people in the world. The World Bank estimates that the number will continue to grow, reaching 9.7 billion by 2050 and 11.2 billion by 2100. You don’t need to be an expert to understand that with such numbers of people, the demand for food will also increase significantly.
Since this sector is so crucial to global prosperity and must adapt to a myriad of challenges over time, blockchain supporters have begun to introduce this technology into agriculture. But is it really a big leap forward or merely the senseless digging of an already sown field? Let’s figure it out!
Conventional ICT vs Blockchain technology
There is no doubt that information and communication technologies (ICTs) provide valuable solutions to many problems, such as finding more customers for products, obtaining information about other “field” players, searching for data to increase crop yields, determining the best prices for them, and so on. By addressing these issues, ICTs improve the agriculture industry and contribute to its development.
Before making important decisions on strategy, sales, marketing, and production, any business, including those related to agriculture, must collect and analyze tons of information, which is why agricultural enterprises widely use such types of ICT as databases. However, traditional databases and those powered by blockchain technology differ significantly. Check out the table and see for yourself.
|Traditional databases||Blockchain-powered databases|
|Type of data||Modifiable data||Immutable data|
|Transparency level||Lack of transparency||High transparency|
|Data management||CRUD commands||A user is only allowed to add new data|
|Data clearing||Data can be deleted||Data remains on the blockchain permanently|
|Security level||Security depends on the administrator||Security is assured by the blockchain itself|
To illustrate what exactly these characteristics mean for your business, we’ll comment on some of them. Let’s take a look at the centralized and decentralized architecture first. Sounds pretty simple, but here’s what lies at the heart of these features: using a traditional database, you rely on one server and administrator. The latter is allowed to modify the data and delete it, so this doesn’t exclude the risk of bias and corruption.
Blockchain databases, in their turn, give the same rights to all network participants: they only perform transactions and record data. Once a block is added to the blockchain, no one can change it and the information remains there forever.
When it comes to an enterprise blockchain, each member needs to get permission to access the network and verify new additions. That way, everyone on the network is checked and the data remains unchangeable, so your entire business and all your information are much better protected from destruction and corruption.
Security is another major point. Using regular databases, you trust your system to the network administrator. With blockchain databases, a consensus must be reached to add blocks, and this mechanism, together with encryption, ensures the security of the network. It also becomes extremely difficult to tamper with the system.
Depending on your enterprise needs, you can consider both options and choose the one that suits you better. Do you want to give the same rights to all people involved in the production and exclude information changes? Then, blockchain is the way to go. Do you still want to have centralized control and administration of everything happening on the network? Then, a traditional database is a good option for you.
In any case, blockchain is the next generation of ICT, and traditional technologies may well soon become a thing of the past.
Using blockchain for agriculture: potential benefits
While blockchain technology has gained popularity, mainly due to its invasion of the financial sector, even its basic characteristics and capabilities can greatly transform other industries, including agriculture.
- Transparency and trust
Most businesses are accustomed to trusting authority or seeking services from third parties. Blockchain is changing these habits: peer-to-peer architecture, cryptography, and mandatory verification of identity and transactions now ensure trust amongst participants in the network.
Customers also trust retailers and farmers more when they know where their food came from, how it was delivered, and how it got to a given supermarket. They can receive all this information through blockchain-based applications.
- Intermediaries? No, thanks.
By utilizing blockchain, the need for a large number of intermediaries is significantly reduced. Banks, notaries, and many third-party sites are no longer necessary, so you can save money.
- Once on the blockchain, always on the blockchain
Every piece of information added to the blockchain is immutable and time-stamped. Taking into account that it’s validated by multiple network participants, you can always be sure that the data is legitimate.
- Fraud and malfunction detection
Blockchain doesn’t completely exclude the possibility of fraud, but it can help to seriously reduce risks. Take supply chains, for example. Since all stages of the supply chain can be tracked through the blockchain and the information is immutable, such an application becomes very difficult to manipulate.
- Enhancing food quality and safety
The agri-food system is extremely large and complex. It needs to be simplified and improved not only for farmers, suppliers and retailers but also for the end consumer, as their health heavily depends on what products they buy.
Using blockchain-based platforms, supply chain participants can report emerging issues in real time. If a foodborne disease outbreak still occurs, retailers can determine where the contaminated food came from in a matter of seconds. This helps to implement quick food recalls and thereby save the health and even the lives of buyers.
Now that you are familiar with blockchain technology and its main functions, you are probably assuming that its main use case is the food supply chain. You are partially correct, but the range of possible blockchain use cases in agriculture is much wider, and literally extends from planting crops to the consumer’s dinner table.
Blockchain in food production
Blockchain implementation can start right from the field, but it’s more effective to combine two technologies – blockchain and the Internet of Things (IoT).
Together, the IoT and blockchain in agriculture are capable of driving the transition to smart farming. IoT sensors can collect and generate important data such as soil temperature and moisture, pH and water levels, pesticide and fertilizer information.
Once the data has been generated, it needs to be structured correctly by adding timestamps and demographic information. After that, the cleaned and well-structured data is converted into a format that machine learning (ML) algorithms will work on. This will provide even more important and useful information for the farmer. ML mechanisms are able to build forecasts for crop yield, crop identification, GrowScore, crop demand, and can even report crop quality recommendations.
After completing these steps, smart contracts built into the blockchain begin to process the data received. Smart contracts also allow all network participants to view the information stored on the blockchain, because the blockchain itself implies transparency and decentralization. Thus, the data is distributed and open to every node, but no one has control over the entire system.
This approach can help farmers optimize the use of resources. For example, they can calculate the amount and cost of water and fertilizer needed and plan how big a workforce will be required at a given point in time. Soil quality and yields can also be greatly improved because farmers will make informed decisions based on real facts gathered in their own fields.
Blockchain transforming food supply chains
Supply chains give many businesses headaches, not just in agriculture. Have you ever worked in a food-related business? If yes, you know how many inspections and stops a product goes through before it gets to the dinner table. And what about all the paperwork? There are piles of documents, which can easily be lost, damaged, or falsified.
Agricultural enterprises and retailers point out several common food supply chain problems: food quality and safety, food traceability, supply chain inefficiency, and trust.
Concerning food safety, eating contaminated and expired food can have dire consequences for a person’s health and life. The World Health Organization (WHO) estimates that nearly one in ten people contract foodborne illnesses each year, resulting in 420,000 deaths. Regardless of a country’s level of development, foodborne disease outbreaks can occur anywhere in the world.
Food traceability needs to be improved, as the ability to quickly find a product’s origin will also help to implement efficient food recalls from supermarket shelves, which, in turn, will protect people from consuming contaminated food.
Trust is an issue not only for the participants in the supply chain but also for the end consumer. The so-called conscious consumption is one of the latest trends in consumer behavior. People need to know where their food came from, how it was made, transported, and delivered to their supermarkets.
Real-life use case
How can blockchain help tackle these critical issues? Walmart, the American retail giant, has recently answered this question with its own pilot projects. The retailer partnered with IBM and began developing two proof of concept (POC) projects: the first involved pork in Chinese stores and the second focused on tracing the origin of dried mangoes sold in the US.
When it comes to pork in China, trust in the system used to be a big issue. After introducing a new solution that allowed the uploading of certificates of authenticity to the blockchain, the problem was solved. As for mangoes, they were often susceptible to Listeria and Salmonella contamination, so Walmart sought to shorten product tracking times and thus speed up product recalls so that people were far less likely to buy and consume contaminated fruit.
In the end, the time it took to trace the mangoes’ provenance dropped significantly, from 7 days to 2.2 seconds.
Enhancing shoppers’ trust was also one of the main goals. In China, for instance, Walmart has launched a blockchain-based tracking platform, through which consumers can scan a QR Code with their smartphones and get full information about a product’s origin, geographic location, and ingredients, and read logistics and inspection reports.
These platforms and services, that have already successfully launched, confirm the feasibility of using blockchain for the supply chain in agriculture.
Building smart agriculture with blockchain
Smart agriculture means the wise use of natural resources and the reduction of environmental impact through the implementation of ICTs, blockchain, IoT, and other modern technologies for collecting and analyzing data. Traditional systems with centralized control are often vulnerable to data corruption, as the authority running the system can be biased and seek to achieve certain results by inputting the wrong information. Such platforms are also often subject to cyber attacks.
In the case of blockchain technology, all data stored in blocks is transparent for each participant involved in the process. In addition, all information is verified and remains unchanged after being added to the blockchain. There is simply no “edit” option here.
Blockchain helps to collect data at all stages of crop and food production. Through decentralization and encryption, blockchain technology ensures the security of the entire system.
Blockchain + IoT = smart agriculture
What else is there? Blockchain seamlessly integrates with other technologies such as the IoT and AI, allowing agricultural workers to take advantage of all these innovations.
For example, this study suggests using blockchain and the Internet of Things to create a smart greenhouse system. Greenhouse technologies based on the IoT have already gained popularity, but the authors propose to add blockchain to the system since this will make it much more secure and improve data privacy.
Another research article proposes a reliable, self-organized, open, and environmentally friendly food tracking system based on blockchain and the IoT. The authors of the paper suggest utilizing IoT devices to replace manual recording and verification, which will reduce human intervention in the system. In addition, smart contracts can help identify problems and handle them in a timely manner.
Blockchain for weather prediction and agricultural insurance
Before making important decisions about what types of crop to grow, you need to know which way the wind blows, right? A farmer’s success is highly dependent on weather conditions, but these can often be very unpredictable. Crops may not survive if you don’t monitor and forecast possible natural disasters, and here’s how you can make it possible with blockchain technology.
Where to start?
The first thing to do is to place agricultural weather stations on your farm, where sensors are able to measure important information about wind speed and direction, solar radiation, atmospheric pressure, soil and air temperature, humidity, etc. All the parameters are then recorded on the blockchain allowing farm workers to access this data transparently and 24/7.
By harvesting real data from their own weather stations and analyzing it, farmers can take the necessary actions in advance to preserve and successfully grow their crops. For example, by analyzing data it can become clear when heavy rain or a natural anomaly like snow is coming. Farmers will be able to react on time and not only protect crops but also have time to insure themselves against a weather crisis.
How does blockchain-based crop insurance work?
If a farmer manages to apply for crop insurance and at the same time uses blockchain technology to track weather conditions, an insurance company can directly request the blockchain to obtain the necessary information using smart contracts. When the claim is approved, farmers will automatically receive compensation on their wallets.
A company that has set an example
Etherisc, a Germany-based company, works exactly like this. The firm provides decentralized crop insurance based on blockchain. They offer farmers to select crop types and field locations first, and then farmers receive automatic payments based on weather information. Farmers receive money in DIP (Decentralized Insurance Protocol) tokens – Etherisc’s own cryptocurrency.
In November 2020, Etherisc announced that they were working on a blockchain-based parametric crop insurance platform for smallholder farmers in Kenya. A similar blockchain application was successfully tested in a previous project for Sri Lankan farmers and the first payments were made in 2019.
Climate change in Africa is quite evident, and to cope with its impact, Etherisc and Acre Africa, an insurance provider for agriculture in East Africa, have been looking for sustainable solutions to protect local farmers and their harvest. The project aims to provide insurance coverage for 250,000 East African farmers.
The solution is built on Etherisc’s “Generic Insurance Framework” on Etherеum. It utilizes local weather parameters, and in extreme weather conditions, insurance policies are automatically activated by incoming data, resulting in fair, timely, and transparent payments that insurers can’t tamper with or change.
Blockchain for eCommerce agriculture businesses
What’s most important to us when ordering goods online? Naturally, it’s trusting the manufacturer and the eCommerce platform, convenient payment methods, and the ability to track what we ordered. When it comes to food, our requirements become more specific, and this can be a problem for agricultural businesses.
First, it is often difficult for them to confirm the origin and delivery conditions of agricultural products. In addition, they need to process orders as quickly as possible so that the product doesn’t spoil and the company doesn’t end up losing consumer trust.
Benefits blockchain brings to eCommerce
Blockchain technology can provide solutions to many of the aforementioned problems, and others as well. Here are five main points:
Encryption, private key, and multi-factor authentication are powerful tools that can keep the eCommerce platform secure. The information collected from the farm and recorded on the blockchain remains there as well, which is essential for producers and customers.
- Effective supply chain management
Information about the farmer, product’s place of origin, logistics company, transportation conditions, warehouse, and even storage temperatures can be added to the blockchain. The data is verified, recorded on the blockchain, and remains immutable there.
- Easier access to the online marketplace for smallholders
Traditional eCommerce often involves large companies, as online platforms receive a lot of orders and bring more revenue. At the same time, many agricultural products are made by households. Blockchain technology can significantly reduce transaction costs for them and enable smallholders to become market participants.
- Payment methods
It’s quite obvious that with the introduction of blockchain, it becomes possible to use cryptocurrency in transactions with agricultural products, which will significantly reduce transaction costs. But, of course, this will not be the only payment option for buyers.
- Consumer trust
Fear of counterfeiting is a strong reason why shoppers may bypass eCommerce platforms. Since the blockchain is a decentralized system where information is verified, timestamped, and publicly available, users will be assured of its authenticity and will be more willing to trust the farmer and their food products.
Blockchain eCommerce platforms for agriculture
The idea of using blockchain for eCommerce in agriculture is far from theoretical. There are many platforms already in operation; let’s take a look at some of them.
Alibaba Group & Bayer Crop Science
Alibaba Group, a Chinese multinational eCommerce technology company, has a subsidiary called Ant Financial. This subsidiary owns Alipay, China’s largest digital payment platform. In 2020, Ant Financial signed a letter of intent with pharmaceutical giant Bayer Crop Science.
Both companies have already launched a blockchain pilot project in Dangshan, Anhui province, China, with pear farmers from Bayer demonstration areas. With the new blockchain-based solution, farmers have been able to provide high-quality products that are sold on Alibaba’s eCommerce platform, and generate bigger profits.
Ant Financial VP Geoff Jiang noted that together with Bayer, their research on blockchain in agriculture will increase the transparency and responsiveness of its supply chain and bring more value to farmers and consumers.
Release Co. Ltd
Release Co. Ltd is a Taiwan-based company that has introduced a blockchain-powered social commerce platform for agriculture and fisheries.
Release aims to combine social media and eCommerce to create a distributed and decentralized social commerce platform. This new marketplace brings buyers and sellers together in one application through a social ecosystem where everyone has access to reliable information.
Release is based on its own REL token, with which token holders will be able to access all the platform’s functions. These tokens will be useful in the future for the purchase of services and products.
Among other technologies, the project also involves big data and AI.
Taking FMS to the next level with blockchain
Agricultural companies have actually been using Farm Management Software (FMS) for years, and the global FMS market is already very big. According to a Grand View Research report, market size was $2.0 billion in 2020 and is estimated to reach $4.2 billion by 2025, with a CAGR of 16.7% over the forecast period.
Population growth and consequent increasing demand for agricultural products, water shortages and outdated farming and crop planning methods will soon force existing FMS to change and improve. There are already platforms that offer new software powered by blockchain technology with built-in smart contracts.
Farmers are increasingly turning to sensors, drones, and artificial intelligence devices. If you add blockchain to this set of technologies, you get a reliable, cyber-resistant, and secure system. FMS based on blockchain will also help reduce inventory costs and transaction costs between agricultural suppliers. At the same time, farmers will be able to monitor the state of their equipment and the process of growing crops more effectively and in real time.
Real blockchain platforms driving smarter agriculture
Compared to the traditional Farm Management Software market, the market size of global blockchain within the food and agriculture sector is smaller. According to ReportLinker, it’s valued at $133 million in 2020 and projected to reach $948 million by 2025. These predictions show the rapid growth of blockchain adoption in the industry, and in the post-pandemic world, blockchain will gain new value as there will be a high demand for food transparency and traceability.
Let’s dig a little deeper and learn more about already existing agriculture blockchain companies and their platforms.
This Australian company launched a platform – an integrated blockchain-based commodity management solution that helps process complex agricultural transactions using smart contracts and greatly simplifies grain supply chains.
AgriDigital allows its users to digitize all stages of product movement and makes piles of paper a thing of the past. Clients and contractors communicate directly through the platform and payments can be made with the click of a button.
Ez Lab, an innovative Italian startup, has launched a platform for farmers and the affiliated industry that can trace all food production processes. AgriOpenData uses blockchain technology and smart contracts and is integrated with open data.
All data coming from the fields, information about the weather and the use of natural resources are automatically collected and added to the platform. Each supply chain participant can track where the product was delivered from and how it got to the end retailer.
Demeter, a Singapore-based company, offers an entire ecosystem for farmers and consumers. In addition to optimizing the supply chain, the company aims to promote fair pricing and help smallholders enter the market. In the implementation of the blockchain platform, Demeter also uses the Internet of Things, artificial intelligence, and solutions for system design and data analysis.
The German company TE-FOOD is by far one of the most successful agrotechnical blockchain projects. The platform of the same name promises to provide food transparency from farm to table on the blockchain. The platform is currently used by over 6,000 business clients.
The future of blockchain technology in agriculture
In the future, we will certainly see the interdependent growth of the following three phenomena. It all starts with global population growth, then leads to an increase in demand for food, and this, in turn, requires innovation. One of the most promising solutions to this problem is blockchain technology.
Agricultural blockchain solutions can address many important industry challenges such as food tracking, food quality and safety, monitoring and weather forecasting. Blockchain helps improve the efficiency, transparency and accountability of the food supply chain and enhance trust between network participants. Consumer confidence increases as well, since with blockchain technology they get access to all the data about the products they buy. In this way, blockchain is able to make agriculture more efficient, profitable, and secure.
However, every business has its own goals and needs, so developing a custom platform that fits all the requirements perfectly is a challenging task. If you have ideas about your own agriculture blockchain-powered app, make sure to find a professional blockchain development team that will translate your plans into a real solution.
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