Role of Blockchain technology in the agri-tech sector
Despite the fact that blockchain technology has gained popularity due to its position in the finance industry, it has a wide variety of uses that go beyond cryptocurrencies. Many sectors, including healthcare, law, real estate, finance, among others, are expected to be dramatically transformed by technology.
Agriculture, on the other hand, is a little-known market that blockchain development has the power to fully transform. More particularly, it has an increasing abundance of problems that we must address immediately. The agriculture sector will benefit from blockchain technologies in a variety of ways.
Aside from the superior features of the blockchain platform, they have the ability to enhance or develop traditional technologies not only in business and trade but in all facets of our daily lives, ushering in modernization.
If it makes its way to the family dining table or any restaurant, food passes through several hands and procedures. Who is responsible for ensuring quality? What is the reliability of the quality assurance process? How else can consumers check the consistency of what is served to them at the dining table except what they can see and smell? Let’s take a look at how agri-tech startups have addressed these issues.
Agriculture, which accounts for 6.5 percent of global economic output and employs about 40-45 percent of the global population, is using blockchain technology. Its overall global output is estimated to be about 5 trillion dollars. Farmers have been dealing with complex environments that require precise scheduling and a large number of moving pieces, as well as seasonal funding mechanisms. It has been important to use new Blockchain technologies to solve these problems.
What is Blockchain?
Blockchain is all about actively storing or tracking information in a way that makes it impossible to alter, hack, or cheat the data or the system.
By architecture, blockchain is a unique software database of transactions that is duplicated and replicated through the whole network of computers. It’s cryptographically safe, distributed, and decentralized, and it’s a write-once-append-only framework.
Each block of the chain includes a series of transactions, and if a new transaction happens on the network, a record of the transaction is added to the database of each party.
Agriculture and Blockchain Technology
In agriculture, blockchain is a valuable technology that simplifies the process of growing and supplying produce.
Blockchain in agriculture has been around for a while in global markets, and there have also been blockchain applications for food supply in India. The government had introduced a blockchain-based marketplace with the aim of assisting farmers in connecting with markets in a transparent way, resulting in a fair price for coffee growers.
Blockchain technology enables peer-to-peer transfers to take place in a straightforward manner, without the need for an intermediary such as a bank (as in the case of cryptocurrencies) or a middleman in the agricultural field. By removing the need for a central authority, the technology shifts the way trust is established, placing it in cryptography and peer-to-peer architecture rather than an authority. As a result, it aids in the restoration of trust between producers and customers, lowering transaction costs in the agri-food industry.
Applications of Blockchain technology in Agriculture
Crop and Food Production
The agriculture sector faces numerous challenges in enhancing profitability when operating in unfavorable environmental conditions, including:
- catering to the rising population’s needs by growing more food with fewer resources
- lowering the environmental impact
- customer satisfaction is maximized
- allowing for transparency in the supply chain
- ensuring farmers get a fair wage
- coping with temperature changes
The food production industry is being transformed by blockchain and IoT. It aims to make farming a more profitable activity by using a simpler approach to maximize farming tools such as:
- the use of fertilizers
Supply Chain for Food
Watching the food supply chain is important for determining the origins of the food. It means that the food provided is safe to consume.
However, with the present state of the food supply chain, it is difficult for food suppliers and retailers to verify its sources.
Through the advent of blockchain technology, it is now possible to instill confidence and openness in the food supply chain environment, ensuring food safety for everyone.
How can a blockchain-based food supply chain help to combat food fraud?
With the aid of the following measures, the blockchain food supply chain will eliminate food fraud:
Step 1: Data is produced by IoT sensors, or data is stored by farmers.
Step 2: Distributions of harvested crops to food processing companies
Step 3: Processed Food Supply to Wholesalers and Retailers
Step 4: Consumers can follow the supply chain backward.
Managing Weather Threats
When growing various crops, farmers are often confronted with unpredictably changing weather conditions.
As a result, crop survival depends on the ability to forecast and track environmental conditions.
Many of the crops cultivated in the United States are unable to withstand floods caused by heavy spring rains. As the oxygen concentration falls below zero, plants struggle to perform life-sustaining functions such as water absorption, root development, and respiration.
Furthermore, the existing food chain ecosystems’ lack of clarity will lead to ambiguous and high surge pricing. Consumers had no idea why the crops were harmed by bad weather or what caused the price hikes.
Farmers and other stakeholders will be able to appreciate the price differences in the food distribution industry thanks to blockchain’s potential to provide traceability and transparency.
Farmers can easily receive crop insurance claims from smart contracts because approved parties can track weather patterns from the blockchain ledger.
Fairer Payment for Farmers
Farmers are currently facing several issues that make it impossible for them to be paid for their products, including:
Farmers usually wait weeks to collect full payment for their products.
Standard payment methods, such as wire transfers, frequently eat up a large portion of the farmers’ earnings.
Smart contracts built on the blockchain function by automatically initiating transfers when a particular, previously specified requirement is met, and without charging unreasonable transaction fees.
Blockchain in Agriculture: What Does the Future Hold?
Blockchain is a rapidly developing technology. And as it has started to transform many markets, it still has a long way to go.
However, it is becoming abundantly apparent that blockchain technology has applications in the agricultural sector. The global agriculture sector is currently worth more than 2.4 trillion dollars and employs more than one billion people. There is more room for creativity now than ever before.