Blockchain And Its Applications In Agriculture
Using blockchain technology, the provenance of food can be traced, aiding in the development of reliable food supply chains and increasing consumer confidence in the industry. It facilitates the use of data-driven technologies to increase Agricultural productivity through secured data storage.
Additionally, when used in conjunction with smart contracts, it allows payments to be made between parties in real-time when data on the blockchain changes.
Farming is increasingly dependent on data and information as a means of boosting productivity and reducing environmental impact. Using Information Technology (IT), data collection, storage, analysis, and use in agriculture have all been made easier and more efficient. To make better farming decisions, agricultural practitioners and farming communities have access to the most up-to-date information possible.
Table of Contents
Importance Of Blockchain Technology To Agriculture
Using blockchain technology, it is possible to conduct peer-to-peer transactions that are devoid of a third party, like a bank in the Agricultural sector. Instead of being centralized, the technology shifts the focus to relying on cryptography and peer-to-peer architecture for trust. As a result, the agri-food market’s transaction costs may be reduced because of the restoration of consumer confidence in producers.
Also, the use of blockchain technology makes it possible to track anonymous transactions securely. This means that fraud and malfunctions can be spotted more easily. In addition, smart contracts allow for real-time reporting of issues.
Due to the complexity of the agri-food system, this helps address the issue of tracking products in a wide-ranging supply chain. There is a great deal of concern among consumers, the government, etc. about food quality and safety.
All parties involved in a transaction are made aware of each other’s identities through the use of blockchain technology. The entire cycle of farm produce, from conception to implementation can be tracked using the blockchain. To develop data-enabled infrastructure and insurance solutions that bring about smart farming, it is important to have reliable data about the farming process.
Applications Of Blockchain Technology To Agriculture
1. Smart Agriculture
Many modern data collection and analysis technologies, like sensors, unmanned aerial vehicles (UAV), and machine learning, are the tools useful in smart agriculture. The development of a comprehensive security system that facilitates the use and management of data is a critical component of smart agriculture.
Traditional data management methods are prone to data irregularities and malicious attacks because data management is centralized.
Data and information generated by various actors and stakeholders throughout the entire value-added process of producing an agricultural product, from seed to sale, are stored using blockchain technology.
The technological barrier for farmers to participate in blockchain-based smart agriculture is not reduced, if not increased. For uploading to the blockchain, large farmers are more likely to provide reliable data than smallholders.
Blockchain-based smart agriculture is more likely to be used and benefited by large farmers. Large farmers and smallholders could be at a disadvantage as a result of this.
2. Food Supply Chain
Food supply chains have grown longer and more complicated than ever before as a result of increased globalization and intense market competition. Factors like food safety, food trust, and food traceability pose major risks to the economy, health of human beings, and society at large.
Blockchain technology enables a more transparent food supply chain, which creates a seamless communication path between customers and producers. It helps consumers by removing barriers to the exchange of goods, which strengthens consumer trust and confidence in food safety.
The full potential of blockchain technology in the food supply chain can only be realized if all parties involved in the supply chain participate and collaborate. In the food supply chain, blockchain technology provides transparency, security, and decentralization, making it possible to track information about food quality throughout the supply chain.
Consequently, there is less opportunity for food fraud, and the associated costs are reduced throughout the supply chain. Producing companies, consumers, and government agencies can all benefit from this.
3. Agricultural Insurance
Weather-related risks can be mitigated through agricultural insurance schemes. An insurance premium is paid in advance of the cropping cycle to ensure that farmers will be reimbursed for any losses that occur on their property.
A farmer’s financial exposure to weather extremes, i.e. losses caused by weather extremes, can be managed to some extent thanks to the insurer taking on all of the insured risks.
Agricultural insurances differ in terms of how losses are assessed and how payouts are triggered. Indemnity-based insurances are those that pay farmers after an expert on the farm evaluates the damage.
More specifically, farmers and insurers have asymmetric information about the riskiness of agricultural production and production practices. What farmers should know is that both of these incentives encourage adverse selection and moral hazard.
Furthermore, farmers’ growing reliance on index insurance as a risk management tool is very important. Index insurance can benefit from two-dimensional blockchain improvements.
Firstly, a smart contract that is triggered by weather data can make timely and automated payments. Secondly, a smart oracle can automatically integrate weather data and other data sources, such as plant growth information or data collected by farm machinery, to improve basis risk reduction and make the index determination and payout process more efficient.
4. E-Commerce Of Agricultural Products
Delivery and logistics are the most critical issues for e-commerce companies, particularly in developing countries. Many of these issues may be addressed properly by blockchain technology, which includes information security, supply chain management, and consumer confidence.
Details like seeding, watering, fertilization, and de-worming have all been recorded before the goods are placed on the platform. The basic knowledge of producers, transportation logistics, storage days, and storage temperature is also provided by these guides. There is no need for customers to do anything other than scan the QR code on the product they are interested in.
Using this method, consumers can regain confidence in agricultural products purchased via the internet and the companies that supply them.
Currently, the use of blockchain technology in e-commerce and agricultural product trading is at an early stage. When it comes to uploading data into a blockchain, for example, there is a problem.
The Internet of Things (IoT) may provide a solution in the future. In addition, the distributed, non-tamperable, and traceable characteristics of blockchain must be explored more widely and deeply to improve agricultural production and trade productivity, and efficiency.
The advent of blockchain technology in Agriculture is still in its early phase, but several factors could prevent farmers in developing countries from participating in a decentralized blockchain-based system.