Blockchain Technology in Agriculture

- Overview

Food and agriculture -- consisting of complex ecosystems that depend on each other -- are areas ripe for adoption of blockchain technology. Increased levels of transparency and sharing are critical if food and agriculture is to fulfill its obligations and opportunities. Blockchain is an important tool to protect this ecosystem and ensure everyone benefits. 

With the growing popularity of bitcoin and other cryptocurrencies, you may have heard a lot about blockchain technology, but it might be surprising to find it in the agricultural sector. 

- Building Trust throughout the Agricultural Value Chain

Traditionally, we have used ICT (Information and Communication Technology) as a database to track data and maintain the flow of information. Blockchain technology is a new way to power these databases. They grant permissions to all network participants rather than individual servers and administrators. Multiple parties can then access and verify new additions to the database, increasing security and reducing the potential for corruption. 

Blockchain technology is also more secure than traditional techniques, as all parties must come to a consensus to put a secure block on top of encryption. It becomes extremely difficult to tamper with any system. 

Building trust is critical throughout the agricultural value chain; there are widespread concerns about data sharing within the industry. Using blockchain-based solutions can improve data transparency and, more importantly, protect upstream and downstream data usage.

Agricultural technologies such as precision agriculture, field maps, IoT sensors, vertical farming systems, location intelligence and crop management software are enabling agribusinesses to achieve better results in food production and overall supply chain management in agriculture. 

- Blockchain Technology in Agriculture

A blockchain is a ledger (also known as a block) of records stored across a network of many computers. The ledger is protected with cryptography to ensure that once written, each block cannot be changed. Blockchain can be used to manage many types of data, such as online transactions or documents such as shipping manifests or veterinary records. Given the myriad items and valuable transactions in everyday food and agricultural production, blockchain is an ideal element for this industry.

The increased demand for food has brought new problems, such as counterfeit products that threaten the food supply chain at various stages. Lack of transparency and inefficiencies disadvantage farmers and consumers. Ultimately, blockchain farming and distributed ledger technology (DLT) have the potential to increase efficiency, transparency and trust throughout the agricultural supply chain. Agricultural supply chain blockchain can empower all market participants by building trust relationships.

[Farmer Market in China - Wikipedia]

- Track and Trace

Currently, large tracts of food and agricultural processes are not shared. This opacity hinders growers, manufacturers, retailers and ultimately consumers, as no one can clearly see the actions and value contributed by the other. Blockchain has the ability to help increase trust and facilitate the sharing of this information for greater clarity.

The visibility generated by solutions using blockchain can improve understanding, tracking and collaboration across all sectors of the industry, which in turn can enable players to meet economic, environmental, health and business needs, all of which are increasing . With increased clarity, the industry can finally see actual production costs, and food valuations will be more in line with the actual cost of inputs and labor.

Data silos fail to provide insights that affect everyone in the food production process because there is no ability to analyze, collaborate and solve problems together. Most of the problems are caused by poor data transparency. This can lead to distrust, which means agriculture and food production accept inherent risk by continuing to use data methods that fuel data silos.

However, the transparency of blockchain provides a platform for the food and agriculture sector to share business interests. The ability to detect and respond to supply chain vulnerabilities protects growers, input suppliers, manufacturers, retailers and consumers. This enables better optimization and greater accuracy, both essential as food and agriculture grapple with unpredictable yields due to climate change, new food source regulations and changing customer expectations.

- The Growing Need for Transparency

Before the Covid-19 pandemic, China was hit by a "zombie meat scandal" in which authorities confiscated 100,000 tonnes of stale meat. In 2016, the European Union (EU) reported more than 700 food-related risk alerts. Covid-19 has increased consumer awareness and the need for high visibility across the food chain from retailers and producers. 

By putting every transaction or input on a blockchain ledger, the risk of counterfeit food labeling can be reduced. Blockchain can only provide more optimization and transparency in food and agriculture if the sector embraces data sharing. 

Codes of conduct, such as the EU guidelines, are positive developments in ensuring farmers trust digital technology; the use of blockchain can help them understand the value of data. The World Economic Forum (WEF) believes blockchain will be critical to the industry if it is to "address consumer demand for transparency and support governments' goals of protecting citizens from fraud." “This can be achieved by verifying the origin of entered information and increasing automation to reduce the risk of human error and prevent data from being deleted,” WEF added. 

Blockchain in food and agriculture is not science fiction; the technology is already in use and is playing an important role within the industry. Major food and retail companies have partnered with leading technology providers to develop and deploy blockchain.

While food and farming is a complex ecosystem, blockchain provides a transparent ledger to provide clarity and is critical to the future of the industry. The key to blockchain success is bringing together players in the industry value chain to collaborate and having a platform to facilitate this.