Blockchain Technology in Agriculture
By Ganesh Prajapat*
Blockchain is an emerging technology that will change the scenario of current Agriculture. Agriculture is a primary requirement of human existence. Nowadays, the agriculture sector is facing lots of problems due to poor data integration. E.g. somewhere people are doing over production of crops and somewhere people are dying due to hunger and malnutrition. But, the reason behind this is a problem with the integration and interpretation of information. Various organisations are working on data collection for the agriculture sector but unfortunately, the collected data is not integrated properly as they are centralised in different organisations.
When the new crop is sowed, it takes 4 to 5 months period to get ready for harvesting. Due to poor storage facilities and reduced price for their produce, farmers are left with no option other than throwing it on roads in rage. But the irony here is no one gets that produce for free! This 4 to 5 month time is sufficient to take a decision about storage and demand generation. In addition to that the government should also come up with “crop-friendly” policies to ensure that the produce is consumed properly and timely.
So, here the question pops up – How can we solve this multitude of problems in agriculture via Blockchain Technology? But before that it is better to understand the concept of Blockchain Technology.
What is Blockchain Technology?
The Blockchain is a digitalised decentralised public ledger that is verified by its own users. Blockchain gives a clear detail about the transfer of information from one block to another block. Blocks are the points of transitions with clear digital identities. Each block has clear information from where this information is coming and where this information is going. The information entered into the blocks is visible to everyone in the Blockchain. It can’t be tampered or hacked. Blockchain provides freedom to users to approve or reject the information. Once the data is validated, it gets recorded into blocks, and after this, it cannot be altered by anyone.
How Blockchain Technology Benefits the Agriculture Industry
In agriculture, there are three major stackholders such as; the producer; the value addition person; and the end consumer. If we integrate all the real-time information, then it will become very easy for all stackholders. With Blockchain technology, we can put all the information about the entire cycle of agricultural events onto Blockchain, and this will turn out to be a transparent and trusted source of information for the farmers and retailers.
Also, there are three major problems, which lead to price inflation or deflation in agriculture such as; overproduction; lower production; and wastage. All of these problems can be solved by Blockchain technology. Blockchain technology operates on peer to peer basis, e.g. a consumer of cumin from Europe can directly contact with the producer of cumin in India.
Problem of Overproduction
Generally, the farmer is not aware of the consumer’s requirement. He starts cultivation on the basis of current price and available resources. E.g. if last year’s prices of tomato was $1.5/kg then this year everyone will grow tomatoes. And after four months due to several reasons such as; overproduction of the crop, unavailability of the storage facilities, and lower market prices, farmers will throw tomatoes on roads. Here, Blockchain technology will help them with real-time requirements of current sowing. For example, if there is a requirement of 100 units of wheat and all the farmers of the world have sown seeds or done the cultivation which is sufficient for production 100 units of wheat. And once this data will go in the system, will a farmer do further sowing? The answer is simply NO. Will all seed companies produce seeds for production of 200-unit wheat? The answer here is again simply NO. Also, if the processing unit knows that this year’s wheat production in its area is 10 units, then will it prepare the warehouse for 20 units? The answer is NO.
Problem of Lower Production
If the consumption of pulses is 100 units in India and the farmer is aware that sowing for production of 90 units has already been completed. There is an opportunity to produce 10 unit of the pulse. Will the farmer produce 10 units of pulses? The answer is YES. Another example, there is information that the price of Ukraine wheat is $1/kg after importing it will cost $1.2 to Bangladesh. Cost of production of wheat is coming only $1.1/kg in Bangladesh. Will farmer from Ukraine produce wheat to export to Bangladesh? The answer is No. If Bangladesh has an opportunity to produce wheat at $1.1/kg, will the farmer of Bangladesh not consider producing wheat? The answer is YES. Blockchain operates on peer-to-peer direct communication between farmers to consumers.
Problem of Wastage
There is information in the Blockchain that in a particular region there is a production of 100 units of tomato but the storage facility is only for 20 units. What will a storage company do? It will develop a space for storage of tomatoes. There is information in Blockchain that 100 units of Potato are stored in “X” warehouse. So there will be no new production for 100 units and the existing stock will not be thrown on roads.
Blockchain also provides the details of agrochemical consumption. E.g. if there is information that this year’s consumption of agrochemical is lower than usual, it implies that the climatic conditions are going to be good and the production is expected to be more than normal.
These are just basic problems related to agriculture. It is also capable to solve other problems such as; climate; availability of farm inputs; and availability of agriculture finance; etc. E.g. a farmer needs finance from a bank; the bank can check whether they are giving finance for in-demand crop or for the overproduction of crop. The information in the Blockchain will make it easy and secure. As already reported there will not be manipulation of data, as well as the information can’t be put from the back date. If “X” is a farmer and he has sowed seeds for the production of 200 units. Later on, he can’t make an agreement to sell 250 units of that crop.
Blockchain technology is a future of world trade.
With this technology, world trade would come on one platform. With this technology farmers can get instant data related to the seed quality, soil moisture, climate/environment related data, payments, demand and sale price, etc. all at one platform. Blockchain gives transparency inthe supply chain by enabling farmers to get the real price for their produce. Also, it makes sure that no one would die due to the shortage of food. The information available in Blockchain will help one country with more produce to donate food to another country with less produce. With this global trade in agriculture, commodities will become very easy, as Blockchain will help in making a direct link between farmers and consumers/retailers. It will also empower small and medium farmers to better organise themselves and get together to reach the market without taking any help from middlemen.
In the end, the information in Blockchain is highly safe and tamperproof. This technology ensures an efficient supply of products, fair pricing, efficient supply and improved product tracking. Also, it enables farmers to do real-time management of their stock. This Blockchain Technology could help in alleviating rural distress in developing countries like India.
* Agribusiness Consultant; B.Sc in Agriculture and MBA in International Business; Agrotech Agriculture Consultancy, Jaipur (Rajasthan) India