How can the agricultural sector reap the benefits of blockchain technology

By Dileep Seinberg

Agriculture employs approximately 2 billion people, or 26.7% of the world’s population. By 2027, the agricultural market is estimated to reach $19 trillion. In many countries around the world, agriculture is a large part of the economy and provides many jobs. By 2030, it is expected that the demand for food will increase by 35%. This will necessarily involve more efficient production systems to satisfy the needs of a growing population.

The industry has witnessed a number of changes as a result of the advent of new technologies, and there are still many chances to put innovative solutions that help Industry 4.0 into practice.

Agriculture and blockchain technology: potential benefits

The agricultural sector is constantly finding solutions to the complicated problems of agriculture and distribution. They have a significant need for supply chain intelligence, especially technology that facilitates the traceability of essential product data throughout the supply chain for all affected businesses. Currently, it is not easy, accurate or efficient to determine the origin of an agricultural product.

Blockchain can be important in this situation. Blockchain technology has all the necessary components to become a genuine problem solver. On the contrary, many existing technologies are either inadequate or prohibitively expensive. This technology uses a distributed ledger to store data securely and immutably. These ledgers are resilient because they are shared among many users, have no single point of failure, and can be transparent to all users depending on the design. As a result, blockchain technology eliminates the need to formally identify both parties to the transaction, resulting in significant cost savings. With the help of this technology, supply chains can be managed more efficiently, prices can be set fairly, transaction costs can be reduced, and so on.

Optimization of the supply chain

Blockchain may have the greatest potential in agriculture, where it can be very beneficial for tracking the supply chain network of food products. This technology appears to have the greatest potential to improve food efficiency and transparency and overall traceability. Blockchain technology provides a reliable method of tracking transactions between unidentified participants. This makes it possible to identify fraud and problems quickly. The use of smart contracts allows for real-time problem reporting. This helps to solve the problems of monitoring products in the extensive supply chain caused by the complexity of the agri-food system. The technology thus offers solutions to end users, the authorities and other stakeholders concerned with food quality and safety. The collection of reliable data is made easier by blockchain technology, which provides transparency among all parties involved.

Product tracking and origin tracking

Using a blockchain-based ecosystem for tracking, settling and distributing agricultural commodities, sellers can be sure that their customers are receiving exactly what they ordered.

If a supplier claims that the tea leaves are ethically sourced from Assam, for example, this can be verified by tracing the path from farmer to consumer thanks to the blockchain, which records every step of the transaction process. From the consumer’s perspective, using a transparent decentralized ledger can give people confidence in the origin and production processes of their food. Instead of relying on the current systems, which can be easily manipulated, they can trace the consumer food chain to gain a better understanding of where the food came from, when it was made and the efficiency with which it happened.

Lower transaction costs, fair pricing

Blockchain can make it easy for buyers and sellers to agree on a fair price for a product. Commodity buyers can communicate directly with their suppliers and make payments via mobile devices thanks to blockchain technology. This can guarantee that farmers are paid fairly for their goods and that dealers are charged fairly because it will save dealers money on agents. Finally, this technology enables producers, retailers and farmers to defend premiums for specific commodities.

Reduction of human error

In agriculture, blockchain technology can be used to reduce material and financial losses due to human error. Adopting blockchain technology enables the automation of labor-intensive tasks, reducing the number of resources that are wasted or misused. In addition, Blockchain can provide farmers with information about infected goods throughout the supply chain, such as type of crop and place of origin. By examining this data set in more detail, the farmer can try to reduce future losses.

Improves financial management on the farm

The agricultural industry can face difficulties when it comes to handling information about finances, accounting and administration. This can also present challenges when setting competitive prices for the products. The management of this data can be done more efficiently, in real time, and with greater transparency and accessibility by implementing blockchain. Farmers can find an ally in the blockchain’s ability to maintain immutable records.

With blockchain technology, a new era of decentralized transactions is on the horizon. Huge amounts of data can now be instantly recorded, verified and shared using technology, which can completely change many industries. Specifically, the agricultural sector will greatly benefit from the implementation of this technology due to its potential applications in food tracking, supply chain management and various forms of payment. Increased information accuracy and transparency promotes greater trust between both parties, reduces costs and increases productivity. These benefits suggest that blockchain technology could be the key to modernizing agricultural trade.

The author is the founder, AgroChain and MuffinPay

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