Agribusiness is one of the areas with the greatest potential for improvement through blockchain implementation.
Through this channel, we have addressed the various applications of blockchains. We have seen that fields such as finance, inventory and supply chain management, gaming, sports, healthcare and insurance are undergoing revolutionary transformations.
By comparison, however, the agrarian sector still lags far behind in this wave of change, despite its immense potential for financial gains and process improvements.
Agriculture is one of the most fundamental areas of human production, existing since prehistoric times. The way we grow our food has been gradually modified over time, according to the needs of each region.
Advances in science, fertilizers and agrochemicals, and our understanding of soil and large-scale plantation models have made possible the industrialization of traditional agricultural processes.
The use of data technologies in agribusiness
Currently, the agricultural sector makes use of information and communication technologies, using information data in the face of demands for increased production and sustainability. Using these resources improves the efficiency of data collection, storage, analysis and use in agriculture. Some application cases are:
- remote sensing data of soil conditions, which aid in crop management;
- mobile devices, such as smartphones, reduce the cost of information and open up farmers’ access to markets and financial institutions;
- the application of GPS technology, with maps and satellite images that allow the management and inspection of plantations and agricultural machinery.
The progressive use of information technologies has provided considerable advances in the profitability of agribusiness. However, there is an inevitable central problem associated with these advances: the acquisition and use of data through a biased bias, which can benefit the particular interests of those who have control over that topic.
This occurs, for example, when stakeholders take part in a multi-parameter decision and are influenced by the interests of the organization they represent. The solution to problems like this comes through blockchain technology.
The potential of using blockchains in agribusiness
Data recorded through blockchains is shared on a P2P network, which works like a read-only ledger. They establish permanent records of the generation, transaction and consumption of data, so that every new record needs to be validated by the network nodes before composing the sequence.
This architecture also prevents modification of this data, making it tamper-proof.
In the agricultural sector, the application of this technology brings a series of benefits, among which are:
- Feeding the aforementioned problems of reliability and bias in the collection, use and transfer of data. This enables transparent decision-making based on this information;
- Implementing blockchains eliminates the participation of intermediaries such as banks, financial institutions and resellers. It decentralizes the production chain and allows direct P2P transactions, which drastically reduces costs and benefits both producers and consumers;
- In supply chain management, the use of blockchains allows the tracking and confirmation of the origin, quality and path taken by food products, something of paramount importance for consumers, governments, etc. It also allows the detection of fraud and problems in real time, with the help of smart contracts.
There are several startups launching innovations for the agricultural industry, with specially architected solutions for transactions, supply chain management and product origin tracking. Market value estimates for these agricultural blockchain innovations were, in 2017, $41.2 million.
This figure is expected to rise to US$430 million by the year 2023, an average growth rate of around 47.8% per year.
The development of new innovative solutions could bring even more possibilities for modernization to agribusiness. Some examples already in development are:
insurance for plantations: The processes involving plantation insurers and farmers are extremely complex and bureaucratic, many prone to fraud and quite time consuming.
The use of systems with smart contracts on blockchains can make this very easy, in two ways: automating the procedures for carrying out insurance and redeeming values in case of losses, and enabling the automatic verification of conditions for redemption, such as condition histories. weather and remote sensing data.
smart agriculture: Smart agriculture, or smart farming, comes from the marriage between agribusiness and the Internet of Things (IoT). This includes technological advances such as machine learning and devices with sensors for data collection and analysis, as well as the use of drones and other unmanned aerial vehicles.
This type of resource involves the need for a unified, efficient and automated security and management system. Blockchain systems are currently the safest and most effective solution on the market.
Blockchain technology promises to take agribusiness a step further, automating processes and reducing costs. The implementation of these new resources should happen especially in large-scale plantations, producing commodities for world trade.
In this year and beyond, we will see a sharp growth in the development of custom blockchain applications for agriculture.
About the author
Alkudmani Fares holds a degree in Business Administration from Tishreen University, in Syria, with an MBA from Edinburgh Business School, Scotland. Brazilian naturalized. He serves as Business Development Manager Brazil at Kucoin.