Application of blockchain technology in agriculture
- 16. May 2019
- Posted by: Blockruption Team
- Category: Applications
What is blockchain?
In order to understand how blockchain technology can be used in agricultural industries, it is important to understand the fundamentals of how blockchain works.
Blockchain essentially uses a decentralized network of hundreds or thousands of computers to independently verify a specific transaction. Each computer verifies the data individually, creating a record block that is linked with all the other record blocks thus creating the blockchain.
The information stored in the blockchain basically exists in a shared and continuously reconciled database, so it is impossible to corrupt. This is great for industries that require a multitude of third parties to work together, as they can share data without fear that it is being manipulated or corrupted.
How can blockchain be applied to agriculture?
Blockchain technology can offer solutions to many of the issues currently found in the agricultural industry. There are many complications in the industry due to a large number of stakeholders that have to work together, ranging from farmers to huge food corporations. In addition, there are many steps in the supply chain from getting food from the farm to the end consumer.
By using blockchain, these stakeholders can trust the data they are seeing without having to explicitly trust the source it came from, thus improving supply chains and increasing efficiency.
One of the biggest applications of blockchain in agriculture is traceability. Blockchain technology allows companies to track products all the way back to the source, and since the data cannot be corrupted there is a high level of data integrity.
This is important, for instance, if there were to be a food recall. Companies could easily trace the origin of the contamination to prevent illness and save money on product recalls by confronting the problem right at the source. In addition, it ensures transparency that consumers are getting the safe and eco-friendly food products they are paying for.
Another great application of blockchain in agriculture is commodity management. There are normally long lags in payment times due to the amount of data that needs to be managed, but through the use of blockchain, data could be verified instantly. This would allow payments to be remitted much quicker.
Examples of blockchain in farming
A great example of blockchain being used in farming relates to coffee. There is currently a program that tracks coffee trade worldwide, from the farmer all the way to the consumer. This allows the farmer to receive a fair price for their beans since they receive payment immediately when their beans are sold. In addition, consumers can trace exactly where their beans came from and how much they actually cost.
The Louis Dreyfus Co. made use of blockchain to track sales of U.S. soybeans to China. They were able to trace contract documents, letters of credit, government certifications, and other important data points and match them in real time, reducing the need for manual checks. As a result, they were able to cut the overall transaction time in half.
A similar blockchain called the BeefChain was created by Wyoming cattle ranchers in order to trace exactly where their beef was being sold. This helped them increase transparency within their supply chain and recapture value from third parties along the chain.
Introducing blockchain in your processes
As you can see, blockchain technology can give you the power to transform inventory management, transmit real-time data about livestock and crops, and improve the agriculture supply chain’s efficiency and effectiveness. In other words, almost every part of an agricultural operation would stand to benefit from the implementation of blockchain.
In order to stay ahead of the competition, it is important to stay informed about different applications of blockchain technology in the industry. Hire a consultant who can help you analyze your current processes and determine where blockchain technology makes the most sense for you.