The Use of Blockchain in Agriculture
The global distributed ledger technology, the blockchain in agriculture sector and food industry target size is estimated at USD133 million in 2020; it is anticipated to increase at a CAGR of 18.5% to reach USD9 485 million by 2020. This technology will enable a secured transfer of credits in real time, reducing the cost and time of trade in the agricultural sector and making trade easier between parties. In order to gain from this, agricultural companies need to develop an information system that will track and manage their assets. This will allow them to make informed decisions regarding investment and marketing strategies.
In the distributed ledger technology, the digital recording of financial transactions in the food industry is combined with the manual recording of product sales and inventory. The ledger is generated by computers connecting directly to the payment networks such as Visa and MasterCard. The transactions are then recorded digitally on a secure computer network and sent to the payment networks where they are converted into credits. The digital recording is done by the manufacturers of crops, making it easier for them to process payments.
The main advantage of the blockchain in agriculture is the greater degree of transparency and accountability it offers. Traditional methods involve physical counts of tons or sacks of grain traded each year. The results are often inaccurate and sometimes unreliable, since not all traders use the same systems. But with the implementation of the protocol, it has made for a more transparent and reliable exchange of commodities.
For stakeholders in the food supply chain, this means improved security for the food supply. They can monitor and trace shipments of their commodities and can trace where they are headed. The value chain is also simplified since there is less duplication of tasks and the risk of duplication is minimized. For example, if a shipment is not delivered on time, the company does not have to pay additional charges for the re-delivery. In addition, there are fewer losses due to delays and breakdowns as the protocol enables rapid data transfers.
There are also several incentives for companies and other stakeholders to adopt the use of the Blockchain in agriculture. The improved quality control and traceability can allow companies to provide better services. They can adopt the best practices from other industries such as finance and banking, to apply the same principles in the food chain.
Companies involved in the agricultural industry should be aware that a streamlined supply chain system plays a crucial role in delivering sustainable growth. If companies do not take the time to improve the quality of their goods and services and adopt the best practices in the agricultural sector, they will find their efforts going in vain. It is important to note that the use of the technology will not make farmers immune from crime or corruption. However, it will make the business more transparent and therefore improve its reputation and credibility both at home and abroad.