The world is changing faster than ever, and nowhere is this change more evident than in the digital world. Innovations based on blockchain technology, such as cryptocurrencies, have disrupted traditional trading systems, creating a more decentralized, open-source, and secure ways to exchange money, or anything of value.
But perhaps even more impactful than cryptocurrencies is the technology that they are based on: the blockchain. This novel encryption technology has a vast potential that many are only beginning to realize. The technology also shows promise for agribusiness, especially in the food supply chain.
First, let´s explain what a blockchain is. Think of it as a ledger made of blocks of information (or anything of value). For each block a hash (a cryptographic value made of words and letters) is generated, and each hash contains a code (pointer) that links it to the previous block. Modifying one word in the ledger would generate a completely different hash, creating a unique, secure identity for each transaction.
In addition, each piece of information is stored on different computers, called Nodes, which decide by a majority vote the validity of the information. In other words, BCT allows us to have a verifiable record of each transaction (or any valuable information) that is subsequently stored in an immutable ledger.
Supply chains are the most promising application for the BCT, due to the increasing concern about the safety and sustainability of food on the part of consumers. For this reason, many certifications schemes have been developed, but these generally rely on third parties and centralized databases that are exposed to fraudulent activities and the adulteration of data. In this case, the blockchain not only facilitates the sharing of data between actors, but also creates a transparent and trustworthy model for consumers.
Another promising application is agricultural insurance based on smart contracts, which could protect farmers from floods and droughts. Registering land via BCT could help prevent fraud and generate permanent records of each property transaction. In the fisheries and forestry sectors it could be used to control illegal fishing and illegal logging respectively, by registering each step of the process in a blockchain.
BCT could even help improve the traceability of subsidy programs. James Lomax, a UN Environment Programs (UNEP) Food Systems expert said, “We can reprogram them (subsidies) to regenerate agriculture and restoration, leading to long-term food security and nutrition. There is amazing new technology which allows large funds to help small farmers—through blockchain, for example.”
Blockchain technology is also attracting interest in India, where a new project is looking to implement BCT in the Maharashtra, the second most populous state of India. Prime Minister Modi has praised the technology many times and about the future he said that, “There will be an entire network of people, including farmers, regulatory bodies, processing units, etc., in the blockchain. All this will be possible with the help of regulation and consensus systems known as smart contracts. There will be less scope for corruption.”
The strong need for a reliable and hack-proof form of record-keeping is present in many industries, and the future looks promising for the BCT in agribusiness. The fishery and forestry industry could control illegal trading, the insurance industry could provide reliable and low-cost agricultural insurance, and the food supply chain could assure consumers trust. As the agribusiness sector moves forward, it stands to benefit greatly from blockchain technology.
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