The Advantages Of Blockchain And Applications For Hi-Tech Farming
As we make leaps forward in creating innovative technologies, we expand the commercial applications for them. These days there are few industries untouched by digitization. Continuing developments in technology have led to the advent of hi-tech agricultural farming. Hi-tech farming is an all-encompassing term for farming processes that use innovative technology to improve quality and efficiency of production.
Cutting-edge science and technology have been used to increase yields in farming since humans first domesticated plants and animals for consumption. Remember, processes like selective breeding were innovative for the Romans and revolutionized farming methods of the time.
Today hi-tech is revolutionizing the farming industry too, it just looks a little different than it did to the Mesopotamians. An example of hi-tech farming today would be the use of a drone carrying image recognition software. The software is programmed to recognise weeds and spray them with a short burst of pesticides. This process prevents the need for spraying an entire field of crops with pesticides, limiting expense, and environmental impact.
Hi-tech farming techniques such as the aforementioned process align with trends in consumer preferences. Consumers are willing to pay more for products with a higher perceived value. In this case, the limited harm to the environment, or lower risk to health from products with minimal contact with pesticides.
So how many blockchain technologies create new avenues in hi-tech farming? For some readers, it may be beneficial, to begin with, the question: What is blockchain? And why do experts believe it has the power to disrupt markets? The following establishes how blockchain functions, before describing use cases for the technology within the farming industry
What is blockchain?
A blockchain is an ever-growing record of transactions, (each individual transaction is represented by one block), linked using cryptography. Successive blocks contain cryptographic codes of the block before them in the chain. A block also contains a timestamp and data pertinent to the transaction.
To this day the ‘inventor’ of the first blockchain is unknown (although it is claimed by a person using the pseudonym Satoshi Nakamoto). The idea of blockchain was conceptualized to prevent timestamps from being tampered with, and as blockchain design prevents data from being modified. Once recorded, the data of an individual block cannot be altered without consensus from the majority of the network.
The blockchain operates as an open, decentralized record of transactions between parties that is verifiable without the requirement for a third party (rather, its authenticity is verified by the entire community). Blockchain eliminates the need for third-party verification by use of a peer-to-peer network.
Blockchains are therefore considered to be a secure way of storing information. For this reason, they are most commonly associated with financial services (and in fact blockchain was ‘invented’ to facilitate records for the cryptocurrency bitcoin). Blockchain has many additional applications, however, and their use in hi-tech farming is now being considered.
Facilitating international trade
Though bitcoin may be the most well-known form of cryptocurrency, there are currently over 1200 cryptocurrencies in circulation globally. Some are universally used, however, the majority have specific use cases or are limited to a specific industry. Blockchain could be used to develop a cryptocurrency for farmers, as successfully demonstrated by the company Agridigital, who used blockchain to securely exchange grain.
This application is useful in the farming industry as agricultural supply chains become increasingly globalized. In this case, blockchain would have the benefit of decreasing the losses to profits incurred when taking part in international trade.
Transactions taking place on a peer-to-peer network are immediate and without intervention, which is rarely the case when settling payments across international borders using traditional banking methods. There is also a much lower transaction fee and commission associated with blockchain transactions. Trade is also not affected by fluctuations in exchange rates and interest rates when using one digital currency.
Building consumer trust
As the trend towards conscious consumerism continues, we as consumers in the developed world are becoming increasingly aware of the impact of our lifestyles. Our actions have a profound effect on the ecological, social, and political environment in our own countries and others around the world. Consumers are now ‘voting’ with their dollars for products and services they perceive to be better for the planet.
This has given rise to a variety of products, from ‘fair-trade’ to ‘organic’ to ‘free-range’, and consumers are willing to pay more for sustainably sourced goods. However, this increase in interest in the origins and contents of products presents a problem for retailers when considering the global supply chain. The products consumers buy in the supermarket have been manufactured via complex international supply chains, and labeling of these products can often be misleading, as evidenced by reporting the BBC did during the 2016 World Cup.
In truth, these supply chains are often so intricate that the retailers themselves do not know the origins of their products, especially if the supply chain is not vertically integrated. Use of blockchain is easily able to solve this issue. By design, information held within a blockchain cannot be altered, were blockchain technology to be fully incorporated into the supply chain it would provide full and reliable information detailing the origins of products.
For retailers and consumers alike, this would reduce the risk of food origin scandals such as the horse meat burger scandal and the shrimp slave labor scandal that have plagued the industry in recent years. The concept of using blockchain to tag produce along the supply chain has been successfully demonstrated by the company Provenance. Provenance tracks sustainably caught fish from the boat to the restaurant, every step along the supply chain.
Supporting small-scale farmers
Many small scale farmers, especially in the developing world, miss out on opportunities to sell to large distributors because they are not able to sufficiently evidence their trustworthiness. Inability to establish trust is often derived from the “narrowness of the system” that qualifies a company, such as those surrounding the labelling of products as fair-trade.
Blockchain mitigates these limitations by creating accountability among all members of the supply chain, therefore reducing the need to evaluate individual members by a list of arbitrary standards. This gives small farmers and those in some of the least developed countries greater access to large global markets.
Blockchain has also been used to encourage small farmers to form cooperatives in developing countries, allowing them to command higher prices for their products. Similarly to the previous application, blockchain facilitates trust between these farmers by providing a secure and transparent record of transactions.
Best known for its association with cryptocurrency, blockchain has many applications for a broad range of industries, and this is only likely to grow in the future as we continue to digitize as a society. Whilst its adoption has been limited thus far, the advantages of blockchain cannot be understated.
Within the agriculture industry, blockchain has the power to build trust for consumers and farmers alike, and increase transparency throughout the whole supply chain, however, it also has significant drawbacks this early in its lifecycle. Cryptocurrencies are still extremely price volatile, due to the lack of a connection to any tangible or intangible assets. As such, their use should be met with caution.
Farming is often misjudged as being an old-fashioned industry, inert in the face of global change. This point of view is inaccurate, however, and the use of innovative hi-tech in farming goes a long way to prove that. One thing is certain: as the global population continues to grow, we must continue to find ways of increasing yields and maintaining food security, all the while protecting consumers and the environment, and blockchain is able to contribute towards these global necessities in a number of significant ways.
About the Author: Andy is a UK native, living and studying in Copenhagen since 2017. Having lived as an expat most of his adult life, Andy has an interest in geopolitics and intercultural communications. He is currently studying a Bachelor’s degree in Marketing and International Sales and works as a content creator at Valuer, a company connecting resource strong corporates and enterprises with agile startups.