From the day the Industrial Revolution began till now, the agriculture industry has seen a steady decline, and rightfully so.
Most agriculture farmers in developing countries make less than $400 dollars a month. On top of that, oftentimes they are responsible for feeding their family, sending their kids to school, and maintaining the land for the next crop. Now, you may be wondering “How that is possible when grocery prices have increased over 10% in just the past year?”. What’s missing in this story is the intermediaries. These “middlemen” make sure that farmers stay poor, they stay rich, and consumers continue to spend $100s of more dollars a month for their basic necessities. Consumers may be able to get subsidized food, but farmers in developing countries don’t have these privileges, so what can we do to help them?
This brings me to blockchain technology. Blockchain tech works on tackling the food supply chain’s greatest problem, the hassles of getting farmed produce to consumers and making sure that the farmers are not only fairly, but well paid for their hard work. There are too many people involved in the supply chain and that makes it difficult for there to be accurate record-keeping on both sides of a transaction, making these deals more susceptible to errors and discrepancies. Now, you may be wondering “How can such a high-tech system like blockchain help farmers get more profit?”, Well, the answer is Smart Contracts and Decentralized Autonomous Organizations (DAOs), but before we dive into those, let me give you a little overview of what blockchain technology actually is.
Quick Overview
To start, what really is blockchain technology? Essentially it’s a decentralized digital registry in which every user in the network holds an exact copy of what’s shared. Say for example it’s your birthday and you want to gift yourself an Ether (Ethereum’s cryptocurrency). You will start by initiating a transaction on Ethereum’s network. Miners then solve puzzles to add a new block of transactions onto the blockchain. Ethereum then uses a Proof-of-Stake system in which validators get to create new blocks based on how many coins they have and are willing to put up as “stake” or collateral. BOOM! You now have an Ether! This transaction will then be available for everyone on the Ethereum network to view.
Now as odd as it may sound for everyone to be able to see your transaction, the transparency of blockchain is a fundamental part of its foundation. This honesty contributes to blockchain being a trustworthy and secure technology. Most of all, it holds its users accountable. This accountability factor is something we lose when goods from small farms in developing countries like Ecuador or Vietnam are exported to countries in North America for a large sum of money. The kicker is that the farmers cultivating these in-demand crops are still living below the poverty line. In fact, some rice farmers in the Philippines make just less than $140 per harvest. This is where blockchain can really make a difference!
Smart Contracts
Let’s start with Smart Contracts. These are contracts that get automatically executed when predetermined conditions are met. An unavoidable issue with farming in developing countries is that it is common for there to be no traditional banks nearby for individuals to make and execute important financial decisions. This leaves them at the mercy of whatever cash they can make from people willing to make the commute out to the farm. That is why blockchain tech is so revolutionary! With the click of a few buttons, each and every farmer can make fair agreements in terms of financial compensation, make sure that these agreements are upheld, reach buyers from various places, and trace the whereabouts of their goods for quality assurance. The blockchain stores all this data, ensuring accountability. To put it more simply, smart contracts are like digital documents with brains because they know what to do and exactly when to do it.
Step-by-Step Guide
The greatest way to showcase smart contracts in the agriculture industry is by educating them and making them see the changes that new technologies can give them. Here is a step-by-step guide on how farmers can create and use smart contracts!
- Pick a platform — Choosing a platform that suits your goals is super important. Some of the popular options include Binance Smart Chain, Tezos, and most notably, Ethereum.
- Digitalize Your Contracts — Transform your traditional contracts into smart contracts. Create the terms and conditions of the agreement, including pricing, delivery schedules, and quality standards.
- Tokenize your product — Tokenizing your agricultural products would ensure traceability and make for easy tracking on the blockchain.
- Start selling— Create or become a part of a decentralized marketplace on the blockchain.
- Create a payment method — Cryptocurrencies are the best for making sure transactions are transparent and fast.
- Quality assurance — Integrating mechanisms of quality assurance would guarantee that the products meet the predefined standards. The smart contract would then execute the payment.
These are just the basic steps that can be implemented, however, like all things on our planet, technology is also ever-evolving. That means, as time goes on, these smart contracts can and should be modified.
The decentralized market opens up farmers to a whole new realm of possibilities and the easiest way to get the most favourable outcomes is by leveraging the accessibility of blockchain through the use of smart contracts.
Trailblazing DAOs
The market for blockchain tech in the agriculture industry is expected to grow exponentially in the next decade. In fact, in 2022 the market was valued at over $285 million dollars and is projected to exceed over $400 million in market value, by the year 2031. These numbers truly validate the push for blockchain to be used in this industry.
Below are some companies that have been making significant progress in jumpstarting the transition to a more blockchain dependant supply-chain.
OriginTrail is a company that provides knowledge to individuals looking for transparency and risk mitigation. This DAO aims to leverage their in-house AI chat search network called ChatDKG (Chat Decentralized Knowledge Graph) and Knowledge Assets to enable users to have insight into any aspect of their supply chain, instantaneously. According to OriginTrail “The system ensures trust, connectivity, and privacy, establishing a web of interconnected and verifiable Knowledge Assets.” It allows farmers to stay to make sure that the supply chain is adhering to standards, and that data is kept safe. They’re like the soil that helps your plants stay nutrient-rich!
AgriDigital is an Australia-based organization that has been able to digitize the management of grain, one of the top-traded commodities, for over 11,000 businesses globally. What makes them so unique is their approach to managing farmers. We all know how difficult it is to cultivate crops, and that’s why AgriDigital takes care of the management. They take care of everything from inventory to contracts to real-time data and insights. This helps farmers make sure that they get good compensation, and that they are well-managed. It’s like growing two fruits with one seed.
GrainChain is a company that provides agribusinesses with a suite of various products that can help them tackle the specific challenges they may have. This is so that these businesses can generate as much profit as possible, and not have to sacrifice their capital to middlemen that end up creating more challenges than solutions. In fact, one of the greatest problems is farmers not getting paid on time throughout the different stages of the agricultural cycle. This causes them to fall into debt. GrainChain uses Smart Contracts to solve this problem! They’re like the fertilizer that helps you AND your crops!
Potential Roadblocks
It is a fact that blockchain technology is not a “one-size-fits-all” solution for agribusinesses looking to venture into the field. To start, blockchain is still a relatively new concept for people and for this reason, farmers may want to tread with caution when transitioning. In addition to this, it can be a time-consuming and technical thing to maintain. Hence, over time farmers could get stressed while looking for ways to implement and develop it to the best of their abilities Another problem new users may face is initial costs. The goal of blockchain technology is to revive the agriculture industry by showing that it is still highly profitable and worth the effort. However, what if farmers don’t even have the minimum funds to approach a company working in the space? It is things like this that make us wonder if the technology being created is even reaching the right audience.
HERE’S WHAT EXPERTS HAVE TO SAY ON HOW BLOCKCHAIN CAN HELP TRANSFORM AGRICULTURE IN AFRICA
The short answer is…yes, but the long answer is that it will definitely take time to reach every individual section of this target audience and till then, companies should start where they can. If it is easier to get blockchain technology embedded amongst large-scale farms, and then move down, it should be done. Till then, blockchain companies must push free education sources and offer subsidies to individual farmers/small-scale farms. It’s understandable for these companies to want to make a profit on behalf of all their clientele, but the agriculture industry is unique in the way that all of society is dependent on it and what it produces. For this reason, providing the technology for free for those who truly cannot afford it may help kickstart a business and take them out of debt. If profit is generated after some time, the farmer can then pay back what was invested in them, otherwise, it doesn’t seem fair to ask for them to pay for something that couldn’t even help them. This could also help companies get honest feedback on the user experience with their technolgies.
Final Thoughts
The future of blockchain tech in the field of agriculture holds immense promise as it could breathe new life into an industry that desperately needs it. Whether it may be through the functionality of Smart Contracts or through the managerial approach of DAOs, the decentralized nature of blockchain tech provides a vessel for a paradigm shift to be made in the way supply chains operate, in regard to produce. Embracing and encouraging this change does not just mean the adoption of a new way of thinking, it means reimagining how farmers engage with their crops and how consumers interact with these changes.
If we, as a society, value the lives of those putting in hours and hours of work every day to give us our daily bread, it is essential for us to question our supply chains. We need to be more inquisitive and ask “ Where is my coffee really coming from and did the person farming it even get to eat dinner?”. If the livelihood of these farmers is something that we’re questioning, even for a second, it’s a sign that there needs to be change. We can not expect people who can’t even eat their own crops to keep growing them for others who don’t value them. This is why blockchain technology is such a transformative force because it provides a secure foundation for sustainable and equitable farming practices to occur.
In the hands of farmers, blockchain is not just a new type of technology — it is becoming the plow that tills the soil of equity, sowing seeds of trust and accountability and reaping a harvest of a revitalized and sustainable agriculture industry.
