When you read the term “blockchain”, it’s likely that you’ll immediatly think about Bitcoin and other cryptocurrencies. Indeed, that has been the most common use of this technology. But this is only the beginning of the story: blockchain has a lot more to offer beyond digital currency. Its potential to transform a myriad of industries – from finance to agriculture – is enormous.
With the news that Louis Dreyfus Company, a US merchant of agricultural goods, completed a deal using blockchain – a first in the agricultural sector – it seems clear: blockchain applied to agriculture is here to stay.
But what does it consist of? Blockchain is based on Distributed Ledger Technology (DLT) or shared ledger. This makes it possible for several elements in a network (like farmers and merchants) to register and share information with safety, transparency and speed. The data record is visible to all of the elements in the blockchain, who can aprove or reject the information. When it’s approved, the data enters the record as “blocks” organized in a chronological “chain” which cannot be altered.
Practical uses: from farmer to consumer
Blockchains can have different uses across several stages in the distribution chain. The main areas where it can have an impact are transparency regarding the origin, the path and the farming practices associated with products; payments; and transactions in the distribution chain.
One of the simplest examples of the practical applications of blockchain in agriculture is the possibility of instantly tracking the origin and journey of a food product. The consumer demand for organic or fair trade products is on the rise but it’s often difficult to verify the products’ certification. With blockchain, this process becomes a lot faster and more effective. For the end consumer, it means that a reading of a product’s bar code at the grocery store will reveal where it came from and how it was farmed.
Similarly, blockchain will be useful to easily solve cases of defective product batches. A consultation of the blockchain will allow the entities involved to identify the defective batch and pull it from the market, reducing the number of people who might be affected.
Blockchain and the Internet of Things, a promising partnership
Pairing blockchain with the Internet of Things is an interesting possibility with the potential to help make agriculture more efficient. Let’s look at this situation as an example: a sensor gathers data about certain crops and sends them automatically to the blockchain. This data could be pH levels and sugar content. Having access to this information, the farmer knows when to harvest the crop; then, by checking the blockchain, the other elements in it will know when the harvest happened and in which conditions.
Automation is in fact one of the greatest benefits of the pairing of these technologies. For instance, a farmer uses a sensor to measure the humidity of the soil where his crops are planted. When the soil’s humidity reaches a critical limit, the sensor, through a smart contract (a computer protocol that automatically executes predefined tasks), turns the watering system on. This way, farmers can automate a good part of work processes and, therefore, save resources.
With agriculture becoming more digitalized, consumer demand for transparency higher than ever and the global need for a more efficient agriculture, this is the moment for players in the agriculture market to invest in blockchain.