The Agricultural Sector Should Adopt Blockchain Technology
Why Use Blockchain Technology In The Agricultural Sector?
The agricultural sector has been in decline for decades. Farmers struggle to make ends meet while watching their acreage decrease yearly. In addition, many wonder if there is a way to make fresh food production more environmentally friendly, as global warming threatens crops around the world.
Many companies have been investigating blockchain applications for the supply chain management. This includes food tracking and distribution, managing permissions, and other concerns inherent in regulated industries. What may not seem clear at first is that farmers are already part of a large global supply chain. Unfortunately, they aren’t always aware of it.
For example, a company might buy seeds from one provider and fertilizer from another. They might even handle packaging or logistics separately. The hope is that blockchain-based systems will offer greater visibility into all aspects of production, distribution, and sale (and beyond). Furthermore, they will provide new opportunities for collaboration across businesses along a single supply chain.
How Can Blockchain Technology Be Used In Agriculture Supply Chains?
First and foremost, blockchain technology can track food shipments from producer to consumer. The increase in customer awareness about where their food comes from, coupled with recent outbreaks of deadly illnesses such as E. coli, demonstrates that food traceability is a growing concern for global consumers. Beyond tracking shipments, blockchain could also monitor individual ingredients. It monitors them as they travel throughout a supply chain by QR codes on labels or RFID tags affixed to each shipment. This capability would allow the tracking and verification of each ingredient entering a supply chain (or even specific farms). They would do so without massive coordination between parties throughout a supply chain.
For example, if a farm wanted to prove its produce was pesticide-free, it could scan an RFID tag attached to each shipment at its point of origin. In turn, any processor receiving these shipments could confirm that information. They can confirm by scanning an RFID tag attached to each box at its entry point into a facility. By providing transparency into every step of a supply chain process via blockchain technology, farmers will be able to avoid recalls while increasing trust among customers who want assurance that what they’re eating is safe and authentic.
Barriers To Adopting Blockchain Technology In The Agricultural Sector
By its very nature, blockchain technology is inherently secure due to its heavy encryption and decentralization. However, because it uses such sophisticated encryption methods, it can also be intimidating and hard to understand at first glance. This could present an issue when trying to convince farmers or other agricultural sector workers to adopt new technology. According to a survey from payments company Square, more than half (57%) of U.S. farmers don’t know enough about blockchain technology. And many simply lack interest. Eight percent of respondents didn’t want anything to do with cryptocurrency, and 12% weren’t interested in making their operations more efficient or saving money through blockchain.
The cost of implementation is a big hurdle for most companies, as developing blockchain solutions is costly and still relatively new. Another barrier to its widespread use is compatibility—with blockchain comes different digital currencies like Bitcoin. While these currencies may make sense from an efficiency standpoint, they’re not universally accepted yet. This makes it difficult for businesses to trade them globally or across regions. Also, governments worldwide are still working out how to regulate cryptocurrencies and their uses in real-world situations.
Finally, only about 13% of American farmers are using technology. Large industrial corporations dominate and use technological advances, but most small farmers do not. This is because it costs a lot of money to start using technology in farming. Once you buy machinery, tractors, and farm equipment and start to use new methods and techniques, everything has to be compatible with each other, or it will not work properly. This can make getting started expensive for some.
What Will It Take For Blockchain Technology To Be Adopted By Agribusinesses, Farmers, And Suppliers In The Future?
Today, blockchain technology is poised to impact how business is conducted in supply chains and farming. But before it can change these industries, agribusinesses need to understand how blockchain technology works. And to start doing that, we need education programs for those that might have an interest in implementing it into their supply chain.
Farmers and suppliers could benefit from classes about what blockchain is and how it can benefit their business. It would give them more freedom to easily find good suppliers and ensure quality products from the beginning of production throughout consumption. This is just a small example of how agribusinesses could use blockchain technology if they choose to adopt it to improve business processes and logistics management in their industry.