Blockchain Technology & Agriculture Sector
How Blockchain Technology Can Revolutionize Agriculture Sector
In the given below version Dr. Amit Kumar Triapthy and Dr. M V Prasanna clearly discussed what actually a blockchain is, how it works and what are it’s applications in agriculture and allied sectors. The recent developments in technologies are mainly concerned and truly focusing on enhancing the food safety by bringing transparency in the supply chain and thus improving the farm process. This definitely reduces much of the transaction costs and time which are precious in this running world. So, let us explore what was written and learn together what need to be explored.
Data & information are oil of the 21st century. In this data-driven era, it is crucial to use the data efficiently & positively to solve the long-lasting problems. For the agricultural sector, it is even more crucial to use data to achieve sustainability & productivity. Information and Communication Technology (ICT) is one such widely used tool to collect, store, analyze & use data in agriculture. It allows farmers, extension workers, agricultural scientists & farming communities to obtain update-to-date data smoothly, thus make better decisions to solve different agriculture problems. But Information and Communication Technology (ICT) is not a perfect tool to handle data, this technology has some biases in the collection & use of data, it can even be manipulated & used according to the will of the organization or Government that controlled it. For example, NGOs can have a disproportionate focus on the issues to address due to their interest (NGO Monitor, 2015). So, it’s time to move from this centralized system of data handling tool to an unbiased & decentralized system like Blockchain, by distributing the power of data management to a large no of systems.
Blockchain is a Distributed Ledger Technology (DLT), where information is recorded & stored in such a way that makes it impossible to change, hack, or cheat the system. The best analogy to understand Blockchain technology is a Google Doc. When we create a Google doc & share it with a group of people, instead of copied or transferred doc is distributed in a very decentralized way so that anyone can access it & do necessary modifications, the updated doc can be seen & verify by others in real-time, which makes this process completely transparent.
How does blockchain work?
Simply, a blockchain is a chain of blocks ordered in a network of non-trusted peers, each block can store any data & has a reference with the previous one.
Like, “cell” is the biological unit of living organisms, “block” is the technical unit of blockchain. A block can store data, but the unit of data depends on the type of blockchain. For example, it can store an amount of money, a share of a company or a digital certificate, a vote during an election, or any other value. It can also store encrypted details about parties whose interaction resulted in the data stored in the block.
A Hash is like a fingerprint, as each hash is unique. Its job is to identify a block & its content. Hash is a value generated after solving a complex mathematical function. Once a block is created, any manipulation or change in the block also changes the hash.
Each block contains two hash, the first one is it's own & the second one is from the previous block. For instance, if there are three blocks in a blockchain, block 3 will contain the hash of block 3 & hash of block 2, like that block 2 will contain a hash of its own & hash of block 1. Suppose someone changes block 2, the hash of block 2 also change, which couldn’t match the hash of block 2 present on block 3. Which makes the whole blockchain invalid.
The biggest scam faced by the Indian farmer community is the lack of transparency in agriculture insurance, the premium amount of insurance get debited from their account unknowingly and during the time of claim, the farmers are cheated & hardly get their due. Weather & climatic factors play a huge role in agriculture production, but the insurance scheme is not so flexible with these uncertainties. That’s where blockchain technology comes into play, which will bring transparency to its decentralized system.
By the application of blockchain technology, we can create self-executing smart contracts together with an automated payment agriculture insurance scheme, which will be a game-changer. The blockchain-based insurance scheme will collect regular weather data from the relevant weather station, any drought-like situation or hardships in a particular area, faced by the framer which fulfill a predefined clause in the insurance scheme, will immediately release the due amount to the linked farmer's bank account or mobile wallet without any hectic paperwork or any third party involvement.
One of the biggest challenge faced by poor Indian farmers are land fraud, many times they cheated by a cunning landlord or they lost their documents in different natural disaster & war. A blockchain-based system can maintain a tamperproof ledger of land ownership & its related transaction. The United Nation Development Programme (UNDP) in India is running a program for making land registry more transparent. The system will capture any land transactions that occur & will put it in record permanently, which leads to achieving real-time traceability & transparency.
Food supply chains
This pandemic brings drastic changes in consumer behavior, people now become more health-conscious and giving utmost priority to food safety & hygiene. With this changing scenario & high consumer expectations, Agribusiness need to reimagine their food supply chains. According to a recent survey of 19000 consumers conducted by IBM shows that four out of five consumers want a guarantee certificate for the food they are buying 71% of them are ready to pay an added premium price for this service. Blockchain technology can capture all data from cultivation, treatment & harvesting in the field to transportation, storage then to consumer ( Farm to the table), all minute details are captured & stored can easily access by the consumer, simply by scanning the QR code.
After the 2013 Horse meat scandal in Europe (Kamath, 2018; Montecchi et al., 2019) force meat supplier & other livestock product supplier to bring transparencies into the value chain, COVID 19 crisis will now be the tipping point, those who can’t fulfill consumer’s aspiration will lose the market share. Blockchain is the only way forward. In the UK a blockchain-based application launched in 2019 by a start-up Breeder, which brings a lot of transparency in the value chain, which helps increase the daily growth rate that leads to reduce optimum call time of cattle which ultimately reduce methane emission. In India also many Start-ups like Enertech innovations help in solving the traceability problems even before blockchain technology like “Bitcoin” gets familiarized in India. One application named ‘AgroTrust’ brings transparency in pricing by replacing middlemen from the value chain, which won the Animal Husbandry Grand Start-up Challenge hosted by Start-up India and the Department of Animal Husbandry and Dairying (DAHD). The Information Network for Animal Productivity and Health (INAPH) program of NDDB, used RFID technology to tackle stray animal menace & insurance fraud.
Blockchain technology can use to tackle illegal, unreported & unregulated fishing, which exploits the marine ecosystem. World Wildlife Fund (WWF) working on a blockchain pilot project in New Zealand to track all fish from vessels to supermarkets so that illegal fishing & selling can be tackled easily.
BARRIERS TO BLOCKCHAIN
According to the PwC survey; Blockchain technology's biggest advantage (i.e. a decentralized system which is free from regulatory authority) is the biggest barrier to its adoption. Except for this lack of trust among users & potential failure of different blockchains to work together is identified as the biggest challenge. Blockchain technology still in its infant stage, definitely needs more time to grow & develop standards. With time it can build trust among consumers & revolutionize the agriculture value chain system & agriculture financial sector. Another limitation is the potential gap between the technology’s current capacity and the capacity that the supply chain requires. These are the factors that are working as hindrances to the evolution of blockchain in the agriculture market.
With the above given information, the potential of blockchain technology in product traceability, smart contracts, risk & compliance management, governance, and payment & settlement is inevitable. According to the recent reports, within the coming period India is going to be the top most running champ in exploration and adoption of this wonderful technology mainly in the agriculture market in the whole Asia Pacific region. There may not be any astonishment even if India joins the list of top players of blockchain technology in agriculture market like IBM (US), Microsoft (US), SAP-SE (Germany), Ambrosus (Switzerland), Arc-net (Ireland), OriginTrial (Slovenia), Ripe.io (US), VeChain (China), Provenance (UK), ChainVine (UK), AgriDigital (Australia), and BlockGrain (Australia).
Dr. Amit Kumar Tripathy
MVSc. Livestock Economics
ICAR- Indian Veterinary Research Institute
Dr. M V Prasanna
MVSc. Extension Education
NTR College of Veterinary Science- SVVU
Dr. Hemalatha Talluri