Jan 31 2023

Applications of blockchain in agriculture

Blockchain technology enables transparent transactions, without the need for a third party, facilitating the collection of reliable data. This technology records every step of a product's value chain, from start to finish

Despite being a burgeoning market, given the complexity of applying this technology, the global market value of blockchain applied to food and agriculture amounted to about US$140 million in 2020, and is expected to grow to about US$1.5 billion by 2026.

Applications of this technology in agriculture include: smart contracts and agricultural insurance, smart farming, traceability in the food chain and e-commerce.

For example Banco Santander and Agrotoken teamed up to offer loans secured by crypto assets. It is the first global experience to back loans with tokens related to agricultural commodities such as soybeans, corn and wheat. This digital solution will allow farmers and the agricultural ecosystem to have an easy and fluid access to a new financing system, expanding credit capacity by using tokenized assets.

Smart Contracts

Climate change is causing unpredictable weather conditions. The implementation of blockchain allows to mitigate the effect of this instability by:

  • developing smart contracts: systems that adapt payments based on weather data collected in the blockchain system. In addition, this technology allows payments to be triggered automatically.
  • optimizing farm data collection: the use of blockchain oracles, the mechanism that connects input and output data in the blockchain system, improves data integration, avoiding errors in risk forecast calculations.

Smart Farming

Blockchain technology serves to store the data and information that various actors and stakeholders generate along the entire value chain.

This technology ensures that data and information are transparent to stakeholders and that all recorded data is immutable. Such data enables decisions to be made to optimize agricultural production.

Traceability in the food chain

The use of blockchain ensures that production, process, storage, and distribution records in the system are reliable. From the perspective of producers, the use of this technology helps to establish a relationship of trust with consumers by transparently providing individual product information. In this way, companies can better achieve the value of their products and thus increase their competitiveness in the marketplace, like in the case of Grupo Avicola Rujamar and Alcampo Producción Controlada giving access to traceability information at any time through the QR printed on the packaging of their free-range eggs. Another example of a company working on a more transparent value chain is the cured ham company, Navidul for the implementation of Blockchain technology in pieces of Ibérico.

E-commerce

Application of blockchain technology enables solving problems that arise in the development of online sales channels, such as information security, and secure value chain management.

Regarding information security, blockchain technology provides private key encryption that serves as an authentication tool.

While in a secure value chain management, blockchain technology enables more efficient supply chain management than traditional control mechanisms by reducing signaling costs for each entity.