Blockchain In Agriculture: 10 Possible Use Cases

  • 14 November 2018
  • Sam Mire

Agriculture contributes more than $992 billion to the United States’ GDP, making it one of the most essential industries in the world. With as many as 21.4 million jobs dependent on agriculture’s sustained success, the stakes are high for ensuring that farming remains viable and a competitive marketplace for all. Negotiating the changes in international trade policy and maintaining affordable labor as borders potentially tighten represent two of the newer challenges to agriculture going forward. But older, more persistent threats to the industry also remain, from grappling with decisions about which technology to embrace and when to bite the bullet and invest in those technologies. Commodity prices are far from consistent, and U.S. farmers were paid less than 90% of the market price in 2018, a figure that is once again trending downward.

The blockchain represents one of the technologies with the most promise to provide more consistency in wide areas of the agricultural industry. Whether it is applied to managing warehouses, silos, and supply chains more intelligently, or utilized in the field as a tool to transmit real-time data about crops and livestock, there are few aspects of an agricultural operation that wouldn’t benefit in one form or another from blockchain technology.

Blockchain in agriculture - Possible Use Cases

Overseeing Farm Inventory

Blockchain use cases in the agriculture industry - Overseeing Farm Inventory

In order to prevent post-harvest losses, farmers must be proactive in monitoring their crop storage techniques, ensuring that CO2 concentration remains below 600 parts per million to prevent mold growth and infestation. Fortunately, sensors are being produced that detect the potential for losses 3–5 weeks earlier than traditional temperature monitoring techniques do. With an estimated 52% of the nation’s essential fruits and vegetables being thrown out due to mismanagement at some point along the supply chain, and as much as 34% being ruined before it even leaves the farm, better tools for oversight of farms’ fruits of labor is overdue.

Utilizing a decentralized ledger on the blockchain that is easily accessible for all players in a given operation will provide more seamless communication regarding what needs to be done, whether that means harvesting crops, making storage-related adjustments, ordering new equipment, or otherwise. 

Enhancing Agricultural Supply Chains

Blockchain use cases in the agriculture industry - Enhancing Agricultural Supply Chains

One study shows that the adoption of a single technology in agriculture, on average, results in a correlative increase in a farm’s profitability of as much as $43,000. Another report suggests that the adoption of certain agricultural management technologies will produce as much as 70% higher yields on existing agricultural land. The potential increase in value of supply chain-specific technologies in agriculture is less clear, but a boost in value is certain. Linking agricultural shipping and monitoring processes using a shared, decentralized blockchain ledger adds value to agricultural products, because machinery, crops, and livestock can be traced by the recipient to prove quality and ethicality and therefore assign greater value.

Producers, especially in the developing world, can also bolster their revenues by ensuring though blockchain technology that they are participants in a supply chain that targets a demographic willing to pay more for provenance and quality. From food provenance to commodity tracking and a related role in grain trading, the projected role of the blockchain for agricultural supply chains is significant.

Companies Trying to Solve This Problem

  • Ripe Improving visibility for food supply chains.
  • OriginTrail  Blockchain driven provenance solutions. 

Modernizing Farm Management Software  (FMS)

Blockchain use cases in the agriculture industry - Modernizing Farm Management Software

The global farm management software (FMS) market is expected to expand to $4.22 billion by 2025. An anticipated 50% growth in demand for agricultural products by 2050, coupled with water shortages and stagnation in methods to expand crop yields means that leaps and innovation in farm management software represents a key area of yield enhancement.

The 2017 FMS market was $1.5 billion, and a projected annual growth rate of 7.6% between 2017 and 2021 could be plausibly accelerated with the widespread adoption of blockchain technology. As farmers integrate the likes of sensors, drones, and artificial intelligence into their agricultural operations, they will see that a store of data kept on the blockchain allows them a greater level of prominence and differentiation among their competitors. Such blockchain-centered FMS software also promises to slice the cost of transactions between agricultural suppliers, as well as inventory costs by providing more effective real-time monitoring of machinery and crops. 

Companies Trying to Solve This Problem

  • AgriDigital  Commodity management platform targeted at the grain industry.  

AgTech IoT Optimization

The average efficiency index for small farmers is 85%, and 91% for large-scale farmers. There are several factors that dictate these figures. 2012, a year of uncommonly extreme weather conditions, exemplified the costs that can arise when adverse conditions hit, as that year a record-breaking $17.3 billion in crop losses occurred in the United States alone. From 2001 to 2010, the average annual crop loss was $4.1 billion. While natural conditions are unavoidable, Mother Nature represents a persistent, unavoidable threat that has led more farmers to turn to technology to maximize their controllable yields.

IoT-linked technologies, such as sensors, have fundamentally improved the way that agricultural operations are run. Along with the likes of machine learning, AgTech has given farmers greater insight than ever into the conditions that are most conducive to high yields, smooth operations, and risk mitigation. The blockchain is already serving as a decentralized storage locker for real-time data on crop quality, which can be utilized by farmers as well as their supply chain partners to increase the quality of products and clarify provenance systems.  

Companies Trying to Solve This Problem

  • Ambrosus – Blockchain powered IoT for supply chain solutions. 

Fair Pricing

Blockchain use cases in the agriculture industry - Fair Pricing

Weather conditions, inelastic demand, inelastic supply, and the conditions of the global market all impact the fact that most farmers’ incomes and commodity prices are extremely volatile. A nation such as Uganda, where throughout the 1990s more than 90% of the population lived in rural regions, exemplifies the outsize impact that commodity price fluctuations have on quality of life for farmers. There, a 10% price increase for coffee beans resulted in a 6% decrease in the number of households living in poverty.

But, conversely, the opposite is also true. Farming is often a feast or famine lifestyle, and the wealth of information that could be provided to farmers via a blockchain platform would help decrease the chances of famine, while helping them maximize the boom times. With a blockchain-linked mobile store of data about transaction trends, global market demand, the stock price of commodities, and beyond, farmers will be able to negotiate fairer prices, especially in nations where internet access is rare and outside data is difficult to come by.  

Oversight and Payment of Agricultural Subsidies

Between 2008 and 2017, Concordia Allied Producers LLC in Ashburn, GA, received nearly $24 million in federal farming subsidies, making it the most generously subsidized agricultural entity over that period — quite a taxpayer-funded haul for growing some peanuts. Concordia was one of ten companies taking $14 million or more in federal subsidies during that span as part of the $20 billion-plus the federal government spends each year on agricultural subsidies for approximately 39% of the country’s 2.1 million farms.

Better oversight into who is being issued these subsidies, what they are being used for, and the wisdom of each payment should be available for public consumption. After all, the public is footing these bills, and like so many government records, a blockchain-linked database that embraces smart contracts and automation to provide a bigger picture of agricultural subsidies is long overdue. Plus, the blockchain could be used as a platform to actually facilitate these payments more cost-effectively, decreasing what is already a bloated, unsophisticated tax burden that doesn’t consider individual businesses’ financial circumstances or market conditions. It’s unlikely, but with the blockchain, there’s hope that at least something about agricultural subsidies could change for the better. 

Community-Supported Agriculture

Community-supported agricultural operations bring together members of a community, who pledge to support a farming operation financially in return for fruits, vegetables, or whatever else a farm may produce. These operations are on the rise, with 54% of CSA managers expecting to see an increase in their sales over the next two years. This is due in part to a diversified customer base, with 71.5% of respondents expecting increased sales to schools, 65% anticipating increased sales via on-farm retail markets, 60% projecting increased sales to restaurants, and 58% foreseeing increased sales to grocery accounts.

CSA farmers are also more likely to be younger, which means that they may be more inclined to embrace blockchain technology, could it prove to be an asset to their operations. Some proposals for blockchain in CSAs include the tokenizing of shares in community farms for easier sale and the ability to reward volunteer labor directly with shares, and minimizing food waste through sensor-based crop quality tracking.  

Companies Trying to Solve This Problem

  • EthicHub Crowdfunding and microloans for small format farms.
  • LokaalMicroloans and payments to small and local farms. 

Mobile Remittance for Small Farmers

Blockchain use cases in the agriculture industry - Mobile Remittance for Small Farmers

Worldwide, there are approximately 450–500 million smallholder farmers, or those who work small plots of land for subsistence and to harvest a couple cash crops. These farmers make up roughly 85% of the world’s farms, and they are the primary example of why better payment systems are needed for small-time farmers in hyper-rural areas making little to no profit from their farms. Small-time farmers’ financial hardships and rural life are exacerbated by yield uncertainty due to unpredictable changes in weather and pest infestations, and studies have shown that these conditions put unsustainable levels of stress on the rural farming population. Depending on the study, farmers may be twice as likely to commit suicide as non-farmers, with an approximate rate of 20 suicides per 100,000 compared with 10 per 100,000 for the rest of the population.

These figures cannot be separated from economic insecurity, and are a compelling reason why establishing more consistent, faster payment for smallholder farmers across the globe is critical. With mobile blockchain platforms aimed at providing real-time payment for goods and services rendered, a system of transparency for commodity buyers, and even the potential for other offshoot services, such as microinsurance, these platforms could be adopted widely to provide a measure of predictability to a marketplace plagued by inconsistency and uncertainty. 

Companies Trying to Solve This Problem

  • Lokaal – Crypto funding for small and local farmers. 

Incentivizing Sustainable Practices

Blockchain use cases in the agriculture industry - Incentivizing Sustainable Practices

There are several common practices in agriculture that are unsustainable, yet persist. The global market for pesticides is worth more than $35 billion per year, and a distressing volume of those chemicals end up discharged into bodies of water that are used for drinking, cooking, and/or bathing. In large part due to unsustainable agriculture practices, a study by the UK Environment Agency found that over 95% of British rivers and 85% all waters in the UK would not pass even liberal standards of ecological quality.

The most common chemical found to contaminate groundwater is nitrate, a primary component in crop fertilizers. In addition to the harm being imposed upon critical water sources, an estimated 4 billion tons of soil are lost or destroyed as the result of raising crops each year, at an estimated economic cost of $27 billion per annum. It’s impossible to issue a good faith denial of the lasting damage agriculture-derived pollution is doing to the land and to the many native populations who ingest the remnants of unsustainable practices in the form of chemicals.

There are now blockchain-enabled platforms that incentivize more sustainable practices, creating more direct incentives, especially in poorer nations. Agricultural cooperatives powered by the blockchain reward sustainable practices, encouraging farmers to establish provenance of their methods in order to attain a financial reward. Similarly, startups have proven willing to pay far above premium to farmers who can prove that they have grown their produce in an organic, sustainable manner. This is a powerful incentive to change the practices that have led to catastrophic environmental degradation. 

Greater Accountability for Multinationals

Blockchain use cases in the agriculture industry - Greater Accountability for Multinationals

There are few names in all of business that are more controversial, polarizing, or argument-inspiring than Monsanto. The most recognizable of the multinational agricultural giants, Monsanto is either the epitome of benevolent technological advancement in its industry or the second coming of Beelzebub himself, depending on who you ask. Regardless of one’s take on the advent of multinational agricultural institutions, there’s no denying their outsize occupation in the industry. Due in large part to their Roundup Ready Xtend Crop System, a chemical formula for reducing weed infiltration, Monsanto crushed its 2017 earnings expectations. Its 2017 revenues grew throughout the year, posting record highs in Q4 with an 8% growth in revenues, which totaled $14.6 billion at year’s end.

Plenty of people are up in arms about this continued success. Critics argue that the reliance upon chemical compounds and GMOs is exposing the population to risk of unintended health consequences, and that the mega-farm business model continues to threaten mom and pop agri-shops. The company holds about 1,700 patents (as of 2014), 80% of the corn grown in the United States, as well as 90% of the soybeans, sprouts from seedlings containing Monsanto’s patented seed traits. This has led to charges of monopoly-like practices and such a dominant share of the market as to foster irresponsible practices.

Those with concerns about the methods with which their produce is grown or their meat raised may, in time, be able to trace their corn back to the seed from which it was grown or their salmon to the farm it was raised in. This ability would empower consumers to make more informed decisions about their health depending on their respective stance regarding chemically-enhanced seeds, GMOs, and the like. 

About Sam Mire

Sam is a Market Research Analyst at Disruptor Daily. He's a trained journalist with experience in the field of disruptive technology. He’s versed in the impact that blockchain technology is having on industries of today, from healthcare to cannabis. He’s written extensively on the individuals and companies shaping the future of tech, working directly with many of them to advance their vision. Sam is known for writing work that brings value to industry professionals and the generally curious – as well as an occasional smile to the face.