Blockchain for agrarians: real case studies
Only the laziest has not yet spoken on the value that blockchain can bring in agriculture. Such comments, however, usually boil down to general forecasts and assumptions based on overall assessments of the technology potential.
However, there were very few specifics on what problems do agrarians have and how blockchain becomes that very solution they need. Which is strange considering that agricultural blockchain projects already exist worldwide. Although they are few, people should know more about it since it is where the future of agriculture lies.
Say no to paperwork
Farmers have two perennial problems: growing crops and selling crops. And if growing crops depends directly on the farmer, selling them is an activity beyond their control. It is so hard to control because the sale of the product, especially on foreign markets is a complex procedure that requires many documents to be collected and approved by various specialists. Blockchain technology will allow you skipping through the paperwork.
A case in point is Easy Trading Connect (ETC), a blockchain platform that serves as the basic technology for smart contracts. It can autonomously verify legal documents (even the complex ones such as sale and purchase agreements or letters of credit). To that note, the speed of examination has been proven to exceed the conventional fivefold.
I am sure many of you heard last year that Louis Dreyfus sold a lot of soybeans to Shandong Bohi Industry. This deal became the first in agriculture to have been arranged via blockchain. This, however, is not as important as the effect of the transaction, which is quite impressive. As a rule, a transaction like this takes 11 days instead of 4 as in the case with blockchain. And time-savings equal cost-efficiency because almost no spendings should be made for legal services. It is particularly important for the agriculture because such procedures always cost more when compared to other industries due to the low margin and high volumes traded.
Needless to say that the risk of fraud, redundant tasks, and simple errors decreases since blockchain tolerates none. Among other advantages are a feature allowing to track the progress of transactions. All the information will be immediately available to the parties to transaction, which, again, minimizes the risk of falsification.
With the development of blockchain, it is plausible that soon the history of counterparties can be verified, provided the counterparties provide any. In addition, it can analyze their compliance with the terms and conditions of a contract and the performance thereof. This is a potential development opportunity. Many experts now say that the massive selling of agricultural products via blockchain is imminent.
Transparency set on maximum
The buyer always wants to spend only on a quality product. Especially if we are talking about food since their health and well-being literally depends on it. Which is just the way to their loyalty. The blockchain may come in handy even here.
Let us take a look at a startup Ripe.io. Its development encompasses a mix of Blockchain and Internet of Things and allows you to learn everything about the product — where it was grown, which chemicals it contains (a great way to learn if the manufacturer overuses pesticides), who and how manages the supplies, etc. In short, the technology tracks the entire path of food from farms right to the plate. It is a handy thing that can potentially help you rid of the problems of food fraud, false markings, and unwanted intermediaries. But most importantly, it will help you cement trust with the buyers and sellers.
The fact that the startup was among the first to join Food + Ag Tech — one of the TERRA accelerators that unites innovative agrarian projects — means that Ripe.io is in high demand. Forbes has ranked Ripe.io in 25 innovative developments, while IBM, Walmart, and Tsinghua University announced a cooperation in the blockchain technology to secure safe food for the Chinese citizen. This means that anyone will be able to learn all about the products they buy.
In protection of the crops
AgriLedger offers a similar solution. However, its goal is entirely different: ensure the harvest accounting. Initially, the project focused on farms in developing countries that lose some of the manufactured products due to a poor communication with suppliers: paper contracts are often concluded with errors and sometimes get deliberately falsified. As a result, up to 50% of the crops do not reach the points of sale according to the AgriLedger’s statistics based on UN studies.
The technology created by the startup encompasses a multifunctional platform. It can be used to enter contracts, negotiate, and even track the location of crops sent to the buyer. It is impossible to make changes in the blockchain, which makes AgriLedger truly transparent and corruption-free.
As we said earlier, AgriLedger was initially designed for small farms, but it can become an interest for the larger business. As this technology develops further, it can be used to control the performance of own logistics and assess the effectiveness of distributors and partners. In fact, the system allows eliminating the human factor and associated risks.
In general, the examples above show that among the main benefits of blockchain is a simplified handling of documents and procedure transparency. At first glance, it does not seem anything special but becomes very important in practice.
It is also worth noting that blockchain can do more than to identify errors and defects. This way, Easy Trading Connect automatically charges fines and penalties on a virtual account when one of the parties to transaction fails to meet own obligations. It is convenient since the breaches of contract happen all the time, and a counterparty may not be paying fines willingly. Funds have to be exacted through legal proceedings, which is costly and time-intensive.
Will blockchain technologies appear on the Ukrainian market and when?
Implementation of blockchain is a complicated process that above all requires changes in the ordinary course of business in agricultural companies. Ideally, such changes should affect all and at the same time. After all, if they use e-documents and the latter will do business old-fashioned way, no real benefits will come out of the technology.
Secondly, there must be regulation at the state level. Like it or not, blockchain is tightly entangled with the cryptocurrency market, which is why the rules and its usage regulations should be spelled out in a clear manner. But there is more than that. We all know that blockchain brings transparency, which is unwelcome in places where corruption thrives. In Ukraine, unfortunately, there are many shadow schemes to distribute agricultural products. Obviously, these masterminds will resist innovation to the last breath.
This post is also available in: Russian