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Although blockchain technology gained traction because of its role in the financial sector, it offers a vast range of applications beyond that. This technology is expected to drastically transform many industries including healthcare, law, real estate, and banking. One industry that blockchain has the potential to revolutionize completely is agriculture.
Here, we walk you through the following topics:
- Use Cases of Blockchain in Agriculture
- Benefits of Blockchain in Agriculture
- Crop and Food Production
- Food Supply Chain
- Controlling Weather Crisis
- Managing Agricultural Finance
Use Case 1: Crop and Food Production
Wthe the goal of improving profitability under unfavorable environmental conditions, the agriculture sector has many challenges to overcome:
- catering to the need of and increasing population by growing more food with minimal resources
- reducing environmental footprint
- maximizing customer satisfaction
- enabling transparency across the supply chain
- ensuring fair income to farmers
- handling weather fluctuations
Blockchain, coupled with IoT, is remodeling the food production industry. It is set to make farming a sustainable practice by using a simplified approach to optimize farming resources such as water, labor and fertilizers.
Let us explore how blockchain combined with IoT can facilitate farmers and other stakeholders in making optimal decisions.
How blockchain can transform the production of crops
- Step 1: IoT devices generating data
- Step 2: Filtering the collected data
- Step 3: Making the data more helpful with the use of machine learning algorithms
- Step 4: Data saved to the blockchain
Step 1: IoT devices generating data
The global population is expected to reach 9.6 billion by 2050. To feed the increasing population, the farming industry is adopting IoT devices and sensors to aid in the following:
- Sensors are used to monitor the crop field (temperature, pH, soil moisture, humidity, light).
- IoT sensors and devices generate data that can help farmers make well-informed decisions related to the crops’ growth.
- Information gathered from the IoT devices must be formatted before being saved to data storage.
Step 2: Filtering the collected data
The following two steps ensure that the data is filtered before being stored on the distributed storage platform:
- Adding Meta Information
To structure data efficiently, information related to the following should be added:
- Making data ready for compliance
- Saving data on the blockchain makes compliance enforcement more seamless.
- Meeting compliance ensures that the personally identifiable information associated with the data collected from IoT devices is protected and follows security measures.
Once the data is enriched, it is put into the machine learning-ready format.
Step 3: Making the data more helpful with machine learning algorithms
Machine Learning is applied to the data generated from the sensors to provide useful insights. Predictive models can drive several valuable use cases, including:
- Crop Quality Recommendations
- Crop Identification
- Crop Yield Prediction
- GrowScore (Automated crop growth factor)
- Crop Demand Prediction
Farmers and other stakeholders will be able to improve the irrigation system from time to time with the information captured through machine learning algorithms.
The insightful data should be stored on the blockchain to enable agriculture market participants such as growers, innovators, producers, service providers and retailers to access it transparently.
Step 4: Data gets saved on the blockchain
The valuable data gathered by applying machine learning is stored in IPFS (Interplanetary File System), a distributed storage platform with addresses hashed and stored on the blockchain.
The existing method of storing essential information in the centralized server has a risk of a single point of failure. However with blockchain, the data is distributed across every node in the network preventing a central authority to control the system.
The information captured in the blockchain will trigger smart contracts to process rules defined within them. Smart contracts facilitate the exchange of data stored on the blockchain with the specific stakeholders in the system. Since information will be visible to every agriculture market participant, it will become seamless to bring efficiency in crop or food production.
Use Case 2: Food Supply Chain
Food Supply Chain tracking is critical to explore the food’s source and safety. Within the current food supply management system, it is challenging for food distributors and retailers to confirm any particular food’s origin. With the emergence of blockchain, it has become possible to bring trust and transparency to the food supply chain ecosystem, ensuring food safety for everyone.
How blockchain can reduce food fraud
- Step 1: IoT sensors generating data and farmers data
- Step 2: Recording distribution of grown crops to the food processing companies
- Step 3: Tracking supply of processed food to wholesalers and retailers
- Step 4: Consumers can backtrace the supply chain
Step 1: IoT sensors generating data or Farmers storing data
As discussed in the above use-case, smart farming allows sensors to generate crucial information related to the crops sown in the fields.
Suppose the farmer is not using technology-driven methods. In that case, they can store essential information by using their mobile application, such as:
- crop quality
- type of seed
- weather conditions under which the crops were sown.
The data captured either by using IoT sensors or manually by farmers is saved in the distributed storage platform, i.e., IPFS with addresses stored in the blockchain.
Step 2: Distribution of grown crops to the food processing companies
Once the crops are grown, the food processing companies start bidding on the bidding platform.
The crops can be transported to the refineries via IoT-enabled vehicles, capturing temperature conditions under which they are kept and delivered.
After the bid is validated through smart contracts, the crops undergo processing and companies store information captured at every step of the process on the blockchain.
The information gathered from refineries can help wholesalers or retailers to confirm if the delivered food is of good quality or not.
Storing data on the blockchain can also ensure if the compliance has been met at every step of the food supply chain.
Step 3: Supply of Processed Food to Wholesalers and Retailers
After the food items or crops are processed, wholesalers and retailers can bid for the products they want through the bidding platform. Like the transportation of crops to the refineries, food items are also distributed to wholesalers and retailers in IoT-enabled vehicles.
The blockchain supply chain offers traceability by helping food companies conduct food recalls or investigations quickly and seamlessly.
Step 4: Consumers can backtrace the supply chain
As details are digitally linked to the food items within the blockchain, consumers can explore everything by backtracing the supply chain, such as:
- farm origination details
- transportation details
- batch numbers
- food processing
- factory data
- expiration details
- storage temperature
The blockchain based food supply chain can help different stakeholders access information about the food’s quality at every stage.
As blockchain brings transparency in the food supply chain ecosystem, it will be easier to figure out when and how food has been contaminated.
Let’s look at the architecture for a real-time bidding platform built on the blockchain, enabling all stakeholders to bid for the crops and processed food items.
The architecture comprises the systems required to:
- set bidding parameters
- create campaigns
- serve ads
- place the bids
- analyze the campaign’s success
- store the results
The application for campaign management is hosted on Lynx Foundation Fabric. It has features like dashboards and reporting. The campaign information uploaded by different users of the system is stored in the blockchain ledger.
When any of the stakeholders access Gro-trac using a PC or other devices, an ad placement request triggers via Double-click or Ad exchange. The load balancer gets the bid request and forwards it to the Bid Server, where tables are matched to examine what bid to return.
The ads can be fetched and stored directly from the blockchain. Pixel Servers running on top of the Compute Engine fulfill the ad requests. Modeling and Analytics run on the ads and campaign results via a wide range of methods.
BigQuery is used for querying and loading data to explore the campaign’s effectiveness. On the other hand, the prediction API is used for implementing machine learning algorithms to the history of bidding results for improving the campaigns.
Apart from facing challenges in food production and food supply chain management, farmer’s have to also deal with the unpredictability of weather conditions. So, let’s explore how blockchain can help control bad weather situations.
Use Case 3: Controlling Weather Crises
Farmers have to confront unpredictable weather conditions while growing different types of crops. Therefore, predicting and monitoring weather conditions are essential to crop survival. Many of the crops grown in the US cannot tolerate flooding due to excessive spring rains. The oxygen concentration level reaches zero, making it difficult for the plants to perform life-sustaining functions like water uptake, root growth and respiration.
Moreover, the lack of transparency in the current food chain ecosystems can result in unclear and high surge pricing. Consumers don’t know when the crops suffered horrible weather conditions and what led to the increased costs.
Due to blockchain’s ability to offer traceability and transparency, farmers and other stakeholders will be able to get a clear understanding of the price differences in the food distribution market.
Since authorized parties can trace the weather conditions from the blockchain ledger, farmers can quickly get the crop insurance claims through smart contracts.
A step-by-step Blockchain-enabled Weather Control Process for Agricultural Fields
Blockchain can help farmers in controlling weather crises with the help of three steps:
- Step 1: Agricultural Weather Stations sending essential information to the blockchain
- Step 2: Farmers can take preventive actions
- Step 3: Quick application for the crop insurance
Step 1: Agricultural Weather Stations sending essential information to the blockchain
Smart agriculture enables farmers to understand the crop’s behavior by deploying sensors and mapping fields. Placing agricultural weather stations within the farms can help generate crucial information such as:
- soil temperature at different heights
- air temperature
- leaf wetness
- wind speed
- dew point temperature
- relative humidity
- solar radiation
- wind direction
- atmospheric pressure
All of the above parameters are measured, recorded and saved in the blockchain enabling farmers and other authorized entities to access it transparently.
Step 2: Farmers can take preventive actions
By analyzing the data generated by the weather station, farmers can make informed decisions related to farming. For example, if they figure out that it may rain heavily in the next two days, it will help them take necessary actions in advance.
Step 3: Quick application for the crop insurance
In case of damage during a weather crisis, farmers can quickly apply for the crop insurance claim amount through the blockchain.
The blockchain’s transparent and immutable behavior will enable insurance companies and other authorized parties to access the data captured by the smart weather station easily.
They can directly query the blockchain to fetch the required information with the help of smart contracts. After the insurance claim request is approved, farmers will automatically get the requested amount in their respective wallets. Therefore, a blockchain-enabled solution can help farmers get compensation seamlessly and quickly.
In order to gain maximum benefits from blockchain solutions, farmers must be able to manage their finances properly. Unfortunately, it is probably one of the areas in which they struggle the most. Let’s discuss how blockchain can assist them in managing agriculture finances.
Use Case 4: Managing Agricultural Finance
Lack of transparency, credit histories, and difficulties in contract enforcement are among the countless problems confronting formal financial inclusion and smallholders.
The inability to access financial services can have an adverse impact on agricultural value chains’ performance, which may lead to:
- producers not maximizing their yields
- buyers facing struggles to ensure an efficient supply of commodities.
It results in buyers’ difficulty to pay farmers on delivery, forcing poor smallholders to sell crops at the lower rates.
The financial services enable smallholders to:
- invest in agriculture
- relieve liquidity constraints
Blockchain brings fairness in the process of agricultural finance via transparency and shared control accessibility.
Blockchain can help in managing agriculture finance with the help of two simple steps:
Step 1: Stakeholders sharing information at every step of food production
Step 2: Auditors can effectively conduct audits
Step 1: Stakeholders sharing information at every step of food production
Every time a transaction will occur, it will be stored in the blockchain, enabling all the involved parties to access every transaction transparently.
Sharing essential information at every step of food production will bring more fairness to the entire system.
Step 2: Auditors can effectively conduct audits
The blockchain can also serve as a verification source for the recorded transactions, as it can store information permanently and securely.
Instead of asking farmers or retailers to send financial reports for auditing purposes, the auditors will verify the transactions directly via blockchain ledgers.
The automated auditing process can make the audit environment cost-effective. Rather than carrying out assessments at the end of the year, audit firms will be in a position to conduct audits throughout the period.
Blockchain will make it possible to replace the random auditing by auditors, making it more useful to access every single transaction.
Now let’s talk about the benefits of implementing blockchain in agriculture.
Benefits of implementing the Blockchain in Agriculture
The four benefits of implementing blockchain technology in agriculture are:
- Improved quality control and food safety
- Increased traceability in the supply chain
- Increased Efficiency for farmers
- Fairer payments for farmers
1. Improved Quality Control and Food Safety
Blockchain can help us to:
- bring increased transparency to the supply chain
- remove ineffective processes
- ensure optimal quality control conditions
For instance, crop failure is a prevalent issue faced by farmers around the globe. It usually happens because of unfavorable climatic conditions, such as poorly distributed rainfall and erratic weather.
To solve this, companies are already investing millions into precision agriculture, creating IoT devices that allow farmers to monitor factors that could affect their crops, such as:
- soil quality
By connecting these devices to a blockchain ledger, the results can be updated continuously and viewed in real-time by just looking at an application on the phone. It will allow farmers to ensure that all factors are as they should be.
If something is wrong, they will be notified immediately to make adjustments before it is too late.
Also, in case of problems such as food safety outbreaks, it gives the ability to find the source of the issue almost immediately. It can save more than just time and money in the supply chain process—it could even save lives.
2. Increased Traceability in the Supply Chain
Consumer expectations for food standards are rising every day. Most notably, more and more consumers want to know where their food comes from.
Using blockchain technology will solve this problem by letting consumers know exactly where their food originated, who planted it, and how fresh it is. It will only require workers to scan the product at each stage in the process to update the database with information.
Just imagine buying something from the store and being able to find out absolutely everything about the product by just scanning the barcode with your smartphone app!
Increasing the traceability of the supply chain will have a considerable impact on:
- reducing food fraud
- false labeling
- cutting intermediaries out of the process
- ensuring producers get paid fairly for their efforts
- enabling consumers to know what they’re paying for.
Increased traceability will also help farmers by allowing them to
- record and update the status of their crops
- track them through the process of planting, harvesting, storage and delivery
They can use an app on their smartphone to see their products’ exact status at all times and make adjustments if necessary.
In Australia, some farmers are already utilizing blockchain to track their production and reduce waste.
3. Increased Efficiency for Farmers
Most farmers currently use a combination of multiple apps developed by software development company, spreadsheets, and notes to record their data and manage their processes. However, it isn’t effortless and requires a lot of work to send this data to other service providers.
Blockchain technology would allow farmers to store all of their data in one place to easily be accessed by those who need it, simplifying the entire process and saving valuable time and energy.
For instance, they’d be able to keep track of things such as:
- Their business goals and how they plan to reach these goals.
- The number of animals, health issues with animals, what they eat and how often they should be fed.
- How many different crop varieties are there, when they were planted, and how they are performing.
- Their employee schedule, how much each employee needs to be paid, and how many hours each employee has worked.
- Income and expenses.
Keeping track of everything on a single application instead of having various methods clarifies the process and diminishes the chance of valuable information getting lost.
4. Fair Payment for Farmers
There are currently several problems that make it difficult for farmers to get paid for their produce, such as:
- it usually takes weeks for farmers to receive the full payment for their goods.
- traditional payment mechanisms—usually wire transfers—often take a significant chunk of the farmers’ earnings.
Blockchain based smart contracts work by triggering payments automatically as soon as a specific, previously-specified condition has been fulfilled, and without charging excessive transaction fees.
It means that farmers could theoretically receive payment for their goods as soon as they are delivered, without a significant portion of their income being taken away from them in the process.
Many farmers also experience difficulty when they try to sell their products in the market at a fair price. Intermediaries enjoy most of the profits while doing a minimal amount of work in comparison.
Smart contracts would eliminate the requirement of intermediaries, as it would allow farmers to connect directly with retailers. Therefore, they’d be able to receive a fairer price for their goods.