Producers can leverage this data to reduce crop insurance costs, the transaction fees, and increase crop’s yield by applying the most relevant treatment at the right times. Computer-assisted analytics has the potential to be a game changer within the agricultural industry. Using non-fungible tokens for every batch of crops to certify the traceability will be the next fully secured generation of highly transparent food supply chains.
Additionally, the value of immutability of blockchain technology will allow visibility for each step of the process to all participants and will generate a permanent record of trust. As an example, a critical stage of food distribution is a major concern of any disease control body regarding food safety. In the US, the Center for Disease Control and Prevention estimated that 48M of Americans had been contaminated by food in 2018 causing 3,000 deaths. Blockchain technology with IoT solutions has the capacity to enable a real-time monitoring of shipping, storage conditions to ensure the cold chain integrity and fast root cause identification. In term, one will be able to ensure that the players in the industry follow ethical practices during all the steps in the process. Furthermore, we can avoid major product recalls in case of a mishap because we will be able to track where and when the problem occurred.
Agriculture insurance and financing products will enter the market and allow for SMB farming to collaborate and compete in an enterprise environment by nature of blockchain’s composition for market differentiation. Firstly, there will be an increase in farming activity as more farmers will have access to crop insurance through smart contracts and they will be able to gain a larger share per dollar of sales.
Second, organizations dedicated to agricultural finance will become an industry supporting the ecosystem. One will see the crop insurance and agricultural finance industry evolve because with blockchain, microfinancing will become easier through ‘Decentralized Application’ (DAPPS). This will be a huge difference compared to the banks that charge a premium to farmers who can’t always afford it. The emergence of decentralized finance can revolutionize agricultural finance.
Thirdly small just got big, as non enterprise farmers will find ways to compete on an even footing with the rest of the market in regards to better financing options, wider access to markets and more control over the price of their goods as well as being able to command a premium if marketed properly. Currently, small farmers face a huge disadvantage because they don’t have the scale to compete with the larger farmers. They have trouble financing their activity and often have to work as a collective. Due to access to better finance, farmers will be able to grow different crops and plan their activities in an optimal manner leading to better income for the year.
Fourthly, details on marketing advantage of transparency of blockchain to traditional enterprise agricultural firms. The small farmers will have the opportunity to differentiate themselves and be more competitive with the larger farmers therefore levelling the playing field to a great extent. This will increase their access to market because they will have more channels to sell their products. Farmers will have more control over how they price their stock. Lastly, blockchain enables traceability which will encourage fair trade practices. Consumers will be able to track the food journey and know what they are buying. This increase transparency through the value chain of the industry.
Considering the complexity and novelty matrix below, it helps one to identify the different stages on the application of the blockchain within the agriculture value chain. As we see with 1-4, it is expected that blockchain’s impact will become increasingly complex to disruptive “transformation”: