What is it?
The blockchain is a ledger of accounts and transactions that are written and stored by all participants. It promises a reliable source of truth about the state of farms, inventories, and contracts in agriculture, where the collection of such information is often incredibly costly. The blockchain technology can track the provenance of food and thus helps create trustworthy food supply chains and build trust between producers and consumers. As a trusted way of storing data, it facilitates the use of data-driven technologies to make farming smarter. In addition, jointly used with smart contracts, it allows timely payments between stakeholders that can be triggered by data changes appearing in the blockchain This article examines the applications of blockchain technology in food supply chains, agricultural insurance, smart farming, transactions of agricultural products for both theoretical and practical perspectives. We also discuss the challenges of recording transactions made by smallholder farmers and creating the ecosystem for utilizing the blockchain technology in the food and agriculture sector.
The use of data and information becomes increasingly crucial for the agriculture sector to improve productivity and sustainability. Information and Communication Technology (ICT) substantially increases the effectiveness and efficiency of collecting, storing, analyzing, and using data in agriculture (Walter et al., 2017). It allows agricultural practitioners and farming communities to easily obtain update-to-date information and thus make better decisions in their daily farming (Kaddu and Haumba, 2016). For example, remotely sensed data on soil conditions can support farmers’ crop management (Brown, 2015), mobile phones reduce information cost and thus promote farmers’ access to markets and financial support (Kaske et al., 2018), and the development of Global Positioning System (GPS) facilitates filed mapping and machinery guidance and crop scouting (Yousefi and Razdari, 2015).
The blockchain technology allows peer-to-peer transactions to take place transparently and without the need for an intermediary like a bank (such as for cryptocurrencies) or a middleman in the agriculture sector. By eliminating the need for a central authority, the technology changes the way that trust is granted – instead of trusting an authority, trust is placed in cryptography and peer-to-peer architecture. It thus helps restore the trust between producers and consumers, which can reduce the transaction costs in the agri-food market.
The blockchain technology offers a reliable approach of tracing transactions between anonymous participants. Fraud and malfunctions can thus be detected quickly. Moreover, problems can be reported in real-time by incorporating smart contracts (Haveson et al., 2017; Sylvester, 2019). This helps address the challenge of tracking products in the wide-reaching supply chain due to the complexity of the agri-food system. The technology thus provides solutions to issues of food quality and safety, which are highly concerned by consumers, government, etc.
The blockchain technology provides transparency among all involved parties and facilitates the collection of reliable data. Blockchain can record every step in a product’s value chain, ranging a product’s creation to its death. The reliable data of the farming process are highly valuable for developing data-driven facilities and insurance solutions for making farming smarter and less vulnerable.
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