Growing the Garden: How to Use Blockchain in Agriculture
The Blockchain phenomenon is gradually settling into people’s lives, making it imperative to understand its applications and limitations. Today, we’re going to discuss how Blockchain can make the food industry better.
Our current food system offers a fertile opportunity to explore how the Blockchain technology can interact with our ecosystems — both human and ecological — to add value to our lives. Fortunately, a number of startups are already hard at work in this area.
After the introduction of Ethereum, altcoins became a popular way to showcase ideas for new cryptocurrencies. We are currently in a period of hype, where many developers are proposing crazy ideas to solve either nonexistent or trivial problems. It’s vital that society and developers focus on applying Blockchain to relevant and important projects, rather than assuming Blockchain technology is a one-size-fits-all panacea.
Food and eating
Food quality is clearly related to chronic illnesses such as heart disease, liver damage, stroke, diabetes and cancer, to name a few. We can significantly reduce chronic illnesses by improving the quality of food available. That requires an answer to the following question: Why do we eat poor quality food?
This large problem can be divided in three parts: production, delivery and sale.
Food production starts at the farm. Farming always implies high risks — natural disaster, harvest failure, accidents, etc. — that directly affect what a farm can offer. Market conditions and large agricultural corporations can also make the lives of small farmers challenging. The companies often abuse their positions by using expensive fertilizers and patented GMO-seeds to gain competitive advantages over smaller operations.
Another problem is in the logistics of food delivery. Modern agriculture is under the siege of large chains’ producer-distributor-consumer model. Large-scale food producers often organize industrial food production in developing countries. They then create large-scale distribution networks to sell the food globally.
Producers are often unable to sell their products directly to consumers, having to appeal to traders or distributors who buy their product cheaply. Large companies are able to cheaply mass-produce food and fill the distribution channels, but this food is never completely consumed. The result is the creation of a new problem: food waste and disposal. Resources like fuel and fertilizers are used to produce and distribute food that will never be consumed, creating waste.
Solutions are possible
Fortunately, health, eating, farming, agriculture and logistics are interconnected, and we can solve these challenges through modern technologies, utilizing experts who understand the systems.
We spoke with Liz Reitzig, founder of NourishingLiberty, who has spent 15 years working on food systems from every angle. She is a consumer advocate who has worked in retail, policy, agriculture and farmer support.
Blockchain as a Financial Tool
Blockchain technologies offer good financial instruments to provide farmers a timely and complete payment for their efforts. Using these technologies will help to avoid risk and make the farmer’s life easier. According to Reitzig:
“Blockchain...offers [a] means for farmers to contract with sellers to grow what is needed. Full or partial payment can go into escrow immediately...to guarantee payment to the farmer without breach of contract and coercion by marketers. Getting paid for labor is a big challenge in the farming world, and Blockchain can alleviate part of that.”
Thanks to smart contracts, farmers can get paid all year long, not only in summer and fall. Using a calculation system based on smart contracts, it is much safer to work with pre-orders, food baskets and buying clubs.
“Some farms produce something called a community supported agriculture (CSA) share. This is a growing model where the consumers prepay a farm for the whole season. We might pay $500 at the beginning of spring, and we'll get a box of veggies every week for 30 weeks. Blockchain can handle that entire transaction.”
“A farmer has different tools: Shovels, tractors. Blockchain is also a tool, and it’s up to you if you use it or not.”
Smart contracts can include any conditions and any parties without involving lawyers. For example, using a smart contract, the owner of a small café can purchase coffee seeds directly from a Kenyan farmer.
All at once, he or she can order delivery to Europe, pay for work of the customs broker and for certification according to the laws of the country of delivery. Smart contracts will free farmers from the long chains of intermediaries and thus lower the final price of the product for the consumer.
Origin, quality and certification
Implementing Blockchain into the production, certification and food processing steps creates transparency in an otherwise non-transparent system and allows consumers to support suppliers they choose. It is particularly relevant for organic and certified origin products.
Liz Reitzig emphasizes the importance of determining the origin of organic products:
“If a farm is certified organic, or they want to emphasize a different kind of certification, they can use Blockchain to track products. Consumers want to know what they are buying, and Blockchain can offer that.”
Marcel Blankenstein, owner of Naked Organics, believes that origin information may be interesting for the user as long as it’s usable:
“Blockchain in agriculture allows the consumer to scan the barcode of a product in the supermarket and instantly view the entire supply chain from supermarket to farmer. In terms of consumer orientated transparency. From a regulatory perspective, agricultural contamination can be very quickly isolated.”
Can a farmer sse Blockchain?
Reitzig believes that the most difficult obstacles for Blockchain implementation in are complicated work principles and terminology. She says:
“The biggest challenge for farmers in using Blockchain is in overcoming the technical understanding of it. Farmers are focused on farming. They are not on the cutting edge of technology.”
This means Blockchain technologies must be simple to understand and use. A number of startups have been working in this space. One such company has developed an entire platform to make Blockchain use simpler for farmers. They have united all the Blockchain functions related to food, farming and agriculture.
This system includes smart contract libraries, remote identification systems, a digital currency payment processor, a smart cryptocurrency wallet, and their own digital currency token. Gregory Arzumanian, co-founder of 1000Ecofarms, says:
“We learned all the opportunities that Blockchain technologies can help with. When the Blockchain technologies are tangible and understandable, we can apply them even to the basic human need for food. [A] key objective is to create a global, comprehensible and safe ecosystem for agriculture and food businesses that would allow them to significantly reduce the expenses related to the production, sales and logistics of the consumable goods.”
Blockchain not a panacea
Blockchain technologies can alleviate technical difficulties and simplify the farmer’s life, and make our food — and thus our health — much better. There remain problems that only consumers can help them solve, however.
Marcel Blankenstein is sure that the main challenge every modern farmer faces is consumers’ ignorance, which must be resolved before Blockchain can reach its full potential:
“Unless consumers are taught to understand that conventional farming is “bad,” Blockchain will have very little “good” purpose, from a sustainability perspective. It is important to remember that traceability does not equal good farming techniques and quality food does not equal healthy food.”
Fortunately, we see modern farming moving quickly towards sustainability. Healthy and organic food is becoming ever-increasingly popular and affordable thanks to Blockchain technologies, which means that direct transactions with consumers can be profitable for small farms.
Blockchain is a valuable technology, but people must create the rest of the ecosystem. If we display the origin of food while making an open and informed marketplace, we are creating a level playing field where small and medium producers can reach their customers.
In turn, when consumers can find products and farmers who meet their needs, and can pay them full value for their product, farmers can make a viable living, which empowers them to remain on the farm and continue the work they love.