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Can blockchain improve the livelihoods of smallholder farmers?

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© Picture - Matthew Lohry

After bitcoin we now hear more and more about blockchain. But what is it exactly? And what will it mean to agriculture? Will it revolutionize the sector? And if so will it also be to the benefit of smallholder farmers? 

First lets have a look at what we can find about blockchain on Wikipedia: "A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block contains a hash pointer as a link to a previous block, a timestamp and transaction data. By design, blockchains are inherently resistant to modification of the data. A blockchain can serve as an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol to validating blocks. Once recorded, the data in any given block can not be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority." 

Well - this definition did not help me any further but this short video from the World Economic Forum did! 

Video credit: World Economic Forum

Now we now more or less what blockchain is about, lets have a look on the impact it will have on the agricultural sector. 

The topic was discussed during the ICT4Ag 2017 conference that took place in June of this year in Washington DC and the panelists discussing blockchain summarized its potential as folllows: "blockchain in development can ensure trust and alignment acrsoss the value chain. It can reduce middle man costs, and allows relevant stakeholder to do business with each other securely without even knowing each other. This transformative technology can dramatically disrupt the way we approach development."

There are still little practical uses of blockchain in agriculture to demonstrate its relevant but we could imagine that blockchain could be important in agriculture in different ways, such as :

  • Food traceability: Blockchain could make an entire supply chain transparent and provide information from the production of the crops till the consumption of the food. As the data along the chain are hard to modify, it will not be possible to change the information. You would be able to know if the product you buy is truly organic for example. 
  • Improved use of mobile payments, loans and insurance: Currently mobile finance is extremely important for smallholder farmers, but every transaction comes with a fee, due to the fact that there is an intermediary (Mobile Network Company offering the service). By using bitcoin and blockchain this intermediary would cease to exist and there would be no more fees on the transactions. 
  • More efficient supply chains: Payments and transactions could take place real-time by using blockchain, while currently farmers have to wait often very long until they get paid for their produce, which delays further investments in the production. When farmers get paid immediately, competition increases and farmers can receive higher prices for their crops whil buyers save time and money. Using blockchain also adds transparancy and trust which is important for example for farmers applying for a loan. 

In an article from Agfunder "From bitcoin to agriculture: how can farmers benefit from blockchain",  I was able to find some practical examples of how blockchain is already used in agriculture that seemed interesting to me. AgriLedger, for example, is a mobile app, that records and transacts transparant information using blockchain technology. It gives a complete framework of integrated services for delivering to farmers and cooperatives. It gives a solid framework that creates trust among all those working, buying selling and sharing things. 

So, a lot of potential, but definitely also a lot of challenges and pitfalls. Potential for smallholder farmers, yes possibly, but there is still a long way ago and application of any new technology in agriculture has to be done carefully and in an inclusive way in order for all famers to benefit from it.

Do you have any examples of the use of blockchain in agriculture? An opinion on this topic or resources to share? Log in with your profile and comment below! 

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