As the excitement of Blockchain technology has swept across the finance industry and into other industries around the world, many believe that agriculture as well will be greatly impacted.
For those of you who are new to the term, Investopedia defines Blockchain as the following:
"A blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions. Constantly growing as 'completed' blocks (the most recent transactions) are recorded and added to it in chronological order, it allows market participants to keep track of digital currency transactions without central recordkeeping. Each node (a computer connected to the network) gets a copy of the blockchain, which is downloaded automatically."
For the international agriculture industry our team envisions blockchain having two short term impacts:
First, the current systems for payments and transactions across countries are costly and inefficient. Banks are the intermediaries between a producer and buyer. It is common for payments, sometimes very large agriculture transactions, domestic and international, to take days to process. From a logical perspective, if one business is sending a payment to another, why should it not be instantaneous? As soon as the buyer executes the transaction, the money ought to be rewarded to the grower/seller. Instead, there are lag times between the buyer sending the payment, and the seller receiving it. These lag times can be very frustrating to growers and exporters who are constantly limited by the cash flow. A farmer must invest for months and sometimes years to achieve their harvest. Once the work is done, the product is sold, and the buyer has approved the payment, the money is still not received right away. Sometimes the difference of a day or week for a producer means a lot.
With cryptocurrency and utilization of Blockchain technology, these large payments can circumvent the inefficiencies of financial institutions and be completed in moments. As soon as the buyer executes the payment, it can be received by producers. This innovation would be a blessing for many who are in the business of growing, packaging, and exporting agriculture products for international markets.
The second area of innovation useful to agriculture is the documentation and authenticity. Using the blockchain technology could provide an avenue for complete authenticity, transparency and success in the movement of documentation that corresponds to harvests. The organic certifications, Global GAP traceability information, and the details on the transportation and physical storage of the raw materials, could all be built into the blockchain and provide a new level of confidence and accessibility to the credibility of a value chain.
With the adoption of just these two innovations, blockchain technology will have a monumental impact on the agriculture industry. It will be part of a great modernization that is taking place in food safety, transaction, and traceability.