Top Three Ways Blockchain is Killing it in Agribusiness
A version of this post originally appeared on CoinCentral.com and was authored by Christina Comben.
Blockchain in Agribusiness
The generic nature of blockchain technology is one of the main reasons every industry is getting excited, or nervous, depending on their point of view. For the first time ever, we can benefit from a transparent and immutable ledger that will enforce accountability and eradicate human error (or tampering).
So, beyond sending Bitcoin from one person to another, the implications are really rather huge. This giant and universal spreadsheet that can’t be censored or changed means that any industry that requires record-keeping of any kind can transform using this technology.
And when it comes to blockchain in agribusiness, there are plenty of ways in which it can, and is already, being applied. Check out the top three.
1. Tracking Produce Around the Globe
According to the CEO of Smart Containers, Richard Ettl, sending a package around the globe requires several hundred communications between parties in the supply chain. You don’t have to be a rocket scientist to figure out how inefficient that is. The more people involved in any action, the more opportunities for human error, which means delays, misunderstandings, and increased expenses.
Now add extra layers of complexity, such as different legislation, language, currencies, and culture. “You have a lot of room for information to be lost in translation,” Ettl says. With blockchain technology, everyone has one place to go for information that’s verified, accurate, and constantly available.
You may be wondering if the transparency part of blockchain in agribusiness could present a problem. And you’d be right. It could. Certain information should only be available to certain parties. This is where companies like Smart Containers use permission blockchains to ensure that only the correct people can access the information they need.
The result? Faster, cheaper logistics and greater control over the entire supply chain. This is particularly important in agriculture since delays can lead to damaged or wasted goods.
Large companies like Walmart and Kroger are also seeing the value of using blockchain tech for traceability and food safety. By taking part in the IBM blockchain initiative, they successfully tracked certain items of food, specifically Chinese pork and Mexican mangoes around the globe, with excellent results.
2. Verifying the Origin of Goods
A lot of people care about where their food comes from. This often causes people to buy locally, so that they can be sure of the origin. But, depending on where you live, that can significantly limit your choices.
Currently, though, we have little way of knowing if the bread or vegetables we buy or the coffee we drink were harvested using child labor, grown according to vegan standards, or contain the ingredients they say they do. This can be a problem. Not only for people who choose to live a certain way but for those who have serious allergies or reactions.
Companies like VeganCoin, Ripe.io, and origintrail are working to use blockchain in agribusiness for its transparency to verify the origin, journey, and ingredients in foods. This means that people with principles may no longer be limited to buying locally. They can be sure about the quality and authenticity of their food. They can even track it at each stage of the journey if they so choose.
3. Reducing Transaction Costs and Increasing Profitability
The need for fewer parties in the agricultural supply chain reduces costs. When produce has to pass through multiple channels before it reaches its destination, each one comes with a markup. And that price is translated to the end customer.
Moreover, approximately one-third of all farm produce is wasted. This is a figure that costs the food industry around $1 trillion dollars per year. Among the many goals of the IBM Blockchain is reducing costs for customers, as well as, eliminating fraud and increasing trust.
In fact, the Walmart experiment in food safety can save the retailing giant millions of dollars per year while making food safer and cheaper for customers. How? Just imagine this scenario: There is an outbreak of food poisoning and question marks raised over a certain food stocked at Walmart. Without knowing which batch of food caused the problem, the company is forced to recall the entire supply from all its stores.
According to a report from Food Safety Magazine, product recall is the greatest threat to profitability, and the average cost of a food recall is around $10 million. And that doesn’t count the potential damage on the brand name or certain loss in sales afterward.
If the product recall is extremely serious, such as the peanut salmonella outbreak of 2009, costs can run into the billions of dollars. That may mean more than a dent in brand reputation. A recall of that scale could put even the largest of food retailers out of business.
Currently, there are certain systems in place that attempt to monitor food, such as UPC codes. But this information often lives in data silos. Relying on a blockchain-based tracking system would allow instant access and accountability, reducing the cost of recalls and even avoiding them altogether.
Wrapping It Up
There are plenty more ways blockchain is (or will be) applied to the agricultural field and the supply chain in general. Blockchain in agribusiness, as with other areas, is largely still in experimental stages, and the possibilities are huge.
From sending borderless, frictionless payments to monitoring food temperature, blockchain may hold the keys. And it’s encouraging to see that solutions exist already to bring down costs while improving quality and safety for all.