BIS Research presented an emerging tech webinar on blockchain technology transforming the agriculture and food supply chain. During the webinar, significant insights were shared on how blockchain technology is likely to disrupt the agriculture industry, increase food safety, and improve the overall supply chain for agricultural produce.
Here’s a list of questions that were raised during the webinar that featured Emma Weston, CEO & Co-Founder AgriDigital as guest speaker
Q. How do you see the quality of commodity (that is currently tested off farm) impacting prices in the functioning of blockchain technology in agriculture?
Answer: Prices can be impacted by a number of variables, of which, quality is one. Quality characteristics are obviously a fundamental dataset to manage for and report on, and in our view, the industry needs to move away from static assessment and reporting to live physical monitoring. This is likely to be undertaken by the emerging Internet of Things (IoT) industry. We are already seeing sensor technology being applied extensively in high-value food crops and cold chain, and over time, this will become a norm across whole of supply chain from farmgate forward.
Q. What is the role of blockchain technology during warehousing?
Answer: Blockchain will be a useful concept for warehousing in the coming future. Blockchain as a distributed ledger, will be able to convey the information regarding real-time inventory status across the supply chain. Blockchain also offers traceability and immutability of data that helps companies in reducing audit compliance issues of operations in warehouses.
Q. Can blockchain technology provide a viable platform for forecasting using data in its blocks?
Answer: Yes, prediction and forecasting can be revolutionized with blockchain. Along with low fees and accuracy in forecasting, data exchange and payments can also become safer in the future. Some of the companies involved in forecasting using blockchain include Augur, Stox, Gnosis, and WeatherBlock.
Q. Are the transaction values ($) visible to all major players in the supply chain, i.e., can the farmer see what the consumer is paying for their product?
Answer: Yes, blockchain is expected to bring end-to-end transparency across the supply chain. The farmers will be able to see the amount which the customer pays for their products depending upon the rules of the contract in the blockchain.
Q. Some of the ABCD’s have already attempted blockchain transactions with limited success for soybean cargos. Do you believe the ultra large scale & highly commoditized products are the target style of transaction or smaller players with unique (smaller volume) commodities should be preferred?
Answer: From an AgriDigital perspective, we believe that the near-term wins will be where blockchain is either the solution or is acting as the primary technology in a solution that addresses three key areas: transaction and payment security, network efficiency (supply chain efficiency) and provenance or assurance of the underlying physical asset and its related dataset.
We are observing that these use cases emerge in combination with niche and specialty supply chains such as organic, non-GMO products, or where specific marketing or health claims are made, e.g., gluten-free, ‘local’, ‘direct from farmer’ or ‘Made in Australia’. In many cases, these supply chains are dominated by locally-based, regional, or SME participants who traditionally have not had easy and affordable access to best-fit software and finance. This has largely limited the growth of these supply chains and their individual players as well as underpinned the issue with ‘trust’ in this sector.
We are excited by the scale application of technology and next-generation finance at scale, but it is likely that we will see an earlier phase of adoption from the smaller to mid-tier players following experimentation by the ABCDs and other multinationals.
Q. With new systems being implemented in well-established trade practices, how can liability and trade insurance be handled? Is this being looked at?
Answer: In some cases, the risks addressed and managed aor mitigated by trade-based insurance, may be able to be offset partially or in its entirety by smart contracts, atomic swaps, and the ability to interrogate the blockchain and/or applications that interface with the blockchain. An ideal example of the same is trade credit insurance where the commodity asset and the payment are exchanged simultaneously and the need for the seller to insure the risk of non-payment by the buyer will no longer be required.
However, it is likely that the insurance industry will adapt its product offering to take advantage of blockchain technology and the contributory dataset to develop new generation insurance and risk management products. There are a number of existing insurers, reinsurers and related sector participants investigating and experimenting in this space. There are also a number of insurtech startups and others with more comprehensive digitization and trade and finance solutions like AgriDigital. These look at various ways in which one can improve the existing insurance offerings either in partnership with incumbents or by embedding risk management within emerging technology and platform solutions.
Q. What is your understanding on the relevancy and use of blockchain in agriculture changing as you work more extensively in this vertical?
Answer: To begin with, our team worked with blockchain technology almost as a standalone part of the tech stack, which of course, it isn’t. We now approach blockchain and related technologies as part of a more complex technology stack that needs to be built for users. In particular, we actively explore inter-relationships with other technologies and hardware/devices. We also have formed the view that one organization alone cannot develop all that is required for a whole industry to migrate. In short, development and adoption is going to be a community effort. Therefore, we are increasingly focused on how we can contribute as and when necessary so as to lead this community effort. An example of leadership is the creation of a standard, smart contract for a digital agricultural asset; an example of contribution is sharing some of our intellectual property with others to develop solutions outside of just the grains industry where we have domain expertise.
Q. Given that agriculture is yet to be transformed digitally, how would you see the adoption of blockchain in agriculture happening in the coming future?
Answer: According to BIS, the global agriculture industry is witnessing the fourth revolution where a wide gamut of innovative technologies is expected to converge to make a digitally connected farm. The revolution is driven by the integration of farming with machines, devices, and information technology. The megatrends impacting the agriculture industry are robotics and drones, artificial intelligence, cloud services, connected devices, nanotechnology, 3D and 4D printing, Internet of Things (IoT), and blockchain.
Blockchain is one such technology which can prove to be an insurer of transparency and security across the agricultural supply chain. The decentralized nature of blockchain technology enables direct transactions without the need of trusted third parties and establishes transparency among the stakeholders. Initially, in the next five years until 2023, the blockchain for agriculture is expected to be dominated by pilot projects from various start-ups and global blockchain technology companies. Post 2023, blockchain in agriculture and food is expected to witness a robust growth. The greater increase in growth is attributed to the wide commercialization of blockchain products by global food producers, retailers, and traders. Blockchain in agriculture and food is expected to witness steady growth post 2025 as the products for blockchain in agriculture and food will garner users steadily.
Q. Is consumption of energy to mine and store blockchain data not a challenge?
Answer: Interesting question. As I said, this list of challenges is just my personal view; accordingly, I don’t believe that ‘proof of work’ and similarly high-energy consumptive consensus mechanisms that are deliberately inefficient by design will be used by supply chain implementations of blockchain in the future.
In terms of storage, we as well as others are looking at combined centralized, traditional database and distributed data storage to ensure that data stored on chain is minimized, especially in early manifestations of blockchain implementations.
In case you wish to get more insights about the market, request for a sample of the report. Also, if you have additional questions you need answers for, you can reach out to our analysts at [email protected].