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Blockchain technology allows the user to keep track of all transactions done in real time. The technology enables highly secure digital transactions and recordkeeping in which the data exchange is recorded— time, date, and nature—when the participants in a blockchain complete a transaction. The record is saved permanently when the parties have confirmed that the information obtained is accurate and can be made accessible to other participants in the system. Blockchain can be applied to all sort of transactions, and numerous applications in agriculture. The technology reduces inefficiencies that arise in the agricultural industry like food safety, pay, and transaction times.
Food traceability: Consumers are showing interest in the origins and contents of the food they have. In the past few years, the demand for organic products and locally farmed products has grown substantially. But the producers can sell mislabeled products because the consumer can’t trust and has no real way of verifying the origin of the products. Blockchain can record the unalterable information at each step in the food supply chain, and it can even provide the origins of food items and the exact journey from farm to delivery.
Optimizing the supply chain: Apart from helping the consumers make informed purchases, improved supply chain transparency could also benefit farmers. The agricultural sector is complicated; it becomes difficult for farmers to know the exact information of the price, and the location that their products are sold. Blockchain technology can rectify this problem by recording the transactions in real time and providing the latest supply and demand information to participants. Farmers can have access to such information, which could allow them to set their prices and make the best of the quantities of products made available in the market. Farmers don’t need any middlemen and agents in selling their products or any other issues. As the ongoing transactions histories are recorded, blockchain can make it much easier for all parties to make the persistent effort.
Better pricing and payment options: The current system takes weeks for farmers to get affordable prices for their goods, and regular payment options which are quite expensive. Recently, developers have designed blockchain-based apps that provide low costs, secure, and peer-to-peer fund transfers. Some are even using “smart contracts” that automates the payments as soon as a buyer confirms the delivery of products.
Though the blockchain technology is promising, there are some legal issues like governance, contractual certainty, and privacy. However, the technology certainly has the potential to surmount all the obstacles and show a significant reduction in agricultural transaction costs.