Blockchain in Agriculture: How Crypto is Disrupting Farming

Blockchain in Agriculture: How Crypto is Disrupting Farming
External Guest Writer
May 11, 2021

Blockchain is one of the latest developments in the field of information and communications technology that has begun to revolutionize our planet. The applications of blockchain are only now being fully explored, and its potential is seen as truly immense.

A recent study by Grand View Research Inc. highlighted the fact that the global blockchain industry is going to be worth USD 394.60 billion by 2028. This speaks volumes about the future potential of this sector. 

Blockchain has recently started to influence the dynamics of the agricultural industry as well. We discuss the manner in which blockchain and crypto is shaping the agricultural technology sector, the applications of this technology in the farming industry, and the benefits and limitations of this innovation in our article below.

What is Blockchain Agriculture?

Blockchain can be defined as the ledger of transactions and accounts that are noted and stored by all involved participants. The purpose of blockchain is to increase transparency and accountability, and this is why it is being seen as an important element of modern day farming.

Blockchain in farming or agriculture is utilized as a system that helps to increase the volume of reliable information available with regard to inventories, contracts in agriculture, and the general state of the farms. Collecting such type of information has been a costly affair in the past, but blockchain can help to change that in the near future.

Thanks to blockchain in farming or agriculture, it is now possible to improve the quality of the food supply chain and maintain the trust between the customers and farmers by constantly tracking the provenance of various foods.

As it is a reliable and trusted method of storing data, it allows for the facilitation of various data-driven innovations in order to herald in the era of smart farming. When coupled with the concept of smart contracts, it helps to also smoothen the nature of transactions between various stakeholders by making things more timely.

This is only the tip of the iceberg when it comes to blockchain in farming or agriculture. We look at the various examples and applications of blockchain in the landscape of agriculture in the section below.

Examples and Applications of Blockchain in Agriculture

There are numerous applications of blockchain in the landscape of agriculture currently, and even more are being developed based on the recent innovations in technology. In order to discuss the major applications of blockchain, it is possible to break it down into four major segments:

  • Smart farming
  • Food supply chain
  • Agricultural insurance
  • Transactions of agricultural products

Smart farming

Smart farming or smart agriculture is the process of utilizing various modern technological developments in order to improve the efficiency and reliability and the farming process. It includes inculcating facets such as ICT, internet of things (IoT), various sensors, machine learning technology, and numerous data collection and analytical machines such as unmanned aerial vehicles.

Although smart technology has been available to farming for some time now, a major issue in the application of this technology has to do with establishing a reliable and comprehensive security system in order to properly manage and utilize the data being collected.

In the traditional system of managing smart technology, all the mechanisms are usually centralized, and this leads to various inaccuracies and distortions in the data collection. It also opens the possibility of leaving the entire system open to a cyber-attack.

An example of this is the fact that environmental monitoring data is often managed and controlled by government bodies that tend to have their own interests in mind while handling this data. This gives them the power to manipulate the information in order to make decisions based on their agenda.

Thanks to blockchain technology, it is now possible to store information in a secured way. The various stakeholders of the process are allowed to generate the necessary data every step of the way, ranging from the seed to sale of various agricultural produce. Blockchain helps to retain the transparency of the data and ensures that all figures are entirely unchangeable. 

The decentralization offered by blockchain is by far its biggest strength when it comes to smart agriculture. This feature also allows for the ease of distribution of data to the screens of the various stakeholders while minimizing data loss and distortion. All the transactions in a blockchain are time stamped for the sake of transparency as well.

Smart Farming Model

Based on the utility and potential of blockchain in agriculture, numerous smart farming models have been developed so far that help to culminate the features of blockchain technology and IoT.

One such model has been developed specifically for greenhouses that require the use of IoT sensors to act as a private local blockchain that can be easily managed centrally by the farmer.

Another model has been proposed for general use that also puts the IoT technology and blockchain to use. The core principle of this framework is to help develop trust among the various participants of the blockchain. Smartphones can be used by various stakeholders in order to access the data generated from every step of the farming process, right down to the sale of the products.

Smart Farming Technology

Numerous companies are also spending a lot of time and resources to develop various pieces of technology related to smart farming. An example of this would be “Filament” — a brand that offers devices that can connect various networks to physical objects using smart farming technology. The company developed a piece of hardware the size of a coin in order to help individuals perform secure transactions against a blockchain.

Food supply chain

The food supply chain in agriculture has now become longer and more intense than ever before thanks to the forces of globalization. The fact however remains that there are plenty of problems that exist in the current food supply chain, and this includes issues related to food safety, quality, traceability, trust, and supply chain inefficiency. This tends to burden not just the economy and our society, but also endangers the health of customers.

Blockchain technology helps to solve a large number of these issues by enabling an environment where trust can be established between the producers and consumers. Transparency in this process can be greatly boosted by offering individual product information within the blockchain.

This also has enormous implications for the businesses and farmers as well. It allows organizations to boost the value of their products and thereby increase their competitiveness in the marketplace. It would also make it highly unlikely that suppliers of poor-quality or fraudulent products would survive in the economy for very long if they continue their malpractices.

From a consumer perspective as well, the use of blockchain can be vitally important in offering users reliable and authentic information regarding how their food is produced. It can be used to address numerous consumer concerns relating to the quality, safety, and environmental friendliness of their food. As consumers can attain a greater understanding of their food production process, it allows them better freedom to interact with the producers of their food. 

When viewing the merits of blockchain from a regulator’s point of view, it is clear that this technology offers accurate information to necessary organizations to help them execute on efficient regulations.

Thanks to the various applications of blockchain in food supply chain and management, numerous organizations have already begun utilizing this technology in their processes. Brands such as Wal-Mart,, and Alibaba are all actively utilizing traceability projects based on the principles of blockchain in order to closely track their entire process of sales, processing, and food production. 

Agricultural insurance

Climate change in recent decades has made the entire agricultural process highly unpredictable. The extremes in weather conditions affect the quality of both crops and livestock alike. In order to counter the unpredictability of farming, agricultural insurance schemes are considered to be a go-to option for most farmers. 

Farmers pay an reasonable insurance premium at the start of their cropping cycle and are eligible to receive a payout in case they experience any losses in their farms due to weather abnormalities. This gives farmers a fair bit of buffer room in order to tackle the uncertainties caused by weather changes. 

There are various types of insurance policies available to farmers that differ based on how losses are calculated and payouts are executed. Indemnity-based insurance is a popular type of agricultural insurance that indemnifies farmers based on the assessment of an expert who visits the farm to examine the damages.

Indemnity-based insurance, however, has numerous drawbacks related to damage assessment and lack of insurer information, and this negatively affects the farmers and the insurance agency as well in the long-run.

In order to provide a better alternative to indemnity-based insurance, blockchain technology enables the use of index-based insurances. It improves the overall accuracy of the insurance process by triggering a payout based on a measurable index instead of the loss. 

Blockchain can contribute to the improvement of index-based insurances in two major ways. Firstly, the basis of payments can be switched to a timely and automated parameter such as weather data. This parameter can be used to trigger the final payout based on the clearly defined terms of a smart contract.

Secondly, all data sources including weather information and plant growth information can be automatically utilized in the insurance scheme with the help of a smart oracle. This helps to improve the payout process and the index determination substantially.

Smart index insurance contracts are already in play at various locations around the world. Etherisc, for example, is a Swiss-based organization that helps farmers attain decentralized crop insurance that’s based on blockchain technology. The payout of this insurance is based on weather data, thereby improving the reliability of the entire process.

Transactions of agricultural products

The purchase and sale of agricultural products on ecommerce sites can be greatly boosted with the help of blockchain technology. It helps this segment in two key ways:

  • Information security 
  • Supply chain management

With regard to information security, blockchain offers the vital feature of private key encryption in order to improve the validity of the authentication process. This can help to apply all of the data collected from the planting and harvesting phases in a safe and secure manner.

In terms of supply chain management, blockchain helps to improve the overall efficiency of the process by reducing the signaling cost for all the entities involved. 

Additionally, blockchain also helps to improve the safety of the payment process by offering digital payment options at zero-transactional fees. The use of cryptocurrency in this method will also help to bring down the transactional cost further.

All of this helps to boost the consumer confidence in the process of purchasing agricultural products on ecommerce sites. This trickles down into numerous benefits for farmers who stand to make a lot more money and gain a greater audience for their products online.

The Benefits of Blockchain in Agriculture

Based on the various examples and applications of blockchain discussed above, it is clear that there are heaps of benefits to be attained by the use of blockchain technology in agriculture. We discuss some of the major benefits in the section below:

  • Blockchain in agriculture enables peer-to-peer transactions to occur with immense transparency and does not require an intermediary or middleman in the process
  • The lack of a central authority figure changes the nature of trust in the transaction. Instead of placing trust in an authority, it is placed in peer-to-peer frameworks and cryptography
  • Blockchain helps to improve and restore the trust between various stakeholders such as consumers and producers. This can help to bring down the transaction cost in the market in the long-run
  • Thanks to blockchain technology, we now have access to a reliable method of conducting transactions between various anonymous members
  • It is easy to detect and report any instances of malfunctions or frauds in the blockchain. The use of smart contracts makes it easier to report any issues in real time as well
  • Tracking products in an extensive supply chain is a lot easier with blockchain technology. This helps ease the customers minds with regard to the safety and quality of the foods they consume
  • There is greater transparency regarding all transactions within a blockchain ecosystem. All the data collected under this method are highly reliable and traceable. This helps to develop various data-driven insurance options and facilities to make farmers less vulnerable to the uncertainties of agriculture

The Limitations of Blockchain in Agriculture

The following are some of the limitations of blockchain in agriculture that need to be addressed in order to further this technology.

  • The motivations of all transacting parties to provide accurate information on the blockchain ledger needs to be further studied. This becomes especially vital for small-scale farmers
  • The overall technological benefits of using blockchain may be dependent on the size of the farm. While it's easier for small farms to participate in the insurance created by blockchain, it is more convenient for larger farms to collect and integrate various sources of real-time farm data
  • Uploading the data to a blockchain is known to be an expensive process. This acts as a barrier to the adoption of blockchain by farmers who cannot afford it. While setting up the ledger itself is relatively inexpensive, the process of accumulating the data can be time intensive and costly

Banking on Blockchain Technology

While blockchain technology has not yet been perfected, the sheer number of advantages that have already been derived from this medium in a relatively short period of time is impressive. When implemented well, blockchain has the potential to radically change the face of the agricultural sector. 

As technological advancements continue to develop, the reliability and efficiency of this method is bound to improve as well.