By 2050, the UN says the world’s population will exceed nine billion, some 20% more than today. Most of this population increase will occur in rapidly-urbanizing developing countries.
The World Health Organization estimates that 70% of the world’s population will be urban by 2050, compared with roughly half today. To feed this larger and more urban population, food production must increase by 70%.
Annual cereal production will need to rise 50% to support population growth, despite the fact that yield growth has been steadily declining.
Blockchain-enabled applications will play an important role in addressing this challenge. Food supply chains are inefficient and suffer from quality control problems, especially in developing nations. One of the clearest real-world applications of blockchain technology is to add greater visibility and efficiency across supply chains.
Although agriculture is a $5.5 trillion global business, employing more than one billion people, it remains highly inefficient. For many smallholder farmers in developing countries, affordable access to capital remains a huge challenge.
Blockchain solutions can solve these financing difficulties. As it stands, farmers often wait weeks or months for payment after delivery and this forces them to deal through larger players with greater bargaining power. This directly translates to lower income for farmers, as they do not receive their fair share despite being the most important part of the chain.
As the world urbanizes and becomes more conscious of the carbon footprint of transporting goods over long distances, indoor farming is playing an increasing role. Blockchain solutions and smart contracts allow for careful management of water and energy. Automated data collection and analysis creates the ability to better manage crop inputs, like water and energy, and the corresponding automation of indoor farming operations.
For example, a farmer using indoor hydroponics and a closed loop system may be able to reduce water usage by up to 90%. Increasingly, global food demands will be met by crops grown indoors, in environments more efficient and more controlled than the outdoors. By moving plants indoors, traditional dependence on the weather can be eliminated. With sensor arrays, plants can “communicate” precisely what they need 24/7.
Blockchain solutions and the “Internet of Things” (IoT) will save time and money for farmers and increase yields. Despite a common belief that farmers are slow to adapt, they have always been eager adopters of technologies that make sense and deliver genuine value. Data democratization of the food chain will increase efficiencies, reduce waste and increasingly transfer remuneration to the stakeholders delivering the greatest value.
Blockchain solutions allow to build a new model of trust in agricultural supply chains. Under the old Information Technology paradigm, agricultural, environmental and regulatory data is stored on centralized computer servers and managed by administrators trusted to maintain data integrity, security and access authorization.
This centralized data administration is a source of risk — data on crop safety and quality data. Data can be lost due to failed or absent back-ups. Centralized administrators may act on their own agendas, with their own interests in mind, impacting decisions related to data access and security.
Applying blockchain technology to crop data ensures that information about our food and its sources is incorruptible. Blockchain and IoT technology simplifies data management throughout the complex system of farmers, brokers, distributors, processors, retailers, regulators and consumers. Information on the food we eat becomes simplified and transparent. Consumers can enjoy greater trust in the food they put on their table and regulatory agencies gain greater confidence in the data reported to them.
Blockchain redefines trust across the agriculture spectrum with arm’s length cryptographic security, eliminating any potential pursuits of self-interest on the part of data administrators or other actors.
Blockchain enables real-time payments concurrent with delivery and better visibility to buyers, leveling the playing field for farmers. Farmers get paid sooner and increased competition for their crops raises the prices they receive while simultaneously helping consumers to pay lower prices for food through a much more transparent, secure and environmentally sustainable supply chain.
Erhan Cakmak is CEO of Pavo, that is working to provide IoT blockchain solutions for the global agriculture ecosystem.