According to many, blockchains will drastically change the future and the world. It also offers great opportunities for the agrifood sector.
The technology of blockchains underlies the bitcoin, the virtual currency. But the use of blockchains goes far beyond paying with virtual money. This technology makes it possible to securely share valuable information with other parties in the chain.
With blockchain , every party involved in the chain has the same version of a database on a computer. For example, the overview keeps track of who does which transactions. The overview is maintained by the parties involved and not by a designated body as a bank. The blocks of data are linked in a chain, from which the term blockchain has arisen.
Blockchain reliable chain by mathematical formula
In the case of a transaction, a kind of mathematical formula ensures that the transaction can not be tampered with. To add the new transfer to the overview, all computers must give approval. If this does not happen, the transaction does not take place. Through a chain of reliable and secure transactions , the entire blockchain, the chain, remains reliable. Nothing can be changed about 'approved' transactions that took place in the past.
Blockchain ensures transparency
The blockchain offers reliability and safety and also ensures transparency for both parties in the chain and consumers of the end product. After all, when using the technology, all participants can follow and monitor all activities in the entire chain. Even in case of a recall, it is easier to trace which products have to do with it.
Dairy cow financed by processor
A report from Rabobank states that blockchains can change the way of financing in the agrifood. Because all flows are visible in a blockchain, it becomes possible to finance at the level of assets instead of at company level.
As a result, for example, the dairy cows on a dairy farm can be financed by the milk processor. This ensures the supply of milk, and the cows can be followed by modern technology on the basis of productivity and health. For example, milking machines could be financed by leasing companies based on the amount of use of the machines.
First blockchain trade: banks guarantee position
A recent example is the setting up of the first agricultural trade via blockchain . As a test, an established platform, involving ING and ABN Amro as Dutch banks, transported a shipment of soybeans from the US to China. During this blockchain trade, all digitized documents were automatically checked.
This made manual checks unnecessary. As a result, the processing time of the documents was five times shorter. The total transaction duration was shortened from the normal 11-14 days to 4 days. Other benefits offered by the blockchain transaction were the ability to monitor real-time progress, lower costs and reduce the risk of fraud.
Stronger position for smaller companies
As a result of blockchains, the report also mentions the strengthening of the position of smaller companies. These companies are no longer lagging behind in terms of information. By using blockchains, the smaller companies also gain insight into the information that larger companies normally obtain through their network or activities.
Blockchain facilitates financing for small businesses
Blockchain can also play a role in financing here. The report gives the example of the Asian Development Bank, which rejects 57% of the financing requests for small and medium-sized companies. This compares with only 10% of applications from multinationals. This is because financing for trade partly depends on the situation on the company balance sheet. The technology of blockchains changes this for smaller companies.
Ankle strap for free-range chicken
Another example of blockchains within the agrifood is that of a Chinese company. Free-range chickens are followed via an ankle strap and blockchain. A free-range chicken receives an ankle strap that registers every aspect of the chicken's life, such as age and the distance that it travels (outside). This data is immediately saved in the blockchain. As a result, it is no longer possible to tamper with these data.
This system gives the consumer certainty about the origin and life of the chicken in the supermarket. The company that developed the idea is an insurance company and wants to better protect companies that insure or finance meat producers.
Precision agriculture determines the use of blockchains in agrifood
According to Lan Ge, researcher at Wageningen University & Research , the development of the blockchains goes hand in hand with the entire digitization. Collecting and making data available is an important aspect to integrate blockchains in the agrifood chain, according to Ge. How fast blockchains in the agrifood sector are going to be used by farmers, also depends on precision farming.
Blockchain provides more margin for farmers
At present, data is only available in private computers, data is entered manually and data is not standardized. That means that the data can not be shared in a way that they really mean something.
However, she is optimistic and expects that blockchains will no longer be future music for farmers within three to five years. According to her, blockchain also generates more margin for farmers, through costs of parties in the chain that disappear.
Benefits:
- Transparency for chain parties
- Transparency for consumers
- Safety and reliability
- Stimulation of cooperation
- Lower administrative costs
Challenges:
- Convince companies of blockchain
- Digitizing data
- Technical and organizational agreements
There are challenges that ensure that it takes a while before blockchains are fully integrated. As an example, you mention companies that obtain and maintain their market position through competitive information, and which now benefit from less transparency. According to Ge, it is an important question how these companies can be convinced to also use blockchains.
Farmers can take the initiative themselves
The Rabobank report states that for the traceability of products it is necessary that all parties that do something with the product participate in the blockchain chain. According to the report, the first initiatives will initially consist of only a few links.
Ge expect many concrete activities of the coming year land come. According to her, farmers can take the initiative or join one of the many other initiatives that have been started up. If good agreements are finally made between the participating parties, it is only a matter of downloading or using an app, website or computer program to participate in a blockchain.