A look at Blockchain in Australian Agriculture.
Over the last decade, technology in agriculture has progressed in leaps and bounds with the likes of drone technology, precision agriculture, autonomous machinery, data analytics, genetically modified grains, the list goes on. The National Farmers Federation’s (NFF) vision for 2030 is to grow Australian Agriculture into a $100 billion industry – a modest 70% increase on today! And to achieve this, AgTech is expected to play a major role. One of the big buzz words in AgTech for the last five to 10 years is Blockchain, which is what we’re going to focus on in this month’s discussion.
What is Blockchain?
The ‘block’ in Blockchain refers to a block of data. One block is added to another block and another block, becoming a chain. The chain is built in chronological order creating a system where data can be stored and verified. Cryptography, a method of protecting information through the use of codes, ensures changes to these blocks of data is near impossible. If someone tries to manipulate a block of information either maliciously or accidentally, it will be highlighted as there are multiple “copies” of the data so the error or change can be identified.
How will Blockchain benefit Australian Agriculture?
Blockchain technologies could bring numerous benefits to Australian (and in fact world) agribusinesses.
Agribusinesses (including farmers) today commonly rely on multiple systems for recording practices and processes including spreadsheets, different software applications and paper trails. Blockchain technology would allow all data to be stored in a single location and enable third parties involved in the process to contribute to the data. The aim being to make communication and record keeping less complicated, quicker and more transparent. With this idea, a single system would be used for monitoring and recording everything. For example, weather and crop conditions, agronomic inputs, farm plans, practises, paddock rotations and yields, onfarm storage quality and quantity, logistics, sales contracts, transfer details, livestock details and payment. A single source of truth for the entire business operation.
Traceability and Transparency
The days of seeing chicken on a shelf in the supermarket, putting it in the basket and moving onto the checkout have gone. Consumers want to know where their food comes from, how it got to the supermarket shelf and what the chicken (they’re about to consume) ate and drank throughout its life. Blockchain technology would allow this. The bar code could identify where the raw ingredients came from, it could show pictures of the pasture the lamb or beef grazed on, through to what chemicals were sprayed on the nuts in almond milk. As well as education, this technology will hopefully go a long way to bridging the rural and urban divide.
Consumer transparency isn’t the only positive that comes from Blockchain technology. Positive food safety is another benefit with the ability to trace contaminations quickly and efficiently. It can also help suppliers, producers, logistics and end users identify and remove ineffective processes and ensure optimal quality control conditions.
Finances and payments
Another benefit is prompt and secure payment. Blockchain technology would allow farmers to retain ownership/title of their produce until the transaction occurs and funds are received, thus alleviating a key risk in selling commodities. On top of this, the payment process will be streamlined, meaning once farmers are paid for their produce the process of repaying suppliers and financiers is simple and more efficient with cashflow automatically allocated to repay suppliers and financiers when a sale process is completed.
When will this all happen and who will do it?
By streamlining the supply chain from the producer through to the processor and onto consumers, Blockchain is working to become the single source of truth for food production in Australia. There are a few players currently developing and investing in this technology with transactions in the cotton, grains and the protein industry already taking place. However, the implementation and adaptation of Blockchain technology on scale won’t happen overnight. But once perfected, the agricultural industry should see widespread benefits in productivity and profitability, helping us to achieve the NFF’s vision of a $100 billion agricultural industry by 2030.
Agfarm is watching this space closely. In time, we see Blockchain technologies having a very positive impact on how we process and manage Agfarm Accelerate crop input finance. With six years of offering crop input finance, we are always looking for ways to improve our offering in the growing alterative finance market and technologies like Blockchain which could offer improved transparency, reduced payment risk and efficient information flows will allow us to continue to offer leading crop input finance products to Australian agribusinesses.