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Blockchain solution for the agro-market
By Hoang Viet
Sunday,  Feb 21, 2021,10:25 (GMT+7)

Blockchain solution for the agro-market

By Hoang Viet

The inspiration of the agricultural blockchain has gained momentum, and hundreds of blockchain platforms have been developed, allowing farmers to open their accounts when necessary, and even to build brands - PHOTO: THANH HOA

It’s a paradox that cultivators and rearers have continuously suffered losses while providers of fertilizers, pesticides and animal feeds have earned handsome profits, and prices of agro-products are pushed up, restricting their exports. Also, while farmers and authorities have poured money into building brands and complying with geographical indications, fake agro-products have been prevalent in the market, and the agricultural insurance system for farmers has not been able to develop.

The success of the AgriDigital platform and the introduction of dozens of other agricultural blockchains have helped farmers sell their products faster and at higher prices and get insurance, while the agro-supply chain and food hygiene conditions are safer because they are always within control.

Blockchain solution for agriculture

The blockchain technology is a ledger system online whereby information is gathered into blocks and connected continuously in time order to create a chain. The participant or the account owner, in this case farmers, and their partners, including providers of fertilizers, animal feeds, banking and insurance services, agro-product buyers, agro-product processors, exporters and foreign customers, are co-owners of the ledger, as they can record information and read relevant information. Farmers can get advice for starting a crop and choose buyers who offer the best price. Everything is transparent in each chain, and all smart services or contracts take place on this technology platform.

In December 2016, AgriDigital was successful with the transaction of 23.46 tons of grains on a blockchain. Since then, more than 1,300 people have quickly used this cloud-based technology for transactions of 1.6 million tons of grains worth US$360 million. Louis Dreyfus Co. (LDC), one of the world’s biggest food traders, has also used the blockchain technology for cooperation with Dutch and French banks in agro-commodity trading, mainly soybeans, from the United States to China. According to LDC, with the automatic data matching in real time, the time for processing of documents has been reduced to one-fifth.

The inspiration of the agricultural blockchain has gained momentum, and hundreds of blockchain platforms have been developed, allowing farmers to open their accounts when necessary, and even to build brands. Some popular platforms are AgriChain, TE-FOOD, Agrolot, IBM Food Trust, Bext360, AgriDigital, AgriLedger, Etherisc and Herbalist. TE-FOOD, for example, helps organizations identify products, and collect, store, process and present data, enabling tagging and monitoring food products from start to end. There are now over 6,000 businesses using TE-FOOD. The Vietnam National University HCMC is one of the partners on this platform.

Besides farmers, organizations, associations and agro-product processors also benefit greatly from the blockchain, and this technology is thus applied in different areas of agriculture. Sustainable Shrimp Partnership (SSP) uses the IBM Food Trust to trace the origin of shrimps for consumers. Nestlé uses OpenSc to monitor milk from farms and producers in New Zealand to factories and warehouses in the Middle East. Cermaq Salmon and Labeyrie collaborate on IBM Food Trust to provide information on fish species, their origins, the time and date of birth, and farming conditions. 

The agricultural blockchain has developed rapidly thanks to special-use platforms where account owners are provided with necessary resources to design their own ledger systems. Bext360 is a platform for supply chains for coffee, cotton, fisheries, wood and palm oil in developing countries. BeefChain provides supply chain solutions for beef and livestock. Herbalist connects buyers and sellers of medicinal herbs and spices worldwide. Etherisc provides solutions for plant insurance worldwide.

Towards Southeast Asia

Agricultural blockchains have started to take root in the Association of Southeast Asian Nations (ASEAN), an agricultural region in the world, though most businesses have not yet announced them during the trial period while most small farmers have not yet been guided how to use the technology to protect the value of their products in the market.

The Malaysia Palm Oil Council (MPOC) has cooperated with BloomBloc to develop the blockchain technology aimed to enhance accountability and origin traceability. They have developed a mobile blockchain app and a web interface to monitor the entire palm oil supply chain. Smartphones help create end-data which are uploaded on the system, enhancing the transparency, accuracy and prestige for relevant partners and customers.

The trial of Blocrice in Cambodia funded by the non-profit organization Oxfam in April 2018 is an experience for blockchain application among small farmers. The project has helped small-scale organic rice farmers get better contracts with the connection into a network of partners in the supply chain, ensuring a fair share for everyone during transactions. The one-year project engaged 50 farmers growing organic rice with output of 2-2.5 tons. The accounts on IBM Food Trust allow recording all elements of the supply chain with a unique identification code, which then introduces a smart contract among all parties. Upon delivery, acceptance of the products is recorded with digital technology, and digital payment is made to the accounts of farmers managed by local banks.

Experts in Vietnam as well as other Southeast Asian countries learned the results of the trial of the Blocrice platform at the 2018 ASEAN Global Blockchain Summit in Phnom Penh. At the technology and startup week in Hanoi and HCMC in late November 2020, two core technologies mentioned were artificial intelligence and blockchain. Though not any agricultural blockchain project was announced, some blockchain investors were found to be present at the event, among them were Binance, a fund for investment in blockchain application and non-concentration finance projects, and Infinity Blockchain Ventures, with the initiative for origin tracing solution to make customers confident in the quality of agro-products. Citing the motto of “Change or die,” the CEO of Infinity said farmers are usually not much familiar with technology, but Covid-19 forces them to change.

Reference materials

The Rise of Blockchain Technology in Agriculture and Food Supply Chains

Meet The Blockchain Startups Disrupting Agriculture Right Now

Applications of blockchain technology in the food industry

Blockchain To Help Rice Farmers

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