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Agribusiness in the new era of Blockchain

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The author, who was in a summit of agro-technology in the US, says that stocks with cryptographic digital platforms will expand the horizon for many agricultural uses.

The particular technology Blockchain which uses cryptography (the technique of writing with secret keys, so that the writing is only intelligible to those who can decipher it ) can create a ledger of assets and transactions that can not be pirated or counterfeited. This allows complete transactions such as currency, commodities or anything else of value to be done transparently. All of this can happen without the need for an intermediary (banks, brokers or others).

Imprinted behind this is that if we can build trust and responsibility among market players then there is less need to individually assess each person for their reliability and ability to perform as in the past.

This implies that market players who could not previously establish trust and develop a relationship for some reason (not live near each other, had no pre-set standards) now can do business without needing an intermediary to generate trust (and of course take a margin) in the middle.

This also means that new market participants can also have a “seat at the table” through this technology. The company AgriLedger, for example, is working to open new markets for producers in developing countries using Blockchain.

Handling products that often have a very short shelf life, involves a lot of commercial risks. Furthermore, often the supply can be uncertain. Companies like UPS  have joined Transport Alliance to play a central role in intelligent logistics network of the future, based on Blockchain technology. Now we see this technology starting to materialize into other industries, and so agriculture will certainly be the next.

For more than a few years, consumers have begun to suspect food they are consuming is not what they think it is. ie truly organic, true country of origin, blended with inferior products etc.  Food fraud costs the global food industry around USD 30 billion a year. Food allergies are much more common now than 25 years ago and consumers are beginning to demand information relating to the food they are consuming.

As this trend continues to grow, the big chains have no choice but to use Blockchain to ensure accountability, traceability and quality, therefore, it will become a competitive advantage for brands that adopt it first.

This allows consumers and bulk food buyers to identify the source quickly in case of an outbreak of food safety risk, then not only it could save time and money but also lives.

The advantage of purchasing locally produced food comes from the premise “you know exactly where your food comes from and who produced it and know it’s fresh.”

What if we could make this happen on a larger scale? That is, no matter where you buy your food, not just know where it comes from, but when it was harvested and processed, and even who produced it. Companies like Ripe.io are working to resolve the issue of traceability right now. This could also go a long way to prevent food fraud, false labelling and redundant and sometimes corrupt intermediaries.

Recent food scandals in Brazil with substituted meat and in China with milk powder additives causing deaths will all speed up the pressure to adopt this technology.

The food supply chains in most developing countries are inefficient due to the asymmetry of information. This results directly in lower incomes for producers since they do not receive their rightful share, even though they are the most important part of the food chain.

With Blockchain, the food chain is simplified as data management in a complex network that includes farmers, intermediaries, distributors, processors, retailers, consumers and regulators is simplified and becomes transparent.

In New Zealand, one of the world largest dairy companies Fonterra which has had food safety issues in the past is now using Blockchain as part of its export business. The Fonterra’s Anchor product range will be the first to be shipped as part of Alibaba’s Food Trust Framework using blockchain technology to improve visibility and enhance consumer and merchant confidence.

In addition to blockchain technology, this framework will tag products using QR codes to authenticate, verify, record and provide ongoing reporting throughout the product’s lifecycle.The new framework gives end-to-end traceability and transparency throughout the supply chain to enhance consumer confidence.

In the case of South America, due to its diversity of climates and soils, ancestral knowledge and customs, such technologies will lower the barriers to market access for small and mid-sized producers.

A new era with unimaginable high ceilings is glimpsing changes not only for production but for marketing Agricultural products to the world.

The author is the manager of Aapresid Prosprectiva.

Source: El Clarin

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