Articles, Blog

Blockchain in Agriculture | CoBank Knowledge Exchange Brief

September 4, 2019

While Blockchain technology is still in its
infancy, companies around the world are racing to harness the distributed ledger technology
to simplify business transactions – but so far adoption has been limited. In agriculture, numerous blockchain-based
solutions have been deployed, but remain largely relegated to a tiny corner of agricultural
commerce. Blockchain solutions still remain elusive
for the complex global commodity trading sector for crops like corn, soybeans and wheat. Don’t expect a blockchain-based transaction
platform to be adopted for global agricultural commodity trading any time soon, though. As you can see in this graphic, the agricultural
commodity supply chain in the U.S. is complex with a crop like corn being blended from numerous
farms, and traded through a network of handlers and shippers. This creates a major challenge with digitizing
Chain of Custody documentation in a blockchain transaction platform where the crop frequently
changes hands and is comingled on the trading route before reaching the end user. Numerous roadblocks must be resolved to make
blockchain a reality, including: • Creating a digital ecosystem for Chain
of Custody documentation like bills of lading and letters of credit. Work is being done now in the private sector
to resolve this issue. • Improvement in global industry protocols
in grain quality and standards, and consistency in language. • Investment in storage and transportation
to allow higher-value or value-added crops to be segregated. • And technological advancements in sensors
to monitor movement of commodities and allow blockchain-based smart contracts to be executed
along complex trade routes. Although the challenges are big, agribusinesses
and financial institutions in the commodity trading sector nonetheless remain keen on
developing and deploying digital solutions for commodity agriculture. If successful, global agricultural commodity
trading can achieve greater efficiencies from less cumbersome documentation, easier payments
between buyers and sellers around the world, and greater value returned to market participants
from farmers to consumers.

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