How blockchain can help transform agriculture in Africa
So much technological progress is happening in the agricultural space globally, and Africa is riding the wave. Last year we organized 11 mission-driven agritech startups in Africa using advanced technologies to boost agricultural productivity. Last month we looked at agricultural trends to watch this year. Agritech startups are key to spreading the gospel of technology adoption in agriculture across the continent. Precision farming, aerial mapping, IoT sensors, vertical farming, location intelligence and agricultural robotics are already deployed on the continent. However, the continent’s technological and agricultural synergy is not yet at its peak. More technology is needed to transform agriculture on the continent. One of them is blockchain technology.
What is Blockchain?
Blockchain is a term that has recently gained popularity. Although it first attracted attention in cryptocurrency, the system is applied in different sectors such as transport, lotteries, politics and, more recently, agriculture. A blockchain is a decentralized register of all transactions on a peer-to-peer network. By decentralization, this means that participants can confirm transactions without the need for a central clearing authority. By design, data stored on a blockchain cannot be altered. The innovation of blockchain is such that it ensures the accuracy and security of a set of data that can be trusted without the need for a third party. This transformative technology has the potential to revolutionize agriculture in many ways.
How Blockchain Transformed Zimbabwe’s Beef Export Market
Like many African countries, agriculture is Zimbabwe’s economic mainstay. Agricultural activities contribute 40% of total export earnings and about 17% of the country’s GDP. In 2018, their agricultural sector experienced a turnaround with the outbreak of a tick-borne disease that killed 50,000 cattle. Zimbabwe is renowned for the quality of its beef and its export strength. Zimbabwe beef is one of the best in the world, and it comes only second to Scotch beef from Scotland. At one time, Zimbabwe’s beef cattle herd numbered approximately $50 million every year exports to the lucrative European market, such as the UK, Germany and the Netherlands. The unprecedented tick-borne outbreak caused a setback for this booming market, and the country’s credibility as an international beef exporter began to wane. Zimbabwe has been unable to sell beef to high-paying markets in Europe and the Middle East due to the lack of a traceability system, which has resulted in lower export earnings.
Last year a blockchain-based livestock traceability system brought end-to-end visibility to the livestock supply chain in the country. Zimbabwean farmers could once again prove the origin and medical history of their cattle. How does this work?
Cattle are tagged with a unique UHF radio frequency identification tag and registered on a traceability system with the identity of the owner. Each time the animal is dipped, vaccinated or receives medical treatment, the tag records the event in the system. This makes it possible to securely follow the authenticity of the cattle’s journey at every stage, from birth to sale. Tracking the medical history of cattle on a tamper-proof blockchain ledger has helped build trust in Zimbabwean cattle farming and restore credibility in Zimbabwe’s beef export. This is just one of the many benefits of blockchain in agriculture.
Blockchain in the agricultural supply chain: Agri-food products are tracked with precision and transparency from production to the time of delivery to the consumer. Information regarding food origins and data on when a product was harvested, processed and produced can be obtained openly by a consumer by simply scanning a QR code. This helps to ensure quality control because with reliable agricultural products, farmers can sell at good prices and consumers are assured of safe products.
Blockchain technology in agricultural trade: Blockchain in agriculture helps simplify transaction processes and creates common ground for smallholder farmers. Supply chains in the African agricultural space are highly fragmented. As a result, the price of agricultural products is likely to be high even before they reach the final consumer. Blockchain technology enables seamless peer-to-peer transactions in the agricultural sector without an intermediary like a bank or an intermediary. By eliminating the need for a central authority, farmers can set their fees without the interference of brokers, which in turn reduces the cost of agricultural products.
In addition, farmers in emerging economies sometimes find it difficult to access a wider market. This partly contributes to the 100 million metric tons of food, worth about $4 billion, lost each year due to post-harvest losses. Blockchain can help connect farmers to suppliers and food processors around the world by providing a secure and trusted environment for buyers and suppliers.
In Nigeria, Agrichainx, a blockchain agriculture platform, helps farmers, retailers, distributors, and manufacturers seamlessly connect and interact with each other. In Kenya, Hello tractor use a AI and blockchain based platform connecting African farmers with tractor owners and data analysis for better agricultural production.
Smart contracts in the blockchain
These programs stored in the blockchain play an essential role in the transformation of the agricultural space in Africa. Smart contracts perform similar functions to paper agreements, but are slightly different due to their automated nature. The clauses making up the contract are executed without human intervention. In agriculture, smart contracts are used for finance and insurance, green bonds, land registration and verification.
A smart contract creates an incorruptible registry of land records: It creates a reliable registry of farmers’ land ownership, verified by other entities, and reduces the risk of litigation, which is prevalent among rural farmers in Africa familiar with the traditional/cultural system of land division and ownership. On two-thirds of the land in Africa belongs to the community. Many land records in most African countries date back to colonial times, so many landowners do not have official documents such as title deeds to prove they are the legal owners.
Smart contracts on blockchain technology help solve these complications. They are linked to an exclusive digital ID/ID and stored on the blockchain. In Kenya, Land LayBy uses a shared Ethereum-based ledger to maintain records of land transactions. These recordings can never be modified, corrupted, falsified or reproduced by mistake. Land LayBy places legally verified land information with trackable histories on the app. Users can access the platform and add additional information in the field. A person looking to buy land or rent it to grow crops can log in to interact with the current owner.
Smart contracts provide better insurance programs for farmers: Diseases, pest invasion, fires, climate change can negatively affect crop yield. To mitigate the effect of losses incurred during such events, farmers purchase insurance to help them bounce back financially. The insurance process can be cumbersome for the farmer, the insurer and all parties involved. Indeed, unpredictable events and erratic weather conditions make it difficult to estimate losses in a timely and correct manner. This uncertainty allows bad actors to act fraudulently. Smart insurance contracts linked to wallets with weather data provided regularly by sensors in the field can help make the process transparent and minimize the risk of misrepresentation.
Written by Adekunle Agbetiloye