How blockchain can help transform agriculture in Africa
So much technological advancement is happening within the agricultural space globally, and Africa is riding the wave. The main story of this magazine issue curates some mission-driven agritech startups in Africa using cutting-edge technologies to boost agricultural productivity. We’ve also projected agricultural trends to watch out for in 2022. Agritech startups are critical 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 being deployed on the continent. However, the continent’s technological-agricultural synergy is not yet at its peak. More technology is needed to transform agriculture on the continent. One of which is blockchain technology.
What is blockchain?
Blockchain is a term that has gained recent popularity. Although it first gained attention in connection with cryptocurrency, the system is applied in different sectors like transportation, lottery businesses, politics, and, most recently, agriculture. A blockchain is a decentralized ledger of all transactions across a peer-to-peer network. By decentralized, it means participants can confirm transactions without the need for a central clearing authority. By design, data stored on a blockchain cannot be altered. The blockchain’s innovation is such that it ensures the accuracy and security of a dataset that one can trust without the need for a third party. This transformative technology has the potential to revolutionize agriculture in a lot of ways.
How blockchain transformed Zimbabwe’s beef export market
Like many African countries, agriculture is the economic mainstay of Zimbabwe. Agricultural activities contribute 40 per cent of total export earnings and approximately 17 per cent to GDP in the country. In 2018, their agricultural sector experienced a change in fortune with the outbreak of a tick-borne disease that caused the death of 50,000 cattle. Zimbabwe is renowned for the quality of its beef and export strength. Beef from Zimbabwe is one of the best globally, and it only falls second to Scotch beef from Scotland. At a time, Zimbabwe’s beef cattle herd raked in about $50 million yearly from exports to the lucrative European market, like 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 dwindle. Zimbabwe could not sell beef to high-paying markets in Europe and the Middle East due to a lack of a traceability system, resulting in lower export earnings.
Last year, a blockchain-based cattle traceability system brought end-to-end visibility to the cattle supply chain in the country. Zimbabwean farmers could again prove the origin and health records of their cattle. How does this work?
Cattles are tagged with a unique, ultra-high frequency radio-frequency identification tag and registered on a traceability system with the owner’s identity. Each time the animal gets dipped, vaccinated or receives medical treatment, the tag logs the event onto the system. This safely and securely tracks 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 helped foster renewed trust in Zimbabwean cattle farming and re-established Zimbabwe’s beef exportation credibility. This is just one of the several benefits of blockchain in agriculture.
Blockchain in the agricultural supply chain: Agro products are tracked accurately and transparently from production to the time of delivery to the consumer. Information regarding the origins of food and data on when a product was harvested, processed, and produced can be sourced openly by a consumer with just the scan of a QR code. This helps ensure quality control because, with reliable agro products, farmers can sell at good prices, and consumers are self-assured of healthy products.
Blockchain technology in agricultural trade: Blockchain in agriculture helps simplify transaction processes and creates a common ground for small-scale farmers. The supply chains in the African agricultural space are heavily fragmented. As a result, the price of agro products is likely to be expensive even before they get to the final consumer. Blockchain technology enables transparent peer-to-peer transactions in the agriculture sector without an intermediary like a bank or a middleman. By stamping out the need for a central authority, farmers can set their fees without the interference of brokers, which in turn reduces the cost of agro products.
Also, farmers in emerging economies sometimes find it hard to access a broader market. This contributes partly to the 100 million metric tons of food, worth about $4billon, lost annually to post-harvest losses. Blockchain can help connect farmers with vendors and food processors globally by providing a secure and trusted environment for buyers and suppliers to transact.
In Nigeria, Agrichainx, a blockchain agricultural platform, helps farmers, retailers, distributors, and manufacturers connect seamlessly and interact with each other. In Kenya, Hello Tractor uses an AI and blockchain-driven platform to connect African farmers with tractor owners and data analytics for better crop production.
Smart contracts in blockchain
These blockchain-stored programs play a salient role in transforming the agricultural space in Africa. Smart contracts perform similar functions as paper-based agreements, but they are slightly different because of 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, and land registration and verification.
A smart contract creates an incorruptible ledger of land records: It creates a trusted record of land ownership for farmers, verified by other entities, and reduces the chances of dispute, which is prevalent amongst rural farmers in Africa, familiar with the traditional/ cultural system of land division and ownership. Over two-thirds of the land in Africa is communally owned. Many land records in most African countries date back to colonial times, so many landowners do not have official documents like title deeds to prove they are the legal owners.
Smart contracts on blockchain technology help solve these complications. They are linked to an exclusive ID/digital ID and stored on the blockchain. In Kenya, Land LayBy uses an Ethereum based shared ledger to keep records of land transactions. These records can never be altered, corrupted, forged, or erroneously replicated. Land LayBy place the information of legally verified lands with traceable histories on the application. Users can access the platform and add extra information about the land. 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, fire disasters, and climate change can adversely affect crop yield. To mitigate the effect of loss incurred during such occurrences, farmers embrace insurance to help them rebound financially. The insurance process can be burdensome for the farmer, insurer, and all parties involved. This is because unpredictable events and erratic weather patterns make it difficult to make a timely and correct estimation of losses. This uncertainty gives room for bad actors to act fraudulently. Smart insurance contracts linked to wallets with weather data being provided regularly by sensors in the field can help make the process transparent and help minimize the risk of false claims.
Written by Adekunle Agbetiloye