An efficient logistics and supply chain system in the agricultural sector is just as important as an efficient crop production system. Blockchain technology can guarantee this necessary efficiency.
Meeting the food demand of an ever-increasing population is a complicated process. It involves a complex supply chain between resource providers (shippers), crop producers (farmers), retailers, and end users. Running such a complex system often involves a lot of paperwork and management challenges.
Traditionally, such logistics tasks were managed with paper documentation. However, with the advent of technology, documentation moved to computers, making the task less complicated; and faster
Blockchain technology is optimizing the food supply chain system
The next step in Blockchain technology is to make the Supply chain management in the food and agricultural industry more efficient and manageable.
The use of Blockchain technology offers accurate, tamper-proof statistics on farms, inventory, credit scores, and food tracking.
According to industry insiders, the blockchain in the agricultural and food market is still developing. Increased research and development activities help develop blockchain technology. Retailers, food processors, and food distributors are also increasing their adoption of blockchain.
Market analysis by BIS Research, the global blockchain in agriculture and food market was valued at $139.6 million in 2020. Global Blockchain is growing with a CAGR of 51.0% reaching $1.48 thousand million by 2026.
Factors such as the increased need for transparency in the food supply chain and supporting government initiatives will drive future market growth.
Supply chain management in agriculture and the food industry
The process of delivering agricultural products from producers to consumers is known as agricultural supply chain. This process involves numerous stakeholders such as resource providers, farmers, distributors and wholesalers. Therefore, efficient interaction between all stakeholders is essential for the smooth functioning of the food and agriculture industry.
Multiple people interact for various competitive purposes, with numerous flows of material and information. Basically, this complicates supply chain activities.
Fragmented and incomplete incoming information flow can complicate the process and increase challenges in the agricultural supply chain system.
According to authentic — The three phases of a typical agricultural supply chain are as follows:
- farmers to intermediate silos,
- silos to transformation facilities,
- and processing plants to customers.
Establishing a smooth relationship between all stakeholders involved in supply chain management is crucial. Sometimes conflict of interest or miscommunication between two parties can lead to huge losses for everyone involved in trading products.
Therefore, to maintain a smooth flow of materials, money and information, a transparent and decentralized medium like blockchain offers the best solution to the problems that arise in the current supply chain management system.
How Does Blockchain Help Supply Chain Management in Agriculture and Food Industry?
The application of blockchain technology in the agricultural supply chain revolutionizes the way information is exchanged between two parties. Blockchain technologies share databases distributed among the nodes of a computer network that store information electronically in digital format. Blockchains allow secure and transparent data storage.
In the food and agriculture industry, blockchain has various applications. When combined with the Internet of Things (IoT) and data analytics, blockchain can provide a shared standard for every stakeholder in the supply chain to record and exchange data at every stage of a commodity’s journey.
Such a method will enable all stakeholders to access crucial and correct data, gain greater efficiency and revenue, and maintain sustainability and transparency with consumers and government.
These days, conscientious consumers are interested in information about the origin and quality of the food they eat. Therefore, the need to curate a secure supply chain system with high-quality food has increased.
On the other hand, consumers demand digital services tailored to their specific requirements. Blockchain technology in agriculture and farm management software helps improve the financial performance of farms and meets the food needs of a growing population.
Advanced farming technologies such as precision farming, farmland mapping, IoT sensors, and vertical farming systems achieve higher yielding food production.
Additionally, location intelligence, crop management software, and transportation technologies are prominent examples of how technology is enabling agribusinesses to achieve better food production and Supply chain management results.
The increase in food consumption creates additional challenges, such as substitute foods on the market.
Therefore, it threatens agricultural food supply chains on several levels. Currently, farmers and consumers are at a disadvantage due to the lack of transparency and inefficiency of the system. However, blockchain for the agricultural supply chain can empower all market stakeholders by establishing trusted partnerships.
Best supply chain management practices in agriculture and the food industry
The integration of advanced technology like blockchain increases the level of productivity and efficiency of the supply chain management system. However, the transition from the traditional method to the new approach is certainly a challenge.
However, few fundamental practices can ensure regularity and smooth operation, regardless of the method of exchange of the system. The following are some of those best practices:
The use of blockchain technology helps ensure the quality and safety of food.
Ensuring the quality and safety of food is essential to maintain the confidence of end consumers. Food contamination and fraud are among the biggest concerns in the industry today and affect businesses.
As consumers become more aware and cautious of what they consume, any stakeholder in the supply chain system will know exactly who is carrying the food. Storage location and transportation information are readily available.
Establish policies to ensure regular audits
Establish policies to ensure regular audits of the carrier/supplier’s facilities and warehouses. These records eliminate inefficiencies and issues that prevent a streamlined supply chain process.
Additionally, audits can be a valuable practice to ensure compliance and improve brand reputation.
A complete tracking system
A comprehensive tracking system is essential to track food through every step of the supply chain process. Government legislation requires importers to submit a catalog of information to the FDA prior to importing any item.
This includes code numbers, identifiers and other data. Proper labeling and monitoring will ensure FDA compliance and help producers prevent the spread of foodborne illness or disease.
The use of automatic identification systems.
The use of automatic identification systems is essential for stakeholders to monitor the entire process, from agriculture to shopkeepers making a sale to consumers. For example, RFID transponders can track livestock, deliveries, purchases, and other aspects of the supply chain.
Additionally, these tracking solutions provide information to participants in the supply chain to identify spoiled food sources or provide real-time data on food safety audits.
Blockchain technology can prevent food spoilage and waste in the system
The technologies allow workers to perform temperature checks and environmental measurements on food data collected from its original point (the farm). Throughout the supply chain journey, workers ensure safety conditions are met.
Careful control of food safety conditions ensures prevention of food spoilage/waste incidents and enhances the company’s reputation among consumers.
The use of blockchain technology has provided a secure and transparent platform for the food and agriculture industry. Today, transparency is an essential aspect of consumer satisfaction.
Furthermore, with the increasing use of blockchain in the agricultural supply chain, stakeholders have begun to recognize the high potential of the technology.
The arrival of blockchain is timely due to the growing demand for supply chain transparency and traceability. Furthermore, the need for blockchain is motivated by the increasing number of foodborne outbreaks and foodborne illnesses.
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