Inception of Blockchain technology in agriculture and its contribution to economic reform of the

sector

Abstract
The blockchain technology gained immense popularity after
the release of white paper under the pseudonym, Satoshi
Nakamoto. The technology has brought revolutionary changes
in the field of economics and finance but the appeal of
blockchain is far above the financial arena and finds itself
relevant in many other fields as well. In this paper, we are
going to explore the possibility of a network that can be
created using the blockchain technology to bring systematic
and exhaustive growth in agricultural and subtler aspects of Figure-2 blockchain properties and reasons to choose it.
agribusiness making it more economical for the small and
mid-scale farmers and discuss the prospect of a peer to peer The blockchain works on the principle of no central
independent network amongst farmers and agriculturally intervention and relies on peer to peer connectivity for safety
dependent counterparts. and maintenance. This biggest challenge here is to ensure
security and levy trust. This is achieved through cryptographic
Keywords​: Blockchain Technology; Agriculture; peer to peer technique(SHA-256 for example). The blockchain commences
network. from the inception block. This block is the starting point that is
the parent of all the forthcoming additions. In the technological
Introduction and Understanding of the Technology terms, each of the non-verified action by any member that is
still to be established and stamped in the block is termed as a
Blockchain as technology has not emerged out of anywhere “pending transaction”. Each transaction is verified by each and
rather it stood the test of time from the Renaissance era. The every member of the network. This ensures the legitimacy of
earliest record of this technological usage can be traced back to the action. Also, the network is maintained by the peers in the
the Medici family of Florence during the time period of users termed as “miners”. The job of these ​miners is to mine a
Leonardo da Vinci where they have successfully implemented new block where the pending transactions are to be
the double entry ledger system. This system made a stored. To get a deeper understanding of the ​technology
breakthrough in the financial record keeping and dramatically there are three key aspects which we have to look into.
reduce the clutter of the transaction process. This system
evolved through the years and now been implemented by
Satoshi Nakamoto in bit-coin technology. If we have to
summarise this technology into a single sentence we can say
that blockchain is an online ledger system with cryptographic
security.

Figure-2 This is a small example of blockchain comprising

of 3 blocks with attributes as previous block hash,
Timestamp, Root, Nonce.
Blockchain removes the middle man from the process and
data storage. In the present systems, organisations ensure
guarantee through mediation. These mediators often rely on
third-party human manual input that is prone to fraud,
making the process of timely and expensive. Also, the
centralised system limits access to information and grants
Figure-1 Differnece b/w central and distributed systems
 control to just the institution. blockchain utilises the
distributed system where information is verified on the
shared ledger, it is immediately reported on all of the
participating peers on the network, which guarantees every
user has access to the latest information. Blockchain utilises a
consensus mechanism to reach an agreement between the
shareholders on the status of information in the network. The
consensus mechanism utilises economic incentives and
consensus algorithms to validate transactions in the
distributed ledger.
Second, Blockchain uses cryptography to guarantee
immutability and security for information. Each entry is
logged with a timestamp and a digital fingerprint which is
secured with cryptographic algorithms and is termed as
“hash”, this hash links each record to each other and is then
saved securely over the distributed network. Hashes are the
foundation of security of Blockchain, which makes it
impracticable to modify an entry without affecting all of the
records in the ledger. This makes false activities in the ledger
noticeable to all of the others.
Third, the immutability of records, through a distributed
ledger, make each record in a distributed ledger verifiable
and clear. In blockchain theory, all participants of the
distributed ledger have access to the full transaction history
registered on the database. Depending on the design and the
laws of the chain, users have the capability to control which
types of transaction aspects are shared, and with whom. The
ledger itself is protected by cryptographic algorithms.
Current statistics of Agriculture Industry and food chain
supply
The average income of a farmer in India is 77,976 per
year[1].1 according to the Economic survey 2018. Also, 52
per cent of the area (i.e. 73.2 million hectares of land) is still
unirrigated. Also, continuous climate change has caused
inconsistent rain pattern. This has resulted in a very alarming
situation of the farmers and they have emerged out to be the
weakest section of the society. To curb this the government
has brought many relief schemes for the farmers but due to
irregular and asymmetric information base, the government
reach has been limited. The fact is well known that it is not
the sector that has incurred losses but the farmer community (
the producers ) that have seen all of the loss and one of the
many reasons for this is agricultural sector has seen the
1
https://www.financialexpress.com/budget/economic-survey-
2017-18-agriculture-climate-change-likely-to-lower-farmers-i
ncome-by-25/1035560/
minimum digital transformations when compared to the other
formal sectors in the economy.
The current agri-food industry is unable to-
● Meet the food demand of the exploding population.
● Adjust to changing varying consumer preference.
● Promote more sustainable practice and decrease
environmental footprint.
● Reduce and optimise the cost incurred in the supply
chain.
● Sustain profitable farming operations.
● Procure advance farming equipment.
Since globally the agriculture sector is the biggest employer
and at an estimate engages 30 per cent of the workforce of the
world this is a major concern.
Food systems with supply chain around the globe are numerous
and vary from fashionable, large-scale distribution systems
channels to traditional food chains. Agriculture in low- and
lower-middle financial gain countries is defined by a majority
of tiny farms, especially in India which makes it difficult for the
overall turnover to cross the threshold.
When it comes to small scale farmers and the agricultural sector
the two biggest that are faced by the farmers are the irrigation
water and cultivation equipment. These issues can be readily
solved by the Blockchain technology by digitizing the supply
chain and forming a network of independent farmers who can
directly interact with each other through distributed ledgers and
cut the middle man. Also, this will create a consistent virtual
database which can be accessed by the government where it can
tally the records of the farmer's economic setbacks and
compensate to the right person.
Figure-3 agriculture and poultry chain example.
The adoption of crop production and equipment sharing
over DTL’s2-

India has two crop seasons and divisions which is can be

utilised when it comes to equipment sharing but first let look
on the general crop pattern of India.
General crop pattern in India

The produced grains are classified into two major portions

cereal and pulses, these occupy two third of the total yield
quantity wise. Oilseeds occupy for 14 per cent of the cropped
area and rest is occupied by the fibre crops like cotton jute
etc. Provided India’s pattern of agro-climate condition there
is several patterns that exist within a state. This diversity can
be understood by the fact that there are 30 rice-based
cropping pattern.12 types of maize cultivation technique and
17 cropping pattern.
Figure 4 - use case digram for the application
Different seasons of crops

The seasons vary across states, in term of crop seasons India

can be subdivided into two zones. The Northern zone and the
Southern zone. The north has 3 different crop seasons Kharif,
rabi and zaid. Although such distinction is not available in
southern India the crop cultivation is done according to the
moisture content of the soil.

Kharif rabi and zaid explained

Kharif season is stretched between June and September rabi

season is the low-temperature season where subtropical crops
like wheat and grams are grown.zaidi is between these two.

This clearly demarcates the difference between the crop

production throughout the year and one thing that is very
clear from this is that farming equipment is not in use
throughout the year as one farmer does the cultivate in all the
seasons due to heavy weather diversity. This spares idle time
for the equipment when they are not in use, during this period
the farmer who is capable of cultivation can make a
transaction from the nearest owner of the equipment on lease
this way both of the farmers can benefit the same resource
thus optimising it.

Figure-5 flowchart digram for the application

2
Distributed ledgers
Challenges and Issues
Conclusion
Table -1 opportunity and corresponding challenge
This article demonstrated blockchain technology that
OPPORTUNITIES DIFFICULTY AND
can be implemented in the agriculture sector aiming to
AND CHALLENGES
establish a proven and trusted environment to build a
IMPLEMENTATION
transparent and more sustainable transaction,
Blockchain application Lack of knowledge and integrating key stakeholders into the business
for small farmers expertise framework
Several startups are working in the development of
Finance for small rural Highly uncertain and software and make blockchain technology easier for
farmers lacks trust farmers to manage, such as 1000EcoFarms, which has
implemented blockchain methods relevant to farming
Financial transactions Very limited field and agriculture, using FoodCoin as the proposed
ecosystem.
Rules and Regulations No central authority or
regulation To reduce limitations of use, governments must invest
more in experimentation and innovation, as well as in
Scalability Technical scalability teaching and training, in order to produce and show
issues proof for the possible benefits of this technology.

Reach to people Digital divide amongst

citizens
Due to the recent inception of this technology, there are wide
and varied challenges that are being faced for the
implementation of the blockchain. Recent few
implementations have indicated that developed applications
lacked in size and scale. Furthermore, a very convincing
financial model and business structure inexistent largely due
to unawareness and lack of trust. Farmers around the globe
have barely access to cutting edge technology adds to the
problem also initial investment is difficult to be raised.
Hence, it strictly needs government intervention to form strict
regulations.
Benefits of adopting a blockchain system in the
agriculture sector
1. ​Application of the latest technology in this sector will
reduce manual work and can be subjected to
automation.
2. Quick and accurate transaction can reduce time.
3. Cost can be brought down considerably due to zero
surcharges of the banks.
4. Can be scaled for government help schemes.
5. Induce globalization and enhance market reach.
6. Avoid fraudulent transactions and improve
trustworthiness.
From a policy prospect, several steps can be, such as
the growth of blockchain-minded ecosystems in
agri-business, supporting the technology as part of the
general goals of optimizing the competitiveness and
ensuring the sustainability of the agriculture finance,
as well as composing a clear administrative framework
for blockchain implementations.
Summing up, blockchain promises a huge opportunity
for the agri-business and economic reform but many
obstacles and difficulties still exist, which prevents its
wider reputation among farmers.
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