By Erhan Cakmak, CEO and co-founder, Pavo
By 2050, the world’s population will exceed 9 billion people, some 20 percent higher than today. Most of this population increase will occur in rapidly-urbanizing developing countries. About 70 percent of the world’s population will be urban by 2050, compared to roughly half today. To feed this larger, more urban, and richer population, food production must increase by 70 percent. Annual cereal production will need to rise 50% to support population growth, despite the fact that yield growth has been steadily declining. Blockchain-enabled applications will play an important role in addressing this challenge.
This has important implications for Turkey’s agriculture industry; the majority of Turkish people still work, one way or another, in agriculture. Like the United States and Canada, Turkey, thanks to its fertile soil, favorable climate and plentiful rainfall, is food self-sufficient. Some 36 percent of the country is arable land, and Turkey is the world’s biggest producer of hazelnuts, figs, apricots and raisins and the fourth largest producer of fresh vegetables and grapes. The Turkish government has set a goal for 2023 of USD 40 billion in annual agriculture exports. The country has a significant role to play in addressing coming global food and caloric demand challenges, and technology can help.
Food supply chains are inefficient and suffer from quality control problems, especially in developing nations. One of the clearest real-world applications of blockchain technology is to add greater visibility and efficiency across supply chains. Although agriculture is a $5.5 trillion-dollar global business, employing over a billion people, it remains highly inefficient. For many smallholder farmers in developing countries, affordable access to capital remains a huge challenge.
Blockchain solutions can solve these financing difficulties. As it stands, farmers often wait weeks or months for payment after delivery, forcing them to deal with large incumbents with greater bargaining power. This directly translates to lower income for farmers, as they do not receive their fair share despite being the most important part of the chain.
Further, as the world urbanizes and becomes more conscious of the carbon footprint of transporting goods over long distances, indoor farming is playing an increasing role. Blockchain solutions and smart contracts allow for careful management of water and energy. Automated data collection and analysis creates the ability to better manage crop inputs, like water and energy, and corresponding automation of indoor farming operations. For example, a farmer using indoor hydroponics and a closed loop system may be able to reduce water usage by up to 90 percent. Increasingly, global food demands will be met by crops grown indoors, in environments more efficient and more controlled than the outdoors. By moving plants indoors, traditional dependence on the weather can be eliminated. With sensor arrays, plants can “communicate” precisely what they need 24/7.
Blockchain solutions and the “Internet of Things” (IoT) will save time and money for farmers, and increase yields. Despite a common belief that farmers are slow to adapt, they have always been eager adopters of technologies that make sense and deliver genuine value. Data democratization of the food chain will increase efficiencies, reduce waste, and increasingly transfer remuneration to the stakeholders delivering the greatest value.
Blockchain solutions allow to build a new model of trust in agricultural supply chains. Under the old Information Technology paradigm, agricultural, environmental, and regulatory data is stored on centralized computer servers, and managed by administrators trusted to maintain data integrity, security and access authorization.
This centralized data administration is a source of risk – crop safety and quality data can easily be corrupted. Data can be lost due to failed or absent backups. Centralized administrators may act on their own agendas, with their own interests in mind, impacting decisions related to data access and security.
Applying blockchain technology to crop data ensures that information about our food and its sources is incorruptible. Blockchain and IoT technology simplifies data management throughout the complex system of farmers, brokers, distributors, processors, retailers, regulators, and consumers. Information on the food we eat becomes simplified and transparent. Consumers can enjoy greater trust in the food they put on their table and regulatory agencies gain greater confidence in the data reported to them.
Blockchain redefines trust across the agriculture spectrum with arm’s length cryptographic security, eliminating any potential pursuits of self-interest on the part of data administrators or other actors.
Blockchain enables real-time payments, concurrent with delivery, and better visibility to buyers, leveling the playing field for farmers. Farmers get paid sooner, and increased competition for their crops raises the prices they receive while simultaneously helping consumers to pay lower prices for food through a much more transparent, secure and environmentally sustainable supply chain.