Updated: Jan 23
You're reading the third installment of a series on exogenous and endogenous assets tracked on the blockchain.
For a definition of these topics, as well as a general discussion about distributed ledger technologies (DLTs), we recommend starting with the first article in the series, Beyond Bitcoin: Assets Off The Chain.
Clearly defined ownership of property is one of the cornerstones of a developed market economy. Property is something owned, and something owned must be accurately tracked. The more accurate the tracking of property, the fewer discrepancies there are over who has the highest ownership claim.
Similar to commodities, physical property such as land or real-estate are exogenous assets. These assets have a physical form that exists outside of the database that keeps track of ownership.
Food and shelter are essential components within a person's hierarchy of needs, so it comes as little surprise that accurate record-keeping of these critical assets has been a feature of record-keeping since its inception. Some of the earliest written records describe amounts of grain tributed from each farm to the Babylonian crown.
A Massive Market For Blockchain In Agriculture
Modern experimental asset tracking in the form of DLT applications may seem far removed from humanity's early, rudimentary forms of property management. However, billions of people must be fed and sheltered. Thus, the essential components of agriculture and real estate remain for our species: these industries are worth roughly $5 trillion and $8.9 trillion, respectively.
The combined value of $13.9 trillion is no paltry sum, so it is perhaps unsurprising that many innovative companies explore potential use cases for DLT applications in agricultural and real estate management. The next two installments to our series on exogenous distributed ledger applications will cover the companies applying this new technology in the agricultural and real estate industries.
The traceability of agricultural products is an ever-increasing feature in our globalized economy. Our previous article on exogenous DLT systems explored how this technology can positively impact bottom-line delivery times through communication optimizations. These enhancements are doubly crucial for agricultural products, many of which have a clearly defined half-life and begin losing nutritional value at the time of harvesting.
Companies Leading Blockchain Innovation In Agriculture
One company applying blockchain technology to the process of tracing agricultural products from farm-to-table is Te-Food. One of the largest blockchains in terms of daily operations volume, Te-Food's blockchain, FoodChain, maintains around 250 active nodes and processes tens of thousands of operations per day. Many new companies are focusing on improving the traceability of agricultural products using DLT and blockchain, including Ripe.io, Verified Organic, Bext360, OriginTrail, Arc-Net, and Provenance.
Existing firms have also taken notice of the diverse agricultural applications presented by DLT and blockchain. Industry giant IBM has launched Food Trust, a blockchain-based verification software operational at every level of the agricultural supply chain.
The world's four largest agribusiness companies have also implemented blockchain for the standardization of international grain trade. Archer Daniels Midland Co, Bunge Ltd, Cargill Inc, and Louis Dreyfus Co, also known as ABCD, have stated that introducing a distributed ledger system will make trades more transparent and efficient while simultaneously reducing costs.
Deloitte, one of the "Big Four" accounting agencies in the United States, details how blockchain has helped to revolutionize cattle ranching and beef processing in Ireland, improving traceability and assuring the quality of meat for the end consumer. Both existing firms and new innovators are beginning to actualize positive bottom-line impacts from the implementation of DLT in the agricultural supply chain.
A feature arising from improved supply chain tracking is price optimization. Two Australian companies, in particular, are primarily focused on leveraging DLT applications to minimize costs at each step of the shipping process. Interfacing with the existing agricultural supply chain, AgriChain offers growers, brokers, and logistics companies blockchain-based software to minimize the cost of product intermediation.
One feature that accomplishes this is the AgriChain app, which allows for seamless compliance with Australia's Chain of Responsibility (CoR) laws governing the shipping of products on Australian roadways. AgriDigital empowers farmers to leverage DLT by interfacing with Australia's National Grower Register (NGR), connecting with potential buyers, and managing their crops from seed to harvest. Available in 36 countries, AgriDigital has seen over a quarter of a million deliveries on its platform.
The process of insuring agricultural products cost the United States over $6.6 billion in 2018. This high cost of insurance generally entails one-size-fits-most policies that discount the levels of variation seen in climates. Long-tail weather events, such as the 2019 "Biblical Spring," which saw record rainfall in Iowa, present disproportionately high costs to farmers and insurers. Companies are beginning to leverage big data, machine learning, and DLT to provide tailor-fit solutions to farmers, thereby driving down insurance premiums and minimizing erroneous payouts by insurance companies.
Arbol utilizes blockchain and smart contracts to drive down the cost of insurance while offering an array of customizable insurance products.
WorldCovr provides a similar service to farmers and ensures timely payouts by leveraging NOAA's satellite weather data, and is exploring the implementation of a blockchain to assist with this process.
On the Ethereum blockchain, Etherisc has prototyped an insurance offering that seeks to benefit small farmers by utilizing peer-to-peer insurance opportunities.
Maximizing the value of fallow land and raising capital for expanding production are two of the most challenging yet salient topics for agricultural SMEs. The legal nature of marketing fallow plots entails high costs and technical knowledge that many agricultural SMEs cannot handle without negatively impacting their existing workflow. SmartLands breaks down these barriers by allowing retail investors to engage in fractional ownership of assets by leveraging blockchain technology.
The company’s peer-to-peer lending format enables capital inflows to otherwise unfundable participants in agricultural markets while also giving rise to incredible ESG investment opportunities.
Demeter empowers farmers to list their land or agricultural products on their platform and connects them with local consumers. Their Growfunding model maximizes the potential value of fallow lands while additionally maximizing the local consumption of existing crop yields.
Avenews connects financial institutions and agribusinesses, allowing farmers to order, invoice, and trade on their blockchain-powered platform. This digital vertical integration minimizes costs and homogenizes workflow for both parties.
One of humanity's oldest pastimes is experiencing significant increases in yield and efficiency by utilizing blockchain and DLT at various steps of the process. New companies and established firms are finding a plethora of use cases that optimize, integrate, and localize the agricultural supply chain. These processes are unlocking massive amounts of underlying value for industry participants and are working in seamless tandem with related technological innovations such as big data, AI, and cloud computing.
Blockchain and DLT is just one helpful tool that is revolutionizing agriculture around the world and helping to feed billions of hungry mouths. Additionally, this technology presents lucrative ESG investment opportunities for investors and firms that seek human-centric investing. This Fourth Agricultural Revolution will benefit all of humanity both financially and nutritionally.
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