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\begin{document}

\title{\emph{Blockchain- Enabling Tomorrow's Rural Agricultural Industries}}



\author[1]{Sheikh Mohammed Irfan}%
\author[2]{Skyler Blacker}%
\affil[1]{MIT}%
\affil[2]{Carnegie Mellon University}%


\vspace{-1em}



  
  \date{May 25, 2024}


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\sloppy


Acknowledgments:

Written By: Sheikh Mohammed Irfan- Managing Partner (Research and
Strategy), Bloccelerate VC

Special Thanks To:

Skyler Blacker- Research Associate, Bloccelerate VC

Hon. Levan Davitashvilli- Minister Of Environmental Protection and
Agriculture, Georgia

Eamoinn Taylor- Former Specialist Adviser- International Development
Committee, House Of Commons UK

Michel Noel- Senior Consultant, World Bank Group

Maria Mateo Iborra- Co-Founder, IBISA NETWORK

Stephanus Basson- Business Development Manager Agriculture South Africa,
Mezzanine

All Team Members at Bloccelerate VC

\textbf{Table of Contents}

\textbf{Introduction 1-13}

\textbf{Current Problems in the Industry 2}

\begin{quote}
\textbf{Technology as a Solution 9}
\end{quote}

\textbf{Examples of Use Cases \& Projects 15-20}

\textbf{Future of the Industry 20}

\textbf{Conclusion 21}

\par\null

\textbf{Abstract:} The world economy is drastically changing, and as of
today, emerging economies account for approximately 59\% of the total
global domestic product
(GDP).\textsuperscript{\href{http://www.imf.org}{1}~}With seven of the
ten largest agricultural producers and exporters being in emerging
economies, the agricultural sector constitutes a large portion of these
economies. Agriculture accounts for almost one billion in global
employment and is the largest employer of women in developing nations.
However, ongoing issues, such as lack of transparency and efficiency,
plague the industry. Today, nearly 40\% of the world's agricultural land
has degraded due to either environmental changes or soil problems caused
by unsustainable agriculture or
mismanagement.\textsuperscript{\href{http://www.ifad.org}{2}}
Furthermore, demand for non-food biofuel crops, development of former
farm lands, rising transportation costs, climate change, consumer
demand, and population growth are threatening food security. As most of
these economies are going through developmental transitions, they face
the additional problems of political instability, corruption,
international debt, and lack of infrastructure/agricultural financing
options.

Smallholding, which forms the bedrock of agriculture sectors in emerging
economies, is considered by the International Fund for Agricultural
Development as part of the solution to global food security. According
to economists, agriculture was the pillar of the industrial revolution,
and in today's perspective, effective and innovative agriculture has the
potential to be the pillar of the new digital revolution. Additionally,
a report published by the International Food Policy Research Institute
suggests that agricultural technologies will have the greatest impact on
food production if adopted in combination with each other. The purpose
of this study is to identify and dissect current and potential future
problems associated with the agricultural industry, and potential
solutions to these problems through emerging technologies such as
blockchain. The publication will also introduce several companies or
projects that utilize blockchain technology and will discern whether
their solutions address critical problems or introduce new market
opportunities associated with the agricultural industry.

The following map provides a look at the percentage of each nation's
population employed in the agricultural sector in
2017:\href{http://https://ourworldindata.org/employment-in-agriculture,\%20https://creativecommons.org/licenses/by/4.0/deed.en_US}{\textsuperscript{3}}\selectlanguage{english}
\begin{figure}[h!]
\begin{center}
\includegraphics[width=0.70\columnwidth]{figures/image1/image1}
\caption{{Couldn't find a caption, edit here to supply one.
{\label{div-886549}}%
}}
\end{center}
\end{figure}

\textbf{Problem:} The current problems associated with the agricultural
industry in emerging economies are multi-faceted; however, key problems
can be grouped into the following:

\begin{itemize}
\tightlist
\item
  Agricultural Sustainability (crop yield, environmental damage,
  mismanagement)
\item
  Agricultural Finance (banking, insurance, agricultural commodities)
\item
  Agriculture Management (value chain, adulteration)
\item
  Agricultural Trends (organic food, consumer demand)
\item
  Agricultural Trade (global trade, transportation, food pricing)
\item
  Agricultural Security (food security, growing population, lack of
  land)
\item
  Agricultural Livelihood (rural lifestyle vs urban lifestyle)
\end{itemize}

Examining these issues from the perspective of emerging economies
provides a better understanding of the problems at hand.

\emph{Agricultural Sustainability}: Contemporary agriculture has been
characterized by increasing crop yield through the utilization of
synthetic fertilizers and pesticides. However, this process has damaged
the soil and natural ecosystem, thus hindering the long-term development
of crops. Today, as the agricultural industry moves towards a more
sustainable crop production model, it is critical for farmers to possess
data, information, and recurring feedback on their assets. In most
emerging economies, farmers are ill-equipped with any such resources due
to lack of infrastructure, cost of information and updates, and little
access to knowledge.

The environment plays another critical role in the agriculture of
emerging economies. Drought, natural disasters, and pollution are some
of the major problems associated with asset maintenance. Battling the
environment requires proper management, as well as knowledge of both pre
and post-disaster strategic crop cultivation. Furthermore, environmental
issues have led to increased problems in both food security and exports
for emerging economies.

Management of the agricultural sector can be underlined as one of the
major problems in emerging economies. In many developing nations, the
inability to utilize existing resources and provide enough
knowledge/tools to farmers leaves them susceptible to sustainability
issues and causes them to suffer production and output shortages.
Furthermore, some developing nations lack resources such as
infrastructure, qualified teams, and equipment to support their farmers
altogether.

\emph{Agricultural Finance}: Most emerging countries are unable to cover
the agricultural sector with traditional financial services. Unlike in
developed countries, where systems, such as the Farm Credit System
(FCS), enable agricultural financial services, similar specialized
agricultural banking, insurance, and equipment lending services are
relatively new or non-existent
here.\textsuperscript{\href{https://farmcredit.com/}{4}} This lacking is
largely due to the risk associated with lending without proper data,
models, or gauging methodologies to track farmers' progress. Most
agricultural lands in emerging economies are located in rural areas,
which lack the mainstream infrastructure to facilitate growth or
monitoring mechanisms. Corruption, nepotism, extortion, and
transportation add to the complexities of enabling agricultural
financial services in emerging economies. Critical risk factors related
to lending in the agricultural industry include:

\begin{enumerate}
\tightlist
\item
  Credit risk: Banks financing agricultural operations and capital
  investments assume the risk associated with the borrower's (i.e.
  farmers) ability to successfully deliver products to market. Prolonged
  adverse market conditions can increase borrower defaults and
  significantly impair collateral value, negatively affecting a bank's
  ability to withstand a sustained market downturn. The borrower's
  repayment capacities are also vulnerable to risks, many of which are
  outside the borrower's control, including adverse weather conditions,
  commodity price volatility, diseases, land values, production costs,
  changing government regulations and subsidy programs, changing tax
  treatment, technological changes, labor market shortages, and changes
  in consumer preferences.
\item
  Interest rate risk: Most agricultural operating lines that banks
  finance are either short-term or variable rate loans, resulting in
  lower interest rate risk. A bank that provides fixed-rate financing
  for an extended term (e.g. on farmlands) exposes itself to an interest
  rate risk where shorter-term liabilities fund the long term loans. For
  example, to mitigate interest rate risk in real estate, banks may
  underwrite long-term loans with a three to five-year balloon payment
  to provide the opportunity for repricing the loans at maturity.
  Additionally, the bank may have an increased credit risk exposure in a
  rising rate environment as agricultural borrower's repayment ability
  is reduced by higher borrowing costs.
\item
  Liquidity risk: Agricultural lending can result in higher liquidity
  risk for banks, especially banks with large agricultural credit
  concentrations. For example, if crop losses or unfavorable market
  conditions result in loan payment deferrals, the bank's liquidity
  could be strained. In addition, discontinued farm operations and
  migration to urban areas can cause declining deposits, creating
  long-term liquidity pressure.
\item
  Operational risk: There is extensive documentation, inspection,
  control, and monitoring associated with agricultural lending. Failure
  to perform these administrative functions can lead to loan collection
  problems. In addition, improper controls can unnecessarily expose
  banks to losses and increased operational risk, particularly if loan
  collateral is sold out of trust. Failure to properly document a loan
  supported by a government guarantee can result in the bank's inability
  to collect on the guarantee if needed. This is most often the result
  of lender complacence or inappropriate assumptions about a borrower or
  collateral. Furthermore, lien perfection requirements for agricultural
  collateral can vary depending on property type and legal requirements
  in different areas. If liens are not properly perfected, banks may not
  be protected by collateral when liquidation, repossession, or
  foreclosure becomes necessary. Evidence of collateral lien perfection
  and timely collateral inspections should be documented in the loan
  file.
\item
  Price risk: For agricultural loans secured by real estate, price risk
  can occur upon a bank's foreclosure or physical possession of a
  property, whereby the loan is transferred into other real estate owned
  (OREO).\textsuperscript{\href{https://www.investopedia.com/terms/o/other-real-estate-owned-oreo.asp}{5}}
  During the holding period, OREO must be carried at the lower cost or
  fair value (less estimated costs to sell). A decline in real estate
  prices can reduce the number of proceeds realized upon the property's
  disposal.
\item
  Compliance risk: Compared with consumer transactions, there are few
  borrower-focused rules regulating agricultural financing. In developed
  markets such as the United States, agricultural lending is subject to
  the Equal Credit Opportunity Act (Regulation B) (12 CFR
  1002).\textsuperscript{\href{http://www.justice.gov/crt/equal-credit-opportunity-act-3}{6}}
  Even then it may be subject to zoning, environmental protection, and
  other government regulations if real estate serves as collateral.
  Failure to comply with regulatory requirements can expose the lender
  leadership to liability and jeopardize ultimate repayment, resulting
  in supervisory actions and/or significant losses.
\item
  Strategic risk: A sound agricultural lending program should include
  risk management systems to identify, measure, monitor, and control the
  bank's risks. The bank should also have staff with requisite knowledge
  and expertise to manage the bank's unique agricultural risks. Prudent
  agricultural lending requires specialized expertise. Failure to
  provide effective oversight of agricultural activities can increase
  the bank's strategic risk profile while also negatively affecting
  interrelated risk in areas such as credit and reputation.
\item
  Reputation risk: Banks with lending activities in certain agricultural
  enterprises can face reputation risk. For example, a bank may finance
  operations that generate large amounts of animal waste that could
  potentially contaminate water sources or cause other ecosystem damage.
  Public perception and potential litigation may cast the bank as being
  responsible for environmental cleanup, the costs of which may exceed
  the amount of the original loan. In addition, a bank can damage its
  reputation by reducing the availability of its farm credit or
  foreclosing on farm collateral. Many agricultural lenders do business
  in small, rural communities where constructively working with
  borrowers often benefits both parties. Lending decisions that are not
  publicly perceived as favorable to the community may have a
  significant effect on the bank's agricultural lending activities. For
  example, if the bank forecloses on a family farm owned for
  generations, the community may negatively view the bank's foreclosure
  action, even if the action was a prudent business decision.
\end{enumerate}

These risks, along with several other factors, make it increasingly
difficult for banks to perform operations in the agricultural industry
of emerging markets. Governance, rural communities, and smallholdings
add to the complexities of banking operations, as do insurance and
equipment lending. Thus, a significant amount of risk assessment and
management is necessary to execute financial operations in the
agricultural industries of developing nations, and without adequate
manpower, forecasting, and risk management, it is difficult to deploy
such services. Although some emerging economies have introduced a
micro-finance scheme that enables them to provide a certain amount of
facilities to farmers; the operational costs and size of lending figures
cannot be maintained or scaled to tackle the next ten years of global
agricultural and food security needs.

\emph{Agriculture Management}: There are multiple problems pertaining to
the successful management and distribution of agricultural products in
emerging economies. Value chain, which is defined as the cost of food
processing, distribution, and agricultural marketing, is at a
significant disadvantage due to poor resource quality, corruption,
extortion, pilferage, and lack of adequate storage spaces. These
problems hinder product management and encourage product adulteration to
increase shelf life and cover target production volumes. Emerging
economies are unprepared to tackle problems stemming from the
grass-roots level and causing the final costs of agricultural products
to rise for consumers without directly attributing to farmers' revenue.
With increased monitoring, compliance, infrastructure, and skilled
manpower, developing nations can work to potentially reduce
approximately 60\% of final goods value that is spent on the value
chain. This is not an easy feat to achieve, as most emerging economies
have major constraints in place.

\emph{Agricultural Trends}: As consumers across the world become
increasingly aware of the quality of food they eat, the type of high
yielding agricultural products produced in emerging economies faces a
massive threat. Over the course of time, fertilizers and
post-industrialization methodologies have created an adverse effect on
the soil along with the knowledge of how to produce food organically.
The new health trend caused many farmers to focus on organic production,
which resulted in lower yield and global food insecurity due to farmers'
inability to satisfy demand. New methods such as genetic modification,
agricultural phonics, and organic farming schemes are both costly and
require new knowledge insertions.

\emph{Agricultural Trade}: Global trade wars and changes to import laws
along with new tariffs have created new complexities for agricultural
exports from emerging economies, while exchange rates and subsidy
policies have negatively affected farmers in both the developing and
developed world. To make matters worse, new compliance laws related to
agricultural products do not allow most emerging economies to tackle
these changes with a holistic approach. Infrastructure remains a major
problem for the transportation and shipment of agricultural products,
and volatility within the food market adds to the list of problems the
industry faces in emerging economies. As the global population increases
in both size and personalized trends, most farmers are not able to
deploy production on demand. Meeting consumer demands for decades to
come will require increasing market trend knowledge, faster production
capacities, and the ability for producers to reach end consumers.

Instability and corruption within local governments can also have a
major impact on agricultural trade in emerging economies. Examples
include government officials requiring bribes prior to conducting
business, or even the threatening of smallholding owners whose trading
is seen as disrespectful. The financial burden of continuous bribes can
dissuade potential business from being conducted, thus hindering
stimulation of the economy. Furthermore, many people in emerging
economies still place great value on traditional beliefs such as holding
family above everything. Without means of protecting themselves or
relocating, a smallholding owner would most likely refrain from
conducting business rather than bring potential harm to their family,
thus also hindering economic and personal growth. Finally, most emerging
economy smallholding owners lack an education, with many of them being
illiterate and lacking trade-knowledge, thus significantly limiting
their options by making it difficult to properly handle complex trade
deals.

\emph{Agricultural Security}: Smallholdings agriculture is thought to be
the solution to the global food security crisis. A smallholding is a
small farm owned by one or several farmers in a developing country. As a
country becomes more affluent, smallholdings may cease being
self-sufficient for reasons such as rising costs, distribution
capabilities, and production requirements. While a large portion of
smallholdings exists in emerging economies, food security requires the
ability to produce agricultural products in a timely and effective
manner, which in turn requires these farmers to be equipped with the
knowledge, machinery, etc. In the past decade, the global demand for
food has almost doubled due to population growth, which has not only
caused a decrease in farms, but also pollution that has affected large
areas of previously arable land. Most emerging economies are unable to
tackle these problems and will require significant amounts of planning,
data, and effective production schemes before any progress is made.

\emph{Agricultural Livelihood}: Due to changes in the economic outlook
of emerging economies, a large number of farmers are moving towards the
service sectors. This is primarily because of better economic
opportunities and institutionalized education. Most rural populations
downplay the role of an agricultural producer in favor of service sector
incentives and an urban lifestyle. This move is further threatening the
agricultural sector in emerging economies. Unless similar economic
opportunities are created where farmers are rightfully credited for
their productions, the world will face agricultural manpower shortages
in the following decades. Most emerging economies or even developed
economies are not prepared to tackle this massive loss of manpower or
facilitate employment to over one billion
people.\textsuperscript{\href{http://www.fao.org/3/i2490e/i2490e01b.pdf}{7}}
Therefore, to address this problem requires substantial planning, new
market opportunities in agricultural sectors, and equal opportunities
and incentives compared to service sectors.

The following graphs depict the change in rural populations and
agricultural labor forces in developing regions:~\emph{Agricultural
labor force and rural population by continent, 1960-2005 -- World
Development Report
(2008).\textsuperscript{\href{https://ourworldindata.org/employment-in-agriculture}{8}}}\selectlanguage{english}
\begin{figure}[h!]
\begin{center}
\includegraphics[width=0.70\columnwidth]{figures/image2/image2}
\caption{{Couldn't find a caption, edit here to supply one.
{\label{div-730937}}%
}}
\end{center}
\end{figure}

\textbf{Technology as a Solution:} The plethora of problems stated in
the agriculture industry has many folds and will require multi-level
solutions. Governance, planning, infrastructure, business models, and
technology will act as key catalysts to drive effective changes. In this
case, technology can be used as an effective tool kit to address these
problems. Technologies such as AI, Big Data, IoT (Internet-Of-Things),
Agricultural-Automation, Blockchain, Genetics, Biotechnology, and
Geo-Satellite could be utilized as effective tools to facilitate the
agricultural industry; however, emerging economies face major challenges
in facilitating such technology, such as cost of deployment and existing
infrastructure. Effective utilization of this technology will require
the following:

\begin{itemize}
\tightlist
\item
  Infrastructure (power, communication, transportation, facilities)
\item
  Education (knowledge, training institutions)
\item
  Finance
\item
  Research
\item
  Manpower (skilled labor for various operations)
\item
  Planning (governance)
\item
  Support industries
\end{itemize}

AI, Big Data, and IoT require significantly advanced infrastructure
(data retrieval devices, data curation tools, ubiquitous devices, etc.)
to address the challenges posed by the agricultural sector of emerging
economies. All these technologies require significant amounts of skilled
manpower to design, extract, curate and execute operations. Most of this
information is also processed in proprietary enterprise systems which
make sense of the data. Unfortunately, most emerging economies cannot
facilitate such processes, and even in developed countries such as the
United States, home of the ``Boston IoT Tomato Project'', development is
still contentious and requires several phases of improvement before
producing actionable outcomes that will lead to higher productivity and
efficiency.\textsuperscript{\href{http://\%C2\%A0http://www.eccpartnership.com/the-boston-iotomato-project.html}{9}}

On the other hand, technologies such as Biotechnology and the Genetic
Modification of plant life have yielded far more actionable outcomes. In
developed countries such as the United States, scientists at or funded
through USDA have opened up new options for farmers responding to market
needs and environmental challenges. Many new plant varieties being grown
by farmers have been produced using genetic engineering, which involves
manipulating the plant's genes through techniques of modern molecular
biology often referred to as recombinant DNA technology. However, such
processes require considerable amounts of safety and compliance
regulations. In the United States, USDA supports the safe and
appropriate use of science and technology, including biotechnology, to
help meet agricultural challenges and consumer needs of the
21st-century.\textsuperscript{\href{https://www.usda.gov/topics/farming}{10}}
USDA plays a key role in assuring that biologically altered plants and
products derived from those plants are safe to be grown and used in the
United States. Once those plants and products enter commerce, USDA
supports bringing them and other products to the worldwide market.

As described in this publication, most emerging economies face major
governance and infrastructure challenges that leave them unable to
create safe and transparent mechanisms. Research is time consuming,
costly, and requires considerable amounts of dedicated skilled manpower.
While some developing countries have produced successful results through
research, such as the high yielding variety of rice (IRRI) produced
through BRRI (Bangladesh Rice Research Institute) in Bangladesh, equal
amounts of resources and time should be dedicated to meet global
demands.\textsuperscript{\href{http://www.brri.gov.bd/}{11}}
Agricultural automation or machinery used in agriculture has been the
pivotal tool for industrialization. Most developed countries have
utilized these machines to exponentially change the production and
efficiency of both plants and livestock. Machines, such as an automated
saw for rice fields, improve a farmer's capabilities to produce;
however, the saying, ``A machine is only as good as its operator,'' is a
daunting reality in emerging economies, as most farmers who lack the
knowledge to effectively utilize agricultural machinery resort to more
traditional processes of farming. Furthermore, the cost of such types of
machinery and their ancillary requirements, such as uninterrupted power
supply or fuel, making them difficult to adopt in emerging economies. As
mentioned previously, most farms in developing countries are
smallholdings, and large farming machinery such as the ``In-Row Weeder''
or ``Harvester'' are unnecessary due to their size. This suggests that
new tools, both specialized and localized, are necessary to address the
agriculture industry in emerging economies. Unfortunately, most of those
countries do not house companies able to produce and deploy such
products at scale, and without the utilization of
agricultural-machinery, it is difficult to attain a prosperous
agricultural industry.

Emerging technologies, such as blockchain, are offering solutions and
opportunities in the agricultural industry. Blockchain technology
requires less on-ground infrastructure and provides affordable access to
multiple sets of tools. Additionally, the skilled manpower required for
the technology can largely be pooled from existing resources placed in
other parts of the world; thus, the same pool of resources can be shared
by multiple parties across various geographic locations. Key challenges
in the adoption of blockchain are based on both understanding and
creating regulatory and compliance clarity within the agriculture
industry. There is no doubt that this technology will have a major
impact on the agricultural industry upon implementation.

\textbf{What is Blockchain and where can it be utilized?}

Blockchain is a peer-to-peer decentralized network and distributed
ledger system technology that allows a vast array of secured data to be
created and shared globally. Furthermore, it allows a globalized storage
system through its infrastructure that can be utilized for various
operations. Among other functions, blockchain records transactions and
changes in data, as well as allows enterprise developments virtually
anywhere in the world at minimum cost. Blockchain's skilled resources
are remote and therefore do not require a ground unit to be deployed.
The technology can be positioned to communicate with existing data,
devices, and systems to gather insight and deploy functions. In a
nutshell, blockchain technology is capable of conducting operations,
storing-exchanging information, transferring real-world value, utilizing
decentralized labor force and infrastructure, and being adopted
immediately into the current scenario with massive future functional
opportunities.

In emerging economies that lack technology infrastructure, specific
skill sets, and utilization of current assets, Blockchain can still be
operational. For example, a farmer growing rice could need a system that
actively monitors droughts and provides him with planning and trading
options. He may have difficulty understanding the data and require it in
simplified terms of what he can grow, when, where and how he can grow
it, and when the best time to harvest and trade it would be. In a
traditional system, this would require an enterprise-grade system
actively communicating with data provided and other devices or existing
data sources. Additionally, key manpower with an understanding of
modeling systems in the agricultural industry would need to be utilized,
and communication with the farmer or ground unit would need to be
conducted to create a system. Existing infrastructure would need to
include devices and systems in place to actively monitor certain
changes, as well as to communicate with other similar systems to extract
certain knowledge or data. Such infrastructure would mean high cost,
complexity, and time, all of which emerging economies cannot usually
afford.

Blockchain simplifies the entire process by deploying a system that does
not require large scale infrastructures such as data centers, data
readers, or massive power input to power operations. Instead, existing
data collection devices, such as featured phones or even IoT devices,
could be leveraged as source inputs. Furthermore, an enterprise-grade
system that can curate data and create a model, can be built either on
the ground location or in a completely remote location. This is possible
because most data available in the decentralized network is easily
accessible within the system and does not come at a premium price like
traditional systems. At the very least, the decentralized network
provides the ``utopian dream'' of combining the size and quality of data
resources similar to Google, IBM, and Microsoft in single global storage
space. Most importantly, a decentralized skilled workforce can be
pooled, based on its expertise and understanding of multiple geographic
locations, to tackle the agricultural industry in emerging economies
rather than wait for emerging economies to build a workforce of their
own. But this is not the only advantage that blockchain technology
provides the industry. Blockchain technology has certain inherent
functions that could prove indispensable to the agricultural industries
of emerging economies:

\begin{itemize}
\tightlist
\item
  Provenance: This allows an individual to not only track goods, but
  also to verify the authenticity of a product. Its direct application
  in the agricultural industry would be providing indispensable
  information about products from a particular source. This feature will
  have direct implications on the supply chain and global trade
  processes of the agricultural industry by addressing the various
  discrepancies that exist around agricultural products of emerging
  economies, such as the quality of goods and the adulteration of
  products before they reach end consumers. It also opens new
  opportunities to strike better market prices for products where higher
  qualitative input has taken place, thus allowing global trade to be
  further localized. For example, during the ``Mad Cow Disease''
  situation in the UK, where beef produced from the entire country
  received international embargos, there were some uncontaminated farms
  located in the UK that fell victim to the embargo without
  cause.\textsuperscript{\href{http://\%C2\%A0https://www.theguardian.com/uk/2012/apr/25/mad-cow-disease-british-crisis}{12}}
  With blockchain, through clear provenance, one would be able to
  differentiate those products from the adulterated ones on a more
  microscopic level, thus preventing the entire industry from suffering
  for the poor quality of some production.
\item
  Identity: As mentioned earlier, most emerging economies lack the
  necessary infrastructure to build a robust identity management system.
  Identity plays a critical role in identifying individuals, activities,
  and qualitative positioning in global markets. Through blockchain
  technology, self-sovereign identity can be managed by users choosing
  who, if anyone, they would like to share their data with.
  Self-sovereign identity can enable emerging economies to build
  farmer's credit ratings, farm performance ratings, product ratings,
  and more. Additionally, as blockchain leverages global networks, these
  processes can be readily adopted and deployed, thus saving valuable
  time and cost while developing across the nation.
\item
  Crypto-Currency: Crypto-currency is currently a hotly debated topic
  and is probably the most defined use case of blockchain technology. It
  provides a new alternative to financing and trading agricultural
  products. As discussed previously, the volatility of exchange rate
  policies and liquidity directly affect the agricultural industry at
  large. Crypto-currency provides a credible alternative to tackle these
  problems using a fast and secured mechanism. While key challenges
  remain in both understanding and regulating compliant use cases of
  crypto-currency in the agriculture industry, there is a high
  likelihood that a mutually beneficial relationship will develop
  between crypto-currencies and emerging economies.
\item
  Autonomous Execution System (Smart Contracts): Smart contracts are one
  of the founding functions of blockchain platforms such as Ethereum.
  These systems automate processes of contractual binding between two or
  multiple parties based on specific task executions. In the
  agricultural industry, extensive paperwork is required for a farmer to
  acquire a specific asset from a service provider. This process is
  lengthy and in many cases unfeasible due to lack of information or
  structures needed to provide these services. A blockchain enabled
  smart contract allows both parties to leverage existing data, verify
  identities, and bind the parties through a contract related to
  execution, financing, etc. There is no doubt that smart contracts will
  not only play a critical role in existing scenarios but will also open
  up new opportunities in the agriculture industry.
\item
  Trust and Transparency: Blockchain enables every transaction/activity
  across the network to be easily monitored by everyone within the
  network. This means activities within the value chain, assets, and
  funds can be securely monitored, and any discrepancies or manipulation
  will be noticed by everyone within the network. For example, if an
  agricultural product moving through the value chain shows a
  discrepancy between its start and end cost, government bodies or even
  end consumers can investigate the cost changes. Therefore, blockchain
  has the potential to either lead to direct boycotting of some products
  (extortion within value chain) or to reduce the end cost of the
  product, thus drastically reducing the economic opportunities for
  extortion while at the same time directly facilitating economic
  empowerment of the farmers. In other words, in broken or corrupt
  governance systems, transparency and trust can be established without
  an overhaul of the current system.
\item
  Security: Blockchain technology's most potent tool is its
  cryptographic immutability. As blockchain is a shared distributed
  ledger connected through a peer-to-peer network, all transactions and
  activities can be monitored and secured through a chain. This means
  that in order to breach the system, the entire system needs to be
  attacked, which decreases the attacker's capabilities. In other words,
  the attacker would need to be extremely proficient and lucky to be
  able to bring down the entire system. Furthermore, even considering
  such an attack would require both a massive amount of time and
  resources. Financial incentives to hack a particular contract between
  a farmer and a financial institution are not high enough to initiate
  the launch of such an attack. While no system is unhackable, the
  architecture of the blockchain system makes it the most robust system
  of its time and primarily creates deterrence. In fact, till today the
  entire system of blockchain is yet to be completely compromised, and
  while most traditional system hacks would not be public information,
  within the blockchain all information is readily available to network
  peers. Such a secure and resilient system enables the safe movement of
  assets, value, and data among parties. This is a particularly
  important tool for emerging economies, which are constantly vulnerable
  to cyber-attack strategic interferences, as can be seen in countries
  such as Turkey, Georgia, and Vietnam.
\end{itemize}

\par\null

\textbf{Use Cases and Projects in Blockchain}

Blockchain is being tested and implemented in several projects, many of
which use IBM's Hyperledger Fabric, a permissioned ledger that is
securely maintained by the interested
parties.\textsuperscript{\href{https://www.hyperledger.org/projects/fabric}{13}}
While using such a system does not provide ultimate transparency, it
does provide much more than the current system.

\begin{enumerate}
\tightlist
\item
  Walmart: used blockchain to track mangoes and to test several other
  food items. Additionally, Walmart is working with IBM and Tsinghua
  University on~a project to track Chinese
  pork\textsuperscript{\href{https://jbba.scholasticahq.com/article/3712-food-traceability-on-blockchain-walmart-s-pork-and-mango-pilots-with-ibm}{14}}
\item
  Dreyfus: used a blockchain platform to close a large soybean deal with
  a Chinese supplier, cutting down transaction time
  dramatically\textsuperscript{\href{https://www.bloomberg.com/news/articles/2018-01-22/dreyfus-teams-with-banks-for-first-agriculture-blockchain-trade}{15}}
\item
  Coca-Cola: building blockchain platforms to help ensure ethical sugar
  production\textsuperscript{\href{https://www.reuters.com/article/us-blockchain-coca-cola-labor/coca-cola-u-s-state-dept-to-use-blockchain-to-combat-forced-labor-idUSKCN1GS2PY}{16}}
\item
  Unilever: working with Provenance to track tea in
  Malawi\textsuperscript{\href{https://www.reuters.com/article/us-malawi-tea-technology/can-blockchain-ensure-unilevers-tea-farmers-produce-a-fairer-brew-idUSKBN1E729G}{17}}
\item
  Carrefour: working on a blockchain system to help trace product
  origin\textsuperscript{\href{http://www.carrefour.com/current-news/carrefour-launches-europes-first-food-blockchain}{18}}
\item
  Dole, Driscoll's, Kroger, Tyson, Nestle, Golden State Foods, McCormick
  and Company, and McLane Company: working with IBM to build blockchain
  tracking
  solutions\textsuperscript{\href{https://www-03.ibm.com/press/us/en/pressrelease/53013.wss}{19}}
\end{enumerate}

\emph{}\href{https://www.ibisa.network/}{Ibisa:} IBISA is a Luxembourg
based company providing an innovative product for inclusive finance in
the agricultural industry using blockchain technology and Earth
Observation. In its early stages, IBISA is positioned to tackle emerging
markets and create sustainable investment opportunities in those
markets. Their product provides the following solutions:

\begin{itemize}
\tightlist
\item
  Risk-Sharing Service: This acts as a mutual alternative to
  micro-insurance, targeting small farmers worldwide.
\item
  Peer-to-Peer Architecture: This reduces the cost incurred by
  insurer-centric paradigms.
\item
  Risk Materialization: This leads to effective and attractive
  compensation for farmers contributing to the scheme through regular
  micropayments.
\end{itemize}

\begin{quote}
IBISA is tackling farmers' requirements in emerging countries in the
following manner:
\end{quote}

\begin{itemize}
\tightlist
\item
  Protection- Protects crop farmers from weather-related calamities.
  Thus providing a solution to a permanent need which is more acute with
  climate changes.
\item
  Affordability- Affordable even for farmers with low revenues. Annual
  contributions of farmers have to be less than 6\% of the sum incurred.
\item
  Loading- Present fair value for money. Current studies have shown that
  farmers accept loading factors up to 30\% above this threshold and
  thus stop renewing insurance contracts.
\item
  Ease-of-Use- Easy to use and easy to adopt; thus taking into account
  that a portion of small scale farmers in emerging economies is
  illiterate.
\item
  Pay-Out- Perform frequent and partial payouts without having to file
  claims. The current status is the slowness of payout and assessing
  claims.
\item
  Contribution- Allows farmers to make contributions in a flexible
  manner. This accounts for the lack of cash at the beginning of the
  season; a critical barrier in the current scenario.
\end{itemize}

IBISA has developed an interesting business model that leverages
farmers, institutions, and infrastructure solution providers. It is
enabling solutions in the following problems existing in emerging
economies' agricultural industries:

\begin{itemize}
\tightlist
\item
  Agricultural Sustainability- This is through direct models that tackle
  weather-centric farming models
\item
  Agricultural Finance: Providing alternative solutions to farmer
  lending services
\item
  Agricultural Trade: Providing a marketplace for farmers and
  agriculture-centric institutions
\item
  Agricultural Security: Providing the ability to manage or acquire new
  farming lands
\end{itemize}

IBISA leverages blockchain technology in the following categories:

\begin{itemize}
\tightlist
\item
  Decentralized Network and Infrastructure
\item
  Identity
\item
  Trust and Transparency
\item
  Smart Contract
\item
  Security
\end{itemize}

The key elements of IBISA are as follows:

\begin{itemize}
\tightlist
\item
  The members are farmers, beneficiaries of global mutual risk sharing
  products.
\item
  The enablers are the link with the farmers' ``last mile'' that
  on-boards them as members into IBISA.
\item
  The watchers are the trackers of the index and assessors of the
  losses, using space assets and other sources of data.
\item
  The profilers are the creators of the risk profiles.
\item
  The developers are the creators of the IBISA infrastructure and its
  evolution.
\item
  The risk contribution is defined based on the area within which the
  farmers live.
\item
  Farmers use mobile money to make contributions and receive payouts.
\item
  Farmers pay what they can when they can, and they are responsible for
  their ``merit,'' which guides how much they are paid in case of loss.
\item
  Loss assessment is done remotely every month, thus eliminating the
  need to file claims and follow up.
\item
  Partial payments are done whenever a partial loss is detected.
\end{itemize}

\emph{}\href{http://www.agriledger.io/}{AgriLedger:} a project primarily
focused on providing regional and international markets and capital
access to small farmers, who supply 80\% of the food consumed in
developing countries. The system primarily runs off of simple smartphone
apps and has run pilot co-op projects in Haiti, Papua New Guinea,
Myanmar, Kenya, Ethiopia, Ghana, and other countries. All results have
been positive so far, with income as much as tripling in some cases.

AgriLedger provides the following services:

\begin{itemize}
\tightlist
\item
  Digital Identity: providing official identification, without which a
  person can struggle to access financial services, social benefits,
  healthcare, education, political and legal rights, gender equality,
  and migration
\item
  Information: Most farmers are operating at just 40\% of their
  potential capacity. With access to information, farmers can now plan
  and harvest more effectively and gain access to the market.
\item
  Immutable Data: DLT (Digital Ledger Technology) solution provides
  immutable information, trust, and transparency through the supply
  chain.
\item
  Traceability: Lack of traceability means tracking and recalling
  specific contaminated products throughout the supply chain. With the
  DLT solution, each item can be traced from seed to consumer.
\item
  Financial Service: Without financial access, many agricultural
  providers lose up to 50\% of their potential income. Farmers can prove
  their identity and income to gain access to financial institutions.
\item
  Record Keeping: Farmers can use their digital ledger for better record
  keeping and proof of income.
\end{itemize}

\begin{quote}
\emph{}\href{https://www.ripe.net/}{Ripe:} a company working to improve
the visibility of food supply chains. Ripe is altering the trajectory of
the food system through blockchain technology and the IoT by providing
the following services:
\end{quote}

\begin{itemize}
\tightlist
\item
  Farmers: will be able to leverage IoT and sensors to automate
  processes and efficiently meet market demand for high quality,
  sustainable products
\item
  Distributors: will be able to transparently track food products to
  provide real-time data on food safety and delivery
\item
  Consumers: will receive trusted, certified information on the journey
  of their food, creating a new standard of food quality
\end{itemize}

\emph{}\href{https://www.agridigital.io/}{AgriDigital:} a commodity
management platform targeted toward the grain industry. AgriDigital is
an end-to-end solution providing farmers and consumers with simple and
easy processes to manage contracts, deliveries, inventory, orders,
invoices, and payments all in one place, and in real time, through the
following services:

\begin{itemize}
\tightlist
\item
  Farmers: one platform for contracts, deliveries, and payments. Receive
  instant delivery and payment notifications
\item
  Storage Operators: from receivable to outturn, all operations on one
  platform. Communication and dealing with customers
\item
  Traders: easy to use commodity management providing reduction of risk,
  time, and money
\end{itemize}

\begin{quote}
\emph{}\href{https://ethichub.com/}{EthicHub:} a platform providing
crowdfunding and microloans for small format farms, as well as
leveraging blockchain to connect investors (lenders) to small unbanked
agricultural producers (borrowers) globally. EthicHub provides the
following services:
\end{quote}

\begin{itemize}
\tightlist
\item
  Investors: are able to choose between highly profitable projects in
  developing countries. The platform provides access to better reward
  vs. risk investment opportunities, which are usually found in those
  countries.
\item
  Small and Unbanked Producers:~can benefit from lower interest rates
  due to greater financing supply and take advantage of stored credit
  history on the blockchain. More liquidity allows them to improve
  productivity and have a higher profit from labor, resulting in a
  better quality of life.
\end{itemize}

\begin{quote}
\emph{}\href{https://twitter.com/lokaalmarket}{Lokaal:} a company that
designed a crypto-currency, the LOKA, to support local farms,
food-makers, and small businesses by providing microloans and payments.
People who are interested in accessing the market can purchase LOKA on
Lokaal's site and use it in their curated marketplace, or donate it
either through Lokaal support fund or directly to specific farms or food
makers listed on their funding
pages.\textsuperscript{\href{https://lokaal.market/}{20}} Key features
of this product are its simplicity and ease of access between end
consumers and producers: Farmers: Farms and food vendors get paid
instantly for any sale made in their network. Lokaal manages the
collections risk with buyers, thus providing cash proceeds based on
sales history with flexible repayment options. Conversion to Fiat is
very easy, as the exchange rate is recorded during the time of sale to
provide stability in exchange rate volatility. End Consumers
(Investors/Purchaser): have the option to choose between products they
want for their individual purposes (such as retail agricultural
products) and can fund projects they believe in, such as organic berry
farms, which in turn reduces the retail cost of organic products as they
fund the farmers directly. Lastly, they are able to store value and gain
in the crypto-currency that is utilized in the platform for lending
purposes.
\end{quote}

\par\null

\textbf{Future of the Industry}

The future of the agricultural industry enabled by technology is
promising. As explored in this publication, certain technologies can
easily be positioned to enable the industry's current scenario, while
others hold promise in the long-run. Blockchain technology can present
new opportunities in agricultural management, trends, and livelihood,
along with areas that IBISA is currently tackling. A clear understanding
of the technology by governments will bring about regulatory clarity,
which will allow usage of internationally traded agricultural
crypto-currencies. Supply chain and production will become more defined
and efficient, thus creating new market opportunities. Due to financial
and technological improvements through current processes within the
agricultural industry, an emerging economy will provide new incentives
to onboard technologies such as IoT, AI, Genetics, Biotechnology, and
localized agricultural machinery. According to a report published by FAO
(Food and Agriculture Organization of the United Nations), the total
population of the world will hit 11.2 billion by the year 2100 and
current food security needs will
double.\textsuperscript{\href{http://\%C2\%A0http://www.fao.org/3/a-i6583e.pdf}{21}}
As emerging economies are positioned to oversee the largest rise in
population, it is fair to say that the agricultural industry will carve
out a massive chunk of the consumer economy in the future.

\textbf{Conclusion}

Blockchain enabled solutions are a much-needed technology for tackling
critical problems existing in the agricultural industries of both
emerging and developed economies. Additionally, blockchain provides a
bridge within the agricultural infrastructure space to deploy other
technologies into the industry. With the service sector overtaking the
agricultural sector in 2009, which bids poorly for the industry that
forms the bedrock of food security and thus the survival of humankind,
timing is ripe for an overhaul of the industry. While multi-layered
challenges exist, including product novelty, government regulations, and
key assumptions in technology, the results of certain use cases clearly
show that blockchain effectively addresses industry problems better than
models enabled by alternative technologies or the current brick and
mortar processes. Use cases also show that the utilization of blockchain
along with other technologies will address critical problems pertaining
to the agricultural industry in the future. Emerging economies are bound
to benefit most from the utilization of this technology because there is
a symbiotic combination of necessities and disruptions within the
existing system and models. Lastly, blockchain is not a duct tape
solution to every existing problem in the current agricultural industry,
but it is a definite catalytic tool that is ready and well-suited to
accelerate the industry for economic growth, increased production, and
better management output.

\par\null

References:

\begin{enumerate}
\tightlist
\item
  \emph{Agricultural Lending Version 1.3 by The Office of the
  Comptroller of the Currency}
\item
  \selectlanguage{ngerman}\emph{Agricultural Sector Risk Assessment: Methodological Guidance for
  Practitioners by Vikas Choudhary, Stephen P. D'Alessandro, Åsa Giertz,
  Kilara Constance Suit, Traci Jeanette Johnson, Tobías Baedeker, and
  Ricardo Jorge Caballero from The World Bank}
\item
  \emph{Agriculture for Development: New Paradigm \& Options for Success
  by Alain de Janvry}
\item
  \emph{Global Agricultural Performance: Past Trends and Future
  Prospects by Mette Wik, Prabhu Pingali, and Sumiter Broca at the World
  Development Report 2008}
\item
  \emph{The Future of Food and Agriculture by FAO}
\end{enumerate}

\selectlanguage{english}
\FloatBarrier
\end{document}

