By Dr. Krishnan S. Raghavan, Ms. Swetha Kolluri, Ms. Rozita Singh, Ms. Layla Hosseiny and Dr Badri Narayanan G
Bridging the Gap: Is Blockchain the big next thing in Indian agriculture?
March 20, 2020
With the rising demands from a rapidly growing population and industries, India needs another revolution in agriculture. With the Government’s efforts to increase agricultural production, food losses have also increased to more than 30 percent of total production, not allowing Indian farmers to escape the vicious cycle of poverty and debts.
To achieve the Government of India’s ambitious target of doubling farmers’ incomes by 2022 and to avoid postharvest losses, innovations such as blockchain can act as catalysts. India is clearly emerging as one of the blockchain leaders globally and its potential has been recognised by the Prime Minister of India, Mr. Narendra Modi: “The changes that blockchain technology and artificial intelligence will bring about in agriculture will be revolutionary”.
What is Blockchain technology all about?
Blockchain is a decentralized process of recording transactions on an open and shared electronic ledger. A data log is created with time stamps in a sequential manner containing all transactions making the process secure, easy to access in real time and impossible to tamper.
How does it help to improve traceability to ensure food quality?
Approximately 420,000 people die annually as a result of food borne diseases. In 2018-19 more than quarter of food samples were found to be non-conforming to food safety standards in India.
A pilot programme conducted with Walmart showed that applying the blockchain technology reduced the time to trace a package of mangoes from days to seconds, ensuring food safety and increased accountability to ensure quality and transparency at every stage of value chain.
How does it help to minimize transaction lead times?
The shipment time for agricultural exports is often affected by customs and border checks that involve long procedures, including physical stamps or signatures. Even when part of the process is digitized, due to incompatibility issues these documents still needs to be printed or retyped. Blockchain can help in seamless integration and easy access to data, thereby benefiting farmers in saving costs and time, leading to better and quicker returns.
So, how does it help the farmers?
India is the sixth-largest producer and fifth-largest exporter of coffee in the world. Despite its global reputation as a premium brand, Indian coffee farmers get less than five per cent of the money for every cup of coffee sold. Farmers sell coffee through agents and sometimes middlemen without receiving any advance payments. Agents enter into contractual agreements with buyers and then pay the farmers, after deducting a 5-10 per cent brokerage fee, which reduces the profit margins of farmers.
With the introduction of blockchain, 30,000 farmers in India can directly negotiate a fair price for their products with buyers through the e-marketplace launched by The Coffee Board of India.
So, is blockchain the next magic bullet for transforming Indian agriculture?
While blockchain can bring radical shifts in the monitoring of value chains, its large-scale adoption in India is still a challenge. Farmers are reluctant to sign up for blockchain and the cost of developing and adopting blockchain applications is significant. Moreover, the blockchain is still in its early stage in India which makes investors reluctant to make substantial investments in this technology.
India, as a country, is fast emerging as an innovation hub and there is a lot to be ensured in terms of investments, regulations and policy incentives for large scale adoption of blockchain. There are ample opportunities with the Government prioritising mainstreaming of innovations across all sectors, a rise in domestic capacities for developing technological innovations and a rapidly growing quality-conscious middle class. So, the question is not “whether” but “how” to accelerate the wider use of blockchain in agriculture and take it to scale across the country.
The writers are:
Dr. Krishnan S. Raghavan is Head of Exploration, Accelerator Lab UNDP India
Ms. Swetha Kolluri is Head of Experimentation, Accelerator Lab UNDP India
Ms. Rozita Singh is Head of Solutions Mapping, Accelerator Lab UNDP India
Ms. Layla Hosseiny is Graduate Student at University of Warwick, UK
Dr. Badri Narayanan is Senior Economist, University of Washington, Seattle
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