In this guest post, Robin Saluoks, co-founder and CEO of climate tech-focused startup eAgronom, sets out how Web3 applications are helping the agriculture sector green up its act.
Technological innovation is not normally associated with agriculture, but within a very short space of time, the sector has turned into a hotbed for innovation and investment.
With the world now aware of the realities of climate change, the prospect of having to feed an additional two billion people by 2050, while dealing with depleting resources and the fact the sector is a major source of greenhouse gas emissions, are both reasons why the agriculture sector is under increasing scrutiny.
Working within an industry that’s facing such fundamental and immediate challenges, a wholesale shift to more sustainable agricultural practices that reduce the need for chemicals, increase yield and decrease wastage and emissions has never been more urgent.
Additionally, protecting communities most exposed to the effects of climate change is another immediate priority. The emergence of Web3 has enabled innovation in the agricultural sector to flourish at an incredible speed. Especially around the use of data. Data is power and up until now has been held and monetised by a very small pool of institutions and organisations, with issues around lack of transparency, data quality, bias and manipulation being some of the key concerns.
Open data on blockchain eliminates most of these problems and is already leading to many real-life uses, a small number of which I am outlining below.
Improving transparency in food supply chains
Food supply chains have become exceptionally long and convoluted. Tracing the origins of products is incredibly difficult for retailers, let alone consumers. Blockchain, however, is able to record information of any product from field to plate.
With the help of smart sensors and artificial intelligence (AI) technology, it is possible to trace back the origins of a salad leaf to its exact location, and see whether it has been treated with fertiliser, when it has been picked, packed, transported and more. Walmart has been working on adding transparency to the decentralised food supply ecosystems on blockchain for a number of years, and other big retailers are following its example.
Finance for small scale, unbanked farmers
According to the World Bank, half the world’s farmers are unbanked. That is 440 million farmers. At the same time, a study of Kenyan farmers has found that 98% own a mobile phone. A smartphone is a game-changer as it provides farmers with the opportunity to access financial services. This can include using cryptocurrency platforms to get microloans and being able to pay or be paid for goods and services instantly, directly and without a middleman. With many communities depending on their local farmers for all their food needs, this Web3-powered development has real potential to improve livelihoods in developing regions.
Index Insurance for small scale farmers
Despite common misconceptions, around 95% of global farms are small holds with less than five hectares of land, which produce 80% of food for some regions, including Asia and Sub-Saharan Africa. Unfortunately, these regions are also already disproportionately affected by the effects of climate change and an extreme weather event can have devastating effects on the livelihoods of farmers and local communities.
Clean and open digital data from weather stations and farms on blockchain cannot be manipulated form the basis of Web3 powered index insurance. This allows claims to be processed fast with quick, automated payouts. Farmers can better manage risks and become less vulnerable to the adverse effects of weather events, equipment failure and other problems.
Blockchain powered carbon markets
Agriculture is an industry incredibly well-suited to becoming part of the carbon offset ecosystem. Soils are the largest carbon sink outside oceans and sequestering carbon into agricultural soil via photosynthesis is a key natural means to fight climate change. While agriculture is one of the major sources of global emissions today, it also represents a big opportunity for removing CO2 from the atmosphere. Unfortunately, many farmers currently do not have the funds to move to more sustainable farming practices, and therefore do not have the opportunity to get carbon certified.
Meanwhile, for corporations to put environment, social and governance (ESG) at the heart of their operating model is increasingly not an option but a necessity due to societal and economic pressures. That said, companies looking to offset their residual emissions are struggling to find high-quality carbon projects that are additional, measurable, transparent and permanent. Whereas traditional financial mechanisms are often unable to meet the monetary needs of farmers, the emergence of blockchain and Web3 technology is enabling concerned individuals to come together quickly to finance a good cause that requires urgent attention.
This is exactly what we are now witnessing in the carbon markets at the moment, where a number of blockchain-powered platforms have sprung up that finance and pre-finance high quality agricultural carbon projects.
Scratching the surface of endless potential
While the usual discourse around blockchain is dominated by talk of cryptocurrency and get rich schemes, Web3 is, undoubtedly, more revolutionary to the agricultural sector than the emergence of the first tractor nearly 150 years ago. It offers endless possibilities, from improving the livelihoods of farmers and communities across the globe, to helping the sector become more sustainable and protecting the environment. The examples above only scratch the surface of the types of applications Web3 powers in agriculture today, let alone its potential for the future. Watch this space for more to come.