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Smallholder farmers are really important producers of food globally, but these farmers struggle with several problems that affect their output and income. Through the use of blockchain technology, these farmers can be provided with better solutions, operations can be made to be more effective and the agricultural systems can be more transparent. This article lays out how blockchain can help small farmers and solve some of the key problems that affect small farmers.
Introduction: Small-Scale Farming and the Call for Innovation
Small farmers are the mainstay of agricultural production and contribute to the production of a large percentage of the world’s food. But they face challenges of poor market access, financial services and technology amenities among other things. Among the problems, there is the opacity of the supply chain and very high transaction costs that only add to the difficulties. In this regard, blockchain technology that is based on decentralization and enhanced transparency may help solve these problems and thus, really improve the situation in small-scale farming.
Understanding Blockchain: A Brief Manual for Small Farmers
Blockchain is a digital ledger system that can hold data on multiple computers and make sure that all the data is correct and cannot be changed. Every operation takes place in a ‘block’ and the blocks are linked to create a ‘chain’ of blocks. This technology can help small farmers to have a secure platform for their transactions, for keeping track of their produce as well as to ensure the genuineness of their product.
Efficiency of Payments and Lowering of Transaction Expenses
Blockchain would also help in payments and minimize the cost of transactions for small farmers. Based on the traditional methods, payment is made through the involvement of the bankers and other middlemen and this can take time and is costly. It also creates a platform for direct transactions meaning farmers get paid without having to go through many middlemen and the payments are quick and cheaper. Plus, now is a better time than ever for farmers to get paid through cryptocurrencies as there is a Bitcoin price new high and relative stability. This can increase returns and liquidity in the small farmer’s operations, which can be used to boost their farming businesses.
Enhancing the Supply Chain Transparency and Traceability
Credit and insurance facilities are limited for small farmers as they do not have collateral and a good credit history, which are the criteria of most of conventional financial institutions. Thus, blockchain can really help in using these financial services by creating a transparent and tamper-proof ledger of transactions and establishing a credit history. Smart contracts are self-executing contracts with the terms of the agreement directly written into code, which can help automate loan disbursement and insurance payment; this really decreases the risks for lenders and insurers and allows farmers to get the money they need faster.
Enhancing the Availability of Credit and Insurance
Credit and insurance facilities are limited for small farmers as they do not have collateral and a good credit history, which are the criteria of most of conventional financial institutions. Thus, blockchain can really help in using these financial services by creating a very transparent and tamper-proof ledger of transactions and establishing a credit history.
Improvement of Market Access and Fair Pricing
Blockchain can also really help in improving market access and ensuring that proper prices are offered to small farmers. This is because, through the utilization of blockchain technology, farmers are able to deal with buyers directly hence they are able to bargain for much better prices.
Promoting Sustainable Agricultural Practices
Concern for sustainability is on the rise in agriculture and thus, there is the need to explore how blockchain can help in the promotion of sustainable farming. Using the technology of the blockchain, a clear account of farming practices can be created thus promoting good practices like the use of organic farming, crop rotation and minimum use of pesticides among others. This way consumers are able to know and make the right choices regarding the products they buy and in the process support farmers who practice sustainable farming. This has the potential to promote the shift to sustainable agriculture thus positively impacting the environment and the small farmers.
Opportunities and Limitations of Blockchain Applications
However, there are some issues and barriers that have to be taken into account with regard to blockchain and its very many possibilities for small farmers. These are the cost of incorporating blockchain technology, the availability and training of digitally literate farmers and how the blockchain solution will be scaled up and integrated. It is also important that there is provision of policies and regulations that will really encourage the use of blockchain technology in agriculture. It is only possible to solve these challenges through the very dedicated collaboration of the governments, technology suppliers and other agricultural institutions in order to foster the use of blockchain.
Conclusion
Small farmers can benefit from blockchain as a disruptive innovation that can help solve problems like supply chain, financial inclusion, market and sustainability. Thus, blockchain can help small farmers to improve their activities, become more prosperous and be a part of the fair and efficient agricultural system. However actualizing this vision will call for more effort to address the implementation issues and make sure that the blockchain solutions are affordable and useful to small farmers across the globe.
