ICTs for Development

Markets and Value Chains

Blockchain, a technology with big potential for farmers and value chains actors

ICT4Ag Outlook Expert Meeting, 9-11 October 2017, Rhenen, Netherlands

November 2, 2017

During a recent CTA ICT4Ag Outlook workshop, three topics were discussed: start-up financing, 3D printing and blockchain. Blockchain has emerged in recent years with exciting potential for ACP countries. The exchanges focused on this new technology in order to help develop better understanding and to discuss its benefits and actual limitations.

Blockchain is an emerging innovation. There is a general lack of knowledge and capacity for its adoption and use, particularly in ACP regions. However, change is on the horizon. Blockchain, which can be enabled on digital platforms, allows peer-to-peer transfer of digital assets, and reduction or removal of intermediaries (e.g. bank, intermediary service providers). It can help all stakeholders involved in a supply chain network or a contract farming scheme — from the farmer, the wholesaler, the financial service provider to the supermarket —  to trade more quickly and in a transparent manner. The farmer can quickly inform (via a blockchain enabled platform such as a mobile app) an off-taker, who can in a short timeframe transact with a distant wholesaler, while the latter has the opportunity to follow all these transitions and authorise payment electronically, via or without a bank.

Digital currencies can be used when needed. This decentralised approach enables efficient and cost-effective business management, instant payments and helps stimulate innovative value chain partnerships. However, whilst blockchain undoubtedly has the potential to impact agricultural businesses in developing countries, Michiel Berendel of RISKebiz Inclusive Finance Blockchain Solutions highlighted that, “Whilst there is much hype around blockchain for inclusive finance, it is not the solution to everything and a regular finance system might sometimes be more appropriate.”

Users and policymakers need to be educated on blockchain evolutions

On the other hand, Sheena Raikundalia of IntelleCap Advisory Services emphasised that, “While the complexity of blockchain can put people off, it is still possible to appreciate the benefits.” Benefits include smart contracts to validate transactions, increased business opportunities, transparency throughout the value chain, certification that will become easier, and an increase in consumer confidence because consumers will know where food has originated from. Hervé Pillaud, from the Chamber of Agriculture of Vendee (France), insisted that though the technology can facilitate efficient transactions, what is of outmost importance is that mutual trust exists between business partners and that the contents of smart contracts are fair to farmers in particular.

Participants agreed that the evolution and uptake of blockchain will disrupt markets including banking, stock exchanges, agriculture value chains and insurance provision. Much more must be done to educate value chain actors, entrepreneurs, and policymakers on the advantages of the technology. Participants also recommended that ACP governments accelerate the adoption of digitization in the agricultural sector, which is a pre-requisite for adoption of any ICT-based innovation.

About the CTA ICT4Ag Outlook workshop:

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