Agriculture Supply Chain Management: Analyzing the Impact of Blockchain and Data Analytics on Farm Businesses

Highlights:

• Introduction
• Incorporating blockchain into agriculture supply chains
• Use of data analytics in the agriculture sector

Despite rapid urbanization and industrialization in developing countries, agriculture has remained a primary occupation in several nations. However, in countries like India, farming has traditionally been an unprofitable economic activity due to challenges such as fragmented landholdings, limited mechanization, unpredictable monsoons, and inaccessible markets. As a result, despite having around 45% of the workforce employed in agriculture, the sector contributes to just 18% of India’s GDP. Many economists and agricultural experts consider the lack of fair price discovery mechanisms for farmers to be a key factor contributing to the sector's unproductivity.

On an international level, the rising geopolitical tensions such as the Russian-Ukraine war and the Israel-Palestine crisis have disrupted global supply chains, thus, resulting in a huge increase in food prices. For instance, since Ukraine is one of the major wheat producers, the conflict between Russia and Ukraine has led to a surge in grain prices worldwide. Many developed countries have, hence, come forward to establish robust logistical frameworks to ease the supply of food grains. In both such scenarios, the importance of agriculture supply chain management has increased significantly.

Using modern technologies to improve the scope of the agriculture supply chain management sector

In many sovereign states, the agriculture sector is fragmented; meaning, the price of a particular product isn’t uniform across the entire country. This creates a trust deficit among the farmers, reducing their profitability despite having good quality farm produce. To address this issue, several agriculturists suggest the creation of a unified market wherein farmers are able to get fair remuneration for their goods. Moreover, government entities and private companies are increasingly investing in various technologies to improve the efficiency of supply chains.

In Kenya, two entrepreneurs, viz., Peter Njonjo and Grant Brooke founded Twiga Foods in 2014 to help farmers reach customers more effectively. For this, the company launched a blockchain-powered platform that connects cultivators directly with end-use consumers, thus nullifying the need for any intermediaries. This farmgate-to-trader trading system by Twiga Foods aids rural farmers in maximizing their profits, thereby increasing their incomes significantly. With this initiative, this Nairobi-based enterprise has managed to connect local farmer-producer organizations, cooperatives, and NGOs to enhance their bargaining power and get better remunerative prices for their farm yield. Additionally, the firm also conducts farmer training and capacity-building programs to help them adopt and understand new technologies in the agriculture sector. In the last few years, Twiga Foods, through its blockchain platform, has helped farmers associate with more than 8,000 retailers across the country.

Over the years, many such companies have launched blockchain-powered platforms to enhance the overall transparency and traceability of supply chains. The decentralized ledger system used by blockchain technology makes it ideal to record all the transactions and agreements signed between farmers and wholesalers or retailers. The increased accountability and trust among different parties help reduce the likelihood of fraud and deceit. Additionally, businesses specializing in agriculture supply chain management prefer such platforms as they aid in accelerating payments by automating most of the financial transactions. Furthermore, since these innovative solutions enable farmer-produce organizations and cooperatives to connect with multiple buyers at once, the level of competition rises, thus helping farmers discover the true price of their produce.

Increased popularity of supply chain analytics creating new investment opportunities in the sector

The growing integration of advanced technologies such as blockchain and data analytics has led to a surge in the revenue share of the agriculture supply chain management market. The industry is expected to gather a revenue of $954 million by 2032, growing at a CAGR of 10.1% during 2023-2032. Many leading technology companies are launching supply chain analytics solutions to empower farmers by connecting them with a wider consumer base. Supply chain analytics refers to the use of data analytics and other such technologies to improve the efficiency of supply chains and manage inventory more comprehensively. Furthermore, accurate and precise information provided by these software applications helps cultivators make informed decisions, enabling them to take calculated risks and explore new growth opportunities in the sector. In October 2023, Helios, an analytics software developer, announced the launch of the world’s first-ever analytics solution for agriculture supply chain management, viz., Cersei. Powered by AI, this platform helps users gain information on different parameters in real-time. Furthermore, it also aids retailers and wholesalers in understanding the availability of different commodities and their price levels depending on the demand and supply.

In summary, the agriculture supply chain management industry is expected to witness huge growth in the next few years due to the increasing need to improve the income levels of farmers and cultivators across the globe. The integration of advanced technologies such as data analytics and blockchain is anticipated to impact the landscape positively.

Contact our experts for the latest advancements and developments in the landscape of agriculture supply chain management!

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