Blockchain In Agriculture Market (And Food Supply Chain)

Posted by MarketsandMarkets on Dec 29, 2018 4:17:43 PM
MarketsandMarkets

Nagesh Manepalli - Head of Research : Food, Beverage, Animal Nutrition & Agriculture, at MarketsandMarkets™, shares his Point of View. Blockchain has been acknowledged as a disruptive technology in terms of compliance, traceability and fraud control. The developments in the recent past reflects the advancements in blockchain technology with wide adoption in food and agriculture supply chain:

  • Based out of Hyderabad, StaTwig becomes the only Indian startup selected by “UNICEF Innovation Fund” to solve global supply challenges in the areas of vaccines and food by using blockchain.
  • Blockchain’s RightMesh partners the International Institute of Tropical Agriculture (IITA), for the design, development, and testing of a mobile application to aid Sub-Saharan farmers in fighting against crop diseases.
  • Chinese state-owned agriculture trader COFCO International Ltd, a subsidiary of COFCO Group, joins the ABCD initiative to bring blockchain to agricultural sector. This initiative was launched in October by four global agribusinesses firm ADM, Bunge, Cargill, and Louis Dreyfus.

Blockchain technology is revolutionizing the food and agriculture sectors by enhancing the decision-making capabilities of organizations. Food and agriculture are considered inherent factors and strong pillars of economic growth for any country. The primary application of blockchain technology was for cryptocurrencies, but nowadays it is gaining momentum in the supply chain market to track the journey of a product from start to end. It finds several potential applications in these sectors, some of which have already been explored. Nowadays, groups of leading retailers, food companies, growers, and IT solution providers are collaborating together with their commitment to “strengthen consumer confidence” in food products. Since the implementation of blockchain technology in food and agriculture is in the nascent stage, there is a lack of awareness among industries about the benefits it can offer.

According to a recent study by MarketsandMarkets™, the global market for blockchain in agriculture and food supply chain is projected to grow at a CAGR of 47.8% to reach USD 429.7 million by 2023 from an estimated value of USD 60.8 million in 2018. North America is estimated to account for the largest share of the global market for blockchain in agriculture and food supply chain in 2018, owing to the presence of major companies such as IBM (US) and Microsoft (US). The increase in research & development activities for blockchain, due to food safety concerns, and the benefits this technology offers to the food and agriculture vertical in terms of transparency, payment, and land registry are the factors that are expected to drive the market for blockchain in agriculture and food supply chain in this region during the forecast period.

1.1  WHAT IS DRIVING THE GROWTH OF BLOCKCHAIN IN AGRICULTURE AND FOOD SUPPLY CHAIN?

Some of the key drivers that are accelerating the demand for its adoption are highlighted below:

1.1.1. INCREASE IN DEMAND FOR SUPPLY CHAIN TRANSPARENCY

With growing concerns related to food safety around the world, many food manufacturers are now keen on detecting contamination in food products.

According to the 2016 Label Insight Food Revolution Study, 94.0% of the respondents in the study reported that it is important for them to buy from a manufacturer who is transparent enough in revealing the correct and complete information about the product. The chart below reflects the importance of food transparency among consumers:

IMPORTANCE OF FOOD TRANSPARENCY FOR CONSUMERS, 2016

Using blockchain technology, the growers, manufacturers, suppliers, and retailers can get real-time information of the product, which could help in efficient and on-time food recalls, thus ensuring food safety. For instance, Provenance tracked the complete journey of tuna fish in Indonesia from the shores to the shelf. Walmart, along with IBM, also conducted similar studies on mangoes in the US and pork in China. Many more big players in the food industry, including Nestlé, McCormick & Co., Tyson Foods, Unilever, and Kroger, have started using blockchain technology in their fight for food safety.

1.1.2.  RISE IN CASES OF FOOD FRAUD

According to the World Health Organization estimates in October 2017, almost one in 10 people become ill every year from eating contaminated food, with 420,000 dying every year, resulting in the loss of 33 million healthy life years.

1.2  GROWTH IN ADOPTION OF BLOCKCHAIN TECHNOLOGY

There are a number of players such as Walmart, Nestlé, and Schneider who have implemented or are willing to implement blockchain in their processes. Some of the major use cases of blockchain technology in the food and agriculture supply chain have been covered below:

CASE 1: Provenance ties up with the co-op to prove the journey and authenticity of fresh produce
CASE 2: Origintrail and Tagitsmart tie up with Plantaze to trace wine with smart sensors
CASE 3: IBM tie up with Walmart (us) to track pork in china and mangoes in us to ensure food safety
CASE 4: FOODCHAIN ties up with Caffè San Domenico to study the story of the coffee
CASE 5: TE-Food ties up with Nongshim to traceback its food products

1.3  UNCERTAINTY IN REGULATIONS AND STANDARDS RESTRAIN THE MARKET GROWTH

One of the major restraints associated with blockchain technology is the lack of regulations and standards. Due to uncertainty pertaining to regulations, many organizations are finding it risky to implement the technology in their processes. Even though the application of blockchain technology holds great potential, lack of regulations is posing a hindrance to its complete adoption.

1.4  APPLICATIONS OF BLOCKCHAIN TECHNOLOGY ACROSS THE GLOBE

Blockchain technology helps the food and agriculture organizations to record, monitor, and get the real-time information of the food product in the supply chain. This recorded information cannot be altered by any of the stakeholders, which makes this technology the safest for all transactions.

FASTEST GROWING APPLICATION OF BLOCKCHAIN TECHNOLOGY Many organizations such as Walmart (US), Nestlé (Switzerland), and McCormick & Co. (US) have started piloting with the blockchain technology solution provided by IBM (US) to ensure food safety and rapid food recalls in case of any contamination.

Not only IBM, but there are also many other big players such as Microsoft (US) and SAP-SE (Germany) providing platforms and solutions for complete traceability of food products across the supply chain.

1.5  IOT AND BLOCKCHAIN TECHNOLOGY TO REDEFINE FOOD AND AGRICULTURE INDUSTRY

North America is a major innovator of agricultural practices and technologies adoption. The US is at the forefront of the global blockchain technology adoption for the food and agriculture industry. Europe is gradually advancing toward the incorporation of these technologically advanced solutions within its large enterprises and SMEs. The blockchain technology is expected to cater to the requirements of consumers related to product transparency and demand for the labeling of products, along with more information of products labeled as organic, locally sourced, cruelty-free, and GMO, which food processors claim. However, regulatory instability and implementation of General Data Protection Regulation (GDPR) is expected to impact the market growth in the European region. On the other hand, Asia Pacific is predicted to witness a substantial rise in the adoption of blockchain technology, owing to the increasing investment and digitalization, growing internet penetration, and the rising demand for traceability to avoid losses from food contamination.

Even though the blockchain revolution started in the banking, financial services, and insurance (BFSI) industry, the food & agriculture supply chain is going through disruptions owing to the blockchain applications. Blockchain, coupled with IoT (the internet of things), is reshaping the food & agriculture industry. Hence, the increasing popularity of blockchain technology among retailers and other stakeholders is expected to present opportunities in the market.

Topics: Agriculture Industry, Blockchain In Agriculture, Blockchain, Food Supply Chain

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