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The agricultural value chain from producer to consumer is one of the world’s largest industries for transaction and employment. It comprises farmers, processing facilities, packing facilities, exporters, importers, wholesalers, distributors, food service providers, consumer brands, and retailers. Every year trillions of dollars are transacted across the value chain.
Over the next five years the industry will be completely disrupted by distributed ledger technology, smart contracts, and cryptocurrency. These technologies will be integrated seamlessly into smartphones and other digital devices of users. We foresee the agriculture industry to be a major mover in the security token movement. Individuals and institutions globally will be able invest in liquid, and vetted agricultural assets while producers will be able to raise capital from a diverse global investor base.
Currently, intermediaries control power by placing a barrier around communication, marketing and finance, thereby separating the two key stakeholders; producers and consumers. From the farmer to the consumer there can exist wholesalers, brokers, distributors, retailers, importers, exporters, sales representatives, and brands, many of whom take excessive profits on top of their operating costs.
With the advent of digital technology, cryptocurrency, and distributed ledger solutions, we are on the cusp of a new, decentralized model of value chain that will rapidly replace this current, archaic system. This new platform of agricultural value chain will align universal values of transparency and equity in a direct system that empowers producers and consumers.
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Here are some of the specific arenas which will be greatly impacted by this new wave of technology:
- Farmers, packers and processors will market their products directly on global open digital marketplaces.
- Transactions of agricultural goods will move onto distributed ledgers.
- Certifications and documentation delivery will move onto distributed ledgers and into smart contracts.
- Transactions of agricultural goods will be executed with minimal delays and minimal monetary fees imposed by bank and governmental intermediaries.
- Contracts between producers and buyers will be digitized (i.e. smart contracts).
- Physical movement of goods and their shipping environments will be transparently tracked from farm to consumer.
The winners from the blockchain and cryptocurrency industry within the agriculture value chain will be the groups that ensure the lowest possible cost per transaction and that integrate technologies to functional formats (i.e. smartphone, tablet and computer). Most importantly, the groups that have the greatest success will be the ones that have a strong base of producer and buyer users, and a trusting relationship with farmers. Success in the future won’t necessarily rely upon which group has the best technology as much of it will be open source and available, but which group(s) has access to the users of the platform itself.
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