Distributed ledger technologies (DLTs) and smart contracts provide a unique opportunity to bring greater efficiency, transparency and traceability to the exchange of value and information in the agriculture sector. This paper aims to facilitate a better understanding of the opportunities, benefits and applications of DLTs in agri-foods. It also identifies technical limits and possible institutional barriers to their adoption.
By utilising digital records, cryptography and the disintermediation of transaction processing and data storage, DLTs can improve both agricultural supply chains and rural development interventions in a number of ways. First, the ability of the technology to trace a product’s provenance, carry detailed attributes for the product in each transaction and ensure its authenticity brings vast improvements in traceability with positive impact on food safety, quality and sustainability. Second, the disintermediation of transactions in agricultural supply chains and the use of smart contracts enable frictionless and real-time payments for agricultural financial services, which can reduce transaction costs, decrease risk for buyers and sellers and increase cash flow and working capital for farmers and sellers which is usually tied up in complex and paperheavy settlement processes. More efficient supply chains and agricultural financial services lead to greater financial inclusion and stronger business development. Third, DLTs allow users to build digital identities with their recorded digital and physical assets. The vast amount of data generated from transactions in agricultural supply chains provides more accurate market information and data for supply chain actors and the public sector, which can be used to inform production and marketing decisions, prove a farmer’s track record to access credit and strengthen the enabling environment with better informed policies. Physical assets registered on the distributed ledger, such as land titles, can be used as collateral to access financing. DLTs are a secure, fast and immutable method to register land titles, providing greater legal clarity to land tenure systems.
Year of publication | |
Publisher | FAO |
Geographic coverage | Global |
Originally published | 24 Mar 2021 |
Knowledge service | Metadata | Global Food and Nutrition Security | Research and InnovationSustainable Food Systems | Food systemSmallholder farmer |
Digital Europa Thesaurus (DET) | digital technologyfood safetytraceabilityvalue chainagricultural tradefood industryfood securityrural developmentsmall and medium-sized enterprisesdigital transformation |