While blockchain technology earned traction because of its contribution to the financial domain, it holds an extensive spectrum of uses beyond cryptocurrencies.
Blockchain is set to drastically remodel numerous industries, including law, healthcare, real estate, banking, etc. A rarely explored domain like blockchain also has the potential to transform the agricultural sector. Distributed ledger and blockchain solutions can be quite competent in changing the existing financial system.
Likewise, conventional insurance schemes are centralized, and agriculturalists must follow different provisions to get insured. As most farmers and agriculturists are not much enlightened to comprehend the requirements and are left uninsured, they incur losses.
In addition, farmers generally lose their investments in farming after a crop failure and loan repayment default. This is where crop insurance comes into the picture. Crop insurance is bought by agriculturalists and funded by the government to save farmers’ investments.
Moreover, during challenging periods of crop loss, farmers subsidize the money through insurance. Crop insurance can fix this issue by establishing monetary security by guarding the investments in crop production and enhancing the risk-bearing capacity. All this can readily get streamlined by incorporating blockchain technology.
What are Crop Insurance and Agricultural Financing?
In modern times, there is an ever-rising demand to invest in agribusiness due to a considerable advancement in the global population and varying dietary choices in emerging markets for agricultural products of higher worth. Modern people also want to understand where their meals come from.
Likewise, the need to eat nutritious food mixed with the mass adoption of technology across all fields has resulted in the agriculture sector looking for supply chain administration to enhance food safety, traceability, and quality in the complete farming supply chain. This is where the introduction of blockchain technology comes to light.
Blockchain is a common, unchangeable ledger that simplifies the method of storing financial transactions and analyzing assets in an enterprise network.
Basically, anything of worth can be traded and tracked on a blockchain network, lowering threats and slashing expenses for all involved. Moreover, the use of blockchain technology in agriculture assists in enhancing the economic performance of farmland and fulfilling the demand for food for the rising population.
Some of the benefits of blockchain technology in transforming the agriculture sector are as follows:
Fulfill the needs of a rising population for more high-quality produce
Cutting-edge technical solutions to fulfill varying customer requirements
Promote sustainable agricultural techniques and reduce environmental footprints
Lower agricultural supply chain expenses
Set and follow strong sanitary and phytosanitary (SPS) measures
Sustain promising functions of agribusinesses and farmlands
Raise the earnings of small farms, remote farmers, and food producers
Understanding Fraud in Crop Insurance
Farmers rely on precision agriculture, farmland measurement, IoT sensors, location intelligence, vertical agriculture systems, crop administration software, and several transportation technologies to accomplish better results for agricultural products and supply chain management.
Nevertheless, improved demand for agricultural products gives rise to new problems along with an increased possibility of fraud, such as fake products jeopardizing food supply chains at distinct stages. In addition, reduced efficiency and lack of efficiency can place agriculturalists and customers at a disadvantage.
Fraud in crop insurance has been estimated to cost a considerable amount to taxpayers. Despite severe actions by private crop insurers and the national government to battle fraud linked to claims, crop insurance misrepresentations remain a substantial problem of national concern.
Hence, it might not be wrong to say that the current extent of fraud and misrepresentation in federal crop insurance increases the need for more combative and solid efforts to further eradicate this issue and support farmers.
To reduce these ongoing instances of fraud in crop insurance, the farming sector is now moving to blockchain farming and distributed ledger technology (DLT). This blockchain technology holds the power to boost efficiency, clarity, and trust throughout agricultural supply chains.
How Does Blockchain Impact the Crop Insurance Sector?
Blockchain technology facilitates the traceability of data in the food supply chain and thus assists in improving food security.
It provides a safe way of keeping and organizing data, which promotes the expansion and use of data-driven inventions for intelligent farming and smart index-based crop insurance.
In addition, blockchain technology will eliminate the requirement for middlemen and ensure clarity in the agro-finance mechanism. It employs the concept of smart contracts while executing the crop insurance system.
Upon research of the outcomes, which remains backed by endorsement testing, blockchain technology is quite effective and thus can be applied to a more extensive scale for the advantage of the agricultural industry.
To sum up, we can say that the utilization of blockchain technology in agriculture and crop production is still in its primary stage. A potential future solution for this can be the use of IoT mechanisms.
Further, blockchain’s attributes of traceability and non-tamperability must be more extensively and deeply analyzed to enhance the productivity and efficiency of farming production and marketing.
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