Can blockchain boost the income of African farmers?

WHAT IS BLOCKCHAIN?

Blockchain is a way of keeping records of financial transactions which allows everyone who has been part of the transaction to see all information about it.

WHY MIGHT AFRICAN FARMERS BE UNDERPAID?

At the moment, around 65% of Africans work in agriculture. Whilst Africa’s produce is sold worldwide, farmers rarely receive anywhere near the final price of their goods. This is partly because there are lots of different buyers and sellers involved in the supply chain (the transactions which take place before a product meets its final buyer). For example, free trade and organic products must be certified in-person. Each of these additional steps adds more onto the cost of the product, meaning that the start of the supply chain (the farmers) are offered less money for their goods.

This situation is made worse for farmers because there is also little information on how much farm produce is worth. Farmers are rarely able to research prices across the supply chain as it is difficult, time-intensive and expensive. They therefore end up selling their produce at a big discount (far below its final value).

HOW MIGHT BLOCKCHAIN IMPROVE THIS SITUATION?

Using blockchain technology means that every transaction is recorded alongside its price, date and other transaction details, and also that it can be seen by every person involved at no extra cost. If blockchain was used in agriculture, it would enable farmers to see the different prices their produce is sold for along the supply chain, for free. This would allow them to find out if they are under-valuing their products and charge more for their goods.

It is also likely to cut out many “middle-men” (people who handle the product but do not add any value). This is because African farmers will be more directly accessible to the final buyers of their products, as information about their goods is stored securely. For example, African cocoa is often sold to Western companies such as Nestlé. These companies require lots of information about the quality of the produce they buy. Through blockchain, farmers are able to provide this information themselves. This would mean that a larger share of buyers’ money would go directly to farmers.

Finally, blockchain may also reduce costs for farmers, as it can be used to record crop information easily and securely. This can allow farmers to be more efficient with their work and save time on their organisation.

CONCLUSION

The use of blockchain technology may boost the income of African farmers, as it increases pricing information, decreases the number of people involved in the supply chain, and helps organisation.

Marwin Ramos

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