Blockchain and Internet-of-Things in Agriculture

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Table of Contents

Introduction
Using Blockchain in the Agricultural Sector
Blockchain and IoT Synthesis
A Look at Supply Chain Optimization
Benefits of Blockchain in the Agriculture Industry
Cybersecurity Issues
Conclusion
References

Introduction

The intensification of the deep penetration of information technology (IT) in all areas of life has naturally led to the development of strategies to use it everywhere to optimize processes. One such area for which IT provides particular value and enables significant streamlining of operations and production is the agricultural sector. In particular, this industry continues to face challenges, including increasing demand due to population growth, the disruptive effects of climate crises and supply chain disruptions, demands for greener, higher quality products, and the growing popularity of this sector among younger consumers. Addressing these challenges is a crucial challenge for today’s agriculture industry, so stakeholders need to make the most of opportunities that facilitate optimization, including IT resources.

The most attractive and rapidly growing Internet technology is blockchain. In simple terms, a blockchain should be defined as a continuous chain of virtual blocks containing unique information of any kind. Traditionally, blockchains have been associated with cryptocurrency technology, but in reality, blockchains can contain any information, including agricultural data (Bodkhe et al., 2020). A unique property of blockchain is the inability to delete or edit the information that has already been entered, but the ability to add new information, resulting in distributed ledger chains of increasing power. Another essential property of blockchain is the transparency with which users with access can access registry entries, which saves high workflow costs. The following sections will discuss in detail how blockchain can be used in the agricultural sector and what potential problems this could lead to. Thus, this paper aims to situate blockchain technology within the agricultural industry in light of the corresponding comprehensive review.

Using Blockchain in the Agricultural Sector

The main production task of the agricultural industry is to adequately provide the population with high-quality products that meet not only food security standards but also demand. However, rapid population growth and increasing environmental awareness among consumers are putting additional strain on the industry and creating demands for greater transparency in farm operations. Research shows that 9 out of 10 respondents believe it is essential to know about the availability of quality certificates for agricultural products, as well as compliance standards and the fertilizers and chemicals used in growing food (Figure 1.1). These responses lead to the conclusion that the agricultural industry must invest in developing transparency and consumer loyalty to meet needs effectively.

Figure 1.1— Results of the consumer survey in identifying critical requests from the agricultural industry (Lenniy, 2022).

The technological transformation of the agricultural industry is already underway today, as realized through the use of IT sensors and drones to track growth dynamics, map territories, and automate soil quality analysis. In this sense, transferring blockchain expertise from other industries to this sector would not only support current trends and demonstrate the industry’s high commitment to technology but also literally simplify most of the operations being managed. One such operation is supply chain management, the efficiency of which is critical to agriculture. Reduced logistical productivity leads to supply disruption and potential hunger and affects the economic well-being of the community. Blockchain can improve sustainable supply chain management by creating a digital registry that contains information about the whereabouts of a particular product and its pathways, and all authorized users, that is, logistics partners, will have access to this information (Chandan et al., 2019). In other words, using blockchain to solve supply chain problems increases transparency, trust, security, and accessibility between partners, which benefits supply chain management. The use of blockchain also invests in better process automation, resulting in a significant increase in the speed of communication and access to data – which entails a positive effect on supply chain establishment.

Thus, blockchain’s main impact on the agricultural industry is the significant optimization of operations and processes. However, the reputational impact cannot be ignored: the widespread use of IT in the industry is expected to increase young consumers’ confidence in the sector. More specifically, an understanding of the modernity and technological sophistication of the farming industry, entailing a perception of the real benefits of this, will allow consumers to take a greater interest in the industry. Eventually, this may lead to an increase in the number of specialists in this field and an increase in the attractiveness of the farming profession. While this section has looked at the example of supply chain management and increasing the attractiveness of the sector, in reality, the potential opportunities for blockchain technology in this industry are much broader; most require the combination of this technology with the Internet of Things (IoT) tools.

Blockchain and IoT Synthesis

While IoT is a broad concept used in many different senses depending on the industry, the general understanding of the term needs to be reduced to the physical objects between which data is transferred. Thus, IoT aims to eliminate the need for human involvement in routine processes, which means that sensors that automatically replace humans are actively used to implement this concept. The combination of such sensors with blockchain technologies makes it possible to meet the growing demands in the direction of the agricultural industry as well.

On an agri-farm, IoT sensors function as automated devices that monitor the behavior of a specific factor and signal when it has changed. For example, if the soil moisture or its mineral composition has been changed, such sensors inform the owners about the changes as they sense a deviation from the norm set in their program. If one adds a blockchain unit to this “IoT human sensor” system, the transfer of information and control will be automated and will not require the direct participation of a human. The information collected by the IoT is structured and modified with the addition of additional metadata before being transferred to the blockchain – in the context of an agri-farm, this could be the time of signal fixation and a specific section of the field. In turn, the information in the blockchain is stored and cannot be modified, ensuring that all historical data has been stored. Connecting additional IoT devices to the IPFS that affect changes in this data and are capable of making machine learning-based decisions allows the agri-farm to automate the response; for example, a device could trigger unscheduled watering of a field if the soil dries out (Kumar et al., 2021). Capturing historical data in large volumes will, in turn, allow the agri-farm to more deeply understand the dynamics of its assets and make timely adjustments without driving the situation into a crisis. Decentralized management of the system, which is realized through saving data in the IPFS protocol, also minimizes the risk of complete failure, which is especially relevant in the case of the need for a long-term lack of human supervision over the assets of the agri-farm or extremely large agricultural areas, unautomated management of which is impossible. The described scenario has a vast number of applications because the basic idea, namely the automatized response of electronic devices to factor changes, proves to be valuable for solving any agrotechnical problem. For example, a slight increase in the number of locusts captured through motion or sound sensors can help prevent field destruction. Alternatively, IoT flood sensors can register any abnormal changes in soil moisture levels and proactively turn on pumping or dewatering systems to keep crops from dying.

In addition to climatic and biogenic crises, agri-farm management is associated with severe economic risks and a constant desire to maximize profits by reducing costs. In this context, blockchain finds another application as a transparent, secure, and unbreakable database. Any information about transactions, purchases, and budget reallocations is automatically recorded and made available via a system of access to interested parties. Such parties could include an audit that verifies the purity of cash flow and suggests any changes or recommendations to the agri-farm based on the financial data collected by the IoT (Shaver, 2020). In this sense, auditing has the potential to become a linear rather than a point-by-point audit of the company, which entails restructuring capital management in a more efficient way.

A Look at Supply Chain Optimization

The traditional agribusiness supply chain involves the production of food directly on agri-farms, followed by distribution to warehouses and distribution on an auction basis to retail stores and markets. The blockchain supply chain, as already discussed, guarantees greater security and availability of logistical data at all stages of distribution. In a farm-to-market project, blockchain, combined with IoT, can be used to reduce asset fraud, enabling supply chain optimization. For example, IoT devices automatically record data on the quality, provenance, and growth conditions of produce and record them via IPFS (Kumar et al., 2021). IoTs can also be used during the transportation stages of production to monitor transportation conditions, including temperature, average machine variations during movement, and humidity, and take preventive measures to save the crop from rotting if any of the indicators deviate abnormally. The auction can also be modified using smart contracts, in which sellers aware of all critical crop information bid their price (Hewa et al., 2021). As a result of the most favorable offers, the system selects a seller and sends them the produce. Notably, at all stages, customers can access the data view with the producer’s permission (e.g., QR on packaging or RFID), so they can learn about growing, storage, and transportation conditions before deciding to purchase the product and not buy questionable products (Xu et al., 2021). The described example shows how useful combining IoT with distributed registry systems can be to improve each party’s experience in a farm-to-market project.

Benefits of Blockchain in the Agriculture Industry

The previous sections have described the potential applications of blockchain and IoT technology in agribusiness, and many scenarios have been discussed in which it can be beneficial. In fact, the benefits of blockchain are not limited to the applications described but are much broader. For example, when implementing a blockchain supply chain, a significant benefit is solving the problem of counterfeit products in the marketplace. The ability of a consumer to read product information using QR or RFID allows them to verify that they are buying quality products that have passed the certification stages, which is the most important preference for the end consumer (Figure 1.1). In fact, authentication in blockchain shipments can be performed at every stage, as shown in Figure 4.1 – relevant barcodes and other identification systems allow stakeholders to track previous manufacturing and processing steps and weed out counterfeit products before they reach the market. This increases confidence in the safety of the goods supplied and minimizes reputational risks for supply chain participants.

Figure 4.1 — Stages of a blockchain-based supply chain with authentication capabilities (Lenniy, 2022).

For manufacturing companies, an established blockchain-based supply chain also allows them to control all stages of the supply and track value-added mechanisms. If a manufacturer realizes that its value proposition is not competitive due to high value-added, thanks to blockchain, the manufacturer identifies the location of maximizing the final value and decides to restructure the collaboration. Additionally, the blockchain captures the number of connections to it through tags on the packaging. Storing statistical patterns of this connection using machine learning allows understanding at what time of the day the consumer is most likely to buy a particular product, which allows to adjust the processes of bringing more effectively in new goods and managing demand so that the minimum amount of sold products is spoiled.

Tracking farm-growth patterns using IoT and blockchain also allows supply to be predicted by refining the quality and safety of produce. If a substantial portion of a crop were found to be unsuitable due to climatic conditions, this could be captured in advance on a particular grower’s blockchain, enabling retailers to take preventive measures to preserve supply in the marketplace. Among other things, this will simplify the insurance claims process, as the insurance company will have direct evidence of the objectivity of damage caused by climate fluctuations. In addition, blockchain can record the specific amount of work that was done by farmers in production, which in turn allows for a more equitable distribution of wages on a piecework basis. Another important consequence of using blockchain in the agricultural industry is the minimization of waste. Since blockchain allows any irregularities to be tracked and recorded, it is also expected to allow waste to be identified at all stages of distribution and decisions to be made on how to reduce this waste in the future.

Cybersecurity Issues

Although blockchain is fully protected from editing the information contained within blocks, has cryptographic algorithms to protect data, and is decentralized, this does not make this system utterly immune to unauthorized access and cybersecurity threats. Because information is now stored on virtual servers, having physical access to it through, for example, social engineering techniques increases the risk of unauthorized access to blockchain data. This is especially dangerous when a company’s commercially sensitive data is stored on the blockchain, as access by fraudsters or competitors could entail financial and reputational risks. Another cybersecurity threat to a blockchain is the 51% Attack, in which a majority of stakeholders conspire against a minority, which can cause damage to the producer in the event that distribution companies enter into fights to discredit the farm.

In the intelligent farming system, it is fair to recognize that it is not the blockchain itself that is more vulnerable but rather IoT devices. Hacking such electronic devices poses a severe danger to the producer, as fraudsters can change the software code of the sensors, leading to unexpected detrimental effects for the farm: lack of preventive fixation of floods, droughts, or locusts (Tsiknas et al., 2021). In other words, the grower will not be able to take preventive control measures because tampered sensors will not detect the problem in the early stages, resulting in the entire crop being ruined. The farm’s competitors can take advantage of such a strategy to eliminate the producer from the market and increase their profits by reducing market supply. Cybersecurity threats do not necessarily involve intentionally damaging the farm’s assets – attackers can use covert tracking systems loaded into IoT devices to monitor the producer’s processes and operations. Ultimately, this could be used against a particular agri-farm, resulting in reputational and economic damage.

Conclusion

To summarize, blockchain technology is a revolutionary solution for the agricultural industry, as it enables significant optimization of internal processes and operations and the initiative-taking management of problems. This paper has shown several of the most promising scenarios for the use of IoT technology and blockchain in agribusiness, which always results in improved production efficiency. Nevertheless, when deciding to invest in such technologies, the producing company must be aware of possible cyber risks, which have also been discussed in this paper.

References

Bodkhe, U., Tanwar, S., Parekh, K., Khanpara, P., Tyagi, S., Kumar, N., & Alazab, M. (2020). Blockchain for Industry 4.0: A comprehensive review.IEEE Access, 8, 764-800.

Chandan, A., Potdar, V., & Rosano, M. (2019). How blockchain can help in supply chain sustainability [PDF document].

Hewa, T., Ylianttila, M., & Liyanage, M. (2021). Survey on blockchain-based smart contracts: Applications, opportunities, and challenges.Journal of Network and Computer Applications, 177, 1-13.

Kumar, R., Tripathi, R., Marchang, N., Srivastava, G., Gadekallu, T. R., & Xiong, N. N. (2021). A secured distributed detection system based on IPFS and blockchain for industrial image and video data security. Journal of Parallel and Distributed Computing, 152, 128-143.

Lenniy, D. (2022). How to apply blockchain technology in the agriculture supply chain?Intellias.

Shaver, C. (2020). Can IoT enable continuous auditing [PDF document]?

Tsiknas, K., Taketzis, D., Demertzis, K., & Skianis, C. (2021). Cyber threats to industrial IoT: a survey on attacks and countermeasures.IoT, 2(1), 163-186.

Xu, Y., Liu, Z., Liu, R., Luo, M., Wang, Q., Cao, L., & Ye, S. (2021). Inkjet-printed pH-sensitive QR code labels for real-time food freshness monitoring.Journal of Materials Science, 56(33), 18453-18462.

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