INP-WealthPk

Blockchain Technology Offers Potential for Uplifting Agriculture Sector

February 17, 2022

By Muhammad Soban ISLAMABAD, Feb. 17 (INP-WealthPK): Pakistan's agriculture sector is the backbone of economy. It is one of prominent contributors (19.2%) to gross domestic product (GDP) which provides livelihood to 38.5% of labour force. But in technical and development aspects, it is one of the most outdated sectors of the economy. The development of blockchain provides an opportunity to explore the prodigious potential to uplift the agriculture sector of Pakistan. Blockchain is the latest technology that has drastically changed all sectors, including finance, retail, automobile, and healthcare. It ensures transparency, trust, and efficiency. In a blockchain, the development of a ledger system allows peer-to-peer transactions of any commodity while being tamper-proof. In Pakistan, the financial sector is the leading sector benefiting from this technology. The agriculture sector in Pakistan is less developed as it relies on traditional methods and lacks new technology. Agriculture sector can be revolutionised by combating different problems using blockchain technology. It can help develop a proper crop and food production system, set up a food supply chain, ensure fair price of crops, control weather crisis, and manage agriculture finance. Agricultural departments became the provinces' responsibility after the 18th amendment to the Constitution of Pakistan, while food security stayed under the control of the federal government. Due to lack of proper coordination, track and trace system of crops, and the food supply chain, Pakistan sometimes faces different crises such as a wheat crisis and sugar crisis. Pakistan’s agriculture sector is far behind the advanced countries in using technology. Adopting blockchain technology can help the government have a proper record of crops and food production. It can find the areas with excess food and also the areas with a shortage of food. Additionally, deploying this technology will assist in maintaining precise records of information regarding the origin of the products, the date of production, and details regarding the producer. One of the major problems of Pakistan's agriculture sector is low production level. Pakistan's per hectare production of major crops including wheat, cotton, and corn is almost half of that in the advanced countries. Pakistan's per hectare wheat yield is 3 metric tons, almost half of that in the advanced countries that produce 7 metric tons per hectare on average. Pakistan's cotton production is 729kg per hectare, while the advanced countries produce 1,511kg per hectare. Pakistan produces 5 metric tons per hectare of corn, while developed countries’ yield is on average 10 metric tons per hectare. Poor soil fertility and water availability, among other problems, lead to a low production level. The production can be increased by using blockchain technology. As an example, data about crops, soil temperature, use of chemicals, fertilizers, weather conditions would be stored in a blockchain ledger that will be used for research and development. In Pakistan, farmers are not provided with a fair price for their crops. Middleman takes more benefit by purchasing crops at a low price from farmers and selling at a high price to customers. But by adopting blockchain technology, the role of the middleman would be eliminated, and farmers will get a fair price for their crops. Along with this, it would increase transparency as end users can trace where the final product was taken and what is the quality of the crop. Farmers in Pakistan face financial stress because of low income. The government announced different subsidies for farmers, but they could not benefit from these subsidies. By adopting blockchain technology, these subsidies could be more transparent to farmers, which would help them use pesticides and fertilizers to increase the production of crops. Pakistan is one of the most vulnerable countries to climate change. This weather crisis has resulted in excessive rains for some crops as well as a shortage of rains at times for other crops that negatively affect agriculture production in Pakistan. According to a research study, Pakistan lost 15 to 20% of agriculture production due to changing weather patterns. Through blockchain technology, Pakistan could mitigate the weather effect and save its production from wastage by educating farmers.