The size of the global blockchain in agriculture and food market in 2021 was approx. USD 80 million, and it is expected to expand at a CAGR of 47% by 2030.
A blockchain can be compared to a distributed digital ledger that is updated by a network of computers, making it impossible to hack or alter. It records financial transactions. Individuals can transact with one another safely and privately because the technology eliminates the need for third parties like governments, banks, and other organizations.
The ever-growing list of records, referred to as blocks, are connected through cryptography. Each transaction is time-stamped, independently validated by computer networks operating on a peer-to-peer model, and contributes to a growing data chain. After being recorded, the data can not be changed in any way.
Blockchain technology has many uses beyond cryptocurrencies, although it has gained popularity in the financial sector. Many businesses benefit greatly from this new technology, such as healthcare, law, real estate, and banking.
However, blockchain can potentially change the agriculture and food sectors, which hasn't yet been explored. Moreover, we need to address an increasing number of pressing problems.
According to the Food and Agriculture Organization, one-third of the food produced globally is thrown away yearly. Processing losses account for over 40% of food losses in underdeveloped countries. The real-time control of storage and transportation conditions, from processing to retail, is one way that blockchain aids in reducing food loss. Food waste is reduced as a result. Countries worldwide are looking for ways to enhance agricultural and food production, which has drawn several governments' attention to the blockchain. As governments begin to implement blockchain technology, there are numerous prospects for the market's leading firms.
The growth of this market has been driven by the need for more small and medium-sized businesses on the blockchain in the food and agriculture supply chain market. It is primarily the result of larger businesses making substantial investments in developing their existing solutions, while newer businesses are producing unique solutions tailored to meet the requirements of their respective national and regional markets. According to a report published by NASSCOM in 2019, the agritech industry is home to more than 450 start-up companies and is expanding at a rate of 25% year over year. For example, Agridigital is an Australian start-up that assists the Australian grain industry by utilizing blockchain technology. This assistance makes tracking and managing grains as they travel through the value chain easier. As a result, the increase in the number of small and medium enterprises is anticipated to drive the market for blockchain technology in agriculture and the food supply chain during the period covered by the forecast.
Consumers in today's markets are aware of and demand complete transparency regarding the processes that produce their food products. Several businesses have initiated test runs of blockchain-based applications to determine and manage the conditions in which food products are stored all along the supply chain to address the problem of ensuring that food is safe to eat. The United States dominated the innovation landscape related to blockchain technology, with the highest number of investments and the most pilot projects being tested in the country. Food conglomerates such as Nestle (Switzerland), Tyson Foods (US), Dole Food Company, and McCormick & Company are among the companies that have collaborated with IBM (US) on a blockchain project to investigate the potential applications of blockchain technology in the field of food safety.
A significant amount of funding has been obtained in the last few years due to the exponential growth of blockchain technology across various industry verticals. According to TechCrunch, the total amount of capital raised through venture funds in blockchain technology from January to May 2018 amounted to USD 1.3 billion. It demonstrates that venture capitalists view blockchain technology's future as highly bright. Significant investments are currently being made in businesses that provide food and agriculture businesses with blockchain-based solutions and platforms.
Even though there is a lot of room for growth in the ways that blockchain technology can be used, the lack of regulations makes it hard for it to be widely used. When governments realize that their intervention in the ecosystem can benefit the various stakeholders by standardizing and regulating the technology, they can reap the benefits of this realization. Nevertheless, it will assist the government in its efforts to collect taxes and restrict the use of distributed ledgers for illegal activities. One of the reasons the blockchain technology business suffers from regulatory uncertainty is the absence of a consistent set of rules for transactions on the blockchain.
Furthermore, each segment has some sub-segments. If we talk about organization size, it is further divided into large enterprises & small and medium-sized enterprises. Large enterprises hold the largest market share. Large enterprises can provide their customers with a customized approach based on innovation to meet the needs of every supply chain. It enables businesses to meet higher market standards.
Moving on, we have segmentation based on the type, which divides the market into public, private and hybrid/consortium. The public segment dominates the market. This type of blockchain is open to the public, and anyone can join without needing to be granted permission first. That's why it's so popular.
Based on providers, the market is divided into application and solution providers, infrastructure providers and middleware providers. Application and solution providers dominate the market. Companies are investing in a blockchain to enable users to know the food products' entire journey to win consumer trust. As a result, customers can see all the information about the ingredients' origins and where they came from to build trust in the product.
According to stakeholders, the market is segmented into growers, retailers and food manufacturers/processors. The growers are more dominating than the other two. It is because growers, such as farmers, are utilizing blockchain technology at higher rates. It is anticipated that the introduction of blockchain into the agricultural supply chain will provide farmers with a more significant stake in the supply chain and more distribution options.
The application-based market is divided into product traceability, tracking, visibility, smart contracts, governance, risk and compliance management and payment and settlement. The product traceability, tracking, and visibility segments dominate the market. As blockchain pilot cases grow, stakeholders in the agricultural supply chain are beginning to see the potential for greater transparency. Due to the rising demand for supply chain transparency and traceability caused by the increase in food outbreaks and food-borne illnesses, the advent of blockchain is also viewed as timely.
Based on region, the global blockchain in agriculture and food market is divided into North America, Europe, Asia-Pacific, Latin America and the Middle East & Africa.
North America dominates the market because it is widely regarded as the most sophisticated region globally regarding technology and related infrastructure development. The regional presence of blockchain technology solution providers in North America, such as IBM and Microsoft, is the primary reason driving the growth of the blockchain in the food and agriculture supply chain industry in North America. The United States was the region's leader in blockchain innovation, with the most investments and pilot projects. The Federal Government of the United States has not regularised blockchain technology; because of that, the states within the United States are allowed to create their own rules and regulations regarding its use. More specifically, retailers in this region have become aware of blockchain technology's possibilities to deliver improved consumer experiences and more effective supply chain systems. As a result, this region has begun implementing the technology to develop business applications.
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