The extended important of Blockchain

[Alobo Realer]

In many countries, individuals, farmers and small-to medium-sized businesses have limited or no access to insurance, or as the case may be, a prevailing hedging instrument for price risk, floods, and the like. There is a countable number of incomplete markets, and where otherwise of incomplete markets, Insurance contracts are often not trusted to be enforced in other word; Costly. Very synonymous to small transactions...
The lack of such key financial service as Insurance, causes high risk of falling into poverty in the long run, business failure, and no existence of Entrepreneurship.

Take For Example:
Imagine a maize farmer in a developing country is a month from his harvest, knowing fully well he can sustain a 20% drop until his harvest is sold, which in no way affects his happiness for the current maize price. In order to hedge against a greater fall, he can purchase a put option with a duration of a month and a strike that is 20% lower than the current market price.
 Engaging in such contract will reassure a payment of the difference therein if the price fall below the strike price. Hence, the contract mollifies the risk of creating a price floor.

The Big Problem
Small farmers are in a way hindered from such contracts despite the simplicity of the contracts. Bilateral over-the-counter agreement may be possible though but, the legal frame work may not be adapted well enough to accommodate them, therefore, creating difficulty and costly enforcement.

The effort of Government to intervene in order to support such contracts have been to no avail, as such policies are either too costly from the government fiscal standpoint or create  moral  hazard  if  noninsured risks  are covered by government payouts in the event of extensive loss.
 
The Saviour
The Blockchain technology and the smart contracts then come in as a big savior to raise the potential for insurance/minimum price contracts that are secure, flexible, low-cost, and high customizable to plenty risks and payouts both large and small, With only marginal transaction cost. This approach will further provide easy access to foreign insurers and as well provides a low cost enforcement if the payouts were collateralized in the blockchain.

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[Darker45]

This is worth appreciating, extending the use of blockchain to agriculture. Well, the technology has been used in all kinds of businesses already, and even government programs. 

But if we are talking of individual corn farmers in developing countries, the problem does not actually need a complicated solution such as employing blockchain or devising a sophisticated hedge plan or whatever. As a matter of fact, you remove the middlemen and you are already giving the farmers a breather.

Poor farmers are preyed upon by these rich middlemen. These sharks are buying the produce at a very cheap price that leave the farmers dirt poor and selling them at the market with a terribly high profit that leave the consuming public scratching their head. In the process, these capitalists are the ones who make so much money.

[Assface16678]

By the time goes by with the use of the cryptocurrency is the blockchain this is the method that all of the transactions are recorded for a long year the use of the blockchain is only with the use of the cryptocurrency and now on there are a lot of people and on their business that would like to apply the use of the blockchain, as far as I know, there is a business company that is elaborate and continue spreading the use of the blockchain and this is the Vechain this kind of company is most have businesses in China and other countries and some of them are one of the big companies which are a good thing they are now adopting the use of it one of the important of the blockchains is the use of the transparency and if the transactions are going on confirmation still some of them are already know and adopt this but some of them are not and it is better if we are trying to widely spread this so most of them will apply the safe and secured transparency transactions.

[pooya87]

The Blockchain technology and the smart contracts then come in as a big savior to raise the potential for insurance/minimum price contracts that are secure, flexible, low-cost, and high customizable to plenty risks and payouts both large and small, With only marginal transaction cost. This approach will further provide easy access to foreign insurers and as well provides a low cost enforcement if the payouts were collateralized in the blockchain.

no it doesn't. instead it adds a lot more complexity, a lot of risk and possibility of fraud, money laundering, market manipulation,... the same farmer who might have had a risk of losing 20% of his profit is now at risk of losing 100% of his money.

[hatshepsut93]

Insurance contracts are often not trusted to be enforced in other word; Costly.

And what makes you think that smart contracts can be enforced? Just because they have the word "contracts", it doesn't mean that they can replace legal contracts. A party can easily choose to ignore a smart contract if they want to, and many of the smart contract setups have some trusted third party that makes decisions, and all the setups that deal with physical world must have one, because there's no other way to link physical things with blockchain.

Sorry, but the revolution isn't coming, smart contracts won't get much traction because they aren't universally useful.

[tbct_mt2]

Smart contract is discussed in another more interesting topic, Why Bitcoin smart contracts are not developed?. If you want to discuss about development, advantages, disadvantages of Smart contract on Bitcoin network, please move to that topic.

d5000 left some very thoughtful clarifications

[davis196]

Small farmers in developing countries won't use both financial derivatives(like put options) and blockchain/smart contracts.They simply aren't tech savvy enough to understand the risks and benefits.
What makes you think that smart contracts are better than put options?The few "pros" that you mentioned-lower transaction costs,flexibility,etc. are debatable and still not tested in real life.
I really want the blockchain technology to get implemented in many industries,including agriculture,but what you are writing here is just wishful thinking.

[kryptqnick]

Take For Example:
Imagine a maize farmer in a developing country is a month from his harvest, knowing fully well he can sustain a 20% drop until his harvest is sold, which in no way affects his happiness for the current maize price. In order to hedge against a greater fall, he can purchase a put option with a duration of a month and a strike that is 20% lower than the current market price.
Engaging in such contract will reassure a payment of the difference therein if the price fall below the strike price. Hence, the contract mollifies the risk of creating a price floor.
The Big Problem
Small farmers are in a way hindered from such contracts despite the simplicity of the contracts. Bilateral over-the-counter agreement may be possible though but, the legal frame work may not be adapted well enough to accommodate them, therefore, creating difficulty and costly enforcement.

The effort of Government to intervene in order to support such contracts have been to no avail, as such policies are either too costly from the government fiscal standpoint or create  moral  hazard  if  noninsured risks  are covered by government payouts in the event of extensive loss.

There are futures contracts for cases like this. A person agrees to sell the product at a certain price on a certain day, and someone agrees to buy it at that price and on that day. You may win, you may lose, but this is supposed to ensure that in case of a devastating situation the person who secured the contract will be fine. No need for Blockchain here. And I'm pretty sure the legal framework for this is already more developed than the framework for Blockchain. Smart contracts are great in theory, but hard to use in practice. Surely, one can spend some time and figure out how to use them, but I'm sure that for maize sellers it's easier to go the traditional way.

[slaman29]

I've actually read about all the blockchain uses for transparency and supply chain models for farmers and I always thought, what a load of crap. Farmers ain't got the time or interest in supply chain traceability.

But options to hedge risk on prices? Now that could be something they can learn to use, I agree!

[ABCbits]

You don't mention how do you solve "The Oracle Problem" in smart contract. If you want to help farmer, there are better ways such as enforcing laws for fair prices and removing middleman as much as possible.

[bitmover]

You don't mention how do you solve "The Oracle Problem" in smart contract.

I barely see people talk about the oracle problem here. This is one of those enormous problems which haven't been solved yet, and unless it is solved Ethereum, Neo, etc smartcontracts will all be useless or ICO/Cryptokitties only.

I only know of chainlink and oraclize which are attempting to solve that.

For those who don't know, smartcontracts cannot interact with data from outside the blockchain, only through an Oracle. if the oracle data is centralized we have big problems as well.

If you want to help farmer, there are better ways such as enforcing laws for fair prices and removing middleman as much as possible.

I don't think it is possible to define what is a "fair price", specially through laws. I doubt politicians (who make laws) can do anything fair.

[carter34]

You don't mention how do you solve "The Oracle Problem" in smart contract. If you want to help farmer, there are better ways such as enforcing laws for fair prices and removing middleman as much as possible.

Also providing seeds for farming and fertilizer areother important tool for farmer's growth. Despite the advent of blockchain, these are also necessary to provide physically which can encourage more farmers participation.

[jpnl0006]

Blockchain and its benefits over the years can not be overemphasized as the ease of transactions has recorded massive increase and also the way and manner in which people have confidence in controlling finances and also confidentiality. The unquantifyable trustless system that the technology presents also has it relief of people psychologically. Blockchain has gone beyond technology and has become a resolve to common challenges faced by people carrying out transactions on a daily basis.

[DoubleEdgeEX]

I just recetnly had a talk with a friend about the idea who to build a blockchain business by using farmland, seperate itin tiny clusters and then sell those small pieces of land to investors. It would be some sort of REIT on farmland on blockchain. One would need a different coin for every farm and an interoperability platform where all those coins come together so they could be exchanged in case someone wants to sell parts of land.

Maybe not totally thought through, but it could be something for the future

[Kemarit]

The Blockchain technology and the smart contracts then come in as a big savior to raise the potential for insurance/minimum price contracts that are secure, flexible, low-cost, and high customizable to plenty risks and payouts both large and small, With only marginal transaction cost. This approach will further provide easy access to foreign insurers and as well provides a low cost enforcement if the payouts were collateralized in the blockchain.

no it doesn't. instead it adds a lot more complexity, a lot of risk and possibility of fraud, money laundering, market manipulation,... the same farmer who might have had a risk of losing 20% of his profit is now at risk of losing 100% of his money.

Yeah, this one, it will just make things complicated for farmers.

And I doubt that they will change their traditional way, I mean this kind agricultural or growing crops has been handed from father to son, meaning its generations of old and very traditional. So I doubt that they will used the latest technology and change their whole structure. And I never heard of insurers or collateral in farming. Blockchain has many used and advantages, but I doubt they're applicable to farming, IMHO.

[Yamifoud]

That is interesting! But how these small farmers will potentially be benefited that thing when they saw its complexity. I'm not sure how Blockchain technology will help them but for big companies, they might need this to cope with their needs and fasten transactions. This technology is helping a lot but for just in a certain area, farmers won't deal with such complexity because it only wasting their time. They are good in their traditional way and have nothing to change either unless if it is badly in need but I don't see they have that troubles.

We can't say that they are unfortunate enough to use this but because this ain't really matter to them.

[Wexnident]

You're making things a lot harder for farmers man. There's a simple solution in the problems farmers have, remove all those people that take advantage of their hard work and you can have a happy farmer life.

The effort of Government to intervene in order to support such contracts have been to no avail, as such policies are either too costly from the government fiscal standpoint or create  moral  hazard  if  noninsured risks  are covered by government payouts in the event of extensive loss.

See? you already said it yourself, the actions of the Government have not been one bit helpful to them, so what did you expect? Hell, If such a system were to be implemented, it wouldn't be the farmers that would take advantage of it, it'd be those people above those farmers. The middleman of sorts, or maybe the owner of the lands farmer use (if there is one). Yes, it brings advantages but there are also disadvantages to it, mostly it stems from how people can capitalize on others' work. It'd just be quite a loss for them tbh, with them not even knowing that they're actually losing out due to the term "blockchain" being involved in their transactions.

[Negotiation]

Since blockchain technology can be used to verify small digital information without compromising the security of digital information it is possible to bring about a radical change in the digital world by applying it.

As blockchain technology becomes decentralized, many sequential tasks come together For example stock market transactions can occur simultaneously using this technology Or land registration records can be made much more accessible to the public than property ownership control but in the case of farmers one and a half it is much harder to deal with They cannot improve with the advancement of technology.