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Improving Agriculture Financing Opportunities for Farmers Using Blockchain Technology: A Proof-of-Concept Development and Case Scenario Illustration

In: Emerging Technologies in Business

Author

Listed:
  • Premaratne Samaranayake

    (Western Sydney University)

  • Pradeep Ranasinghe

Abstract

This research aimed to investigate blockchain technology adoption in the agriculture sector and develop a proof of concept of an application using Hyperledger Fabric blockchain that could facilitate the provision of financing to rural farmers. The research involved (i) proposing a conceptual framework for adopting blockchain technology, (ii) developing a prototype blockchain-based application, and (iii) illustrating the prototype using a simple case scenario. The key building blocks of the prototype included two main actors, a hypothetical government agency (AgroBank) providing financing in the form of credit lines to farmers, and farmers as the main users of the blockchain-based application to access the funding. The prototype blockchain-based application would allow farmers to receive and repay financing using digital wallets. In this proof-of-concept application, AgroBank staff could execute farmers’ financial withdrawal and deposit requests. The proof-of-concept suggests that smart contracts, a key part of blockchain technology, can replace the need for approvals performed by human intermediaries in the agriculture financing process with approvals based on policies. This study contributes to the existing literature by looking beyond the traditional paper-based, process-intensive approach to funding rural farmers to explore an approach that leverages emerging technologies to improve the efficiency of applying for and receiving decisions on financing, distributing approved financing, and collecting financing repayments. The use of blockchain technology to improve the efficiency, speed, and cost-effectiveness of the agriculture financing process could attract and incentivize farmers to seek and secure financing to improve or expand the sustainability of their farms and food production, leading to increased income and improved quality of life for them. Government funding agencies could use the real-time data generated by blockchain-based financing applications to examine how borrowers access, use, and repay financing, leading to the development of policies that could improve the targeting and distribution of financing to better support the development of the agriculture sector.

Suggested Citation

  • Premaratne Samaranayake & Pradeep Ranasinghe, 2024. "Improving Agriculture Financing Opportunities for Farmers Using Blockchain Technology: A Proof-of-Concept Development and Case Scenario Illustration," Springer Books, in: Andrei O. J. Kwok & Pei-Lee Teh (ed.), Emerging Technologies in Business, pages 193-218, Springer.
    • Handle: RePEc:spr:sprchp:978-981-97-2211-2_9
    DOI: 10.1007/978-981-97-2211-2_9
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