Agriculture & Blockchain: The Early Bird Catches the Worm
Walmart, Kroger, and AgriDigital are a few companies that have already begun using blockchains to manage food supply chains to track where food is produced, processed, distributed, sold, and/or consumed.
A blockchain is a digital transaction ledger that is maintained by a network of computing devices without any reliance on a third-party mediator. Individual transaction files, referred to as blocks, are distributed throughout the network and subsequently validated by the computing devices in a consensus to prevent unauthorized changes by malicious entities.
In an exemplary agricultural-based blockchain, each block may include information about a specific exchange. For example, a production block may indicate information about a crop (e.g., fertilizers/pesticides used, harvest time, weather conditions, etc.). A processing block may include information about batch numbers, financial transaction details between a farmer and distributor, etc. A distribution block may include information about shipping details, storage conditions, etc. A retail block may include information about quality, quantity, shelf-life, pricing, etc. A consumer block may include a purchase date and payment method.
In each stage of a supply chain, unique blockchain applications have also been used. For example, in the case of production, the World Wildlife Foundation introduced the Blockchain Supply Chain Traceability Project to eliminate illegal tuna fishing. In this initiative, fishermen register their catch on a blockchain via RFID e-tagging and fish scanning. In the case of distribution, startups such as Provenance and Bext360 support farmers by providing them tools to trace the journey of their goods and receive competitive compensation.
Innovations in this field have been substantial. The number of patents issued worldwide that integrate agriculture technology and blockchain has consistently tripled each year since 2017. As this niche technology area has only recently taken off, patent office examiners may have a tougher time rejecting applications because of the relatively small prior art pool size. Because patent applications undergo a prosecution phase where examiners search for prior art to potentially disqualify an application, the relatively small prior art pool size for this technology area indicates that applicants will have an easier time acquiring patents if they file sooner rather than later. This leads back to the English proverb that many in the agriculture industry uphold: “the early bird catches the worm.”
Arent Fox is a market leader in helping clients to navigate the business and legal issues surrounding agricultural and blockchain technology. We can help clients acquire patents for their agriculture-based blockchain technology, and review the legality of contractual clauses used in the smart contracts of blockchain applications/projects.