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Kakamega vegetable farmers raise income 30% through blockchain technology

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By George Munene

Research on the use of blockchain technology in Kenya agriculture has shown a 30 per cent increase in farmer incomes among smallholder farmers of African indigenous vegetables in Kakamega County, Western Kenya. 

The study conducted by researchers from America’s Virginia Tech University in coordination with Egeton University, Kenya, and Australian tech startup AgUnity found blockchain to be the right technology to introduce into the indigenous vegetable value chain due to a lack of trust among actors and lack of efficient operation throughout the value chain.

“We saw an improvement in income and food security, especially among women farmers. There was a -2 point average decrease in experiences of food insecurity and a 30 per cent average improvement in income from the same quarter as the previous year which came from improved income in on and off-farm activity because the value chain was more efficient, transactions were more easily arranged and executed enabling farmers to diversify their sources of income which is critical for long term resilience,” explained lead researcher Dr. Jesssica Agnew.

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At a fundamental level, blockchain is a method of storing information in a reliable and transparent way. It is concerned with storing records and does not use crypto-currency or fintech.

In May 2021, the researchers deployed 60 smartphones to 40 farmers 10 traders, 10 retailers, and one community-based organisation in Kakamega County. These participants were provided with initial physical training and continuous training on their phones. A local field officer was also hired to provide continual support to users.

‘Ag Champions’ were also nominated by different communities. They received additional training and helped provide assistance to users when they were having challenges using the phones and helped rally users along the concept of collaborative working along the value chain.

“Essentially how the system works is if I want to sell vegetables to John and they accept the price and quantity of my produce, I confirm the transaction actually happened by scanning a QR code on my phone. Farmers and retailers do this at every stage of transacting along the value chain. These transactions are recorded as a block of information. The block is a distributed ledger technology that is broadcast to every party in a network with everyone within it validating the transaction. The block is added to the blockchain and secured using cryptography making it an immutable record of the transaction,” illuminated Dr. Agnew.

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Because blockchain is a distributed ledger, this makes it virtually impossible to change records as you would have to alter the record on every ledger that’s been distributed throughout the network otherwise there would be a discrepancy and it would not be validated. 

Blockchain can address deeply entrenched issues within the agriculture value chain such as:

  • Unreliable or non-existent paper-based record keeping 
  • Opaque supply chains
  • Exploitative broker-behavior 
  • Lack of market information
  • Smallholder farmer lack of services– financial, extension, etc.

“There are other technologies that can be used to store records, the full value of blockchain is realised when there is a lack of trust between actors as once a digital record is created within the blockchain it can’t be altered or changed. This makes the information being passed among actors more trustworthy,” said the researcher.

92 per cent of farmer participants within the program reported improved relationships with buyers using blockchain as they understood the complete value chain. Growers were able to know who to trade with and the buyers came to collect the vegetables when they were ready– saving on time and the hustle of sourcing for markets. 86 per cent of buyers reported preferring buying from buyers within the chain as supplier and buyer names were on their phones and they were able to build trust and consistency with farmers. 

Negotiations between parties were easier and more straightforward as there was reduced debate around price given there was a record of transactions between participants. The technology also helped improve the coordination between actors by standardising the bundles of vegetables sold which clarified and improved everyone’s revenues. Buyers and sellers trusted each other more as the participants within the value chain were clearly known. This enabled producers and traders to know who to call enabling them to plan transactions ahead of time reducing post-harvest losses significantly as they only harvested what they needed. 

Personal relationships of participants within the value chain also improved significantly and there was a lot more enjoyment in engaging in the network with women growing even more indigenous veggies. 

The program worked with Australian-based startup AgUnity as beyond the company developing a base-level record-keeping product for the research they are creating an entire operating system with a super app that acts like a platform. “The app will be more of a play store than an app where you can download applets from enabling it to offer farmer-focused information such as weather, extension videos, access to markets, and ways to procuring inputs,” informed Dr. Jesssica.

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According to the researcher, they focused on vegetables because oftentimes when talking about food security there’s a focus on cash crops because an improvement in incomes can lead to improved food security. The researchers were keen to explore the impacts of making nutritious foods more available and their value chains function more efficiently and how possible this was using blockchain technology.

The program further focused on indigenous African vegetables because:

  • Increased demand for traditional vegetables for their nutritional and medicinal value
  • Wanting to make a return to historical and heritage products  
  • Supports food security, and nutrition as well as creates income for producers and consumers 
  • Informal value chain– highly affected by seasons 
  • Genderd transaction– farmers are often women, traders often men, and retailers women
  • Export market opportuinity

For more information: Chris Alan Rice ([email protected])

                                    Dr. Jesssica Agnew ([email protected])

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