Half of India’s population depends on agriculture for income and livelihood. Per capita rural incomes are lower than national averages. The sector is hugely fragmented with nearly 150 million operational farms, 30 million farmers involved in backyard poultry, and 30 million fisherfolk on 160,000 fishing vessels. This level of disaggregation serves to make the case for both the opportunity and the imperative for a digital and data technology revolution.

India has been a global leader in this space, with India Stack’s combination of Aadhaar and Universal Payment Interface (UPI) revolutionising identity management, financial inclusion, direct cash benefits transfer and so much more.

A follow through of India Stack was Agri Stack, which aims to build the digital foundations for transformation in agriculture. While progress on this has been relatively slower, there is a strong case that can be made to prioritise this now. The Agri Stack in summary is a combination of databases, digital standards and interfaces, policies as well as links with technologies. The vision is to connect farmers, farms, suppliers, governments and markets.

Something that is not explicitly highlighted in the current digital ecosystem plans for India is blockchain. Blockchain is a system for recording information in a way that’s secure, transparent, and decentralised – and with each piece of information (also referred to as a “block”) linked to preceding and succeeding blocks. This creates a tamper-proof record, because you cannot just change one block. Hence the term blockchain.

Offering transparency

The most immediate benefit of blockchain is traceability – which leads to greater transparency and trust. It can increase market access and farmer prices by introducing new markets or providing new guardrails or standards by food companies – all of which can improve market access and incentivize more sustainable practices.

There are challenges, including the cost and capability required for implementation. Specific to agriculture in India, there is the added complexity of records list of those related to land ownership. It would be wise when one faces these to consider that there were similar challenges to digital banking which have been significantly overcome.

There are important regulatory forces that are likely to push blockchain expansion. The biggest is the European Union Deforestation Regulation (EUDR) - effective from December 2024 - which requires that commodities such as soya, beef, palm oil, wood, cocoa, and coffee entering the European Union (EU) are not linked to deforestation.

Exporters to the EU are increasingly considering blockchain because it is an accurate, efficient and credible way of complying with this regulation – especially given that the alternatives are too cumbersome to scale up (given how manual the process is including the sheer volume of paperwork). Companies that adopt blockchain for this are able to build brand and generate revenues with confidence.

Working to become sustainable

The EUDR is not the only demand-side pressure for blockchain. Every respected food company in the world is working on becoming more sustainable. This includes tracking, reporting and reducing emissions from agriculture – which is made tougher by the size and complexity of the agricultural value chain.

For instance, some companies are already working directly with farmers to agree on optimal levels of water and fertilizer use for produce supplied. Blockchain can help not just in traceability but also in sustainability.

The e-Spice Bazaar initiative, led by the Spices Board India and supported by the Department of Electronics and Information Technology is worthy of highlighting. It aims to increase market reach and price realisation for farmers in Andhra Pradesh and Telangana.

This platform uses blockchain to create a transparent and traceable supply chain, ensuring product credibility and meeting global standards. It currently covers 1000 chilli farmers, with plans to move to 15,000 chilli and turmeric farms. This example is important because it is not about responding to a regulatory requirement, but it is about creating a business opportunity.

Sharing the learnings from the work that is already being done by various players is essential to educate and encourage others to experiment and adopt. Fulsome sharing of designs, models, challenges, costs and improvement plans for blockchain pilots will be a great way of accelerating this new technology. Every innovator working in this space should be encouraged to do this. Movement generosity is needed by all.

Data protection

It will be remiss to not call out the big risks for all things digital – and that is about data protection and privacy. Anything done in the digital and data space involving citizens – especially those like farmers who might not be as aware of their digital rights – has to have a rigorous data protection protocol including but not limited to legislation. A farmers-first approach to this – and indeed all things climate smart agriculture related – is an essential first step.

Part of the challenge with blockchain is that there is the risk of it being regarded as being the purview of geeks. It should not be. The best technologies are those that act in service of people. Blockchain is one of these. The time has come for the digital and data revolution to reach agriculture.

The author is Chief Advisor, Environmental Defense Fund, India