Blockchain and Agriculture Insurance

By Krasimir Hristov

Blockchain technology holds great promise to revolutionize agriculture. Farmers could connect directly with retailers, giving them better prices for their crops. Blockchain and agriculture insurance have to be analyzed.

At present, agricultural insurance penetration in Sub-Saharan Africa stands at less than 3% due to a combination of factors including high premiums, lack of farmer creditworthiness, and limited education on agricultural insurance policies.

Smart Contracts

Blockchain technology can help to enhance agriculture in many ways. For instance, it can accelerate transaction speeds and assist farmers with tracking and analyzing crops more easily; payment and claims transparency increases accordingly; but to be truly effective it must be combined with other technologies.

Smart contracts offer an effective means of reducing fraud in agriculture by enabling farmers to automatically verify the authenticity of data, while simultaneously offering efficient crop tracking capabilities. But before their full implementation is possible, further development work must be undertaken first.

Hybrid smart contracts hold tremendous promise to transform the insurance industry. By cutting time and costs associated with weather damage proofing, these contracts could facilitate faster payouts to cash-strapped farmers – especially important on subsistence farms where families rely on harvest sales as sources of money.

Startups that use blockchain technology in agriculture include AgriDigital, AgriLedger, AgriLeap, and TE-FOOD. These companies offer services that help farmers trace food origins and link with local markets; additionally, they track produce through its journey, guaranteeing it meets quality standards – an essential step toward leveling the playing field for small-scale farmers from poor regions.

Parametric Models

Blockchain technology promises to transform insurance systems by eliminating asymmetry between insurers and policyholders. Furthermore, this new technology could speed up processing times and enhance transparency, and reduce premium costs by eliminating manual processes – thus making parametric models accessible even to smallholder farmers who find traditional policies expensive.

Insurance providers are struggling to meet the coverage needs of three billion rural families worldwide, which include subsistence farmers reliant on crops who do not qualify for any other form of protection. They face high levels of risk and often do not understand insurance. Tinka Koster of Wageningen University suggests using chain-based parametric insurance as a solution; this approach however still faces obstacles such as increasing awareness and knowledge among farmers.

Arbol provides parametric weather insurance using smart contract technology that is globally accessible. Farmers who experience less than 20 inches of rain receive payments through Chainlink Price Feeds which trigger the policy’s smart contracts, thus eliminating manual verification of data and eliminating information asymmetry among conventional insurance providers.


Blockchain technology enables a more transparent and secure system for supply chain management, crop insurance, and shipment of goods. This is achieved by eliminating middlemen to increase trust between all stakeholders in agriculture as well as reduce transaction costs and provide for more efficient data transfer.

Farmers in developing nations face numerous risks, from extreme weather events and climate change to lack of access to agricultural insurance coverage – particularly among sub-Saharan African farmers, which does help with blockchain and agricultural insurance. As a result, their livelihoods may be threatened, hindering the production of crops that sustain livelihoods while producing crops that make a living possible for themselves and the community at large. As a result, few have access to this coverage despite having such risks exposed themselves in previous seasons.

Blockchain can improve the efficiency of the insurance industry despite these hurdles, through the automation of product pricing and contract review processes and smoother payout schedules for farmers. Moreover, it may lower the costs of smallholder farmer insurance policies while offering greater transparency to both insurers and customers about what products are offered by insurers.

Blockchain can make this possible through smart contracts, or self-executing programs, which automatically trigger payments between stakeholders when predetermined conditions are fulfilled through data changes on the blockchain – typically such as rainfall, temperature, area crop yield or any other objective proxies for a claim payout.


Sprout, in collaboration with Etherisc, is working on developing an open risk pool on blockchain that will allow farmers to receive payouts based on publically available sources, including rainfall, temperature, area crop yield, and other objective indices. Automated smart contracts will handle this trigger-based claim management.

Small-scale farmers typically lack knowledge about how insurance works, leading them to mistrust their providers and delay receiving claims. This means that blockchain and agriculture insurance are not properly understood. Blockchain technology offers solutions by creating transparent and immutable conditions of payment that provide transparency.

Blockchain and agriculture insurance can also assist with supply chain management by eliminating intermediaries, thus cutting costs and leading to higher profit gains for farmers as well as faster product and service deliveries. It will also ensure information authenticity while decreasing fraud risks.

Tracking food supply chains helps mitigate risks associated with contamination, so retailers can more quickly trace sources if contaminated items appear at retail. This allows them to minimize losses in profits while protecting consumer safety.

Blockchain can also provide consumers with greater transparency on the source of their products, helping small-scale farmers and crop growers from poorer regions compete on an equal playing field. According to estimates, approximately $940 billion worth of food goes uneaten annually due to inaccessible markets.