5ire, being an SDG-centred sustainability blockchain, is focused on solving or improving the processes that impact achieving sustainable development goals. In this effort, 5ire is collaborating with many agrarian economies worldwide to solve problems around food security and sustainable agriculture.
5ire and Food Security
For a long time now, the agriculture and agricultural lobby has been actively reformulating its incentive structure along the value chain in terms of sustainability (reduced greenhouse gas emissions, lower CO2 emissions, etc.) and trying to minimise any potential short-term losses. This is a catch-22 and goes against the trends of the past few decades where “for-profit” agriculture has been shooting for hyper-efficiency in both food and animal production.
Simultaneously, the agricultural supply chain is also very fragile. Most shocks to its system ripple throughout the more extensive economy through skyrocketing food prices, textile, and other critical consumer goods.
Non-fungible tokens or NFTs are a recent craze in the crypto economy that allows the creation of digital assets that are one of a kind. The significant advantage of using NFTs is that each object can be readily audited for its track of possession and ownership through a decentralized ledger that everyone can access.
The NFTs have been successfully utilized to replicate real-world things that comprise legitimate use cases, from sporting tickets to art (or art ownership). NFTs can have a natural real-world analogy as well in agriculture: an acre of land. Like an NFT, agricultural land can also be thought of as a unique hybrid of space and time. Each arable acre garners the value depending on the economic environment it is traded in.
The NFTs associated with land acres could also be used to stimulate sustainable agriculture practices in this way. There are approximately 400,000,000 acres of arable land in the US. Using each calendar year as a unique entity, we can mint a unique NFT every calendar year for each acre. When individuals or companies wish to offset carbon emissions, enhance water quality, or include or improve certain sustainable practices, they can purchase associated NFT that meets their sustainability standards. The free market can determine the value for each NFT for an acre. Every NFT minted but not purchased in a particular calendar year can simply be burned at the end of its minted calendar year.
Yes, this is not a fancy use of NFTs like that of ArtBlocks or CryptoPunks, where only a few ‘tokens’ are minted. This is the inverse of the standard application of NFTs, where minting fewer tokens and letting scarcity and rarity attributes drive value. The minting of vast tokens makes them intrinsically worthless because so many acres of US farmland has no desirable attributes for sustainability purposes. Yet, they are gold for an individual or a company seeking green credits. And unlike traditional NFTs whose attributes are essentially hardcoded, the characteristics with agricultural land will be valued differently by virtually every market participant.
Using an NFT as a framework essentially curtails a serious problem in the massive adoption of sustainable agriculture by preventing double-counting, allowing verification, and defeating scarcity. Any well-established blockchain (probably Ethereum) will solve the double-counting problem. Once an entity buys and claims carbon offsets, it can be verified on the blockchain.
Adopting an NFT solution also incentivizes sustainable agriculture: we want to reward people that have been doing these practices the longest. The NFT structure also adds to the rarity of sustainable practices and the length of time those practices were observed. There is no structure in agricultural land where a company wants to ‘back-pay’ producers who have already adopted sustainable practices. But fortunately, almost all of these entities are for-profit companies [Bayer, Pepsi, Corteva, Indigo, Syngenta, FBN, etc.]. They want to get new enrollees, which they hope to transition into one of their other revenue streams. However, with this sustainability NFT, the tokens with these long-term attributes may be more valuable than ‘fresh’ attributes. The market will figure out that value.
This way, we can utilise blockchain technology to track sustainable practices and incentivize the sustainability mindset’s longevity and reward those who stick to it.