In the developing nations, the countries face corruption due to third parties involved in the supply chain. A similar case is with India, where farmers are protesting for their rights. The problem faced by farmers is, the price for the crop, resources, and efforts they put in is much less compared to the profits received by middlemen.
A solution can be Contract Farming, where the farmer and buyer will create a contract before growing the crops.
Here the buyer can be any food processing company, trader, etc. which is interested in that crop type. This will ensure that both are satisfied with the prices and products.
On Ethereum Blockchain, we can create a smart contract that can be used as a vault where the two parties can settle the trade.
The whole process will be:
- Farmer and Buyer will decide a price and crop amount for the crop.
- The buyer will deposit the total price of the crop to the smart contract.
- As a farmer can escape easily on getting a better price for the crop, hence a cost will be decided as insurance to the company which the farmer will deposit into the smart contract.
- Once locked, this vault will keep the funds till the final settlement which can be used by the farmer to take loans if he wishes.
- At the settlement time, the parties will sign a transaction unlocking the vault.
- This transaction will send the amount to the eligible party (Farmer if the delivery goes as planned or Buyer if not).