A farmer clears weeds at a rice field in Cianjur, West Java in this file photo by Beawiharta/Reuters

Is Blockchain the Future of Indonesian Farming?

The tech sector is eyeing one of oldest industries in Indonesia—rice farming.

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Oct 8 2018, 10:15am

A farmer clears weeds at a rice field in Cianjur, West Java in this file photo by Beawiharta/Reuters

Can the Blockchain turn around Indonesia's ailing agricultural sector? One tech startup thinks so—as long as it can get tens of millions of farmers living in rural communities with little-to-no broadband connection to adapt a technology few of them ever heard of before. Easy, right?

"The largest barrier right now for Blockchain in Indonesia is scalability," explained Imron Zuhri, the chief technology officer of HARA Token, a startup trying to get the country's rice growers on Blockchain, at a recent Blockchain conference held in Jakarta, Indonesia. "It provides the alternative infrastructure for a frictionless society, but the first thing we have to do is to socialize it."

There's a reason why so many startups are obsessed with tech like Blockchain. The digital ledger system first reached a level of mass consciousness with the rise of cryptocurrencies like Bitcoin. Blockchain was the totally transparent ledger that made a decentralized currency possible. It's basically a never-ending list of all transactions, ownership, and related data constantly updated by a network of individual computers and servers all over the world. It's a "block" of data in a long, unbroken "chain." And it's applicable to way more than just cryptocurrency.


Watch: What Is Blockchain?


Just recently Blockchain has been used to coordinate the distribution of electricity to energy-poor regions of Thailand, reduce instances of voter fraud in Sierra Leone, and run the entire government in Estonia. Here in Indonesia, there's discussions to roll out a Blockchain system that allows all 92 million Nahdlatul Ulama (NU) members in Sumatra to vote—with the hope that it could be a test study to support expanding the system to the national elections.

In the agricultural sector, HARA Token wants to use critical information like soil quality, grain price, and land ownership from farmers and field agents to help Indonesian farmers increase annual yields. The country is fertile ground for rice production, but the entire industry is plagued by a series of entrenched problems, from poor land use practices to shady middlemen. It's a highly fragmented, shadowy supply chain that could seriously benefit from some sunshine.

Farmers who input this data into the Blockchain will be rewarded with HARA Tokens, which can be exchanged for needed goods like fertilizer. In the end, it could help make farmers more plugged-in and knowledgable about prices, sales, and best practices. And for NGOs and government institutions, it creates a valuable data set that shows what's happening in the rice sector in real time.

Image courtesy HARA Token

But transparent ecosystems like this depend on the tech. HARA Token wants to reach 2 million farmers by 2020 using a grassroots method of data collection involving drones and local community members. By last month, they've only reached 7,000 though.

While HARA’s reach remains small, a recent trial run is still promising enough to attract big name partners like BNI. The startup hopes to fund expansion and outreach with an ICO, a crypto currency fundraising that's sort of like an Initial Public Offering (IPO) on the stock market. It's targeting for between $7 million USD and $15 million USD in new funds from the ICO.

Still, it's an uphill battle. Tokocrypto CEO Pang Xue Kai said that the growth of Blockchain in Indonesia really depends on how well its promoted to potential users.

"The best technology in the world is worthless if nobody knows how to use it, or if the inventors don’t know how to integrate it into people’s lives as simply as possible so that people can use it without knowing it," he said during a panel discussion at the conference.

Then there's the regulatory issue. Indonesia banned Bitcoin transactions, warning that the bank-less currency could be used to circumvent laws prohibiting illegal activities like prostitution, arms, and drug sales. But Kai believes that this lack of regulation may help the industry grow by showing government regulators the impact of pilot programs.

“We recognized that the regulations in Indonesia have not yet finalized,” Kai explained. “And that can be a good thing because it allows people to learn about this technology before making a decision.

And today, without regulations, the Blockchain industry is basically operating in a Wild East-like environment. Startups bold enough to take the risk can capitalize on the country’s many inefficiencies. After the panel, Kai told VICE that he estimates that we'll see an "incredible growth" of Blockchain technology here... one day.

"After that, Indonesia will be in a much better place, but only if the regulators decide to really embrace this," he said.

After all, it's not the first time government regulations held back an industry only to eventually open up and set off a period of explosive growth—just look at television channels, or fax machines.

"You weren’t allowed to buy a fax machine in Indonesia in the 90s," Imron said. "You had to register with Indosat first. So if we’re talking about regulation, if the direction and usage are clear, the government will definitely adopt it one way or another."

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