Smart Contracts in Agri-Finance Supply Chains
DOI:
https://doi.org/10.63345/sjaibt.v2.i2.102Keywords:
Smart contracts, agri-finance, blockchain, supply chain, decentralized finance, transparency, simulationAbstract
Agriculture remains the backbone of many economies, yet inefficiencies in financial access, supply chain governance, and transaction transparency continue to hinder its full potential. Smallholder farmers, who constitute the majority of agricultural producers globally, often face barriers such as limited credit availability, lengthy payment cycles, high transaction costs, and dependency on multiple intermediaries. These constraints perpetuate cycles of debt and reduce overall productivity. The advent of blockchain technology, particularly smart contracts, has the potential to transform agri-finance and supply chain ecosystems by introducing automation, transparency, and trustless agreements. Smart contracts, executed without intermediaries, can enforce payment settlements, credit disbursement, and delivery confirmation in a secure, immutable, and real-time manner. This study investigates the integration of smart contracts into agricultural finance supply chains through a multi-layered approach combining literature synthesis, statistical analysis, and simulation modeling. The findings reveal that smart contracts can reduce transaction costs by up to 35%, cut settlement time from weeks to mere minutes, and lower default risks by nearly 50%. Simulation-based experiments demonstrate enhanced resilience in supply chains by reducing disputes and fraud while fostering greater access to microfinance and insurance services. The study further emphasizes that smart contracts are not merely technological add-ons but strategic enablers of inclusive financial ecosystems that empower marginalized farmers, enhance trust among stakeholders, and facilitate sustainable agri-value chains. However, scalability, regulatory compliance, and digital literacy emerge as critical challenges requiring coordinated policy and infrastructure interventions. This research contributes to the discourse on agricultural digitalization by positioning smart contracts as a cornerstone technology for future-ready, efficient, and equitable agri-finance supply chains.
Downloads
References
• Al-Saqaf, W., & Seidler, N. (2017). Blockchain technology for social impact: Opportunities and challenges ahead. Journal of Cyber Policy, 2(3), 338–354. https://doi.org/10.1080/23738871.2017.1400084
• Andoni, M., Robu, V., Flynn, D., Abram, S., Geach, D., Jenkins, D., ... & Peacock, A. (2019). Blockchain technology in the energy sector: A systematic review of challenges and opportunities. Renewable and Sustainable Energy Reviews, 100, 143–174. https://doi.org/10.1016/j.rser.2018.10.014
• Bala, V., & Verma, P. (2021). Blockchain technology in agriculture: Applications and scope. Journal of Rural Development, 40(2), 183–200.
• Benet, J. (2014). IPFS—Content addressed, versioned, P2P file system. arXiv preprint arXiv:1407.3561. https://arxiv.org/abs/1407.3561
• Casino, F., Dasaklis, T. K., & Patsakis, C. (2019). A systematic literature review of blockchain-based applications: Current status, classification and open issues. Telematics and Informatics, 36, 55–81. https://doi.org/10.1016/j.tele.2018.11.006
• Chang, S. E., Chen, Y. C., & Lu, M. F. (2019). Supply chain re-engineering using blockchain technology: A case of smart contract-based tracking process. Technological Forecasting and Social Change, 144, 1–11. https://doi.org/10.1016/j.techfore.2019.03.015
• Ganne, E. (2018). Can blockchain revolutionize international trade? World Trade Organization. https://www.wto.org
• Giungato, P., Rana, R., Tarabella, A., & Tricase, C. (2017). Current trends in sustainability of bitcoins and related blockchain technology. Sustainability, 9(12), 2214. https://doi.org/10.3390/su9122214
• Kamilaris, A., Fonts, A., & Prenafeta-Boldú, F. X. (2019). The rise of blockchain technology in agriculture and food supply chains. Trends in Food Science & Technology, 91, 640–652. https://doi.org/10.1016/j.tifs.2019.07.034
• Kshetri, N. (2018). 1 Blockchain’s roles in meeting key supply chain management objectives. International Journal of Information Management, 39, 80–89. https://doi.org/10.1016/j.ijinfomgt.2017.12.005
• Li, J., Greenwood, D., & Kassem, M. (2019). Blockchain in the built environment and construction industry: A systematic review, conceptual models and practical use cases. Automation in Construction, 102, 288–307. https://doi.org/10.1016/j.autcon.2019.02.005
• Lin, I. C., & Liao, T. C. (2017). A survey of blockchain security issues and challenges. International Journal of Network Security, 19(5), 653–659.
• Mougayar, W. (2016). The business blockchain: Promise, practice, and the application of the next Internet technology. Wiley.
• Narayanan, A., Bonneau, J., Felten, E., Miller, A., & Goldfeder, S. (2016). Bitcoin and cryptocurrency technologies. Princeton University Press.
• Patel, D., & Modi, J. (2020). Smart contracts in agricultural supply chain finance. International Journal of Innovative Technology and Exploring Engineering, 9(5), 1183–1190.
• Saberi, S., Kouhizadeh, M., Sarkis, J., & Shen, L. (2019). Blockchain technology and its relationships to sustainable supply chain management. International Journal of Production Research, 57(7), 2117–2135. https://doi.org/10.1080/00207543.2018.1533261
• Sander, F., Semeijn, J., & Mahr, D. (2018). The acceptance of blockchain technology in meat traceability and transparency. British Food Journal, 120(9), 2066–2079. https://doi.org/10.1108/BFJ-07-2017-0365
• Tapscott, D., & Tapscott, A. (2018). Blockchain revolution: How the technology behind Bitcoin is changing money, business, and the world. Penguin.
• Tripoli, M., & Schmidhuber, J. (2018). Emerging opportunities for the application of blockchain in the agri-food industry. Food and Agriculture Organization of the United Nations (FAO).
• World Bank. (2019). Blockchain and distributed ledger technology in agriculture. World Bank Group Report.
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Scientific Journal of Artificial Intelligence and Blockchain Technologies
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The license allows re-users to share and adapt the work, as long as credit is given to the author and don't use it for commercial purposes.
