Blockchain Community-Supported Agriculture
By William E Bodell III
– INACTIVE SINCE 2016 –
FarmShare is a decentralized community-supported agriculture platform built on Ethereum, the world’s first distributed world computer. Blockchains, smart contracts, and decentralized autonomous organizations are causing quite a stir in the tech industry, yet they have not affected the vast majority of the world’s population, to whom the notion of Ethereum conjures scenes from dystopian sci-fi thrillers. It is imperative for the success of the blockchain ecosystem to invent applications that solve real world challenges affecting millions of everyday people. With that in mind, this document outlines a proposal for an agricultural blockchain service which aims to rebuild the broken food system, starting at the community level, by adapting an existing business model (CSA) and leveraging the Ethereum network’s potential for distributed governance, platform cooperativism, and planetary-scale computation.
1.1 The Effects of Centralized Industrial Agriculture
Intensive farming techniques, developed throughout the 16th-19th centuries in response to rapid population growth, greatly increased output while lowering production and labor costs. The United States in the early 20th century experienced the ecological wrath of the Dust Bowl in large part due to wholesale conversion of the Great Plains’ prairies into wheat fields. Today we are told that if soil degradation due to intensive farming continues, farmers may run out of top soil in just 60 years. While the success of Whole Foods and the organic food industry as a whole has been substantial, it has not solved the fundamental problems with scale and centralization that have caused such environmental crises as the current California water shortage.
Beyond its environmental effects, the centralization and industrialization of agriculture has had considerable detrimental socio-economic effects. As the size of farms rises the number of farm jobs decreases, leading to high unemployment rates in regions which once depended on agriculture. Farms have consolidated in large part due to the widespread agglomeration of processors, distributors and retailers along the supply chain, each taking a generous cut to support its massive infrastructure. In the dairy sector in particular, farmers no longer have any control over the price of their product, as massive cooperatives such as Dairy Farmers of America have taken over the supply chain entirely.
1.2 Community-Supported Agriculture
Community-supported agriculture is an alternative economic model for the production and distribution of locally grown food. It originated in the 1980s in the north eastern United States, based on the concept of biodynamic agriculture first proposed by Rudolf Steiner. CSAs operate on a shared risk-reward model, in which a community of shareholders funds the operation of a local farm at the beginning of the growing season in exchange for weekly deliveries of fresh produce and other food products (such as eggs, dairy, meats, etc) over the course of the harvesting period.
Such an arrangement is beneficial for both the farmers, who are effectively insured against risks such as potential environmental factors leading to low crop yield, and consumers, who gain the ability to influence decisions such as crop production ratios to better suit the needs of the community. Ideologically, the original CSAs promoted new forms of communal land ownership, collaborative labor relationships, and locally-oriented economies which rely on direct farmer-consumer engagement. However, as CSAs have grown in number and size, the philosophical underpinnings have given way to more practical considerations.
1.2.1 Common Issues with CSAs
Although community supported agriculture sounds like the perfect arrangement for both farmers and consumers, there are drawbacks to the model. Over-expansion is a common issue, since large farming operations require significantly more work to manage both the crops and the community. Farmers are not typically accustomed to running consumer-facing businesses, so managing a community of concerned shareholders can be a distraction from the maintenance of the farm. It is often difficult to maintain active community engagement, and perhaps even more difficult to achieve consensus within an engaged community. Shared risk can cause frustration if the harvest is small, especially if communication is inconsistent.
1.3 Agriculture and Information Technology
Agriculture is possibly the largest industry that has not been significantly affected by the proliferation of information technology. According to a 2014 report by IBM, “Today, the sector of the economy with the lowest IT intensity is farming, where IT accounts for just 1 percent of all capital spending. Here the potential impact of the IoT is enormous. Farming is capital- and technology-intensive, but it is not yet information-intensive.” There is a great deal of work being done on data-intensive indoor farming, hydroponic, aquaponic, and aeroponic agriculture, but there is a dearth of digital infrastructure for supporting smaller, more traditional farms.
Blockchains are a type of decentralized database system, first implemented as the underlying technological innovation behind Bitcoin. In the case of Bitcoin and other cryptocurrencies, the blockchain serves as a public ledger, containing a record of every transaction ever made on the network. A blockchain is not stored on any centralized server, but rather is maintained by a network of users, thus eliminating the need for a trusted third party to process transactions. The computational power required to add new transactions to the blockchain makes it prohibitively hard to alter or cheat the system, and a reward system is typically used to provide an incentive for users (known as miners) to maintain the system. While the blockchain was first used in the context of digital currency, there have been many subsequent projects which aim to leverage the model of distributed consensus for other applications, such as domain name registration (NameCoin), crowdfunding (Swarm), and smart property (colored coins).
1.4.1 Ethereum, Smart Contracts, and Decentralized Autonomous Organizations
One of the most ambitious projects to come out of the ‘Blockchain 2.0’ space is Ethereum, a platform for hosting practically any decentralized application (DApp) on a blockchain. Ethereum contains its own Turing-complete programming language, so that users can develop DApps that exist on the blockchain and can interact with other DApps. These programs are built around smart contracts, essentially contracts written in code, which can only be executed if certain conditions are met. Smart contracts can be as simple as a bet between friends (money is placed in an escrow wallet and only released to the winner based on the final score of the football game) or as complicated as entire corporations. Decentralized Autonomous Organizations (DAOs) are organizations which do not require any direct human involvement, run according to a set of business rules written in code. Typically DAOs will interact with humans to perform non-computational tasks, and can pay for such tasks with some form of internal capital, such as Bitcoin or equity shares.
2. FarmShare Overview
FarmShare is an evolution of the community-supported agriculture model, which takes advantage of the blockchain’s potential for distributed consensus, token-based equity shares and automated governance in order to foster greater community engagement while removing some of the managerial burdens and financial risks from farmers involved in a CSA. The goal is to return to the fundamental goals of the original CSAs: to create new forms of property ownership, community cooperation, and locally self-sufficient economies.
FarmShare differs from both original and contemporary community-supported agriculture in several key ways. Rather than operating as a single farm, FarmShare serves as a platform for entire communities to create a parallel economy for the production, processing, distribution, and consumption of local food. Furthermore, shares need not be purchased ahead of time at a flat fee, but may also be earned by supporting and contributing to the local food system. Shares may be issued for volunteering on the farm, transporting food, contributing to a crowdfunding campaign, sharing processing equipment, participating in an educational workshop, and anything else a community assigns value to. Shares may be exchanged for food from a network of farmers markets, co-op stores, specialty markets, restaurants and food pantries
2.1 Token ‘Shares’
FarmShare tokens, or ‘shares’, are the primary unit of value transfer upon which the blockchain CSA model relies. The token contract can use the general framework provided by the open-source Community Currency project, which establishes a treasury account for minting shares and a community account for managing membership, reputation, and paying community members for service. The Community Currency template also includes a system for zero reserve mutual credit, allowing members to authorize credits to other members. The community account can be funded through a combination of crowdfunding and transaction fees.
Shares may be minted when a new member joins the community, as in the Community Currency template. The treasury could also mint shares in response to messages from the ‘workshare’ contract indicating that a task has been completed successfully. The community will have to decide whether it is more appropriate to mint new shares to pay task bounties, pay them from the community fund, require that the creator of the task pay, or some combination of the three. The balance may shift over time, with the treasury minting new coins early on until the community fund has generated enough income. Members may be required to pay the bounty for certain tasks but not for others. For instance, the community may decide to reward people for attending an educational workshop from the community fund, whereas a farmer could be required to pay for access to another member’s processing facility.
Shares may be redeemed for food and other agricultural products from a variety of producers in the community. Because FarmShare will have to integrate with the existing agricultural ecosystem at critical touch points such as farmers markets, grocery stores and co-ops, which typically involve a cash exchange, shares will require an exchange rate to allow users to easily convert to familiar units. At first the share will likely have to exist in tandem with traditional cash transactions, perhaps combined with a discounted price in USD.
2.2 Tasks, Rewards and Reputation
Shares can be earned either by performing tasks, sharing resources, or selling products on the marketplace. Each of these methods can be built as a separate smart contract which communicates with the token contract to either transfer or mint new shares. The process of delegating tasks can be managed by assigning rewards (or bounties) to specific tasks, which allow community members to collect shares in return for their labor. This is similar to the ‘workshare’ component of traditional CSAs, but extends beyond farm work to include making deliveries, working at a co-op store, or repairing a piece of machinery. Members may compete to accomplish tasks for a smaller bounty, and may accumulate reputation for a job well done.
There is already a simple job market DApp which allows users to post jobs and skills to be completed for a reward. It is a very basic framework which could be expanded upon to features such as escrow, repeating tasks, group tasks, volunteering (in return for reputation only), and user reviews. Identity and reputation could be managed by an external DApp, such as uPort. Successful completion of a task would require both parties to send a transaction to the task contract, which would then trigger a message to the token contract to transfer or mint shares, as well as a message to the identity system indicating an increase in reputation for a job well done. Tasks that are accepted by a user but not completed may result in a reputation loss, while disputed tasks could be handled by a community conflict resolution board (see section 2.5 on community governance).
2.3 Resource Bank
Shares can also be earned by sharing resources within the community, through a separate resource bank contract. Resources may include excess food (for donation rather than the market), compostable waste, farming equipment, processing facilities, land, etc. This component is intended to allow for a parallel economy based on the free exchange of resources as well as labor. There is a clear lack of infrastructure to support such sharing within a community, as most resources spend the majority of their time unused. Bootstrapped solutions such as Craigslist (and the Upper Delaware Network in Sullivan County) have been fairly successful, and a whole ecosystem of companies have emerged around the new ‘sharing economy,’ but these services have not yet been successfully integrated with local food systems.
A user may interact with the resource bank either to list a new resource or request access to a resource that has already been listed. The resource bank contract would message the identity system to verify the reputation of the user before confirming access. Each instance of a resource contract may contain parameters such as payment information, access length, restrictions, etc. For instance, one might offer to exchange some excess food in exchange for one-time access to a processing facility, or this may be scheduled on a weekly or monthly basis. The contract may then stipulate that the processor bring the resulting goods to market, in return for which both parties receive a percentage of the sale.
Shares may be exchanged for food and other agricultural products through the marketplace feature. The marketplace will be distributed and integrated into the existing fabric of the community, at critical touch points such as farmers markets, farm co-ops, grocery stores, restaurants and food pantries. To some extent the experience may be similar to shopping on online farmers market platforms such as Farmigo or GoodEggs, where customers join a local community with a host that serves as a distribution hub. However, it may be the case that many community members are willing to travel to the farm to pick up their food directly rather than have it delivered to the farmers market. Users will have the option of viewing the entire supply chain associated with each food item, and the ability to choose at what point in the chain to interact with the market.
Producers may post a product on the market along with a description, price, quantity, and photos (via IPFS). Consumers may interact with the marketplace by claiming a product, which could involve holding the shares in escrow until both parties confirm the successful exchange. Community members may coordinate the exchange via Whisper messaging or traditional modes of communication. If enough members opt for delivery to a community hub, the market contract could message the task contract to find transportation. Members may also leave reviews for particular vendors, customers, and products, which would cause the market contract to message the identity system and either add to or subtract from the user’s reputation.
2.5 Community Governance
Decision-making within the community can be handled democratically, using a distributed governance application such as BoardRoom. Any member may table a proposal on the platform to be voted on by the rest of the community, with the ability to automatically enact proposals via smart contract once a predefined number of community members have approved it. The community may establish committees and subcommittees on any number of issues, which may have an electable chair, add or remove members based on community consensus, allocate funds according to tabled proposals, and revise its structure or bylaws as deemed necessary by the community.
By default the community would have two independent boards for managing the treasury and community fund accounts. It may be effective to have multiple subcommittees to manage portions of the community budget associated with various subjects or sectors of the local food economy. For instance, dairy farmers, processors, and contributors to crowdfunding campaigns to support local milk and cheese initiatives may be added to a committee devoted to local dairy, which may have subcommittees for managing funding, marketing, processing, and distribution.
2.6 Food Provenance Data
By incorporating agricultural IoT and blockchain technology throughout the supply chain, FarmShare can allow users to keep track of a wide array of data about their food. Agricultural sensors could monitor the environmental conditions and nutrient levels of crops over the course of a season, and the data can be stored in the blockchain to be reviewed at any time. Additional data, such as labor or transportation information, can also be tracked on the blockchain, allowing conscientious consumers to make decisions about their food based on ethical concerns about energy sustainability or fair labor practices.
Consumers are becoming increasingly concerned about the provenance of the food that they purchase, which is one of the primary reasons that CSAs have grown in popularity over the past several decades. The local food movement grew out of a concern not just for the quality of the food but also for the energy burned and emissions caused by the transportation portion of the supply chain. The blockchain allows FarmShare users to know not only the farmer from whom they purchased a product, but also the quality of the soil and the air on his land, the source of the seeds and the fertilizer used to grow it, and the distance it traveled to get from farm to table.
3. Sullivan County Pilot Program
This paper is the result of a year-long feasibility study conducted in a rural agricultural community in the Catskills, about two hours northwest of New York City. FarmShare would like to launch a pilot program in Sullivan County, NY, hopefully by 2018, which will serve as an integral part of the design and development of the tools and protocols.
3.1 Sullivan County Background
Sullivan County is an interesting test site for several reasons. It is only two hours away from New York City by car, in the Catskills, providing easy access to urban farmers markets and restaurants. It is also an incredibly underserved area, with a dire need for an improved agricultural infrastructure. Despite its natural beauty and rich soils, the county’s economy has failed to recover from the lost tourism industry of the Borscht Belt. Sullivan has the second worst health rating among New York counties, higher only than the Bronx, and contains two food deserts. However, an increasing number of people are either buying a second home or moving to the Catskills from the city, inspired by the artistic community and agrarian homesteading mentality.
3.1.1 Agriculture in Sullivan County
Agriculture has been an important sector of Sullivan County since the early 1800s, and in 2012 its 321 farms generated $27.1 million in sales, while the entire agricultural industry earned $741.1 and employed over 1,500 people. However, the county’s small to medium sized farms have been struggling to stay profitable in recent years. According to a 2012 Agricultural Sensus, the average Sullivan County farm nets less than $10,000 annually, forcing many farmers to work multiple jobs.
Despite the hard times, there is much to be optimistic about in Sullivan County. A growing number of small farms are producing a greater variety of goods, contributing to a vibrant farmer’s market community. Agritourism has been a growing trend, drawing capital as well as interest from New York City and elsewhere.
3.1.2 Dairy Farms in Sullivan County
New York’s dairy industry has seen a dramatic decline in the number of farms, yet it remains the nation’s third largest milk producer, as many smaller operations are consolidated into larger farms. Dairy was once a thriving industry in Sullivan County, yet the region is not well suited to such large farms, due to the topography of the Catskills. The accumulation of control over the processing, distribution, and marketing of dairy products by massive “cooperatives”, themselves formed through the consolidation of many smaller entities, forces farmers to frequently sell their product at a loss. While milk was once a staple product of the region, as of May 2016 there are only 23 dairy farms remaining in Sullivan County.
One promising alternative to selling fluid milk to Dairy Farmers of America is local value-added processing. Products such as cheese, yogurt and ice cream sell for a premium at local farmer’s markets and grocery stores, and may be produced with great variety. This returns power over the price of the product to the farmers, and allows them to make a living. However, most dairy farmers are far too busy to learn an entirely new craft, much less handle the marketing and pay for the necessary equipment. Still, the recent success of Tonjes Dairy Farm in Callicoon, which began making cheese in a mobile processing unit and later built its own facility, suggests that the business model has the potential to revitalize dairy in Sullivan County.
3.1.3 Local Processing Infrastructure
There have been several recent initiatives to improve access to agricultural processing facilities in Sullivan County. The county’s Industrial Development Agency (IDA) launched a project to build a red meat processing facility in Liberty, and has completed construction of a building shell, but has been unable to secure an operator. The IDA is also in the planning phase of a local food hub project, though the selection of a site has been held up in politics for some time.
In 2010 the IDA commissioned a study on the feasibility of building a regional creamery in Sullivan County. While the report ultimately concluded that the investment required to construct and operate medium-sized dairy processing facility made it infeasible given the expected returns, it did refer to the Tonjes Farm model as a promising alternative, stating that niche producers could benefit from the “creation of on-farm local processing and distribution capacity that might be shared with others.”
3.2 Local Dairy Initiative
In partnership with the Upper Delaware River Roundtable, the Sullivan County FarmShare community has identified value-added dairy products as a promising market to target in an initial pilot program. Inspired by the failures of centralized milk industry and the success of cheese operations such as Tonjes, FarmShare proposes to establish a network of small, on-farm dairy processing facilities in Sullivan County. The goal of the initiative is to revitalize the local dairy industry, rebrand the region as cheese country, and demonstrate the potential of distributed community organizations (DCOs) and blockchain technology to provide farmers with more equitable prices and support services.
3.2.1 Crowdfunding Cheese Facilities
The original ‘cheesemobile’ that launched Tonjes was purchased by the county. Though intended to move from farm to farm, selling and transporting it to another farm proved difficult. The cost of repairs required, about $40,000, was prohibitively high, and the unit has sat idle for three years. Its owners and potential operators have expressed an interest in crowdfunding the project, as access to capital is a critical barrier to entry for such projects. FarmShare proposes to help such projects raise funds and access skills and resources from the community.
Rather than repairing the original unit, the community could also elect to purchase a new one, or even several. This would allow the units to be truly mobile, making it possible to move frequently from farm to farm. However, trailer-sized mobile units such as these could cost more than $200,000, which may make this option infeasible.
A third option is to invest in many small-scale facilities, which could be packed up in a typical truck and moved from farm to farm with relative ease. Indeed, a group of Sullivan County farmers considered such a proposal in 2010, when they spoke with farmer and inventor Frank Kipe, whose micro-scale equipment sells for under $14,000 altogether. This is a reasonable goal which could be raised through a combination of crowdfunding and grants, and would allow the network to scale gradually as small, successful projects accumulate value through network effects.
3.2.2 Connecting Farmers with Cheesemongers
In addition to fundraising, it will be critical to facilitate matchmaking between dairy farmers, whose labor-intensive work makes it impractical to spend time mastering a new craft, and artisan cheese-makers from the region who would operate a small facility on the farm. FarmShare will utilize its network to connect with cheesemongers who will commit to spending a period of time working (and possibly living) on one or more dairy farms in Sullivan County and the Upper Delaware River region.
Artisan dairy producers will be attracted to the platform by the combination of technological innovation and the agrarian lifestyle. In addition to traditional methods, cheesemongers can be compensated by receiving a specific percentage of the price of each product sold, which would be converted to Ether (ETH) and divvied out automatically by a smart contract, according to the specific agreement between all parties involved. This could include many contributors to the supply chain, small and large, as each step is a transaction which can be recorded on the blockchain. Consumers could view the transaction history of every block of cheese, and both cheesemongers and farmers could receive a reputation for high quality products.
3.2.3 Marketing Local Cheese
As Frank Kipe of MicroDairy Designs noted, although production on such as small scale would be easy to handle, most farmers would have a hard time with marketing. Much like Farmigo, FarmShare will aggregate products from a variety of farms and provide a shared platform for marketing. In addition to the FarmShare dApp marketplace, communities may choose to sell products to non-members, the revenue from which would be divided between members, according to an agreed upon split, or added to the community fund.
Consumers of high-quality value-added dairy are often willing to spend considerably more for goods that portray a sense of craft, tradition, nutrition and renewability. By cutting out the middlemen and emphasizing these qualities, the FarmShare network will be able to market its products at a competitive price while providing a greater return to the farmers. Producers will benefit from branding as a community, i.e. FarmShare Catskill Cheese, which will raise awareness of the region and stimulate more agricultural innovation in Sullivan County.
3.3 Developing an Agricultural Information Infrastructure
One of the greatest impediments to the success of Sullivan County’s agricultural economy is the lack of a shared information infrastructure. Many independent organizations, such as the Cornell Cooperative Extension, SC Farm Network, the Farmer’s Market Association, Sullivan Alliance for Sustainable Development, and the Industrial Development Agency, are engaged in several agricultural initiatives simultaneously. These organizations use a variety of communication channels, including email, newspaper, social media, committee meetings, and a Yahoo group to share information. This is not an efficient strategy, and may lead to the duplication of efforts as well as frustration over lack of transparency. FarmShare hopes to alleviate some of this frustration by aggregating pertinent information in a distributed and transparent way.
3.3.1 Agricultural Asset Map
Proposals to create an interactive map of local agricultural assets have been ongoing for several years. A 2009 project by the Urban Design Lab at Columbia University proposed to map the NYC foodshed, though it focused on Orange County. Another precedent which was identified by the UDR Roundtable is the Maryland Food System Map, an interactive GIS map with many layers of spatial data. There is still some motivation within Sullivan County to create such a map, though nothing has materialized yet.
FarmShare proposes to incorporate the interactive asset map as a core feature of the user interface. Presenting a spatial representation of the chain of transactions will make the tangible for non-technical users, who can also use the map to locate tasks, resources and exchanges. Producers may use the map to manage logistics, for example to find volunteer drivers, while some farmers may just choose to share their location so that community members can pick up their food in person. Other community members may have available land that they would like to see farmed, or even a garden. Community members may be rewarded shares for contributing information to the map, providing an incentive for keeping it up to date.
3.3.2 Aggregated Funding Opportunities
In addition to locating resources, volunteers, and marketing opportunities, farmers and food entrepreneurs may use FarmShare to locate sources of funding. There are many grants and other funding opportunities available through regional and statewide organizations, though many farmers are either unaware or need help filling out the application. Community members may receive a reward for posting opportunities to the network, and again for volunteering to handle the paperwork.
Perhaps the most obvious challenge to implementing FarmShare in Sullivan County is a lack of digital infrastructure. A considerable portion of the county’s residents does not have Internet access, particularly the elderly and immigrant population. These residents are often the most vulnerable to poverty and poor nutrition, and must be factored into any metric of the project’s success in the long term. One possible solution is to issue a paper wallet with each account, which members could bring to volunteer and distribution sites. A mobile app might scan a QR code on the paper wallet to access a member’s account, for instance when visiting a food pantry or participating in an educational workshop.
Another significant challenge will be the prevalence of poverty and poor education in the county. Comparable community currency projects such as Berkshares and Ithaca Hours benefit from relatively affluent populations, while most cryptocurrency adopters are well-educated and comfortable with sophisticated technology. It must be stated that the scope of the project in Sullivan County will be reasonably limited as it is, due to technical and budgetary constraints. However, with such dismal statistics as a reference point, any improvement at all to the wealth and wellbeing of the county should count as a success. The success of the dairy initiative will depend upon whether FarmShare can secure a better price for the farmers, while the intention of the asset map is in part to educate and inform.
4. Plans for the Future
4.1 Scaling the Network
4.2 Revenue Streams
4.3 IoT Integration
4.4 User Experience
History of CSAs: http://www.newfarm.org/features/0104/csa-history/part1.shtml
The Tricky Business of Community Supported Agriculture: http://kcur.org/post/tricky-business-community-supported-agriculture
White Paper: https://github.com/ethereum/wiki/wiki/White-Paper
Swarm: Distributed Collaborative Organizations https://swarm.fund/
BoardRoom: Distributed Blockchain Governance http://boardroom.to/
White Paper http://boardroom.to/BoardRoom_WhitePaper.pdf
Augur: Distributed Prediction Market http://www.augur.net/
White Paper: http://www.augur.link/augur.pdf
From Cryptoequity to Cryptocommons: http://www.slideshare.net/raffaele.mauro/from-cryptoequity-to-cryptocommons
P2P Foundation: Cryptoequity: http://p2pfoundation.net/Cryptoequity
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