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Inventory Management and Storage

Agriculture inventory mismanagement processes lack precision and efficiency and cost the world around $1 trillion a year and more in waste.

Grain Inventory mismanagement alone costs the world $1 trillion or more annually, representing losses of up to 50-60% of product. Due to inefficient storage methods, an estimated 52% of the nation’s essential fruits and vegetables are being discarded and 34% are ruined before leaving the farm, leading us to assume similarly scaled financial losses for fruit and vegetable inventory mismanagement, and demonstrating the scale of the issue for the industry as a whole.

Context & Challenges

Inventory management is a tricky practice to perfect and if not executed properly, can lead to immense post-harvest losses and food waste, one of the foremost concerns for farmers. Mainland China reported that it loses 12% of its grain and 20% of its potato and fruit product due to improper storage.

To reduce these losses and the astronomical costs that accompany them, farmers must proactively store inventory at a carbon dioxide concentration below 600 parts per million in order to curb mold growth and infestation. Currently, there are sensors in production that can discover and flag any potential losses 3-5 weeks earlier than traditional temperature monitoring methods, which often only uncover risks too late to fully prevent losses.

Proper farm inventory storage relies on adequate and accurate data, full oversight of all activities in real-time, and proper communication between all parties. Without these factors, there will inevitably be costly financial, product, and resource losses.

While product waste occurs throughout the supply chain, reducing losses at the post-harvest storage stage could significantly reduce waste throughout the chain, especially as it sits at the beginning of the supply chain.

If agricultural products are stored properly, they are more likely to meet retailers’ standards and not be discarded at this stage.

Food loss is an issue that affects the industry on a financial, social, and environmental level.

  • Farmers
    If product is stored incorrectly, farmers lose product they have put resources and time into, creating financial and agricultural waste. Additionally, disposing of food waste can be very costly and difficult, as it is a highly regulated practice.
  • Distributors
    If food is ruined at the storage stage, distributors cannot pick up the promised quantities, which can affect their margins.
  • The Environment
    Wasted food not only involves lost resources, disposing of food waste can also be unfriendly to the environment and very costly.
  • Consumers
    Food losses mean lower yields, which inherently affects society’s ability to feed itself. This is particularly important in countries that rely on smallholder farmers, which tend to have the highest proportion of losses due to storage.

The Good News

Since many crop shrinks are the result of human error, miscommunication, and/or delays, a single, incorruptible source of truth as provided by STRATO’s decentralized ledger significantly reduces waste, especially when partnered with new sensor methods. This in turn, lessens the financial burden and offers opportunities for increased profit and sales for the industry.

  • Ensures ideal conditions to decrease the risk of mold and infestation
  • Tracks any problems to the source and avoids unnecessary waste
  • Increases yield to drive financial and social profits for all

The World Bank has estimated that every 1 percent reduction in post-harvest losses leads to $40 million in output gains.

Solution Benefits

  • Automate data collection to monitor conditions in real time
  • Streamline communications between farmer, distributors, and storage facilities in order to ensure proper storage methods
  • Verify all recorded data immediately and track its origin
  • Reduce the risk of error through automation and digitization of systems

Any STRATO insurance solution leverages STRATO’s enterprise grade features

  • RESTful APIs for direct connection of IoT devices like storage providers’ iPads to the blockchain network
  • Identity Management, OAuth and SSO capabilities for simplified IoT authorization and user login
  • Privacy via private chains to ensure only permissioned parties access data, keeping it secure and free from tampering
  • Enterprise Data Modeling for integration of existing and future agricultural storage data models