This farm wants to sell its yields as NFTs
Elderberries are said to clear the body of free radicals that damage cells, contain antiviral properties to prevent or reduce the severity of certain infections, and have anti-inflammatory properties, according to Verywell Health, though some have disputed whether elderberries really have the benefits many claim.
Regardless of the plant’s medical efficacy, thanks in part to the Covid pandemic, elderberry supplements are on the rise. A November 2021 article named it the “plant of the month” and JSTOR Daily reported that, in 2020 alone, US consumers spent $270 million on elderberry supplements.
Most of the plants used for elderberry supplements have historically come from the European variety of elderberry, called Black Elderberry, or Sambucus nigra. There is a North American variety, Sambucus canadensis, which isn’t as commonly commercially cultivated. According to a 2009 report from the Center for Agroforestry, most commercial elderberry production at that time was concentrated in Europe in Denmark, Italy, Austria, and Germany.
Until American Elderberry entered the market, that is. The Pleasant Grove-based farm currently sells whole fruit puree and not-from-concentrate juice via e-commerce. According to Trent Nydegger, who works for business services firm TAP Group and is working with American Elderberry, one of the hurdles to beginning to farm American elderberries is the introductory cost.
According to an estimate from Iowa State University Extension and Outreach in 2016, establishing elderberry comes at a “very significant cost” of just over $5,200 per acre.
Harvest costs are also a significant expense according to Iowa State University, though annual maintenance costs are “relatively low.” Nydegger also says that plants could last up to 10 years once established, so it’s important to just get over that initial barrier, though that’s a big hurdle for a farm to cross.
With that in mind, Nydegger has an idea: NFTs.
When you think of non-fungible tokens, digital assets that exist on a blockchain and are traded over the internet, you probably think of a primate profile picture or something along those lines. But blockchain-based ownership isn’t limited to colorful apes that you see on Twitter. Anything can be an NFT on the blockchain, and some people believe that years down the line, everything will be secured on the blockchain, from car titles to fractionalized homeownership, which companies like Realium are currently working on.
Nydegger’s idea, which wouldn’t be limited to the elderberry space, is that farmers could sell part of their yields as NFTs. An investor would provide an initial sum of money to a farmer, who would then pay royalties to the investor at the end of that year’s harvesting cycle. The investor wouldn’t have any claim to the actual harvest, they wouldn’t be in charge of selling it, and they wouldn’t have to be involved in the supply chain at all, but by providing money upfront, it enables the farmer to cultivate more costly crops that have a high entry cost, and the investor then receives money on the back end for his initial investment. At the end of the transaction, the NFT cashes out, and the process starts over.
“I don’t want to farm it, and I don’t want to sell it, I don’t want to be involved in the supply chain, necessarily, but I like it, I think it’s cool, and I want to invest in it,” Nydegger says. “Well, if we fractionalized those NFTs on the harvest, that could also be a way to get revenues for the companies to subsidize the farmers as well as do the wholesale processing. And then at the end, that increases the value, because they’re still going to do revenue-generating activities, we’re going to sell the berries, we’re going to sell the raw ingredients, people are going to make products with it.”
It’s not something that could happen tomorrow, Nydegger says, instead giving a timeline of probably three to five years on the NFT side of things. One thing that impacts projects like this is the Oracle Problem. Smart contracts on a blockchain work like an if-then statement. In theory, if the berry harvest was successfully planted, harvested, and sold to a company that would make a product with the berries, then the agreed-upon amount of money would be automatically delivered to the farmer, and in turn, the NFT investor. That would happen automatically because it would be written into the code of the smart contract and verified on the blockchain.
This can work great for online tasks connected to the blockchain, but not all tasks happen online, and farming certainly does not. The Oracle Problem is essentially connecting real-world information with the digital world and the execution of smart contracts.
“How do we verify that that berry harvest didn’t get adulterated somewhere along transport or through processing? Building the system out on that side of things is probably, rough guesstimate, maybe three to five years out,” Nydegger says, noting that there are companies working on devices that could track things like humidity, temperature, and more to verify that what’s recorded on the blockchain is correct and true in reality.
Though his ideas may be severall years down the road, that gives the elderberry market time to continue to grow, and gives American farming operations time to take advantage of it.
Nydegger says he’s working with several farmers who are willing to commit between 20 and 50 acres to elderberry farming in the near future, both in Utah and beyond.
“As far as the commercial cultivation, that’s already in process right now and is ramping up, so it’s kind of step-by-step,” Nydegger says. “First, let’s get the commercial cultivation up, and then in the next year to two years, when we have proof of concept and say ‘this is a viable crop, it’s a viable ingredient,’ we’ll start building out the NFT side of things.”