The agriculture sector is a crucial part of the global economy and is responsible for feeding billions of people. However, it also faces numerous challenges such as increasing demands for food production, changing climate patterns, fraudulent labelling practices, and the need to promote more sustainable agricultural practices. Project CERES aims to address these challenges by using a combination of best available technologies to monitor and manage activities along the agricultural value chain in a more efficient, transparent and sustainable manner.

One of the primary challenges that Project CERES addresses is the need to improve transparency and accountability in the agricultural sector. Today, irrespectively of the country, there is a lack of transparency and accountability in the production and supply of agricultural goods, making it difficult for consumers to trust the origin and quality of the food they eat. In this sense, some countries have it better and some countries have it worse, but given the globally-integrated food supply chain, fraudulent practices in one country usually impact other countries too, and the monitoring and enforcement practices that could be implemented to weed out abuse are so prohibitively costly that it would make food much more expensive than it is at present. This has led to instances of fraudulent labelling and illegal importation practices that have shaken, and continue to shake, consumer trust in the sector.

Another significant challenge facing the agricultural sector is the structure and the magnitude of the transactions costs. Right now, the transaction costs associated with the agricultural sector are quite considerable. This leads to inefficiencies, lower profits, and missed opportunities for farmers and other stakeholders in the value chain. Some of the factors contributing to high transaction costs in agriculture include:

Information asymmetry: Lack of information about prices, quality, and supply chain can result in higher transaction costs for farmers and other stakeholders, as they have to invest time and resources into obtaining the necessary information to make informed decisions.

Logistics: The physical transportation of crops, livestock, and other agricultural products can be costly and time-consuming, especially for small farmers who are located in remote areas.

Regulations and bureaucracy: Government regulations and bureaucracy can also contribute to high transaction costs, as farmers have to navigate complex procedures and rules in order to participate in the market. While several rules are paramount in ensuring food safety and in combating fraud, the way they are dealt with by the stakeholders do not always ensure in that compliance costs are kept at optimal levels, often resulting in compliance costs that are significantly higher than what they need to be.

Intermediaries: The involvement of intermediaries in the agricultural value chain, such as bankers, brokers and traders, can add to the cost of transactions, as they typically charge fees for their services. By way of an example, a Letter of Credit typically accounts for 5% to 6% of the total transaction cost, and this is a very significant expense.

The high transaction costs associated with agriculture can have significant impacts on the sector, including reduced profitability and competitiveness, lower efficiency and productivity, and lower income levels for farmers.

A third challenge that Project CERES addresses is the need to increase food production while preserving natural resources. The world population is expected to grow to 9.7 billion by 2050, and the demand for food will only increase. At the same time, the degradation of natural resources such as soil, water, and forests has already reached critical levels in many regions, making it difficult to sustain agricultural activities.