New Agri Technology

Blockchain & Agriculture: A Look at the Issues & Projects Aiming to Solve Them

In 2017, Frank Yiannas, VP of food safety for Walmart, bought a package of mangoes from one of their stores, brought it back to HQ, and told his team to find out where it came from. It took them over six days. Though he’d been skeptical before, Yiannas teamed up with IBM to test a blockchain solution. Running the same trial with the new technology cut the tracking time down to under two seconds, with every stop on the mangoes’ journey instantly visible.

If anything, though, Walmart came late to the game. Conglomerates and idea-driven startups alike have been exploring agricultural blockchain applications for years now. Supply chains have understandably been one of the hottest areas for blockchain development, as the current system (impressive as it is) is plagued by a host of problems, from outdated record-keeping to ethical concerns.

The problems: where did this food come from and where is it going?

Some questions don’t have answers. Other problems do have answers, but they’re buried in a filing cabinet somewhere. Agriculture falls into that second category: farms, processors, shippers, distributors, and retailers generate a lot of data, but it’s spread across a multitude of siloes, making answers of any kind difficult to find. Not having a comprehensive picture of the supply chain means that buyers and sellers are often not optimally organized and leads to significant inefficiency—in the form of food waste, for example. According to a 2011 UN survey:

  • Around 1/3 of all food produced worldwide is wasted. Only in the wealthy countries does the waste occur on the consumer side—most of it happens in the production and distribution stages.
  • The wasted food in Sub-Saharan Africa alone would be sufficient to feed 300 million people.
  • The total value of the lost food is almost 1 trillion dollars.

Other issues that continually pop up in the agrifood supply chain include:

  • Food fraud (non-organic food is pretty easy to pass off as organic)
  • Food safety (E.coli in lettuce, as happened in May 2018)
  • Unethical production practices (slave labor)
  • Lack of transparency (in cost, production practices, etc.)
  • Distribution inefficiency (food isn’t wasted because people don’t want it; it’s wasted because people can’t get it)

Agricultural problems, blockchain solutions

Outdated record-keeping

It’s the 21st century, but a disturbing amount of business is still conducted on paper—and the global supply chain is no exception.  Dealing with international import and export laws, banks, third-party auditors, and a host of other actors means spilling a lot of ink on faxing things to three different offices for every transaction. This fragmentation and lack of standardization slows things down and makes data harder to gather and analyze, which means that pretty much every problem with the supply chain is harder to solve.

There have already been moves to update these systems, such as the GS1 standard, but no solution has thus far been able to offer what the supply chain really needs: a shared system of record-keeping and transaction settling that can be trusted by all involved parties. That’s where projects like Agunity’s Agriledger, Provenance, OriginTrail, Ripe.io, and Blockgrain come in. Each project has a different focus, but the general idea is that they can provide exactly the above: a standardized, secure way to keep track of a massively complex system without requiring full, simultaneous compliance from all players involved. Ultimately, they hope to create a secure, easily auditable system that can cut down on unnecessary paperwork and make verification processes and transactions more efficient. When it comes down to it, it’s all about good record-keeping; that alone will have a massive influence.

Blockchain Supply Chain Management

 

On the corporate side, supply chain and shipping giants like Dreyfus and Maersk have already started experimenting with transactions and record-keeping on the blockchain, which may end up being interoperable and integrated with other systems in the future.

Traceability/Transparency

Fair-trade, organic, “cruelty-free,” “ethically-sourced”—how accurate are these labels? Not as on-point as you’d like: there are so many steps in most supply chains that it’s relatively easy to disassociate the source from the product. At minimum, it would be nice to have peace of mind about food ethics, but in more serious situations, like epidemics, it could save lives to know sources in seconds rather than days.

The need for transparency is especially emphasized by projects like Provenance, which is basing most of its business model on increased demand for organic, ethically-sourced food. They have successfully run an impressive number of pilot programs, with one of their most successful projects being tracking fish from Indonesia. The process was simplified to the point that fishermen could log their catches on the blockchain via SMS, with each batch then being tracked through processing and distribution, all the way to the store. With all the steps involved, one of the clear issues here is how many sensors would be required and how exactly the food would be tracked, but at least permissioned blockchains make using fast consensus systems, like Raft, possible.

Even Coca-Cola is exploring the possibility of using blockchains to incentivize ethical labor practices in their sugar supply chains. They will not only be registering workers and contracts, but plan on building in incentives to ensure that the local employers want to abide by the standards.

Transaction costs and market access

Current supply chains don’t really have mechanisms for including small-scale farmers, and, in return, the small-scale farmers don’t really have ways to access broader markets. This is one of the reasons that sub-Saharan Africa sees so much food going to waste—they just can’t send it where it will be more useful. Even in more developed countries, a lot of agriculture deals are made on the basis of personal trust, handshake agreements, and intermediaries, which means there is a larger-than-necessary gap between the market price and the price the farmers receive. Entering larger markets just isn’t very feasible for small-time farmers, especially in less-developed regions, so the cycle continues to repeat itself.

Agriledger is one of the biggest and most successful agri-blockchain projects currently working, and they’re especially interested in issues of market access, building trust between farmers and regional co-ops, and in providing better access to financial services. Investing in farm equipment and scaling up is difficult when you don’t have a good way to sell your product, keep records, or turn financial capital into physical capital. Agriledger’s pilot programs so far have been quite successful—one case in Papua New Guinea showed income as much as tripling after farmers were given access to the blockchain via an app.

The Players

Most blockchain sectors have two sides: the high-profile, energetic startups who are trying to get their platform adopted, and the corporate logistics departments who are quietly building blockchains into their current systems. The agrifood blockchain is no exception to that, so here’s a quick rundown of the space as it stands.

Notable commercial applications

Many of these platforms have IBM’s Hyperledger Fabric in common—a permissioned ledger that is securely maintained by the interested parties. That isn’t exactly ultimate transparency, but it’s a lot closer than the current system.

  1. Walmart: They put mangoes on the blockchain, and that’s probably not the end of it. Has also worked with IBM and Tsinghua University on a project to track Chinese pork.
  2. Dreyfus: Used a blockchain platform to close a big soybean deal with a Chinese supplier, cutting down transaction time dramatically.
  3. Coca-Cola: Building blockchain platforms to help ensure ethical sugar production.
  4. Unilever: Working with Provenance to track tea in Malawi
  5. Carrefour: Working on a blockchain to help trace product origin.
  6. Dole, Driscoll’s, Kroger, Tyson, Nestle, Golden State Foods, McCormick and Company, and McLane Company: Working with IBM to build blockchain tracking solutions.

Notable independent projects/platforms

Recognizing that most of their potential corporate users won’t be keen to have their supply chain data broadcast to the entire world, many of the independent projects are also using some form of permissioned blockchain as a base technology. They’ve already run some pretty interesting experiments, but whether they’ll be able to outcompete the existing corporate players is yet to be seen.

  1. Agunity/Agriledger: Primarily focused on providing regional and international market and capital access to small farmers (who supply 80% of the food consumed in developing countries). The system primarily runs off of using simple smartphone apps, and they have run pilot co-op projects in Papua New Guinea, Myanmar, Kenya, Ethiopia, Ghana, and other countries, all with positive results, with income as much as tripling in some cases.
  2. Provenance: Provenance is primarily focused on making supply chains more transparent, riding the increased global demand for environmentally-friendly, ethical products. Their pilot project successfully traced Indonesian fish, and they’ve run many on a smaller scale as well, from coconuts to fashion products. Rather than being a one-stop solution, though, they are aiming to use the blockchain as a universal records layer, accessible even via SMS, which can serve as a way to increase interoperability and data sharing across supply chains.
  3. Blockgrain: This Australian startup is finding innovative ways of cutting out middlemen, using blockchains as a way to give buyers and sellers a direct channel to each other. A trial run in Queensland has already used the system successfully, keeping records on the Blockgrain blockchain and settling transactions with ERC20 “AGRI” tokens.
  4. io: This one is for the locavores. It essentially works as a way to connect farmers and buyers within a 250-mile radius, making it easier for the smaller farmers to sell food and cheaper for people to buy it. It also works as a way for consumers to trace their food in real time, and even implements route optimization to cut down shipping costs for farmers who otherwise wouldn’t be able to afford to send their product to market.
  5. io: Ripe is another supply-chain solution, but it’s also looking to track what goes into food. Using lots of sensors and real-time tracking, powered by the blockchain, Ripe is focused on making every minute detail of a product completely transparent and trackable from farm to store. Their claim to fame so far is putting tomatoes on the blockchain.
  6. OriginTrail: An ambitious project aiming to integrate databases across supply chains, using an off-blockchain network for data governance and a blockchain layer where zero-knowledge proofs are stored.

Outlook

Blockchain tech isn’t a magic bullet—no matter how revolutionary it is, it will still leave industries with some issues. Interoperability remains a concern, with so many competing projects coming from multiple angles, and the implementation isn’t going to be a walk in the park. Many of the projects depend on arrays of sensors and tagging technologies that may not be in place yet, and that’s not going to make it any easier for farmers and the subsequent steps along the supply chain to get this system off the ground.

That said, there are so many companies and platforms working in this sector that it seems inevitable that agriculture will ultimately end up using blockchains in some form or another. While they may start small, with individual cases and on local levels, it may end up being exactly what the industry needs, since parts of the supply chains seem to have skipped over a few key parts of the internet era up until now. Ultimately, the measure of blockchain’s success is how much good it can do, and ideally, it will contribute to a more food-secure, efficient world.

Source: blockonomi.com

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