Three Ways Blockchain is Being Used in Food and Agriculture Supply Chains
An overview of how blockchain is being used to improve food and agriculture supply chains around the world.
The blockchain community has come a long way over the past couple of years. We have moved from a focus on cryptocurrencies to a wider understanding of different ways we can leverage blockchain technology across industries. I’ve counted more than fifty different initiatives focused on food and agriculture around the world that are doing more than just raising funds through an ICO (Initial Coin Offering) to build a platform. Here are the six main ways I am seeing blockchain applied to food and agriculture supply chains.
The most common use of blockchain in food and agriculture supply chains is to improve traceability. It enables companies to quickly track unsafe products back to their source and see where else they have been distributed. This can prevent illness and save lives, as well as reducing the cost of product recalls. Information being collected and the stakeholder groups involved varies based on the needs of the groups behind each initiative.
The most common use of blockchain in food and agriculture supply chains is to improve traceability.
1. Traceability
The most common use of blockchain in food and agriculture supply chains is to improve traceability. It enables companies to quickly track unsafe products back to their source and see where else they have been distributed. This can prevent illness and save lives, as well as reducing the cost of product recalls. Information being collected and the stakeholder groups involved varies based on the needs of the groups behind each initiative.
The IBM Food Trust initiative started with their collaboration with Walmart China and Tsinghua University, and has grown into a global consortium that includes big names companies such Dole, Driscoll’s, Kroger, Nestle, Tyson, and Unilever. Frank Yiannas of Walmart has said that the improved data traceability provided by the IBM platform reduced the time it took to trace a mango from the store back to its source from seven days to 2.2 seconds. That reduction in time enables companies to identify contaminated supply chains and recall affected products before they are consumed and cause illness.
Viant is a supply chain traceability focused subsidiary of Consensys, which is making global waves for using blockchain to address many different challenges (civil.co is a platform for trustworthy journalism, uPort is an identity management platform, Ujo is a platform for musicians to share content and connect directly with their fans). Viant has partnered with in Fiji with WWF and Traseable Solutions to track albacore tuna caught by Marine Stewardship Council-certified fishing company Sea Quest Fiji. Automatic Identification System (AIS) transmitters were installed on their vessels and operate continually to track and monitor fishing activities. Fish are tagged with a sensor when caught; that sensor interacts with the AIS transmitter to record both the time and exact location. The location data confirms that the fish were caught in a place where fish stocks are not over-exploited.
2. Commodity Management
Agricultural commodities are big business, and commodity managers have been plagued by data management challenges and payment time lags. Blockchain is enabling innovation that addresses these issues.
Australian company AgriDigital provides cloud-based agricultural commodity management services recorded onto a blockchain. CEO and cofounder Emma Weston says that she and her cofounders knew they “could create cost-effective, efficient and world-leading agri-commodity management and supply chain solutions that would have global impact” by using emerging technologies. In 2016 they completed the world’s first farmer to buyer wheat sale recorded on a blockchain; since then they have run pilots for food traceability and supply chain provenance, real-time payments, digital escrows and supply chain finance.
Deal documents, including contracts, letters of credit, and government certifications, were all digitized, and data was automatically matched in real time via their blockchain platform
At the end of 2017, Rotterdam-based trading house Louis Dreyfus Co. completed its first agricultural trade using blockchain, for a sale of U.S. soybeans to China. Deal documents, including contracts, letters of credit, and government certifications, were all digitized, and data was automatically matched in real time via their blockchain platform, which avoided duplication and the need for manual checks. This reduced document processing to one fifth of the usual time and cut overall transaction time in half, from two weeks to one.
3. Marketplace Creation
One challenge for commercial food companies is sourcing quality ingredients in sufficient quantity. Farmers may not know who the big customers are or what end customers are looking for. Historically, intermediaries have controlled a significant percentage of profits. Digital marketplaces allow buyers and growers to connect directly, increasing the amount of profits that go to the farmers, and investors to invest directly into farms producing commodities and then trade on that investment.
There are several technologies devoted to improving the sustainability of agriculture. Examples include:
- Smart irrigation systems: using sensors to optimize the irrigation process;
- Precision planting systems: optimizing the planting process, such as the spacing between seeds;
- Crop yield prediction, which helps farmers decide what to plant each season.
At the end of 2017, Rotterdam-based trading house Louis Dreyfus Co. completed its first agricultural trade using blockchain, for a sale of U.S. soybeans to China. Deal documents, including contracts, letters of credit, and government certifications, were all digitized, and data was automatically matched in real time via their blockchain platform, which avoided duplication and the need for manual checks. This reduced document processing to one fifth of the usual time and cut overall transaction time in half, from two weeks to one.
