Blockchain Comes to Agriculture
Blockchain can help traders cut costs and ensure full-on food traceability for consumers
Blockchain is best known for its financial applications, namely its use in cryptocurrencies like Bitcoin. However, an increasing number of role players and startups in the agricultural industry are starting to look at blockchain technology to improve food safety and facilitate agricultural trades.
What is a blockchain?
A blockchain is a shareable, unchangeable, decentralised record of data points, created in real time without reliance on third parties such as banks or governments. A blockchain is secure by design. Each record, called a block, is cryptographically linked to the previous block in the chain and contains a timestamp. Blockchains are stored on a network of computers and cannot be edited once they have been created. It’s easy to see why blockchains are so appealing: they allow data to be recorded and transacted in a verifiable, transparent and permanent way.
On the journey from farm to table, our produce makes countless stops in processing facilities, warehouses, container ships, trucks and supermarkets. Meanwhile distributors, retailers and customers have little way to verify the provenance and safety of the products they are selling or buying. Blockchain is a promising way to improve food traceability, and it’s already being put to the test.
In October 2017 Cargill announced the use of blockchain to track their Honeysuckle White turkeys from farm to market and to help their consumers understand where their birds were coming from. During the holiday season, buyers could send a text with a code taken from a tag on their turkey, or enter the code online, to determine the farm from which their turkey originated.
The aim for Cargill was to see if blockchain could be used to improve how the company handles data while also adding value to the customer by showing that the birds predominately came from small, family owned farms.
What Cargill was right about is that today’s consumers, particularly in more developed countries, want transparency when it comes to the origins of their food. In Cargill’s case, customers were only allowed to see a small portion of the data collected in the blockchain and there is certainly potential for a lot of data to be included in a blockchain, which can add value for users at all levels of the supply chain:
Internet of Things (IoT)
IoT devices, such as RFID tags, probes, sensors and thermometers, are becoming more common in the agricultural industry. These devices collect data in a physical space and transmit it via the internet. This data can be automatically added to the blockchain to show, for instance, the time of day fruit was harvested or the temperature at which it was transported. This adds transparency along the whole food supply chain and adds value to the end consumer.
Ripe.io aims to use blockchain and IoT to create what they call a “blockchain of food”. They want to use IoT information collected on farms and along the food supply chain to create a system which helps farmers and distributors to deliver high quality products to consumers. They believe that the transparency offered by the data collected in a blockchain will result in better, safer food.
Data about farmland, such as which fertilizer was used in individual fields or which crops were grown when, can be stored in a blockchain to create a farmland registry. This creates a timestamped, verifiable and unchangeable record which is enormously valuable to potential buyers.
Food waste – on farms, in supermarkets and in homes – is a major global problem. The Food and Agriculture Association of the United Nations estimates that roughly one third of the food produced in the world for human consumption every year gets lost or wasted. This amounts to hundreds of billions of dollars in food waste and losses. Blockchain can be used to create a dependable real-time marketplace for produce directly from farms.
AgUnity is a blockchain startup doing exactly that. They put smartphones in the hands of small farmers in developing countries around the globe so that farmers can use their Agri Ledger app and blockchain to sell their produce and negotiate better prices for supplies. Blockchain adds security and legitimacy to transactions which would otherwise have taken place verbally or on paper. It also helps to reduce food waste by improving the efficiency of transactions and making sure food is sold before it spoils.
Using IoT and blockchain can help identify unsafe or inferior products before they reach end consumers. Knowing more about a product’s origin, shipping time and storage conditions can allow distributors, supermarkets and restaurants to make better decisions about which products to buy. It can also help to give consumers a more accurate expiration date, preventing food from being consumed too late or thrown away too early.
In countries like South Africa, where basic food security is a problem for a large portion of the population, knowing intricate details about food and its origins can seem irrelevant, however big names are investing in blockchain for food overseas.
IBM has recently launched IBM Food Trust: a collaborative network, powered by the IBM Blockchain Platform. IBM Food Trust brings together the growers, processors, wholesalers, distributors, manufacturers, retailers involved in getting a product from soil to supermarket shelf. The idea is to enhance visibility and accountability in each step of the food supply. With IBM Food Trust, blockchain can be used, for example, to track and contain instances of food poisoning. Once the responsible product has been identified, IBM Food Trust can be used to find out which farm the product came from, which processing facilities it visited and which stores it is stocked in. It therefore becomes possible to identify the source of the problem, recall the contaminated products and prevent any further illness.
American retailer Walmart has signed up to IBM Food Trust and wants each of its suppliers to do the same. In fact, by September 2019 all suppliers of fresh, leafy greens to Walmart and its Sam’s Club division will have to use blockchain. Walmart intends to issue similar mandates for other fresh fruit and vegetable suppliers in future. The aim is to improve the way that food is tracked and transported so that consumers receive quality goods.
In December 2017, Louis Dreyfus Co., one of the world’s biggest food traders, announced what they say is the first agricultural commodity trade to use blockchain technology. With the help of Dutch and French banks, Louis Dreyfus Co. used digitised documents to sell 60,000 tons of soybeans to China’s Shangdong Bohi Industry Co.
They say that using blockchain significantly reduced the transaction time, from two weeks to one. Documents that would normally need to be faxed back and forth or audited by third parties could be instantly and securely updated. Following the success of this sale commodity traders and trade finance banks are looking to blockchain as way to reduce costs, make trades more secure and extend their profit margins.
AgriDigital is another business using blockchain to facilitate agricultural trades. Based in Australia, AgriDigital is currently developing a blockchain protocol for the global trade and finance of agri-commodities. Since 2016 they have been successfully using blockchain in global agricultural commodity trades in different ways. They are also developing blockchain technologies to improve supply chain trust, transparency and traceability.
In January of this year shipping giant Maersk and IBM have announced their intent to establish a joint venture to provide more efficient and secure methods for conducting global trade using blockchain technology. The aim of the new company is to provide more transparency and simplicity in the movement of goods internationally.
It seems that we are still a few years from using our smartphones and blockchain to trace the origins of the strawberries in our trollies while in the supermarket. It’s not even clear if that’s something consumers will really do. However, the potential for blockchain technology in the agricultural industry is immense and it could have many positive effects for farmers. Combined with the use if IoT, blockchain can help farmers to deliver better products and negotiate better prices while managing their outputs more efficiently by selling produce in real-time and managing waste. Only time and the success of applications such as IBM Food Trust will prove blockchain’s true value to the food supply chain.