April 9, 2018 | By Elizabeth Leake

Guest Commentary - Blockchain and the Future of Agricultural Markets

Photo by Malcolm Carlaw (Summer Wheat beginning to ripen in the Palouse region; used with the photographer’s permission)
 
By Elizabeth Leake, STEM-TREK Nonprofit
Given the many non-financial applications for blockchain that have cropped up ever since cryptocurrencies gave it a controversial reputation, more people have become "blockchain-curious." Experts are increasingly interested in uses that improve value chains in agricultural food systems in low and middle-income countries. Because more people in these areas earn a living from agriculture, blockchain stands to alleviate poverty while improving food security prospects for everyone.
 
According to analysts who work for International Business Machines (IBM), blockchain is “a shared, unalterable ledger for recording the history of transactions. It increases trust, accountability, and transparency across business networks.” By enabling smart contracts between individuals anywhere around the world, there is no need for centralized support or oversight, such as legal, banking, or title companies, brokers, or other steps that add cost and opportunities for fraud. A decentralized ledger can still be tampered with, but with blockchain’s transparency, it is easier to detect if something has been altered. As for efficiency, IBM Global Financing reportedly saved as much as 75 percent of the time required to mediate transaction disputes among 4,000 partners and suppliers using a blockchain distribution management solution.
 
To economists and business managers, 75 percent savings is nontrivial. This explains why the Consumer Goods Blockchain Forum—with representation from such commercial giants as Nestle, Walmart, Proctor and Gamble, and McDonalds—is rapidly employing blockchain.
 
Medical and pharmaceutical industries are also embracing blockchain to secure public health and personal information and to safeguard consumers against counterfeit drugs. There are also blockchain enthusiasts in agricultural and related industries investigating its use in insuring global food security. While most of us have become wise to counterfeit software, telephony, and designer handbags, few realize the same deceptive practices can affect food, feed, seed, and agricultural supplies. A compromised herbicide or pesticide, for example, might not be identified until after a crop fails. It could take years and declining health before some realize they are not receiving promised fortifications.
 
Blockchain effectively tracks the provenance of raw materials and commodities. For example, by capturing GPS coordinates when and where cocoa is harvested, producers can verify that best and sustainable practices are being exercised, preventing irresponsible deforestation. This information can also be used to track how rare earths used in electronics are mined to ensure that forced or child labor are not involved.
 
Mitigating disputes and crime robs time and money from the value chain. Therefore, international policing agencies can use blockchain to combat fraud. While bad actors can still dump junk into the market, with blockchain’s ability to offer immediate traceability, they will be discovered more quickly and issues will be resolved faster. In essence, it would cost more for criminals to cheat a blockchain system than the cheat is worth because associated risks and penalties are much higher.
 
Crossing from the virtual to physical realms will require a “follow the product solution,” and that is what Netherlands-based FOCAFET Foundation is developing. Designed with the goal of becoming 100 times more efficient and 1,000 times more secure than current methods, FOCAFET’s “virtual Internet of entities” employs a bar code that cannot be copied. Unique product attributes, like a seed’s genetic makeup or a product’s exact chemistry, are recorded in blockchain ledgers. These characteristics are then followed through each step of the supply chain, including where and how it was produced, until delivery. Using a mobile device, the end-user scans the bar code and the product’s authenticity and integrity are immediately verified. The mobile app will accommodate a broad range of devices (considering that some people will use older hardware) and is interoperable with about 80 spoken languages. Additionally, it will seek community feedback in an interest of continuous improvement.
 
Food security blockchain enthusiasts are encouraged to join the CGIAR Platform for Big Data in Agriculture’s “Blockchain Coalition,” which is emerging from the Platform’s Socio-Economic Data Community of Practice (SED-CoP) led by Gideon Kruseman (CIMMYT). Since the CGIAR Platform collaborates with stakeholders at 15 research centers and 12 research programs around the world, the Coalition will draw leading specialists who can work together to shape the future of blockchain’s use in agriculture. To join the SED-CoP, visit the platform website and complete the form.
 
The state of global blockchain culture is a theme for STEM-Trek’s July workshop called DIGI-FI@PEARC18. The workshop will take place during the Practice & Experience in Advanced Research Computing (PEARC18) conference in Pittsburgh, Pennsylvania, July 22-25. Watch the STEM-Trek site for updates.
 

About

The Global Food and Agriculture Program aims to inform the development of US policy on global agricultural development and food security by raising awareness and providing resources, information, and policy analysis to the US Administration, Congress, and interested experts and organizations.

The Global Food and Agriculture Program is housed within the Chicago Council on Global Affairs, an independent, nonpartisan organization that provides insight – and influences the public discourse – on critical global issues. The Council on Global Affairs convenes leading global voices and conducts independent research to bring clarity and offer solutions to challenges and opportunities across the globe. The Council is committed to engaging the public and raising global awareness of issues that transcend borders and transform how people, business, and governments engage the world.

Support for the Global Food and Agriculture Program is generously provided by the Bill & Melinda Gates Foundation.

Blogroll

1,000 Days Blog, 1,000 Days

Africa Can End Poverty, World Bank

Agrilinks Blog

Bread Blog, Bread for the World

Can We Feed the World Blog, Agriculture for Impact

Concern Blogs, Concern Worldwide

Institute Insights, Bread for the World Institute

End Poverty in South Asia, World Bank

Global Development Blog, Center for Global Development

The Global Food Banking Network

Harvest 2050, Global Harvest Initiative

The Hunger and Undernutrition Blog, Humanitas Global Development

International Food Policy Research Institute News, IFPRI

International Maize and Wheat Improvement Center Blog, CIMMYT

ONE Blog, ONE Campaign

One Acre Fund Blog, One Acre Fund

Overseas Development Institute Blog, Overseas Development Institute

Oxfam America Blog, Oxfam America

Preventing Postharvest Loss, ADM Institute

Sense & Sustainability Blog, Sense & Sustainability

WFP USA Blog, World Food Program USA

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