To discuss the opportunities and challenges for blockchain in agriculture in the agri-food sector, over 160 participants gathered in Brussels on 15 May, 2019 at the 55th Brussels Development Briefing organised by CTA, the European Commission (DEVCO), the ACP Secretariat, Concord and BMZ.
In recent years, business transactions in agriculture have been transformed by the digitalisation of the value chain. However, there are still many challenges relating to the traceability of products and transparency in supply chain management, especially in making transactions secure. Blockchain is an emerging digital technology that intends to address these gaps.
Blockchain is a method of documenting data via a digital ledger that records and verifies transactions, agreements and contracts. The technology allows immediate transfer of digital assets and reduces – or completely removes – the need for intermediaries, like banks and other financial service providers. With this decentralised approach, blockchain helps stakeholders involved in a supply chain network or contract farming scheme – from the farmer, the wholesaler, the financial service provider, to the supermarket – to trade more quickly and in a more transparent manner. However, application of blockchain in ACP regions is still nascent and awareness on the implications of blockchain, partnerships and knowledge sharing were highlighted as being amongst key priorities for blockchain development by the panellists at the Briefing.
To provide an overview, Mischa Tripoli, an economist with the Trade and Markets Division at FAO presented on the opportunities and challenges for blockchain in the agri-food industry. Key areas of interest in blockchain applications for sustainable agriculture in ACP regions from CTA’s project “Promoting blockchain to increase innovation and business performance in the agri-food sector” were then shared by senior expert for data4Ag at CTA, Chris Addison.
Innovations in blockchain technology for agriculture and the food system across several value chains, include new opportunities in finance that can benefit smallholders, as highlighted by Sander Govers of Moyee coffee who presented on the increasing price transparency through blockchain in the coffee chain in Ethiopia. The appeal of blockchain for a new generation of farmers was also highlighted by Theo de Jager, president of the World Farmer’s Organisation, “The nature of the chain has changed and if you cannot keep up, at the cutting edge of the technology, you don’t remain in business. A new generation of young farmers understand and love the technology. With blockchain, we can bring the incorruptible flow of information and data into our value chains.”
Several blockchain applications in the agri-food sector include supply chain management, food safety, trade finance, agricultural financial services, market information, land registries and international agreements related to agriculture. For example, blockchain technology provides a secure, fast and immutable method to register land titles, and registered physical assets can be used as collateral to access financial services. Ways of upscaling private sector-led applications were presented by Louis de Bruin from IBM and Anthi Tsilimeni-Archangelidi from Cargill. However, all these developments have implications for policy and governance in ACP countries. Alice Namuli Blazevic, a Ugandan lawyer with expertise in blockchain and artificial intelligence raised the issues being tackled in her country and some of the actions being taken both by government and the Blockchain Association of Uganda.
Providing a cautionary note, Pat Roy Mooney, founder of the ETC Group shared a very inspiring presentation. Mooney’s report “Too big to feed” highlights the concentration of corporate power in agribusiness that is aided by new technology and blockchain. His second study: “Blocking the chain” is not against the technology per se but provides a cautionary word on the pace of development and who is regulating it, then asks if we understand the technologies well enough to regulate them.
From the presentations and discussions, some recommendations emerged:
- To look at improving the knowledge base of the public sector on the application of distributed ledger technology (DLT) for food and agriculture;
- To address the numerous technical, regulatory, institutional, infrastructure and capacity development related challenges for widespread adoption;
- To create an enabling environment that ensures the productivity gains generated by DLTs are shared by all market participants, including smallholder farmers, processors and MSMEs. This can be achieved by promoting international cooperation through public-private sector partnerships and support to research and development; but also, by providing policy guidance on the use of DLTs in supply chains and developing appropriate regulations and standards with the private sector.
- Finally, there is a need to improve digital infrastructure and skills, as well as to ensure inclusive approaches.