Consisting of a small group of ambitious young people, Fairfood in the Netherlands aims to contribute to the achievement of six of the 17 sustainable development goals. Lonneke Craemers, head of business development and project management at Fairfood, explains how blockchain technology is helping them to achieve these aims.
Transforming the food industry
The food industry faces issues of environmental and social exploitation and injustice, such as insufficient incomes for people working at the beginning of the food value chain. Fairfood’s food system depends on about 70-80 million smallholder farmers who are currently living below the poverty line. Poverty indirectly leads to further development issues, such as child labour.
Fairfood’s approach is to look for solutions that benefit all stakeholders across agricultural value chains by seeking out innovative and entrepreneurial ways to bring them together towards sustainable change. Blockchain is one of those solutions. The technology can help to build trust between supply chain actors, for instance, by verifying agreements and claims without having to share or reveal sensitive information with a central authority. By decentralising data, companies – and farmers – increase the ownership of their products, and the movement of products and data along the chain become much more transparent and efficient.
All actors within a supply chain, including consumers, are connected and can review each other’s transactions on the blockchain. Information about each transaction is stored and is publicly accessible in a digital ledger. Since data within the blockchain cannot be altered, anomalies in the system can be revealed or solved. For Fairfood, the most important aspect of the technology is that producers at the beginning of its food chains get an opportunity to be identified, claim ownership over their products, increase their negotiating power, and gain access to relevant information and markets.
Learning by doing
Fairfood was the first in the Netherlands to pursue blockchain technology for food chains, and one of the first in the world. In 2017, Fairfood started with a coconut chain. With the help of the technology, the NGO was able to import 1,000 coconuts to the Netherlands, with total transparency of information – the blockchain presented the coconuts’ place(s) of origin, prices paid and whether these prices were fair. One interesting finding was that, through the system, farmers were able to confirm whether or not they had received the agreed upon price. Acting as the retailer, Fairfood made agreements with the coconut supplier to buy the coconuts only after all farmers had received their agreed-upon price.
Fairfood then adapted the blockchain structure for two other enterprises – using the technology’s data transparency to develop coffee value chains based in Ethiopia and Colombia. The NGO was able to confirm the claims of quality and income through the creation of a consumer interface, where the end consumer could look back through the chain, see the names and locations of the farmers that contributed to that coffee, and if they had received an agreed upon premium for their high quality red cherries.
Fairfood is developing the software with every project, and hope to make this technology more accessible for everyone involved in the food sector. Currently, Fairfood is working with the Dutch family business Verstegen Spices & Sauces to trace a batch of nutmeg from Indonesia. For Verstegen, a company keen to make all of their chains transparent, the main appeal of the technology was the fact that farmers get to verify the price they receive for their produce.
To get a bit more technical, collaborating farmers receive a digital wallet in which their produce is logged. All of their products, or batches of products, are assigned a ‘token’. This token embarks on a digital journey, which runs parallel to the real-world journey of the product. En route, it collects value and information that can be shared or used to verify agreements and claims. This way, at any point in the process, the product, with its token, can be traced back to the farmer. The next – and most interesting step – is when the accrued value and information travels directly back to the farmer.
Of course, farmers don’t always have a smartphone, but there are ways to work around this. In the case of the nutmeg farmers in Indonesia, Fairfood verifies that farmers have received an agreed-upon price by connecting farmers to a ‘hot wallet’ via SMS. The compangy keeps their private key and enable them to access their wallet via their older mobile models. When a farmer has delivered his or her products, he/she receives a text message to verify the quantity and payment, such as: “You sold (x) kilo’s and should receive (y). Have you received this amount?” The farmer’s response is logged publically on the blockchain.
A word of advice
Blockchain is still developing. There are still practical and technical obstacles to overcome, not least insufficient farmer access to smart-phones and the internet. However, for the obstacles that are often mentioned in relation to blockchain, innovation is already happening and moving fast. My advice to anyone looking to utilise the technology would be to just do it, keep it simple, learn a lot, and hit the ground running. It’s going there anyway.
This article is one of a series of case studies on blockchain applications in agriculture undertaken by Wageningen University and Research on behalf of CTA. See the rest of the collection at https://www.cta.int/en/blockchain.