The use of blockchain technology in the agri-food sector has been recognized by the FAO, as well as in numerous scientific studies mentioned below, as an effective solution for ensuring safety, quality and sustainability of agri-food products. (1)
In turn, the organic supply chain can benefit from this system to provide incontrovertible assurance of the traceability of certified organic products, from the soil to the table. (2) With the ability to include additional data such as analysis on soils, water, products, rather than assurance on workers’ rights(without caporalism) and transparency on the value chain.
Blockchain, the benefits for the agribusiness supply chain
The transparency offered by an authentic blockchain system allows for the strengthening of trust among supply chain players everywhere based and stimulates the development of business relationships. Thus, information sharing among stakeholders improves the quality of collaborations. Also helping to identify and reduce areas of inefficiency, often related to various intermediaries between the agricultural and processing or distribution stages. (3)
Blockchain can also help overcome information asymmetries between producers and end consumers. An essential element for SMEs and others to achieve that visibility hitherto obscured by large downstream players (industry and retail). (4) Therefore, the opportunity to form business networks or consortia should be considered, precisely to make all players in the supply chain shine in a synergistic rather than competitive perspective. (4)
Fig. 1. Illustrative diagram of blockchain operation (Xu et al., 2020)
Traceability and risk management
Blockchain technology offers various possibilities for intervening in the supply chain, due to the data that operators choose to record and share. The starting point, as noted above, is the ‘digital notarization’ of product (re)traceability data and other news prescribed by current regulations. (5)
The management of food safety risk-as well as minor nonconformities pertaining to product qualities-can be optimized precisely because of the ability to accurately identify material flows of goods in real time. (6) The possible recording of data related to so-called internal traceability-although not prescribed by current regulations, for the generality of products-can then facilitate the identification of the causes of nonconformities.
Fig. 2. Simplified diagram of an agribusiness supply chain employing blockchain (Kamilaris et al., 2019)
Blockchain, the opportunities in the organic supply chain
The market for organic products is growing steadily, internationally as well as in Italy (see. SINAB report ‘Organic in Figures 2020‘, 1.10.20). Coop Italia, in turn, reported a +9% increase in sales on its private labels, thanks to organic but also to controls on supply chains that guarantee sustainability requirements related to animal welfare, health and worker protection (e.g., the without antibiotics – ‘Let’s Raise Health‘, ‘Good & Fair‘). (7)
Moreover, a recent study(Becchetti et al., 2020) confirmed the propensity of Italian consumers to recognize the added value of products that come from sustainable and controlled supply chains, such as organic and various others. Other studies conducted in Canada and Belgium confirm how sharing supply chain information through blockchain actually enables full consumer trust, as well as achieving the goals set (8,9). The farmer enters the initial inputs, and the system validates and processes them to confirm that they meet the requirements for organic production. (9)
Fig. 3. Example of smart contract between small farmers and cooperatives (Kamilaris et al., 2019)
Blockchain, experiences in Italy
In Italy, blockchain is beginning to be introduced, in the agri-food sector, to guarantee the origin of its products, especially for PDOs, but also to protect their safety and authenticity, as in the case of organic. (10)
In Umbria, a technology mimicking blockchain has been applied, but without meeting its authentic criteria of decentralizing the platform. (11)
Wiise Chain
is the solution developed for enterprises of all sizes-including SMEs, microenterprises and the key players in peasant agriculture-that wish to introduce a public blockchain that is interoperable with the various data recording systems already used by each. This approach therefore allows the various systems to ‘learn’ the standard language validated in the BitCoin protocol (the same one used to secure the cryptocurrency of the same name).
Digital notarization, features and benefits
‘Digital notarization’ -guaranteed by authentic blockchains alone (e.g., Wiise Chain) enables:
– Incorruptibly record data required by current regulations (traceability and tracking), (17)
– share the above data with economic stakeholders, public and private supervisory authorities and consumers (with different levels of access, depending on the different stakeholders and their respective interests),
– offer additional suitable news to solidify their confidence about theintegrity of the supply chain,
– Enhance the data with written, audio and video materials aimed at describing supply chains, products and their key players. With a narrative(storytelling) based on the facts that the system demonstrates (e.g., geolocation of land), rather than talk.
Fig. 4. Interaction among the various actors in the supply chain using blockchain (Xu et al., 2020)
Blockchain and organic supply chains, the US experience
WalMart was the first large-scale retail (supermarket) group to understand the importance of blockchain in the food supply chain. It started applying it a few years ago in the first planet-wide supermarket network (11,496 stores, 2.2 million employees, $524 billion in sales). Starting with the very supply chains most exposed to the risk of fraud, which is closely linked to farmers’ inadequate remuneration.
Still in the US, an organic egg supply chain has implemented its traceability system with the transparency guarantees offered by blockchain. The consumer has more guarantees about the origin, production system and freshness of eggs. (12) In turn, distribution is better assured against the risks of fraud, which in the egg sector has also been seen in Italy just in the past few months.
Fig. 5. Flowchart of organic coffee production, information in the supply chain and inputs into the blockchain (Bettìn-Diaz et al., 2018)
Equity in the organic supply chain
In India, a recent study on organic supply chains shows how the use of blockchain can improve farmers’ remuneration, limiting the presence of middlemen, and ensure safer products. With a significant potential impact on the entire agricultural system, which in India absorbs more than 50 percent of workers. (13)
In China, a large organic farm has identified blockchain as a great tool for building supportive relationships among organic businesses. And prevent middlemen from speculating excessively on prices, or adopting fraudulent practices such as selling as organic products purchased from companies that are not part of the system. (14)
Risks and prospects
The risk for agribusiness operators less familiar with the technology is to fall into the trap of service offerings that are called blockchain but are not. Provided that these are not public blockchains but distributed ledgers (DLTs), under the control of a lead manager. As in the Umbrian case and several others, starting with IBM Food Trust.
Instead, the perspective is to share real blockchain technology in a broad and participatory way, with a view to increasing the trust of supply chain operators and consumers based on transparent and incorruptible traceability systems (15,16,17). And promote sustainable development through inclusion of data on worker compensation, value chain, social-environmental impact.
Dario Dongo and Andrea Adelmo Della Penna
Notes
(1) Mischa Tripoli, Josef Schmidhuber. (2018). Emerging opportunities for the application of blockchain in the agri-food industry. FAO(Food and Agriculture Organization), ICTSD(International Centre for Trade and Sustainable Development), http://www.fao.org/3/CA1335EN/ca1335en.pdf
(2) Manning (2016) Food fraud: policy and food chain. Current Opinion in Food Science 10:16-21, http://dx.doi.org/10.1016/j.cofs.2016.07.001
(3) Stranieri et al. (2020) Exploring the impact of blockchain on the performance of agri-food supply chains. Food Control, https://doi.org/10.1016/j.foodcont.2020.107495
(4) Tiscini et al. (2020) The blockchain as a sustainable business model innovation . Management Decision, https://doi.org/10.1108/MD-09-2019-1281
(5) Kamilaris et al. (2019) The rise of blockchain technology in agriculture and food supply chains. Trends in Food Science & Technology 91:640-652, https://doi.org/10.1016/j.tifs.2019.07.034
(6) Xu et al. (2020) Blockchain: A new safeguard for agri-foods. Artificial Intelligence in Agriculture 4:153-161, https://doi.org/10.1016/j.aiia.2020.08.002
(7) Coop (2020) Coop 2020 Report. Digital preview. https://www.italiani.coop/rapporto-coop-2020-anteprima-digitale/
(8) Sengupta et al. (2019) Meeting changing customer requirements in food and agriculture through application of Blockchain technology . SSRN, https://dx.doi.org/10.2139/ssrn.3429200
(9) Perpete (2020). Challenges and opportunities of using blockchain technology in the food supply chain. Focus on organic food supply chain. Liege University Library, https://matheo.uliege.be/bitstream/2268.2/10227/5/MASTER_THESIS_SARAH_PERPETE.pdf
(10) Antonucci et al. (2019) A review on blockchain applications in the agri-food sector. J. Sci. Food Agric. 99:6129-6138, doi:10.1002/jsfa.9912
(11) IBM News Room (2020). Umbria Food Cluster Project: Promoting authenticity and quality of local products using IBM Blockchain. https://newsroom.ibm.com/2020-05-20-Umbria-Food-Cluster-Project-Promoting-Authenticity-and-Quality-of-Local-Products-Using-IBM-Blockchain
(12) Bumblauskas et al. (2020). A blockchain use case in food distribution: Do you know where your food has been? International Journal of Information Management 52, https://doi.org/10.1016/j.ijinfomgt.2019.09.004
(13) Balakrishna Reddy et al. (2020). Quality improvement in organic food supply chain using Blockchain technology. Innovative Product Design and Intelligent Manufacturing Systems pp.887-896, https://doi.org/10.1007/978-981-15-2696-1_86
(14) Chen et al. (2020). Electronic agriculture, blockchain and digital agricultural democratization: Origin, theory and application. Journal of Cleaner Production 268:122071, https://doi.org/10.1016/j.jclepro.2020.122071
(15) Feng et al. (2020). Applying blockchain technology to improve agri-food traceability: A review of development methods, benefits and challenges. Journal of Cleaner Production 260:121031, https://doi.org/10.1016/j.jclepro.2020.121031
(16) Bettìn-Diaz et al. (2018). Methodological approach to the definition of a Blockchain system for the food industry supply chain traceability. International Conference on Computational Science and Its Applications, https://doi.org/10.1007/978-3-319-95165-2_2
(1,3) Xu et al. (2020) Blockchain: A new safeguard for agri-foods. Artificial Intelligence in Agriculture 4:153-161, https://doi.org/10.1016/j.aiia.2020.08.002
(2,4) Kamilaris et al. (2019) The rise of blockchain technology in agriculture and food supply chains. Trends in Food Science & Technology 91:640-652, https://doi.org/10.1016/j.tifs.2019.07.034
(5) Bettìn-Diaz et al. (2018) Methodological approach to the definition of a Blockchain system for the food industry supply chain traceability. International Conference on Computational Science and Its Applications, https://doi.org/10.1007/978-3-319-95165-2_2
(17) Traceability and traceability requirements established by European legislation in the various supply chains are set out in our ebook ‘Food Safety, Mandatory Rules and Voluntary Standards,’ at https://www.greatitalianfoodtrade.it/libri/sicurezza-alimentare-regole-cogenti-e-norme-volontarie-il-nuovo-libro-di-dario-dongo.
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
Graduated in Food Technologies and Biotechnologies, qualified food technologist, he follows the research and development area. With particular regard to European research projects (in Horizon 2020, PRIMA) where the FARE division of WIISE Srl, a benefit company, participates.
